OYO GEOSPACE CORP, S-1, 1997-09-30

OYO GEOSPACE CORP
S-1, 1997-09-30
MEASURING & CONTROLLING DEVICES, NEC

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<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 1997

REGISTRATION NO. 333-
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
OYO GEOSPACE CORPORATION
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 3829 76-0447780
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

7334 N. GESSNER ROAD
HOUSTON, TEXAS 77040
(713) 939-9700
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

GARY D. OWENS
OYO GEOSPACE CORPORATION
7334 N. GESSNER ROAD
HOUSTON, TEXAS 77040
(713) 939-9700
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

COPIES TO:

<TABLE>
<C> <C>
CHARLES H. STILL T. MARK KELLY
FULBRIGHT & JAWORSKI L.L.P. VINSON & ELKINS L.L.P.
1301 MCKINNEY, SUITE 5100 1001 FANNIN, SUITE 2300
HOUSTON, TEXAS 77010-3095 HOUSTON, TEXAS 77002-6760
(713) 651-5151 (713) 758-2222
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

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

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
---------------

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<S> <C> <C> <C> <C>
==================================================================================================================
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value per
share........................... 2,300,000 $13.00 $29,900,000 $9,061
==================================================================================================================
</TABLE>

(1) Includes 300,000 shares of Common Stock subject to the Underwriters'
over-allotment option.

(2) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457 of the Securities Act of 1933.

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.

================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED SEPTEMBER 30, 1997

PROSPECTUS

2,000,000 SHARES

[OYO GEOSPACE LOGO]

COMMON STOCK

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

Of the 2,000,000 shares of common stock, par value $.01 per share (the
"Common Stock"), of OYO Geospace Corporation ("OYO Geospace" or the "Company")
offered hereby (the "Offering"), 1,000,000 are being sold by the Company and
1,000,000 are being sold by OYO Corporation U.S.A. ("OYO U.S.A." or the "Selling
Stockholder"). The Company will not receive any proceeds from the shares of
Common Stock sold by the Selling Stockholder. See "Selling Stockholder."

Prior to the Offering, there has been no public market for the Common
Stock. It is currently estimated that the initial public offering price will be
between $11 and $13 per share. See "Underwriting." The Company has applied for
listing and quotation of the Shares on the Nasdaq National Market under the
symbol "OYOG."

SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
=============================================================================================================
PROCEEDS
UNDERWRITING PROCEEDS TO THE
PRICE DISCOUNTS AND TO THE SELLING
TO PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDER(2)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share............. $ $ $ $
- -------------------------------------------------------------------------------------------------------------
Total (3)............. $ $ $ $
=============================================================================================================
</TABLE>

(1) The Company and the Selling Stockholder have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting."

(2) Before deducting expenses payable proportionately by the Company and the
Selling Stockholder estimated to be $425,000.

(3) Each of the Company and the Selling Stockholder has granted the Underwriters
a 30-day option to purchase up to an additional 150,000 shares of Common
Stock (aggregate of 300,000 shares) on the same terms and conditions as set
forth above solely to cover over-allotments, if any. If the Underwriters
exercise such option in full, the Price to Public, Underwriting Discounts
and Commissions, Proceeds to the Company and Proceeds to the Selling
Stockholder, before deducting expenses, will be $ , $ ,
$ and $ , respectively. See "Underwriting."

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

The shares of Common Stock are offered severally by the Underwriters named
herein subject to prior sale, when, as and if delivered to and accepted by the
Underwriters subject to their right to reject any order in whole or in part, and
subject to certain other conditions. It is expected that delivery of the shares
of Common Stock will be made at the offices of Rauscher Pierce Refsnes, Inc.,
Dallas, Texas, on or about , 1997.

RAUSCHER PIERCE REFSNES, INC.
RAYMOND JAMES & ASSOCIATES, INC.

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

THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE> 3

(PRODUCT PICTURES TO BE PROVIDED)

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
COMMON STOCK, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and Consolidated Financial Statements, including the Notes thereto,
appearing elsewhere in this Prospectus. Unless otherwise indicated, the
information in this Prospectus gives effect to a 4,000-for-one exchange of the
Common Stock (the "Stock Split"), effected September 30, 1997 in contemplation
of the Offering. Unless otherwise indicated, the information in this Prospectus
assumes that the Underwriters' over-allotment option will not be exercised.
Unless the context indicates otherwise, all references to the "Company" or "OYO
Geospace" refer to OYO Geospace Corporation, a Delaware corporation, and its
subsidiaries and predecessor entities. Certain seismic and technical terms used
in this Prospectus are defined in the "Glossary" appearing elsewhere herein.

THE COMPANY
GENERAL

OYO Geospace Corporation is a leading designer and manufacturer of
instruments and equipment used in the acquisition and processing of seismic
data. The Company has been in the seismic instrument and equipment business
since 1980, and markets its products primarily to the oil and gas industry
worldwide. The Company has grown revenues from $23.1 million for the nine months
ended June 30, 1996 to $30.6 million for the nine months ended June 30, 1997 and
increased gross profit margins from 40.6% to 45.4% over the comparable period.

The Company's product lines currently include geophones and hydrophones,
seismic leader wire, geophone string connectors, thermal imaging products and
small data acquisition systems targeted at niche markets. The Company's products
are compatible with most major seismic data acquisition systems currently in
use, and sales result primarily from seismic contractors purchasing the
Company's products as peripheral components of new data acquisition systems or
to replace or upgrade peripheral components of data acquisition systems already
in use. The Company believes that its products are among the most
technologically advanced instruments and equipment available for seismic data
acquisition.

The Company has recently introduced a line of high resolution, wide format
thermal plotters for use in the commercial graphics industry. This product line
is an outgrowth of its seismic thermal imaging product line. In addition, OYO
Geospace plans to expand its product lines with the commencement of seismic
telemetric cable manufacturing in fiscal 1998, and to expand its product lines
further through research and development and through selective acquisitions,
focusing in the areas of (i) seismic instruments and equipment used in time
lapse 3-D seismic data acquisition (the acquisition of 3-D seismic data repeated
in the same area over time in order to track fluid movement in a reservoir),
(ii) three-axis seismic data acquisition (the acquisition of seismic data on
three axes to determine rock properties and fluid types) and (iii) borehole
seismology (the process of generating and/or recording seismic waves in existing
well bores).

PRODUCTS

The Company designs, manufactures and markets geophones and hydrophones.
Geophones are seismic sensor devices that detect energy from the earth's
subsurface. The Company's GS-20DX geophone historically was the industry
standard and is still manufactured and sold by the Company. Since 1992, the
Company has introduced the more advanced GS-30CT and GS-32CT geophones, which
provide greater geophone-to-geophone uniformity, lower signal distortion and
substantially tighter tolerances on key geophone parameters. This improved
signal quality allows customers to take full advantage of the capabilities of
24-bit 3-D seismic data acquisition systems. Hydrophones are seismic sensors
that respond to changes in pressure associated with a seismic signal and are
used to acquire seismic data in water. The Company manufactures a line of
hydrophones for use primarily in swamps, rivers, bays and transition zones.

The Company also designs and manufactures multi-strand seismic leader wire
(composed of up to four wire strands) used to connect geophones and hydrophones
into configured strings and designs, manufactures and markets geophone string
connectors used to connect geophone strings or hydrophone strings to a seismic
data collection unit.
3
<PAGE> 5

In addition, the Company designs, manufactures and markets two lines of
seismic products based on thermal imaging technology: (i) a line of digital
field monitors, sometimes referred to in the seismic industry as "field
cameras," which are used to display seismic data during the recording process to
assure quality control, and (ii) a line of seismic plotters employed in
connection with seismic data processing. The Company believes that it is the
leading manufacturer of thermal plotters for the seismic industry. As an
outgrowth of its seismic thermal imaging product line, the Company has developed
wide format 400 dots-per-inch ("dpi") and 600 dpi thermal plotters for use in
the commercial graphics industry. Such commercial graphics applications include
the newsprint, screen print and corrugated print industries. The Company
believes that it is the only manufacturer of wide format 600 dpi thermal
plotters for use in commercial graphics applications.

SEISMIC INDUSTRY OVERVIEW

Seismic data is the principal source of information used by geoscientists
to map potential or existing oil and gas bearing formations and the geologic
structures that surround them. Seismic data is used primarily in connection with
the exploration, development and production of oil and gas. The process of
seismic data acquisition is conducted in several stages. First, an energy source
imparts seismic waves into the earth, reflections of which are received and
measured by geophones and hydrophones. Electrical signals generated by the
geophones and hydrophones are then transmitted through leader wire, geophone and
hydrophone string connectors and telemetric cable to data collection units,
which store information for processing and analysis.

The Company believes that several important trends have impacted the
seismic industry in recent years and will have positive effects on the Company's
business. First, the outsourcing of seismic instrument and equipment
manufacturing operations by large geophysical contractors has substantially
increased the Company's universe of potential customers. Second, one of the
primary advancements in the 3-D seismic data acquisition process has been the
trend toward larger and higher resolution surveys, requiring large channel
counts and resulting in the use of more geophones, hydrophones, leader wire,
connectors and telemetric cable. Third, the increased size and expense of
seismic surveys has caused a continuing consolidation of geophysical contractors
resulting in a number of larger, better capitalized contractors that utilize
greater quantities of sophisticated seismic instruments and equipment. Finally,
declining computing equipment costs are making 3-D seismic technology available
to a larger number of independent oil and gas companies, improving demand for
3-D seismic surveys.

NEW SENIOR MANAGEMENT

To position OYO Geospace for increased growth, the Company recently hired a
new senior management team headed by Gary D. Owens, Chairman of the Board,
President and Chief Executive Officer. Prior to joining OYO Geospace in August
1997, Mr. Owens served in various positions with Input/Output, Inc.
("Input/Output"), a leading manufacturer of seismic data acquisition systems and
related equipment, from 1977 to May 1997, most recently as President and Chief
Executive Officer. Other recent additions to the Company's senior management
team include Michael J. Sheen, Vice President and Chief Technical Officer, and
Thomas T. McEntire, Chief Financial Officer. Mr. Sheen served in various
positions at Input/Output from 1977 to June 1997, most recently as Senior Vice
President and Chief Technical Officer. Mr. McEntire served in senior financial
positions for APS Holding Corporation, a nationwide distributor of automotive
parts and accessories, from 1990 to September 1997, most recently as Financial
Controller.
4
<PAGE> 6

BUSINESS STRATEGY

The Company's new senior management team has developed a business strategy
designed to accelerate the Company's rate of growth. Pursuant to this strategy,
the Company will seek to:

- Significantly Expand Manufacturing Capacity of Existing Products -- The
Company plans to commence a 45,000 square foot expansion of one of the
Company's Houston-based manufacturing facilities in the first quarter of
fiscal 1998. Planned for completion in the third quarter of fiscal 1998,
the expansion will significantly increase the Company's geophone and
multi-strand leader wire manufacturing capacity.

- Expand Product Lines -- In fiscal 1998, the Company intends to construct
or lease additional facilities to diversify its manufacturing capability
to include five-strand leader wire and telemetric cable used in the land
and marine seismic data acquisition markets.

- Increase Research and Development Expenditures -- During fiscal years
1994 through 1996, the Company's research and development expenditures
averaged $1.9 million per annum or 6.1% of revenues. Management intends
to increase such expenditures gradually in future periods, with an
emphasis on the development of new technologies to serve the rapidly
emerging markets for time lapse 3-D seismic data acquisition, three-axis
seismic data acquisition and borehole seismology surveys.

- Continue to Develop Non-Seismic Markets for the Company's
Technologies -- OYO Geospace has committed significant resources to
adapt the Company's thermal imaging products for use in commercial
graphics applications. Management believes that the development of
additional non-seismic applications for its technologies will diversify
the Company's revenue base and expose the Company to larger markets.

- Selectively Pursue Niche Acquisitions -- Management intends to
supplement the Company's internal growth through the acquisition of
manufacturers of seismic-related products. While the seismic equipment
industry has undergone consolidation in recent years, the industry
continues to be populated by numerous niche manufacturers, certain of
which may become available for acquisition by the Company. However, OYO
Geospace is not presently in discussions with any potential acquisition
candidates, and no assurances can be made that any acquisitions will be
available to the Company on attractive terms.

THE PARENT COMPANY

The Company currently is a wholly-owned indirect subsidiary of OYO
Corporation, a Japanese public company ("OYO Japan") established in 1957 and
engaged in the business of providing geo-engineering and consulting services
primarily for geological analysis of the earth's subsurface for construction
projects. The Company has historically benefited from its relationship with OYO
Japan through financial support, a favorable supply contract and shared
technological resources. The Company expects the supply contract and, to the
extent relevant, shared technology with OYO Japan to continue upon consummation
of the Offering; however, the Company anticipates that it will not rely on OYO
Japan for financial support. Upon completion of the Offering, OYO Japan will own
indirectly approximately 59% of the outstanding Common Stock through its
wholly-owned subsidiary, OYO U.S.A.

The Company's principal executive offices are located at 7334 North Gessner
Road, Houston, Texas 77040, and its telephone number is (713) 939-9700.
5
<PAGE> 7

THE OFFERING

Common Stock offered by the
Company............................. 1,000,000 shares

Common Stock offered by Selling
Stockholder(1).................... 1,000,000 shares

Common Stock to be outstanding after
the Offering(2)..................... 5,050,000 shares

Use of proceeds..................... To expand the Company's manufacturing
facilities and for general corporate
purposes.

Proposed Nasdaq National Market
Symbol.............................. OYOG
- ---------------

(1) The Company will not receive any proceeds from the sale of Common Stock by
OYO U.S.A. See "Selling Stockholder."

(2) Assumes an aggregate of 50,000 shares of restricted stock to be granted to
certain key employees in connection with the Offering pursuant to the
Company's 1997 Key Employee Stock Option Plan. The actual number of such
shares has not been determined but will be determined prior to the
commencement of the Offering. Does not include an aggregate of 450,000
additional shares reserved for issuance pursuant to that plan and the
Company's 1997 Non-Employee Director Stock Plan. See "Management -- Key
Employee Stock Option Plan."
6
<PAGE> 8

SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30, JUNE 30,
--------------------------- -----------------
1994 1995 1996 1996 1997
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales.................................................. $29,072 $32,615 $30,878 $23,094 $30,572
Cost of sales.......................................... 15,690 18,909 17,278 13,730 16,706
------- ------- ------- ------- -------
Gross profit........................................... 13,382 13,706 13,600 9,364 13,866
Operating expenses:
Selling, general and administrative.................. 6,035 5,854 6,729 4,984 6,349
Research and development............................. 1,697 1,988 1,959 1,400 1,521
Bad debt expense(1).................................. 73 1,013 2,860 2,427 118
Write-down of investment in foreign joint venture.... 1,712 -- -- -- --
------- ------- ------- ------- -------
Total operating expenses............................... 9,517 8,855 11,548 8,811 7,988
------- ------- ------- ------- -------
Income from operations................................. 3,865 4,851 2,052 553 5,878
Other income (expense), net............................ (95) (931) (466) (506) (114)
------- ------- ------- ------- -------
Income before income taxes............................. 3,770 3,920 1,586 47 5,764
Provision for income taxes............................. 1,487 1,579 577 19 2,317
------- ------- ------- ------- -------
Net income............................................. $ 2,283 $ 2,341 $ 1,009 $ 28 $ 3,447
======= ======= ======= ======= =======
Income per share....................................... $ .57 $ .59 $ .25 $ .01 $ .86
======= ======= ======= ======= =======
Weighted average shares outstanding as restated for
stock split.......................................... 4,000 4,000 4,000 4,000 4,000
OTHER FINANCIAL DATA:
Depreciation and amortization.......................... $ 1,009 $ 891 $ 1,025 $ 781 $ 1,124
EBITDA(2).............................................. 5,167 5,263 3,013 1,112 7,331
Capital expenditures................................... 1,470 1,391 2,063 1,852 2,709
</TABLE>

<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
------------------------------------------
PRO PRO FORMA AS
HISTORICAL FORMA(3) ADJUSTED(3)(4)
---------- -------- --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................................. $14,282 $17,726 $28,674
Total assets................................................ 32,320 32,672 41,795
Short-term debt, including current portion of long-term
debt...................................................... 3,097 1,825 --
Long-term debt.............................................. 7,245 -- --
Stockholder's equity........................................ 14,086 25,127 36,075
</TABLE>

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

(1) Includes $2,834 in the year ended September 30, 1996 and in the nine months
ended June 30, 1996, reflecting a provision for loss on notes receivable
from Grant Geophysical, Inc. ("Grant"), thereby reducing the carrying
balance of such notes to zero. The total amount of indebtedness on such
notes as of September 26, 1997, including accrued interest, was $6,759. On
September 26, 1997, the Company received $6,164 in conjunction with such
notes and related interest income, resulting in a recovery, net of $965 in
purchase credit concessions, of $5,199. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources" and Notes 4 and 16 to the Notes to the Financial
Statements contained elsewhere in this Prospectus.

(2) EBITDA is defined as earnings before interest, income taxes, depreciation
and amortization. EBITDA is not a measure of cash flow as determined by
generally accepted accounting principles ("GAAP"). EBITDA should not be
considered as an alternative to, or more meaningful than, net income or cash
flow as determined in accordance with GAAP or as an indicator of the
Company's operating performance or liquidity.

(3) Reflects the receipt of amounts in respect of the notes from Grant described
in note (1). Also reflects the settlement of certain transactions with OYO
U.S.A. and affiliates of OYO Japan consisting of (i) the contribution to
equity by OYO U.S.A. of $4,447 of amounts owed by the Company, and a cash
contribution of $676 by OYO U.S.A. The payment by the Company of long-term
indebtedness to OYO U.S.A. totaling $7,532, (iii) the collection by the
Company of a $2,799 receivable from OYO U.S.A. (classified on the
consolidated balance sheet as a reduction of stockholder's equity) and (iv)
incremental borrowings by the Company to fund the net cash transactions
referred to above.

(4) As adjusted to reflect the Offering and the application of the net proceeds
therefrom (based on an assumed initial public offering price of $12 per
share) and the issuance of 50 shares of restricted stock pursuant to the
Company's 1997 Key Employee Stock Option Plan.
7
<PAGE> 9

RISK FACTORS

Prospective purchasers of the Common Stock offered hereby should consider
carefully the following factors in evaluating an investment in the Common Stock.
Statements made in this Prospectus that are not historical facts are
forward-looking statements. Such statements include those relating to the
Company's future plans and expected events, outcomes and results. Although the
Company believes it has a reasonable basis for each such statement, such
statements are by their nature subject to risks and uncertainties, including
those described below, and the Company cannot and does not provide any assurance
as to such plans or expected events, outcomes or results. Prospective purchasers
should therefore exercise caution in making an investment decision.

VOLATILITY OF OIL AND GAS EXPLORATION ACTIVITY

Demand for the Company's products is dependent primarily upon the level of
worldwide oil and gas exploration activity. That activity, in turn, is dependent
primarily upon prevailing oil and gas prices. Historically, the markets for oil
and gas have been volatile, and such markets are likely to continue to be
volatile. Oil and gas prices are subject to wide fluctuation in response to
relatively minor changes in the supply of and demand for oil and gas, market
uncertainty and a variety of additional factors that are beyond the control of
the Company. These factors include the level of consumer product demand, weather
conditions, domestic and foreign governmental regulations, the price and
availability of alternative fuels, political conditions in the Middle East, the
foreign supply of oil and gas, the price of foreign imports and overall economic
conditions. It is impossible to predict future oil and gas price movements with
certainty. Accordingly, no assurance can be given as to the level of future
demand for the Company's products. See "Business -- Seismic Industry Overview."

TECHNOLOGICAL EVOLUTION AND PRODUCT OBSOLESCENCE

The markets for seismic instruments and equipment are characterized by
continual and rapid technological developments that have resulted in, and will
likely continue to result in, substantial improvements in product function and
performance. The Company believes that its future success is dependent upon its
ability to continue to (i) improve its existing product lines, (ii) address the
increasingly sophisticated needs of its customers, (iii) maintain a reputation
for technological leadership and (iv) maintain market acceptance. The Company
also believes that its success will depend on its ability to anticipate changes
in technology and industry standards and to respond to technological
developments on a timely basis, either internally or through strategic
alliances. Current competitors or new market entrants may develop new
technologies, products or standards that could render the Company's products
obsolete. There can be no assurance that the Company will be successful in
developing and marketing, on a timely and cost effective basis, product
enhancements or new products that respond to technological developments, that
are accepted in the marketplace or that comply with industry standards.

COMPETITION

The markets for the Company's products are highly competitive and
characterized by continual and rapid changes in technology. Many of the
Company's existing and potential competitors have substantially greater
marketing, financial and technical resources than the Company. Additionally, one
of the Company's competitors currently offers a broader range of seismic
instruments and equipment for sale and markets this equipment as a "packaged"
data acquisition system. The Company does not now offer for sale such a complete
"packaged" data acquisition system. Further, certain of the Company's
competitors offer financing arrangements to customers on terms that the Company
may not be able to match. In addition, new competitors may enter the market and
competition could intensify. For example, a former joint venture partner of the
Company in the People's Republic of China is capable of manufacturing a geophone
similar to the Company's older model geophone, the GS-20DX, and, since such
venture has now been terminated by mutual agreement, may attempt to market such
geophone outside of China and in competition with the Company. There can be no
assurance that sales of the Company's products will continue at current volumes
or prices if its current competitors or new market entrants introduce new
products with better features, performance, price or other characteristics than
the Company's products. Competitive pressures or other factors also may result
in

8
<PAGE> 10

significant price competition that could have a material adverse effect on the
Company's results of operations. See "Business -- Products and Competition."

LIMITATIONS ON PRODUCTION CAPACITY; INCREASED DELIVERY TIMES

The Company's production capacity and ability to fill orders for its
products timely is limited by its equipment, the size of its production
facilities and its human resources. These resources are in turn restricted by
the availability of the capital and time required to increase capacity,
particularly to construct or build out additional facilities. Although the
Company strives to fill orders for its products within 60 days of the date they
are received, in recent months the Company has taken 90 days or longer to
deliver on certain orders due to its limited capacity to meet an increased
number and size of orders. There can be no assurance that the Company will have
sufficient capital and resources to expand its production capacity and return
its delivery times to levels it considers appropriate. Further, the Company's
current increased delivery times may result in a loss of the Company's
customers. Finally, if the Company is able to increase its production capacity,
there can be no assurance that demand for its products will remain sufficiently
high for it to realize an appropriate return on the capital expended to increase
capacity. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."

LIMITED MARKET AND CUSTOMER CONCENTRATION

The Company markets its products to seismic contractors and large,
independent and government-owned oil and gas companies. The Company estimates,
based on published industry sources, that fewer than 100 seismic contracting
companies are currently operating worldwide (excluding those operating in Russia
and the former Soviet Union, India, the People's Republic of China and certain
Eastern European countries, where seismic data acquisition activity is difficult
to verify). Partly as a result of these market factors, a relatively small
number of customers has accounted for most of the Company's sales. The loss of
certain customers would be material to the Company's sales. See
"Business -- Products and Competition" and "Business -- Markets and Customers."

FLUCTUATIONS IN QUARTERLY PERFORMANCE

Historically, the rate of new orders for the Company's products has varied
substantially from quarter to quarter. Moreover, the Company typically operates
and expects to continue to operate on the basis of orders in hand for its
products before commencing substantial manufacturing "runs"; hence the timing of
orders can significantly impact the operating results and cash flow for any
quarter and can further adversely impact the Company's manufacturing capability
and expense levels. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Results of Operations."

CREDIT RISKS OF CUSTOMER FINANCING

The Company has in the past incurred significant write-offs in its accounts
receivables due to customer credit problems. The Company is subject to special
credit risks as to certain of its customers, as the Company has found it
necessary from time to time to extend trade credit to long-term customers and
others where some risks of nonpayment or late payment exist. There can be no
assurances that sufficient aggregate amounts of uncollectible receivables and
bad debt write-offs will not have a material adverse effect on the Company's
results of operations in the future. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources," "Business -- Markets and Customers" and Note 4 of Notes to
Consolidated Financial Statements.

UNCERTAINTY OF PATENT PROTECTION

The Company has applied for and holds certain patents relating to its
seismic data acquisition and other products. There is no assurance that the
Company's patents will prove enforceable, that any patents will be issued for
which application has been made or that competitors will not develop
functionally similar

9
<PAGE> 11

technology outside the protection of any patents the Company has or may obtain.
See "Business -- Intellectual Property."

RISKS AND DIFFICULTIES OF FOREIGN MARKETING

The Company's sales to foreign customers (excluding sales in Canada, which
are made in Canadian dollars) accounted for approximately 26% and 19%,
respectively, of the Company's net sales during fiscal 1996 and for the nine
months ended June 30, 1997. Substantially all of the Company's sales are made in
U.S. dollars, but from time to time the Company may make sales in foreign
currencies and may, therefore, be subject to foreign currency fluctuations on
its sales. In addition, net assets reflected on the balance sheet of the
Company's Canadian subsidiary are subject to currency fluctuations. Foreign
sales are subject to special risks inherent in doing business outside of the
United States, including the risk of war, civil disturbances, embargo and
government activities, all of which may disrupt markets. Foreign sales are also
generally subject to the risk of compliance with additional laws, including
tariff regulations and import and export restrictions. Sales in certain foreign
countries require prior United States government approval in the form of an
export license. There can be no assurance that the Company will not experience
difficulties in connection with future export sales.

RELIANCE ON SINGLE SUPPLIER AS TO ONE PRODUCT AND ON OTHER VENDORS

Most of the Company's products incorporate certain products or technology
supplied in part by third parties. To the extent the Company experiences any
significant supply or quality control problems with its vendors, such problems
could have a significant adverse effect on the Company's ability to meet future
production and sales commitments.

Currently, a single Japanese company is the sole supplier of a key
component of the Company's line of wide-body thermal plotters. If the Company
were unable to obtain adequate supplies of these components from this supplier,
the Company could experience delays or reductions in production and increased
expenses while the Company redesigns its thermal plotters, all of which could
have an adverse effect on the financial performance of the Company. If the
Company were unable to identify an alternative source to this supplier or to
redesign its thermal plotter to utilize a different component without diminution
in product performance, the Company's ability to compete in the wide-body
thermal plotter market could be significantly affected. In addition, payments to
the Japanese supplier for the component are required to be made in Japanese yen.
Accordingly, there exists some risk of foreign currency fluctuation, which could
increase the cost to the Company of the component. For the foreseeable future,
the aggregate amount of such purchases are expected to be approximately $3.0
million per year. See "Business -- Suppliers" and "Relationship with OYO Japan
and Related Transactions."

FUTURE UNAVAILABILITY OF HISTORICAL SOURCES OF FINANCING

Prior to the Offering, the Company has been operated as an indirect
wholly-owned subsidiary of OYO Japan and has relied on the financial support of
OYO Japan to assist in financing its acquisitions and operations. After the
Offering it is anticipated that the Company will not rely on OYO Japan for
financial support. No assurance can be given that additional financing will not
be required or that, if required, it will be available to the Company on
economically acceptable terms. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."

CONTROL BY PRINCIPAL STOCKHOLDER

Upon completion of the Offering, OYO Japan will own indirectly in the
aggregate approximately 59% of the outstanding Common Stock (55% if the
Underwriters' over-allotment option is exercised in full). Accordingly, OYO
Japan, through its wholly-owned subsidiary OYO U.S.A., will be able to elect all
of the directors of the Company and to control the Company's management,
operations and affairs. See "Security Ownership of Management and Principal
Stockholder." The Company currently has, and will continue to

10
<PAGE> 12

have, a variety of contractual relationships with OYO Japan and its affiliates.
See "Relationship With OYO Japan and Related Transactions."

UNCERTAINTY OF ACQUISITION STRATEGY

The Company anticipates that it will selectively pursue acquisitions of
manufacturers of seismic-related products. Nevertheless, there can be no
assurance that attractive acquisitions will be available to the Company at
reasonable prices or that any completed acquisition will ultimately prove to be
a successful undertaking by the Company.

DEPENDENCE UPON KEY PERSONNEL

The Company believes that its success is dependent upon attracting and
retaining highly skilled professionals. A number of the Company's employees are
highly skilled engineers and other professionals, and the failure of the Company
to continue to attract and retain such professionals could adversely affect the
Company's continued ability to compete in the industry. In addition, the Company
believes that its success will depend to a significant extent upon the abilities
and efforts of several new members of its senior management who joined the
Company subsequent to August 1997, one of whom is the President and Chief
Executive Officer of the Company. See "Management."

HISTORICAL ABSENCE OF PUBLIC MARKET

Prior to the Offering, there has been no public market for the Common
Stock. Although application has been made for inclusion of the Common Stock on
the Nasdaq National Market, there can be no assurance that an active trading
market will develop, or, if developed, will continue upon completion of the
Offering. The initial public offering price of the Common Stock will be
determined by negotiations between the Company and the Underwriters and may not
be indicative of the market price of the Common Stock after the Offering. For a
discussion of the factors to be considered in determining the initial public
offering price, see "Underwriting." The market price of the Common Stock could
be subject to significant fluctuations in response to variations in quarterly
and yearly operating results, the success of the Company's business strategy,
general trends in the oil and gas industry, competition, product obsolescence,
changes in federal regulations affecting the Company or the oil and gas industry
and other factors. In addition, the stock market in recent years has experienced
extreme price and volume fluctuations that have often been unrelated or
disproportionate to the operating performance of affected companies. These broad
fluctuations may adversely affect the market price of the Common Stock.

ANTI-TAKEOVER PROVISIONS

OYO Geospace's Restated Certificate of Incorporation and Bylaws include a
number of provisions that may have the effect of encouraging persons considering
unsolicited tender offers or other unilateral takeover proposals to negotiate
with the Board of Directors rather than pursue non-negotiated takeover attempts.
These provisions may have the effect of delaying, deferring or preventing a
change in control of the Company whether or not such person chooses to negotiate
with the Board of Directors and may adversely affect the market price of the
Common Stock. The provisions include authorized blank check preferred stock, the
denial of the use of written consents, a classified Board of Directors and
restrictions on removal of directors. See "Description of Capital Stock."

POTENTIAL ADVERSE EFFECT ON MARKET PRICE OF SHARES ELIGIBLE FOR FUTURE SALE

Immediately following the Offering, 5,050,000 shares of Common Stock will
be outstanding (5,200,000 shares if the Underwriters' over-allotment option is
exercised in full). In addition, an aggregate of 450,000 unissued shares have
been reserved for issuance pursuant to the Company's 1997 Key Employee Stock
Option Plan and 1997 Non-Employee Director Stock Plan. The Company intends to
register the shares issuable under these plans pursuant to the Securities Act.
The 2,000,000 shares of Common Stock offered hereby, together with any shares
issued upon exercise of the Underwriters' over-allotment option or under the

11
<PAGE> 13

Company's stock plans, will be eligible for resale in the public market without
restriction under the Securities Act, except to the extent that those shares are
acquired by affiliates of the Company. All of the remaining outstanding shares
of Common Stock will be subject to resale in accordance with Rule 144 under the
Securities Act. Sales of a substantial number of shares of Common Stock may
adversely affect the market price of the Common Stock. See "Shares Eligible for
Future Sale" and "Underwriting."

DILUTION

A purchaser of Common Stock in the Offering will experience an immediate
and substantial dilution in the net tangible book value of its shares. See
"Dilution."

DIVIDENDS

The Company expects to retain cash generated from operations to support its
cash needs and does not anticipate the payment of any dividends on the Common
Stock for the foreseeable future. See "Dividend Policy."

12
<PAGE> 14

THE COMPANY

HISTORY

OYO Japan first entered the North American market in 1980 with a start-up
geophone manufacturing business. Beginning in 1983, OYO Japan's North American
operations were conducted through a wholly-owned holding company, OYO U.S.A. In
1986, OYO U.S.A. acquired the geophone and hydrophone operations of AMF Geo
Space Corporation, a leading U.S. manufacturer of geophones. In 1988, these
acquired operations and the Company's separate geophone operations were merged
to form what is now Geo Space Corporation ("Geo Space"), a wholly-owned
subsidiary of the Company. Geo Space currently manufactures geophones and
hydrophones and related accessories such as geophone cases. OYO U.S.A. also
acquired from AMF in 1986 the nucleus of what is currently OYO Instruments, Inc.
("OYO Instruments"), another wholly-owned subsidiary of the Company. At the time
of its acquisition, OYO Instruments produced a single thermal plotter line. In
addition to an expanded line of thermal plotters, OYO Instruments also currently
manufactures and distributes other thermal display instruments, such as digital
field monitors and small data acquisition systems, and a line of high resolution
wide format thermal plotters for use in commercial graphics applications. In
1988, OYO U.S.A. acquired Houston Geophysical Products, Inc. ("HGPI"), a leading
manufacturer and distributor of geophone string connectors.

The Company was incorporated on September 27, 1994. The Company was
organized upon the contribution to it of all the outstanding shares of stock of
the subsidiaries of OYO U.S.A. that were engaged in seismic instrument and
equipment businesses and certain related assets and liabilities. In
contemplation of the Offering, the Company has recently undergone an internal
corporate restructuring to more fully separate itself from OYO Japan and OYO
U.S.A. See "Relationship with OYO Japan and Related Transactions." In preparing
its capital structure for the Offering, the Company effected the Stock Split.
References to "the Company" in this Prospectus relate to the business now
carried on by the Company and its subsidiaries and previously carried on by
their predecessors. The Company's principal executive offices are located at
7334 North Gessner Road, Houston, Texas 77040, and its telephone number is (713)
939-9700.

OYO JAPAN

OYO Japan is principally engaged in providing geo-engineering and
consulting services in Japan and the Far East in connection with construction
projects. OYO Japan provides soil investigation, foundation investigation and
other engineering services, primarily in connection with the protection of
structures and facilities from earthquake damage or damage resulting from
underground soil conditions. See "Relationship With OYO Japan and Related
Transactions." As a result of the Offering, the Company will operate
independently of OYO Japan.

13
<PAGE> 15

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,000,000 shares of
Common Stock offered by the Company are estimated to be approximately $10.9
million (approximately $12.6 million if the Underwriters' over-allotment option
is exercised in full), assuming an initial public offering price of $12 per
share and after deducting the underwriting discounts and estimated expenses
payable by the Company.

The Company intends to use an aggregate of approximately $3.0 million of
the net proceeds to fund a planned expansion of its primary manufacturing
facility. The Company intends to use the remainder of the net proceeds for
general corporate purposes.

Pending the application of the net proceeds from the Offering, the Company
will invest the net proceeds in investment-grade, short-term, interest-bearing
securities.

DIVIDEND POLICY

The Company has not paid cash dividends since its formation and does not
anticipate that cash dividends will be paid in the foreseeable future since the
Company presently intends to retain any future earnings to finance the expansion
and continuing development of its business. The declaration and payment in the
future of any cash dividends will be at the election of the Company's Board of
Directors and will depend upon the earnings, capital requirements and financial
position of the Company, future loan covenants, general economic conditions and
other pertinent factors.

DILUTION

The pro forma net tangible book value of the Company at June 30, 1997, was
$24.1 million, or $6.03 per share of Common Stock, after giving effect to a
recent internal corporate reorganization and the receipt of amounts in respect
of an outstanding fully-reserved note receivable. After giving effect to the
sale by the Company of 1,000,000 of the Shares (at an assumed initial public
offering price of $12 per share and after deducting the underwriting discounts
and estimated offering expenses payable by the Company and the Selling
Stockholder) and the issuance of 50,000 restricted shares of Common Stock
pursuant to the Company's 1997 Key Employee Stock Option Plan, the pro forma net
tangible book value at such date would have been $35.1 million, or $6.94 per
share of Common Stock. This represents an immediate increase in net tangible
book value of $0.91 per share to OYO U.S.A. and an immediate dilution of $5.06
per share to investors purchasing shares in the Offering.

The following table illustrates this dilution per share of Common Stock to
investors purchasing shares in the Offering:

<TABLE>
<S> <C> <C>
Initial public offering price per share..................... $12.00
Pro forma net tangible book value per share as of June 30,
1997................................................... $6.03
Increase per share attributable to the sale of shares
offered hereby......................................... .91
-----
Pro forma net tangible book value per share after the
Offering.................................................. 6.94
------
Dilution in net tangible book value per share to New
Investors................................................. $ 5.06
======
</TABLE>

14
<PAGE> 16

CAPITALIZATION

The following table sets forth the capitalization of the Company as of June
30, 1997, pro forma to give effect to recent transactions occurring subsequent
to June 30, 1997, and as adjusted to reflect transactions as indicated. This
table should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Financial Statements
(including the Notes thereto) included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
-------------------------------------------
PRO
FORMA AS
HISTORICAL PRO FORMA(1) ADJUSTED(1)(2)
---------- ------------ --------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Long-term debt, including current portion............... $10,342 $ 1,825 $ --
Stockholder's equity:
Common stock, $.01 par value, 20,000 shares
authorized, 4,000 shares issued and outstanding
(5,050 issued and outstanding as adjusted)......... 40 40 51
Preferred stock, 1,000 shares authorized, no shares
issued and outstanding............................. -- -- --
Additional paid-in capital............................ 4,687 9,810 21,347
Retained earnings..................................... 12,379 15,498 15,498
Receivable from Parent................................ (2,799) -- --
Cumulative foreign currency translation............... (221) (221) (221)
Restricted stock awards............................... -- -- (600)
------- ------- -------
Total stockholder's equity.................... 14,086 25,127 36,075
------- ------- -------
Total capitalization.......................... $24,428 $26,952 $36,075
======= ======= =======
</TABLE>

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

(1) Reflects the receipt of amounts in respect of fully-reserved notes
receivable from Grant. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" and Notes 4 and 16 to the Notes to the Financial Statements
included elsewhere in this Prospectus. Also reflects the settlement of
certain transactions with OYO U.S.A. and affiliates of OYO Japan consisting
of (i) the contribution to equity by OYO U.S.A. of $4,447 of amounts owed by
the Company and a cash contribution by OYO U.S.A. of $676, (ii) the payment
by the Company of long-term indebtedness to OYO U.S.A. totaling $7,532,
(iii) the collection by the Company of a $2,799 receivable from OYO U.S.A.
(classified on the consolidated balance sheet as a reduction of
stockholder's equity) and (iv) incremental borrowings by the Company to fund
the net cash transactions referred to above.

(2) As adjusted to reflect the Offering and the application of the net proceeds
therefrom (based on an assumed initial public offering price of $12 per
share) and the issuance of 50,000 shares of restricted stock pursuant to the
Company's 1997 Key Employee Stock Option Plan.

15
<PAGE> 17

SELECTED FINANCIAL DATA

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The following selected consolidated financial data for each of the years in
the three-year period ended September 30, 1996 have been derived from audited
financial statements of the Company. The Statement of Operations Data for the
years ended September 30, 1994, 1995 and 1996 and the Balance Sheet as of
September 30, 1995 and 1996 were derived from the Company's audited Consolidated
Financial Statements appearing elsewhere in this Prospectus. The selected
consolidated financial data shown below as of September 30, 1992 and 1993, and
for the years then ended, and as of June 30, 1996 and 1997, and for the nine
months then ended, are derived from unaudited Consolidated Financial Statements
of the Company. In the opinion of management of the Company, such unaudited
financial information includes all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation of the Company's results
of operations for the periods then ended and the Company's financial position as
of such dates. Operating results for the nine-month period ended June 30, 1997
are not necessarily indicative of results for the entire year. This information
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Consolidated Financial
Statements of the Company and the related Notes thereto included elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED SEPTEMBER 30, ENDED JUNE 30,
----------------------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales.................................... $20,361 $18,649 $29,072 $32,615 $30,878 $23,094 $30,572
Cost of sales............................ 13,249 12,787 15,690 18,909 17,278 13,730 16,706
------- ------- ------- ------- ------- ------- -------
Gross profit............................. 7,112 5,862 13,382 13,706 13,600 9,364 13,866
Operating expenses:
Selling, general and administrative.... 5,056 5,179 6,035 5,854 6,729 4,984 6,349
Research and development............... 1,381 1,582 1,697 1,988 1,959 1,400 1,521
Bad debt expense(1).................... 1,500 -- 73 1,013 2,860 2,427 118
Write-down of investment in foreign
joint venture........................ -- -- 1,712 -- -- -- --
------- ------- ------- ------- ------- ------- -------
Total operating expenses........ 7,937 6,761 9,517 8,855 11,548 8,811 7,988
------- ------- ------- ------- ------- ------- -------
Income (loss) from operations............ (825) (899) 3,865 4,851 2,052 553 5,878
Other income (expense), net.............. (212) (300) (95) (931) (466) (506) (114)
------- ------- ------- ------- ------- ------- -------
Income (loss) before income taxes........ (1,037) (1,199) 3,770 3,920 1,586 47 5,764
Provision (benefit) for income taxes..... (543) (398) 1,487 1,579 577 19 2,317
------- ------- ------- ------- ------- ------- -------
Net income (loss)........................ $ (494) $ (801) $ 2,283 $ 2,341 $ 1,009 $ 28 $ 3,447
======= ======= ======= ======= ======= ======= =======
Income (loss) per share.................. $ (.12) $ (.19) $ .57 $ .59 $ .25 $ .01 $ .86
======= ======= ======= ======= ======= ======= =======
Weighted average shares outstanding as
restated for stock split............... 4,000 4,000 4,000 4,000 4,000 4,000 4,000
</TABLE>

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, AS OF JUNE 30,
------------------------------------------------ ------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.............................. $ 8,912 $ 8,883 $ 6,099 $ 9,266 $ 10,718 $ 9,939 $ 14,282
Total assets................................. 19,090 19,373 19,208 24,259 26,272 19,168 32,320
Short-term debt, including current portion of
long-term debt............................. 1,188 1,187 2,779 2,932 3,124 2,097 3,097
Long-term debt............................... 9,989 8,799 8,140 7,818 7,919 7,532 7,245
Stockholder's equity......................... 7,205 6,742 3,399 6,241 8,628 7,780 14,086
</TABLE>

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

(1) Includes $1,500 in the year ended September 30, 1992 and $2,834 in each of
the year ended September 30, 1996 and the nine months ended June 30, 1996,
reflecting a provision for loss on notes receivable from Grant, thereby
reducing the carrying balance of such notes to zero. The total amount of
indebtedness on such notes as of September 26, 1997, including accrued
interest, was $6,759. On September 26, 1997, the Company received $6,164 in
conjunction with such notes and related interest income, resulting in a
recovery, net of $965 in purchase credit concessions, of $5,199. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and Notes 4 and 16 to the
Notes to the Financial Statements contained elsewhere in this Prospectus.

16
<PAGE> 18

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following analysis of the financial condition and results of operations
of the Company should be read in conjunction with the Financial Statements and
Notes related thereto included elsewhere in this Prospectus.

OVERVIEW

In recent years, the seismic equipment industry has undergone change as a
result of an increasing reliance by seismic contractors on 3-D data acquisition
systems with greater channel capacity. Because each channel of data requires at
least one geophone string to provide the input signal, the shift to larger
channel 3-D data acquisition systems has resulted in an increase in demand for
geophones, hydrophones, leader wire, geophone string connectors and telemetric
cable. The trend toward the use of seismic data acquisition systems with greater
channel capacity, coupled with higher seismic acquisition activity levels, has
also stimulated demand for the Company's other seismic related products.

The Company has recently developed and introduced new products for both the
seismic industry and for other applications that have contributed to increased
revenues.

RESULTS OF OPERATIONS

The following table sets forth for fiscal 1994, 1995 and 1996, and for the
nine months ended June 30, 1996 and 1997, the percentage of certain income
statement items to total sales:

<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL SALES
---------------------------------------------------
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30, JUNE 30,
--------------------------- ------------------
1994 1995 1996 1996 1997
----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C>
Sales.............................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales...................... 54.0 58.0 56.0 59.4 54.6
Gross profit....................... 46.0 42.0 44.0 40.6 45.4
Selling, general and
administrative................... 20.7 17.9 21.8 21.6 20.8
Research and development........... 5.8 6.1 6.3 6.1 5.0
Bad debt expense................... 0.3 3.1 9.3 10.5 0.4
Write-down of investment in foreign
joint venture.................... 5.9 - - - -
Income from operations............. 13.3 14.9 6.6 2.4 19.2
Other income (expense), net........ (0.3) (2.9) (1.5) (2.2) (0.4)
Income before income taxes......... 13.0 12.0 5.1 0.2 18.8
Provision for income taxes......... 5.1 4.8 1.8 0.1 7.5
Net income......................... 7.9 7.2 3.3 0.1 11.3
</TABLE>

Nine Months Ended June 30, 1997 Compared to Nine Months Ended June 30, 1996.

Sales for the first nine months of fiscal 1997 were $30.6 million, an
increase of $7.5 million, or 32.4%, from $23.1 million in the first nine months
of fiscal 1996. The increase in sales was attributable primarily to increased
demand for the Company's products.

Cost of sales for the first nine months of fiscal 1997 was $16.7 million,
an increase of $3.0 million, or 21.7%, from $13.7 million in the first nine
months of fiscal 1996. Cost of sales decreased as a percentage of total revenues
to 54.6% in the first nine months of fiscal 1996 from 59.4% in the first nine
months of fiscal 1997. Such percentage decrease is the result of sales price
increases and favorable manufacturing cost variances caused by increases in
industry-wide demand for the Company's products.

Operating expenses for the first nine months of fiscal 1997 were $8.0
million, a decrease of $0.8 million, or 9.3%, from $8.8 million in the first
nine months of fiscal 1996. Operating expenses decreased as a

17
<PAGE> 19

percentage of total revenues to 26.2% in the first nine months of fiscal 1997
from 38.2% in the first nine months of fiscal 1996. Selling, general and
administrative expenses for the first nine months of fiscal 1997 were $6.3
million, an increase of $1.3 million, or 27.4%, from $5.0 million in the first
nine months of fiscal 1996. Selling, general and administrative expenses
decreased as a percentage of total revenue to 20.8% in the first nine months of
fiscal 1997 from 21.6% in the first nine months of fiscal 1996, principally
reflecting the impact of high sales volume and the leveraging of certain fixed
expenses. Research and development expenses for the first nine months of fiscal
1997 were $1.5 million, an increase of $0.1 million, or 8.6%, from $1.4 million
in the first nine months of fiscal 1996. Research and development expenses
decreased as a percentage of total revenues to 5.0% in the first nine months of
fiscal 1997 from 6.1% in the first nine months of 1996, principally reflecting
an increase in research and development expenses relating to the Company's
geophone products. Bad debt expense for the first nine months of fiscal 1997 was
$0.1 million, a decrease of $2.3 million from the comparable 1996 period. The
1996 bad debt expense principally reflects the bankruptcy of a single customer
in 1996.

The Company's effective tax rate for the nine months ended June 30, 1997
was 40.2% compared to 40.4% for the first nine months of fiscal 1996. Such
decrease represents lower state income taxes (as a percentage of total taxes) in
1997.

Year Ended September 30, 1996 Compared to Year Ended September 30, 1995.

Sales for fiscal 1996 were $30.9 million, a decrease of $1.7 million, or
5.3% from $32.6 million in fiscal 1995. The decrease was attributable to reduced
demand for the Company's thermal imaging and geophone connector products.

Cost of sales for fiscal 1996 were $17.3 million, a decrease of $1.6
million, or 8.6%, from $18.9 million in fiscal 1995. Cost of sales decreased as
a percentage of total revenues to 56.0% in 1996 from 58.0% in 1995, principally
attributable to increased prices on geophone and thermal imaging product lines.

Operating expenses for fiscal 1996 were $11.5 million, an increase of $2.7
million, or 30.4%, from $8.9 million in fiscal 1995. Operating expenses
increased as a percentage of total revenues to 37.4% in 1996 from 27.1% in 1995.
Selling, general and administrative expenses for fiscal 1996 were $6.7 million,
an increase of $0.9 million, or 14.9%, from $5.9 million in fiscal 1995.
Selling, general and administrative expenses increased as a percentage of total
revenue to 21.8% in 1996 from 17.9% in 1995, principally reflecting lower sales
volume and higher incentive compensation expenses. Research and development
expenses for fiscal 1996 were $2.0 million, a decrease of 1.5%, from $2.0
million in fiscal 1995. Decreases in research and development expenses relate
principally to the thermal imaging product line. Bad debt expense for fiscal
1996 was $2.9 million, an increase of $1.9 million, or 182.3% from $1.0 million
in fiscal 1995. Such increase is principally the result of a single customer
declaring bankruptcy in fiscal 1996.

The Company's effective tax rate in fiscal 1996 was 36.4% compared to 40.3%
in fiscal 1995. The decrease in the effective tax rate principally relates to
adjustments to deferred tax assets relating to temporary differences in the
recognition of certain state income tax deductions.

Year Ended September 30, 1995 Compared to Year Ended September 30, 1994.

Sales for fiscal 1995 were $32.6 million, an increase of $3.5 million, or
12.2%, from $29.1 million in fiscal 1994. The increase in sales was attributable
principally to increased sales of geophones, particularly the Company's model
GS-30CT geophone. While selling prices of geophones remained essentially
constant during this period, unit sales increased, reflecting both a growing
geophone market during the period and, in the Company's estimate, increased
market share.

Cost of sales for fiscal 1995 was $18.9 million, an increase of $3.2
million, or 20.5%, from $15.7 million in fiscal 1994. Cost of sales increased as
a percentage of total revenues to 58.0% in 1995 from 54.0% in 1994. Such
increase in cost of sales as a percentage of total revenue reflects a decline in
gross margins due to pricing pressure relating to the Company's geophone
connector and thermal imaging product lines.

Operating expenses for fiscal 1995 were $8.9 million, a decrease of $0.7
million, or 7.0%, from $9.5 million in fiscal 1994. Operating expenses decreased
as a percentage of total revenues to 27.1% in 1995

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<PAGE> 20

from 32.7% in 1994. Selling, general and administrative expenses for fiscal 1995
were $5.9 million, a decrease of $0.2 million, or 3.0%, from $6.0 million in
fiscal 1994. Selling, general and administrative expenses decreased as a
percentage of total revenues to 17.9% in 1995 from 20.7% in 1994, principally
reflecting higher sales volume and lower accrued bonus expense. Research and
development expenses for fiscal 1995 were $2.0 million, an increase of $0.3
million, or 17.1%, from $1.7 million in fiscal 1994. Research and development
expenses increased as a percentage of total revenues to 6.1% in 1995 from 5.8%
in 1994, principally reflecting higher research and development expenses in the
Company's geophone and seismic instrument product lines. Bad debt expense for
fiscal 1995 was $1.0 million, an increase of $0.9 million from $0.1 million in
fiscal 1994. Such increase is principally the result of a single customer
declaring bankruptcy in fiscal 1995. In 1994, the Company expensed its
investment in OYO Geo-Impulse, a joint venture engaged in the manufacture of
geophones in Russia.

The Company's effective tax rate in fiscal 1995 was 40.3% compared to 39.4%
in fiscal 1994, reflecting adjustments to deferred income taxes in fiscal 1994.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 1997, the Company had $1.0 million in cash and cash
equivalents. For the nine months ended June 30, 1997, the Company had net income
of $3.4 million and cash provided by operating activities was $1.0 million. The
principal uses of cash in operations during this period were to fund an
approximate $4.7 million increase in accounts and notes receivable and
inventory, principally relating to seismic products. These increases were due
principally to higher sales levels during the first nine months of fiscal 1997
compared to the comparable period in 1996. Additionally, at June 30, 1997, the
Company maintained higher than normal inventory levels relating to seismic
instruments, particularly thermal plotters and related components, and
experienced higher accounts receivable because of slower payments by certain
customers and a greater volume of sales with extended payment terms to seismic
products customers.

For the nine months ended June 30, 1997, the Company used approximately
$2.1 million in investing activities, comprising capital expenditures of
approximately $2.7 million less approximately $0.6 million in proceeds from the
sale of rental equipment and other property, plant and equipment during the
period. The Company expects that its capital expenditures in the last quarter of
fiscal 1997 will be approximately $3.2 million, which includes the purchase of
certain buildings and land from affiliates of OYO Japan. See "Relationship with
OYO Japan and Related Transactions." The Company expects that its capital
expenditures in fiscal 1998 to support currently existing product lines and
develop new product lines will be $6.0 million, including $3.0 million for the
construction of an additional manufacturing facility.

At June 30, 1997, the Company had $1.5 million of outstanding bank
indebtedness. Historically, the Company has relied on various intercompany
arrangements with OYO U.S.A. for its financing requirements. In September of
1997, in connection with the Company's internal corporate reorganization and
separation from OYO U.S.A., the Company established a $9.0 million unsecured,
uncommitted credit line with a United States Agency of a Japanese bank and a
$4.0 million unsecured, uncommitted credit line with a United States Agency of
another Japanese bank. Neither of these lines of credit currently constitutes a
commitment on the part of either bank to fund such loans.

After the Offering, the Company expects that OYO Japan will no longer
guarantee any indebtedness for the Company's benefit. However, the Company
expects to be able to obtain new working capital lines of credit with one or
more banks (which, if secured would be secured solely by the Company's assets),
given the Company's absence of indebtedness after the application of the
proceeds of the Offering. Additionally, the Company may seek to arrange
additional financing in conjunction with acquisitions or material internal
expansion. While no committed lines of credit are currently in place, the
Company believes that its essentially debt-free balance sheet after the Offering
will be sufficient to support such lines of credit.

On September 26, 1997, the Company received $6.2 million on certain notes
receivable that had been fully charged to bad debt expense in 1992 and 1996.
These notes receivable had been from a single customer,Grant Geophysical, Inc.
("Grant"), who sought protection under the United States bankruptcy laws in
1996. The Company's claim against Grant was purchased by a third party for cash.
In connection with this

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<PAGE> 21

transaction, the Company issued $1.0 million in purchase credit concessions to
Grant, which it expects to reflect on its balance sheet as a current liability.
The Company expects that the recovery, net of concessions, will be recorded on
its statement of operations in the fourth quarter of the fiscal year ended
September 30, 1997. See Notes 4 and 16 to the Notes to the Financial Statements,
contained elsewhere in this Prospectus.

The Company believes that the combination of cash flow from operations,
credit facilities it expects to enter into and the proceeds of the Offering
should provide the Company with sufficient capital resources and liquidity to
fund its operations for the coming fiscal year and support an acquisition and
expansion program as described elsewhere in this Prospectus.

Inflation has not had a significant impact on the Company's operations to
date.

RECENT ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 128, Earnings Per Share ("SFAS
128"). SFAS 128 changes the computation of earnings per share and requires dual
presentation of basic and diluted earnings per share. SFAS 128 is effective for
financial statements issued for periods ending after December 15, 1997,
including interim periods. SFAS 128 is not expected to have a material impact on
earnings per share.

In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130 establishes
standards for reporting and display of comprehensive income and its components
(revenues, expenses, gains and losses) in a full set of general-purpose
financial statements. It requires (a) classification of the components of other
comprehensive income by their nature in a financial statement and (b) the
display of the accumulated balance of the other comprehensive income separate
from retained earnings and additional paid-in capital in the equity section of a
statement of financial position. SFAS 130 is effective for years beginning after
December 15, 1997 and is not expected to have a material impact.

In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosure about Segments of an Enterprise and Related Information"
("SFAS 131"). SFAS 131 establishes standards for reporting information about
operating segments in annual financial statements and requires selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. The Company has not
determined the impact of SFAS 131 on its financial reporting practices.

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<PAGE> 22

BUSINESS

GENERAL

To position OYO Geospace for increased growth, the Company recently hired a
new senior management team headed by Gary D. Owens, Chairman of the Board,
President and Chief Executive Officer. Prior to joining OYO Geospace in August
1997, Mr. Owens served in various positions with Input/Output, Inc.
("Input/Output"), a leading manufacturer of seismic data acquisition systems and
related equipment, from 1977 to May 1997, most recently as President and Chief
Executive Officer. Other recent additions to the Company's senior management
include Michael J. Sheen, Vice President and Chief Technical Officer, and Thomas
T. McEntire, Chief Financial Officer. Mr. Sheen served in various positions at
Input/Output from 1977 to June 1997, most recently as Senior Vice President and
Chief Technical Officer. Mr. McEntire served in senior financial positions for
APS Holding Corporation, a nationwide distributor of automotive parts and
accessories, from 1990 to September 1997, most recently as Financial Controller.

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<PAGE> 23

BUSINESS STRATEGY

The Company's new senior management team has developed a business strategy
designed to accelerate the Company's rate of growth. Pursuant to this strategy,
the Company will seek to:

- Continue to Develop Non-Seismic Markets for the Company's
Technologies -- OYO Geospace has committed significant resources to adapt
the Company's thermal imaging products for use in commercial graphics
applications. Management believes that the development of additional non-
seismic applications for its technologies will diversify the Company's
revenue base and expose the Company to larger markets.

- Selectively Pursue Niche Acquisitions -- Management intends to supplement
the Company's internal growth through the acquisition of manufacturers of
seismic-related products. While the seismic equipment industry has
undergone consolidation in recent years, the industry continues to be
populated by numerous niche manufacturers, certain of which may become
available for acquisition by the Company. However, OYO Geospace is not
presently in discussions with any potential acquisition candidates, and
no assurances can be made that any acquisitions will be available to the
Company on attractive terms.

SEISMIC INDUSTRY OVERVIEW

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<PAGE> 24

THE SEISMIC DATA ACQUISITION PROCESS

The diagram set forth below depicts the "data chain" pertaining to seismic
data acquisition and processing. Following the diagram from left to right, an
energy source imparts seismic energy into the earth and sensors receive
reflections of such energy from subsurface formations and transmit energy
through leader wires, connectors and telemetric cables to a sequential chain of
data handling devices, which ultimately produce information for analysis.

SEISMIC DATA CHAIN

SEISMIC DATA CHAIN CHART

Current Methods

The oil and gas exploration and development process typically begins with
the selection of a defined geographical area and the collection and analysis of
various types of data, including seismic and well log data, that may provide
information as to the existence and location of potential oil and gas reservoirs
within the target area. Seismic data is the principal source of information used
by geoscientists to map potential oil and gas bearing formations and the
geologic structures that surround them. Seismic data is acquired over a wide
area by directing seismic waves into the earth and measuring the response as
these seismic waves reflect from subsurface geologic features. Because seismic
waves reflect differently from different types of subsurface formations,
measurements of these reflections can be used to construct a model of the
subsurface structure.

In seismic data acquisition, an energy source is used to impart seismic
waves into the earth. For land systems, this energy source is either vibroseis
or an explosive charge. In marine environments, a device called an air gun is
used to generate the seismic waves. The reflections of these seismic waves are
received and measured by seismic sensors, either geophones (typically on land)
or hydrophones (in water), which convert the reflected seismic waves into an
electrical signal. Geophones are typically enclosed in a plastic or polyurethane
case. A land geophone case may include a metal spike for positioning and
coupling to the ground. Hydrophones are typically attached inside a streamer
cable or attached to a bottom cable by a marine connector. For land systems, a
string of geophones is generally used as the seismic sensor. The electrical
output of each geophone string becomes the electrical input for one recording
channel, or "trace," of seismic data. A geophone string typically consists of
six to twelve geophones connected by electrically conductive cable, called
"leader wire," and is terminated into a geophone string connector. Geophones
measure the ground motion caused by the seismic wave reflection and convert this
movement of the earth into an analog electrical signal, which is passed along
the leader wire to the geophone string connector. The leader wire is then
connected by multi-stand telemetric cable to a remote data collection unit. This
multi-strand telemetric cable is typically 50 to 300 meters in length and is
connected by cable connectors. Typically, six channels of analog seismic data
will feed into a remote data collection unit, which then digitizes the analog
signal and transmits it via telemetric cable and cable connectors to a central
electronics unit, where all of the data from the seismic survey is stored in
digital form, generally on magnetic tape. In marine environments, cable and
cable connectors are also utilized to transmit the data. In transition zone and
shallow depths, bottom cables are laid on the subsea floor. In deeper waters,
cables called "streamers" are towed behind vessels equipped with an on-board
data recording system. Both land and marine data recording systems will
typically utilize a field data monitor to enable the seismic contractor to
evaluate the quality of the data received before the crew moves to the next
recording location.

After the seismic data is collected, it is processed and analyzed with
sophisticated computer imaging software to generate images of the subsurface
lithology and structure being investigated. These images are

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<PAGE> 25

then displayed using field cameras and plotters. Monochrome plotters are
generally used to display preliminary evaluations. Color plotters are generally
used to display final interpretations of the data.

Developing Methods

Time Lapse 3-D Seismic Data Acquisition. The 3-D seismic data acquisition
process is being developed for use in characterizing producing reservoirs by
repeating the process over the same area during the life of the reservoir and
comparing the results to earlier surveys. Differences in the surveys are used to
identify changes in the reservoir caused by production and the effects of
enhanced recovery techniques and allow reservoir engineers to more efficiently
drain the reservoir.

Three-Axis Seismic Data Acquisition. The 3-D seismic data acquisition
process is being further developed to expand seismic data acquisition from a
single axis direction to 3-axis direction by positioning three geophones on the
"x", "y" and "z" axes. The additional information provided by this process
allows for the possible interpretation of rock properties (permeability and
porosity) and fluid types (oil, gas and water).

Borehole Seismology. An alternative method of seismic data acquisition,
borehole seismology, employs techniques that place either the energy source, the
seismic sensors or both into an existing borehole. The sensors are placed near
or within the rock formation being surveyed to achieve better seismic imaging of
rock properties and geologic structures. Seismic detector systems used in
reservoir characterization include high quality multi-level borehole systems
capable of near real-time data telemetry to advanced seismic recorders at the
surface. Techniques employed in reservoir monitoring include monitoring natural
or induced microseismic activity, vertical seismic profile (energy source at the
surface, sensor in the wellbore), reverse vertical seismic profile (energy
source in the wellbore, sensors on the surface), crosswell seismic imaging
(energy source in one well, sensor in another well), single well seismic imaging
(energy source and sensor in the same wellbore) and various combinations of
these methods.

PRODUCTS AND COMPETITION

OYO Geospace's core products are instruments and equipment that either
measure some aspect of the physical environment or display such a measurement in
a usable manner. The principal focus of the Company is seismic measurement;
however, the Company has also applied its technology in certain other
industries.

Instruments and Equipment

The Company is one of the world's leading manufacturers and distributors of
geophones and hydrophones (sometimes collectively referred to as seismic
"sensors"), along with ancillary equipment such as geophone cases and
connectors.

Geophones. Geophones are electromagnetic sensor devices that detect energy
from the earth's subsurface. A magnet is attached to the inside frame of the
geophone, which is fixed as securely as possible to the earth's surface so that
it will move in unison with the earth in response to seismic reflections. A coil
of wire is suspended within the magnetic field by springs from the inside frame
of the geophone and is the inertial element. The relative motion between the
magnetic field produced by the permanent magnet and the coil produces a voltage,
with the voltage being proportional to the velocity of the motion.

The Company's GS-20DX geophone historically was the industry standard
geophone and is still manufactured and sold by the Company. However, because new
data acquisition systems, such as the 24-bit 3-D systems, are capable of
acquiring much more data with greater accuracy than conventional 2-D systems,
the Company determined that a more uniform and precise geophone would result in
better signal quality and, hence, better subsurface imaging. Since 1992, the
Company has introduced its GS-30CT and GS-32CT geophones, which provide greater
geophone-to-geophone uniformity, lower signal distortion and substantially
tighter tolerances on key geophone parameters. This improved signal quality
allows customers to take full advantage of the capabilities of 24-bit 3-D
acquisition systems. The use of 24-bit recording techniques makes possible the
recording of higher fidelity seismic signals by means of increasing the number
of bits (each "bit" is a binary digit or unit of information, e.g., a "zero" or
"one") in the digital data stream. Sales of geophones

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<PAGE> 26

and geophone strings to the seismic industry accounted for approximately 31% of
the Company's revenues in fiscal 1996.

The Company's geophones are also used in certain industrial and
geo-engineering applications such as intrusion detection, structural evaluation
and vibration monitoring. In fiscal 1996, the Company derived approximately $1.5
million in revenue from sales of geophones outside the seismic markets.

The Company offers a warranty on its geophones against defects in materials
and workmanship for a period of three years. The Company believes that this is
the longest manufacturer's warranty available for such products in the seismic
industry.

Hydrophones. Hydrophones use piezoelectric materials (which are materials
that can create an electrical charge as a result of subjecting them to
mechanical stress) which respond to changes in pressure associated with a
seismic signal. The Company manufactures a line of hydrophones for use primarily
in swamps, rivers, bays and transition zones.

Geophone String Connectors. Geophone string connectors are used to
electrically connect a group of geophones or hydrophones to a seismic data
recording system. These connectors are either input connectors, which are
attached to a data recording instrument directly or through telemetric cable, or
output connectors installed on geophones or hydrophones. Approximately 80% of
the Company's connector revenues are from the sale of output connectors.
Typically, a string of twelve geophones will have one output connector attached
to the end of the string.

Geophone string connectors must be rugged and highly resistant to both
water entry and electrical leakage. The Company was the first to develop,
successfully patent and sell a single-unit paralleling connector, the KC2 line
of connectors, which allows users to electrically connect more than one geophone
string into a single recording channel. In certain environments, optimal signal
quality requires up to six geophone strings per channel. The Company's extensive
line of single-unit paralleling connectors greatly simplifies the linking of
multiple geophone strings per channel.

Competition for Seismic Instruments and Equipment

The Company's principal competitors for geophones, hydrophones and geophone
string connectors are Input/Output, Inc. and Mark Products. The Company believes
that it is one of the largest manufacturers and distributors of geophones,
hydrophones and geophone string connectors in the world. In addition to the
competitors named above, certain manufacturers of marine streamers also
manufacture hydrophones for their own use.

The Company believes that the principal competitive factors in the seismic
instruments and equipment market are technological superiority, product
durability and reliability and customer service and support. Price and product
delivery are also important considerations for customers. These factors can be
offset by a customer's standardization preferences. In general, particular
customers prefer to standardize geophones and hydrophones, particularly if they
are used by a single seismic crew or multiple crews that can support each other.
This is a factor in the ability of a geophone or hydrophone manufacturer to gain
market share from other such manufacturers.

A key competitive factor for land field instruments and equipment, and to a
lesser degree for marine instruments and equipment, is durability under harsh
field conditions. Especially for land data acquisition systems, the field
instruments and equipment must not only meet rigorous technical specifications
regarding signal integrity and sensitivity, but must also be extremely rugged
and durable to withstand the rigors of field use, often in harsh environments.

With respect to competition concerning geophones, the Company and an agency
of the government of the People's Republic of China agreed in 1995 to terminate
a joint venture for the manufacturer of geophones in China based on the design
for the Company's GS-20DX geophone. Whereas previously the joint venture company
was restricted to marketing such geophones in China, the former joint venture
partner currently has the capability and legal right to manufacture and market
them without restriction. Although the

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<PAGE> 27

GS-20DX geophone has been superseded by the more technologically advanced
GS-30CT and GS-32CT geophones, which the former joint venture partner has no
capabilities or rights to produce, the Company continues to manufacture and sell
limited quantities of the GS-20DX geophone and, therefore, may experience some
competition with respect to this older model geophone. The Company is unable to
predict the extent or effect of any such competition.

Data Handling Devices

The Company is a leading manufacturer and distributor of three lines of
seismic instruments that handle or manipulate seismic data, two of which involve
thermal imaging.

Thermal Imaging Products. The Company designs, manufacturers and sells two
lines of products based on thermal imaging technology: (i) a line of digital
field monitors, sometimes referred to in the seismic industry as "field cameras"
and (ii) a line of office plotters. Thermal imaging is based on a computer-
controlled process called "rasterization," whereby an image to be portrayed is
divided into a number of dots per inch. Each dot is defined to be either light
or dark. This "rasterized" data is then transmitted to the printhead, which
consists of small resistors, called "nibs," whose density corresponds to the dpi
rasterization density. A chemically treated heat-sensitive medium, usually
either paper or film, is advanced on a roller under the printhead. The
rasterized data generates instructions which turn each nib either on or off as
the medium is advanced. If the nib is on, it generates heat resulting in a black
dot on the paper or film. A nib which is off does not produce a mark. The
greater the number of dots per inch, the clearer and more precise the image
produced. Most of the Company's products are capable of either 400 or 600 dpi
image clarity.

The Company manufactures a line of digital field monitors. Digital field
monitors are PC-based units capable of rapid data rasterization and display of
seismic data using thermal plotting technology. The Company's DFM-480-P uses a
Pentium microprocessor. These compact units are generally used by seismic and
other geophysical contractors and their customers for quality assurance during
the acquisition of seismic data. Because of the cost of moving a seismic crew
from one location to another, it is critical that seismic data be reviewed in
the field to measure the data quality and determine if a re-shoot is necessary
before moving to the next location. The Company's digital field monitors are
compatible with most seismic data acquisition systems. Product durability and
performance, low maintenance requirements and environmental safety are the
principal competitive factors regarding digital field monitors.

The Company also manufactures and sells a complete range of direct thermal
raster plotters for office or field use with printhead widths ranging from 8
inches to 54 inches. These monochrome plotters are used primarily by seismic and
other geophysical contractors and users of seismic data to inspect and evaluate
seismic data, often during processing and before final presentation of the
seismic images. Although color plotters are often used to portray seismic data
in its final presentation form, monochrome thermal plotters are preferable for
use during seismic data processing and in other applications because of their
substantially lower price and operating cost, their low maintenance requirements
and environmental safety. Additionally, the Company's thermal plotters are
designed to be rugged and highly durable. The principal competitive factors
affecting a customer's choice of thermal plotters are product performance and
technological superiority, while price has historically been a less important
competitive factor.

The Company believes that it is one of the largest providers of thermal
imaging products to the seismic industry. Principal competitors include
Atlantek, Calcomp and Veritas for office plotters, and Veritas, Ref Tek and
Seistronix for field monitors.

The Company also has successfully adapted its thermal plotting technology
originally developed for the seismic industry for applications in the newsprint,
silkscreen and corrugated printing industries. Using new dry film technology
developed in conjunction with a film manufacturer, the Company believes that its
wide format thermal printers are a cost-effective alternative to conventional
equipment. The Company expects to continue its research and development
activities directed toward expanding the markets for its thermal imaging
products, including increasing the dpi image clarity of its products. In fiscal
1996, the Company derived approximately $4.5 million in revenues from
non-seismic thermal imaging products.

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<PAGE> 28

Data Acquisition Systems. The Company manufactures and sells a seismic data
acquisition system identified as the model DAS-1, which is capable of recording
and processing up to 144 channels of data. The DAS-1 was originally designed to
satisfy the needs of the geo-engineering market, which generally focuses on
relatively shallow subsurface structures. However, the DAS-1 has also been used
by oil and gas seismic contractors as a cost-effective way to collect and
process data using state-of-the-art 24-bit technology for 2-D seismic
applications. Because of their high cost, larger channel systems such as the
Input/Output System Two, which are capable of collecting and processing over
2,000 channels of data, are not always efficient for use in seismic data surveys
requiring fewer channels. The Company believes that the relative cost of the
DAS-1 is a principal competitive advantage over larger channel capacity data
acquisition systems. Technological superiority and product performance are
principal competitive factors.

MANUFACTURING OPERATIONS AND FACILITIES

The Company manufactures or assembles its products and spare parts and
renovates and repairs instruments at its various facilities in the United States
and Canada. The Company's manufacturing and products assembly operations consist
of machining or molding the necessary component parts, configuring these parts
along with components received from various vendors and assembling a final
product. Upon completion, the final products undergo functional and
environmental testing to the extremes of product specifications and final
quality assurance inspection. Because the Company normally manufactures and
ships based on customer orders, the Company maintains no significant inventory
of finished goods.

The principal design, manufacturing and assembly operations of the Company
are conducted at the following locations.

<TABLE>
<CAPTION>
APPROXIMATE
OWNED/ FLOOR SPACE
LOCATION LEASED (SQUARE FEET) PRINCIPAL USE
-------- ------ ------------- -------------
<S> <C> <C> <C>
Houston, Texas............. Owned 32,800 Corporate headquarters and manufacturing
and sales
Houston, Texas............. Leased 34,000 Manufacturing and sales
Houston, Texas............. Owned 11,000 Manufacturing and sales
Calgary, Alberta, Canada... Owned 21,000 Rentals and warehouse
</TABLE>

The corporate headquarters and sensor manufacturing space in Houston,
Texas, and the geophone string rental and warehouse space in Calgary, Alberta,
Canada were recently purchased from affiliates of OYO Japan for an aggregate
purchase price of $2.4 million. See "Relationship With OYO Japan and Related
Transactions." The Company plans to commence a 45,000 square foot expansion of
its primary facility in Houston, Texas in the first quarter of fiscal 1998 for
an estimated cost of $3.0 million. The expansion is expected to be completed in
the third quarter of fiscal 1998. Following this expansion, the Company believes
that its owned and leased facilities will be adequate for its current and
immediately projected needs.

SUPPLIERS

Although the Company is not presently experiencing any supply or quality
control problems with its suppliers, such problems could have a significant
effect on its ability to meet production and sales commitments. Certain items
are currently provided by only one vendor. Although the Company believes it
maintains an adequate inventory of these single source items, the loss of ready
access to any of these items could temporarily disrupt the Company's ability to
manufacture and sell certain products. In particular a Japanese manufacturer
unaffiliated with the Company is the only current supplier of wide format
printheads for the Company's wide format thermal plotters. If this supplier were
no longer to supply these printheads or was unable or unwilling to supply such
items in sufficient quantity to meet the Company's requirements, the Company's
ability to compete in the wide format thermal plotting market could be severely
impeded. See "Risk Factors -- Reliance on Single Supplier as to One Product and
on Other Vendors."

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<PAGE> 29

MARKETS AND CUSTOMERS

The Company's principal customers are seismic contractors or major,
independent and government owned oil and gas companies that either operate their
own seismic crews or specify specific seismic instrument and equipment
preferences to contractors. In addition to the seismic industry, the Company
sells its wide format thermal plotters for use in the newsprint, silkscreen and
corrugated printing industries. To date, the Company has sold these products
primarily to equipment distributors that focus on these industries.

The Company sells its products through a direct sales force consisting of
Company employees and through several international third-party sales
representatives responsible for key geographic areas. Sales personnel generally
have industry experience or expertise. In addition, the Company sells certain
seismic instruments on a nonexclusive basis through OYO Japan and its
affiliates.

In general, products are sold on standard 30-day credit terms. However, in
order to meet competitive pressures, sales are also made on extended term credit
arrangements or under lease/purchase arrangements. Under certain circumstances,
certain of the Company's customers have been unable to pay the Company under
agreed terms, causing the Company to agree to arrangements for extended payment
terms. In the past, the doubtful collectibility of certain accounts relating to
sales or leases of seismic instruments and equipment have resulted in material
financial losses reflected in the Company's financial statements. Additionally,
the Company rents geophone strings in Canada to seismic contractors operating
there. The Company's rental terms are generally based on days usage of the
equipment by the customer, with rental payments being due on standard 30-day
credit terms.

Although the Company strives to fill orders for its products within 60 days
of the date they are received, in recent months the Company has taken 90 days or
longer to deliver on certain orders due to its limited capacity to meet an
increased number and size of orders. The Company expects to increase its
capacity in fiscal 1998 through the expansion of existing facilities and
possibly through the construction or lease of additional facilities. See "Risk
Factors -- Limitations on Production Capacity; Increased Delivery Times" and
"Use of Proceeds."

REGULATION

The Company's operations are subject to numerous local, state and federal
laws and regulations concerning the containment and disposal of hazardous
materials. The Company does not foresee the need for significant expenditures to
ensure continued compliance with current environmental protection laws.
Regulations in this area are subject to change, and there can be no assurance
that future laws or regulations will not have a material adverse effect on the
Company.

INTELLECTUAL PROPERTY

The Company seeks to protect its intellectual property by means of patents,
trademarks, trade secrets and other measures. It is generally the Company's
policy to file patent applications for all product designs and product
enhancements where such patent protection may have commercial value. Currently,
the Company is the assignee for several outstanding patents related to its
seismic instrument and equipment business, and has additional patent
applications pending. Some of the Company's products utilize and offer features
covered by the Company's patents, and such features are considered to be
important. However, no single patent nor the patents as a group are considered
essential to the success of the Company.

It is the Company's policy to aggressively defend and protect its interests
in its intellectual property, including, when necessary, resorting to legal
proceedings to halt infringement, bar improper use and recover damages. No such
proceedings are currently pending.

28
<PAGE> 30

EMPLOYEES

As of June 30, 1997, the Company employed approximately 269 people on a
full-time basis, of whom 234 were employed in the United States. The Company has
never experienced a work stoppage and considers its relationship with its
employees to be satisfactory. None of the Company's employees are unionized.

LEGAL MATTERS

From time to time the Company is a party to what it believes is routine
litigation and proceedings that may be considered as part of the ordinary course
of its business. The Company is not aware of any current or pending litigation
or proceedings that could have a material adverse effect on the Company's
results of operations or financial condition.

29
<PAGE> 31

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

In connection with the Offering, the Board of Directors of the Company will
be expanded to seven positions. The Company's Restated Certificate of
Incorporation provides for the classification of the Board of Directors into
three classes of directors (Class I, Class II and Class III), with the term of
each class expiring at successive annual stockholders' meetings. At and after
the 1998 annual meeting of stockholders, all nominees of the class standing for
election will be elected for three-year terms. It is intended that the directors
named below will constitute the Board of Directors of the Company at the time of
the closing of the Offering.

The following table sets forth the names, ages and titles of the Company's
directors and executive officers and significant employees of the Company's
subsidiaries as they will exist as of the closing of the Offering and, with
respect to directors, the year of expiration of their initial term of office.

<TABLE>
<CAPTION>
YEAR TERM
AS DIRECTOR
NAME AGE POSITION WILL EXPIRE
---- --- -------- -----------
<S> <C> <C> <C>
Gary D. Owens............................. 50 Chairman of the Board, President and 2000
Chief Executive Officer and Director
Michael J. Sheen(1)....................... 49 Vice President and Chief Technical 1999
Officer and Director
Thomas T. McEntire........................ 37 Chief Financial Officer
Arnold Pater.............................. 57 President, OYO Instruments
Thomas L. Davis, Ph.D.(1)(2)(3)........... 50 Director 1998
Ernest M. Hall, Jr........................ 72 Director 1998
Katsuhiko Kobayashi(3).................... 52 Director 1999
Satoru Ohya............................... 65 Director 2000
Charles H. Still(1)(2)(3)................. 55 Director 1999
</TABLE>

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

(1) To be elected as a director immediately prior to the closing of the
Offering.

(2) Member of the Compensation Committee of the Board of Directors.

(3) Member of the Audit Committee of the Board of Directors.

GARY D. OWENS joined the Company as President and Chief Executive Officer
in August 1997 and became Chairman of the Board of the Company in September
1997. From October 1993 until May of 1997, Mr. Owens was the President and Chief
Executive Officer of Input/Output. Mr. Owens had held other positions at
Input/Output since 1977.

MICHAEL J. SHEEN joined the Company as Vice President and Chief Technical
Officer in August 1997 and will become a director immediately prior to the
closing of the Offering. Mr. Sheen had been a Senior Vice President and Chief
Technical Officer of Input/Output since 1991, and had held other positions at
Input/ Output since 1977.

THOMAS T. MCENTIRE joined the Company as Chief Financial Officer in
September of 1997. Mr. McEntire had been Financial Controller of APS Holding
Corporation ("APS") since February 1995 and held other senior financial
management positions since joining APS in 1990. Prior to joining APS, Mr.
McEntire held various positions with Coopers & Lybrand L.L.P. from 1982 to 1990.

ARNOLD PATER has been president of OYO Instruments since April 1993. He has
also been President of OYO Instruments Canada, Inc. since April 1995 and has
been an employee or officer of the subsidiaries of the Company since 1986. From
1972 to 1986, Mr. Pater held various engineering and engineering management
positions with AMF GeoSpace, concentrating on seismic data acquisition system
design. He holds a degree in electrical engineering from Stattliches Polytechnik
in Hanover, Germany.

30
<PAGE> 32

THOMAS L. DAVIS, PH.D. will be elected, and has consented to serve, as a
director of the Company immediately prior to the closing of the Offering. He is
Professor of Geophysics at the Colorado School of Mines. Dr. Davis also is
coordinator of the Reservoir Characterization Project, whose objective is to
characterize reservoirs through development and application of 3-D and time
lapse 3-D multicomponent seismology. Dr. Davis consults and lectures worldwide
and has written and co-edited numerous papers and other works in the field of
seismic interpretation.

ERNEST M. HALL, JR. has been a director since the Company's formation in
September 1994. From the Company's formation until his retirement in July 1997,
Mr. Hall was the President and Chief Executive Officer of the Company. He was
President of OYO U.S.A. from 1985 until 1995, and has been re-elected to that
position effective October 1, 1997. From 1980 to 1985, Mr. Hall served as a
consultant to OYO U.S.A.

KATSUHIKO KOBAYASHI has been Joint General Manager of OYO Japan since May
1995. From 1973 to 1995 he was employed by Sanwa Bank in its international
banking area, where he last held the position of general manager of the
International Credit Administration Department from 1993 to 1995.

SATORU OHYA, who is a geologist by education at Tokyo University, was
Chairman of the Board from the Company's formation in September 1994 until
September 1997, and continues as a director of the Company. He has been
President of OYO Japan since 1993. For approximately 40 years, Mr. Ohya has been
an employee or officer of OYO Japan and various of its affiliates, including
serving as Chief Executive Officer of the Company's predecessors from 1983 to
1994.

CHARLES H. STILL will be elected, and has consented to serve, as a director
of the Company immediately prior to the closing of the Offering and has been
Secretary since the Company's formation in September 1994 and Secretary of
various affiliates and predecessors of the Company since 1980. He has been a
partner in the law firm of Fulbright & Jaworski L.L.P. since 1975.

COMMITTEES

The Board of Directors of the Company has established an Audit Committee
and a Compensation Committee. The Audit Committee is charged with recommending
to the Board of Directors the appointment of the Company's independent auditors,
reviewing the compensation of such auditors and reviewing with such accountants
the plans for and the results and scope of their auditing engagement. The
Compensation Committee reviews the performance and compensation of directors,
executive officers and key employees and makes recommendations to the Board of
Directors with respect thereto. It also administers the Company's 1997 Key
Employee Stock Option Plan. See "-- Key Employee Stock Option Plan."

COMPENSATION OF DIRECTORS

Directors of the Company currently are not compensated for their services
as directors. All non-employee directors of the Company are reimbursed, however,
for ordinary and necessary expenses incurred in attending Board or committee
meetings. The Company, however, intends to begin compensating non-employee
directors for their services at a rate of $25,000 per year, of which one-half
will be payable in shares of Common Stock based on the fair market value thereof
at the date of issuance pursuant to the 1997 Non-Employee Director Stock Plan.
In addition, the Company may from time to time grant stock options to such
directors for the purchase of shares of Common Stock pursuant to the terms of
such plan.

31
<PAGE> 33

COMPENSATION OF EXECUTIVE OFFICERS

The following table sets forth information with respect to the current
President and Chief Executive Officer of the Company and the former President
and Chief Executive Officer of the Company (the "Named Executive Officers"). No
other executive officer of the Company or a subsidiary of the Company received
compensation in the year ended September 30, 1997 that exceeded $100,000. The
following compensation data does not include bonuses that may be awarded in
fiscal 1998 in respect of fiscal 1997.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
YEAR ENDED SEPTEMBER 30, 1997
------------------------------------
NAME AND ALL OTHER
PRINCIPAL POSITION SALARY BONUS COMPENSATION(1)
------------------ -------- ------- ---------------
<S> <C> <C> <C>
Gary D. Owens
Chairman of the Board, President and Chief Executive
Officer(2)................................................ $ 29,167 -- --
Ernest M. Hall, Jr.
Former President and Chief Executive Officer(2)........... 200,000 -- $ 4,745
</TABLE>

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

(1) Represents contributions by the Company under the Company's 401(k) savings
plans.

(2) Mr. Hall retired from the offices of President and Chief Executive Officer
effective July 31, 1997. Mr. Owens was appointed to those offices effective
August 1, 1997.

KEY EMPLOYEE STOCK OPTION PLAN

The Company has established an incentive stock option and restricted stock
plan, the OYO Geospace Corporation 1997 Key Employee Stock Option Plan (the
"Employee Plan"), pursuant to which options to purchase shares of Common Stock
and awards of restricted shares of Common Stock will be available for future
grant.

The Employee Plan is designed to provide key employees, including officers
and employee-directors of the Company, with additional incentives to promote the
success of the Company's business and to enhance the Company's ability to
attract and retain the services of qualified persons. The Employee Plan will be
administered by the Compensation Committee or such other committee of no less
than two persons (the "Committee") appointed by the Board of Directors.
Committee members may not be employees of the Company and must not have been
eligible to participate under the Employee Plan for a period of at least one
year prior to being appointed to the Committee. Under the Employee Plan, options
to purchase Common Stock and restricted stock awards up to an aggregate of
425,000 shares of Common Stock may be granted by the Committee. The exercise
price of an option granted pursuant to the Employee Plan may not be less than
the fair market value of the Common Stock on the date of grant and is determined
by the Committee on the date the option is granted. In the case of a grant of an
option designated as an "Incentive Option" (as defined in the Employee Plan) to
an employee who owns ten percent or more of the outstanding shares of Common
Stock (a "10% Stockholder"), the exercise price of each such option under the
Employee Plan may not be less than 110% of the fair market value of the Common
Stock on the date of the grant. No option may be granted under the Employee Plan
for a period of more than ten years. In the case of a 10% Stockholder, no option
designated as an Incentive Option may be granted for a period of more than five
years. Options designated as Incentive Options under the Employee Plan may not
be granted to the extent the aggregate fair market value of the stock, valued as
of the date of the grant, with respect to which options first are exercisable by
the option holder in any calendar year, under the Employee Plan or any other
incentive stock option plan of the Company, exceeds $100,000. Under the Employee
Plan, the Committee may issue shares of restricted stock to employees for no
payment by the employee or for a payment below the fair market value on the date
of grant. The restricted stock is subject to certain restrictions described in
the Employee Plan, with no restrictions continuing for more than ten years from
the date of the award.

32
<PAGE> 34

To date, no options or restricted stock awards have been granted under the
Employee Plan. In connection with the Offering, the Company intends to grant
options and make restricted stock awards for a number of shares of Common Stock
to certain officers and key employees. The number of restricted shares and
options to be granted in connection with the Offering will be determined prior
to the commencement of the Offering. These officers and employees will not be
required to make any payment for any restricted stock awards, which vest over
four years in 25% increments. Restrictions on transfer and forfeiture provisions
upon termination of employment will apply to the restricted stock covered by the
awards. After the restrictions lapse, the stock will be owned by the employees
free of further restrictions under the Employee Plan.

In the 1993 Omnibus Budget Reconciliation Act ("OBRA"), Congress generally
limited to $1.0 million per year the tax deduction available to public companies
for certain compensation paid to designated executives. These executives include
the Chief Executive Officer and the next four highest compensated officers of
the Company. An exception is provided from this deduction limitation, for
"performance-based" compensation, if specified statutory requirements are
satisfied. The Plan is generally designed to satisfy these statutory
requirements for stock options. The Company anticipates being entitled to deduct
an amount equal to the ordinary income reportable by an optionee on exercise of
nonqualified options and the early disposition of shares of stock acquired by
exercise of incentive stock options. Restricted stock awards become vested based
on service to the Company, and generally will not be exempt from the $1.0
million deduction cap. Because of special transition rules applicable to
companies which first become public in an initial public offering, the Company
does not anticipate that application of this deduction cap will have a material
impact on awards issued under this Plan.

The Employee Plan may be amended by the Board of Directors without any
requirement of stockholder approval, except as required by Rule 16b-3 under the
Securities Exchange Act of 1934 ("Rule 16b-3") and the incentive option rules of
the Internal Revenue Code of 1986.

DIRECTOR STOCK PLAN

The Company has established the Oyo Geospace Corporation 1997 Non-Employee
Director Stock Plan (the "Director Plan"), pursuant to which options to purchase
shares of Common Stock will be available for future grant to non-employee
directors and pursuant to which one-half of the annual fees paid for the
services of such non-employee directors (not to exceed $25,000 per year) will be
paid in shares of Common Stock based on the fair market value thereof, as
determined under the Director Plan, at the date of grant. The Director Plan is
designed to enhance the Company's ability to attract and retain the services of
qualified persons as directors and to provide such directors with a direct
proprietary interest in the success of the Company. The Director Plan will be
administered by the Board of Directors of the Company. Under the Director Plan,
an aggregate of 75,000 shares of Common Stock will be available for grant of
options to purchase Common Stock and for issuance in partial payment of
directors' annual fees. The exercise price of an option granted pursuant to the
Director Plan may not be less than the fair market value of the Common Stock on
the date of grant and is determined by the Board of Directors on the date the
option is granted. No option may be granted under such Plan for a period of more
than ten years. Shares issued to directors in payment of part of their annual
fees shall be issued based on the fair market value thereof on the date of
issuance.

To date, no options have been granted under the Director Plan and no shares
have been issued under such plan in respect of director fees. In connection with
the Offering, the Company intends to grant options to each non-employee director
to acquire shares of Common Stock at an exercise price equal to the initial
public offering price of the Common Stock to be acquired in the Offering as set
forth on the cover page of this Prospectus. Thereafter, the Director Plan
provides for the annual grant of an option to acquire shares of Common Stock to
those non-employee directors who are serving on the Board of Directors following
the annual meeting of the stockholders. The number of shares that will be
subject to such options will be determined prior to the commencement of the
Offering. The Director Plan generally may be amended by the Board of Directors
without any requirement of stockholder approval except to the extent required by
Rule 16b-3.

33
<PAGE> 35

401(K) PLAN

The Company has adopted a new 401(k) Plan (the "401(k) Plan"), effective as
of the closing of the Offering, under which substantially all employees of the
Company and its subsidiaries who have completed at least six months of service
will be eligible to participate. The 401(k) Plan permits eligible employees to
contribute up to 17 percent of their annual compensation up to a maximum dollar
amount established in accordance with Section 401(k) of the Internal Revenue
Code of 1986. The Company may, in its discretion, make matching contributions of
up to 50 percent of the employees' deferrals of up to six percent of their
compensation. During the fiscal year ended September 30, 1997, the Company made
matching contributions under a 401(k) plan sponsored by OYO U.S.A. in an
aggregate amount of $4,745 for the Named Executive Officers.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

The Company's Restated Certificate of Incorporation provides that the
liability of the directors for monetary damages shall be limited to the fullest
extent permissible under Delaware law.

The Company's Bylaws indemnify its directors and officers to the fullest
extent possible under Delaware law. These indemnification provisions require the
Company to indemnify such persons against certain liabilities and expenses to
which they may become subject by reason of their service as a director or
officer of the Company or any of its affiliated enterprises. The provisions also
set forth certain procedures, including the advancement of expenses, that apply
in the event of a claim for indemnification. The Company intends to enter into
indemnification agreements with each of the directors of the Company, pursuant
to which the Company will indemnify each such director to the fullest extent
permitted by law. The Company also intends to obtain insurance to protect its
officers and directors from liability.

EMPLOYMENT AGREEMENTS

Each of Messrs. Owens and Sheen (each individually an "Employee") has
entered into an employment agreement (each individually an "Employment
Agreement") with the Company. Mr. Owens' base annual salary is $175,000, and Mr.
Sheen's base annual salary is $150,000, in each case subject to adjustment by
the Board of Directors of the Company. Each of the Employees also is entitled to
participate in the 401(k) Plan and any bonus plan the Company adopts and to
receive certain employee benefits and vacation.

Each Employment Agreement provides that the Employee will receive the
severance benefits described below upon termination of the Employee's employment
unless the termination (a) results from the death, disability or retirement of
the Employee, (b) is by the Company for Cause (as defined in the Employment
Agreement) or (c) is by the Employee other than for Good Reason (as defined in
the Employment Agreement). Under the Employment Agreements, "Cause" is defined
to mean the Employee's willful and continued failure to perform his duties after
a demand for such performance or the Employee's willfully engaging in gross
misconduct materially and demonstrably injurious to the Company. Under the
Employment Agreements, "Good Reason" is defined to mean a demotion, a reduction
in base salary, a relocation of the Employee's base location of employment, the
discontinuation of any employee benefit without comparable substitution, the
failure of any successor of the Company to assume the Employment Agreement or a
purported termination not in compliance with the Employment Agreement. The
severance benefits to which each Employee would be entitled include (i) his
salary through the date of termination, (ii) twice his base salary and pro-rated
bonus for the fiscal year of termination, (iii) any relocation and indemnity
payments to which he is entitled and any costs and legal fees incurred in
connection with any dispute over the Employment Agreement and (iv) a gross-up
for any applicable "excess parachute payment" tax imposed by the Internal
Revenue Code of 1986.

In the Employment Agreements, each Employee has agreed that he will not
disclose or misappropriate any confidential information of the Company.

34
<PAGE> 36

RELATIONSHIP WITH OYO JAPAN AND RELATED TRANSACTIONS

Mr. Ohya, a director of the Company, is President of OYO Japan and Chairman
of the Board of OYO U.S.A. and holds other offices of subsidiaries of OYO U.S.A.
Mr. Kobayashi, also a director of the Company, is the Joint General Manager of
OYO Japan. Mr. Kobayashi also holds offices with many subsidiaries of OYO U.S.A.
Mr. Hall, also a director of the Company, is the President of OYO U.S.A. and a
director of OYO Japan. Mr. Still, who is to become a director of the Company at
the Closing of the Offering, is the Secretary of OYO U.S.A. and also serves in
that position with respect to most of the subsidiaries of OYO U.S.A.

In contemplation of the Offering, the Company received from OYO U.S.A. in
September 1997 to settle various intercompany debts and accounts and an equity
contribution of $4.4 million and a cash contribution of $.7 million.

In contemplation of the Offering, the Company declared and distributed to
OYO U.S.A. a dividend of all of the outstanding capital stock of TrueTime, Inc.,
a former wholly-owned subsidiary of the Company, effective September 30, 1997.

The Company intends to enter into a tax separation agreement with OYO
U.S.A. whereby any tax assessments, adjustments or refunds relating to the
Company's tax attributes utilized in OYO U.S.A.'s consolidated returns as a
result of an audit by a taxing authority will be allocated between the Company
and OYO U.S.A.

In September 1997, in contemplation of the Offering, the Company purchased
from two affiliates of OYO U.S.A. several tracts of real property that it
previously had leased from those affiliates. These properties include the
Company's manufacturing facilities and related office space located in Houston,
Texas and Calgary, Alberta, Canada. Annual rent for these facilities for fiscal
each of 1995, 1996 and 1997 was approximately $213,000, plus utilities, taxes,
insurance and ordinary maintenance. The properties were purchased at appraised
values aggregating approximately $2.4 million.

To effect a complete separation of the administrative operation of the
Company and OYO Japan and its affiliates, the Company and OYO Japan have entered
into a transition services agreement whereby each party has agreed to compensate
the other for the use of personnel of the other party for up to one year
following the closing of the Offering. Under the agreement, no employee of
either party will be required to provide more than 25 hours per month of service
for the benefit of the other party.

During fiscal 1994, 1995 and 1996, the Company paid an aggregate of
$345,000, $272,000 and $256,000, respectively, in interest to OYO U.S.A. and its
affiliates pursuant to inter-company lending arrangements. As of September 30,
1997, the Company was not indebted to OYO Japan. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

In fiscal 1996, the Company purchased printheads for its thermal plotters
from OYO Japan for an aggregate price of approximately $2.8 million pursuant to
a Printhead Purchase Agreement, dated November 10, 1995 (the "Printhead Purchase
Agreement") between the Company and OYO Japan. In fiscal 1995 and 1994, prior to
the Printhead Purchase Agreement, the Company purchased approximately $2.8
million and $1.3 million, respectively, in thermal plotters from OYO Japan. OYO
Japan had in turn purchased such printheads primarily from another Japanese
corporation, and to a lesser extent from two other Japanese corporations. For
its service and assistance in such transactions, pursuant to the Printhead
Purchase Agreement, OYO Japan marked up its cost for such printheads by 10% in
reselling them to the Company. The Company believes that, by purchasing the
heads through OYO Japan, it receives a more favorable price for the heads than
could otherwise be obtained if the Company were to negotiate directly for their
purchase. With respect to the two other Japanese companies, the Company believes
it is convenient and facilitates the administrative handling of the purchases to
purchase the printheads from OYO Japan. This arrangement with OYO Japan will be
continued under and pursuant to the terms of the Printhead Purchase Agreement
after the Offering. Under that agreement, the Company will continue to purchase
printheads from OYO Japan at a price equal to 110% of OYO Japan's cost in
acquiring such printheads, and OYO Japan will supply the Company with its
requirements of printheads on those terms. The Printhead Purchase Agreement
automatically renews on a year-to-year basis unless either party provides 90
days notice prior to any annual renewal.

35
<PAGE> 37

Pursuant to a Master Sales Agreement, dated November 10, 1995 (the "Master
Sales Agreement"), the Company and OYO Japan purchase products from one another
at scheduled discounts of 5 to 20 percent off the seller's list prices. In
fiscal 1996, the Company purchased approximately $75,000 in goods from OYO Japan
and sold approximately $915,000 in goods to OYO Japan. In fiscal 1995, prior to
the Master Sales Agreement, the Company sold approximately $2.0 million in goods
to OYO Japan and its affiliates. In fiscal 1994, the Company sold approximately
$3.3 million in goods to OYO Japan and its affiliates (in each case excluding
the products covered by the Printhead Purchase Agreement). These transactions
reflected discounts of between 20 and 25 percent from list price. The Company
expects that this arrangement will continue under the Master Sales Agreement
following the Offering. The Master Sales Agreement automatically renews on a
year-to-year basis unless either party provides 90 days notice prior to any
annual renewal.

The Company's employee benefit plans and insurance programs have been
administered or combined with affiliated companies under OYO U.S.A.'s control.
The Company has paid its proportionate share of related costs (administration
fees to third parties and premiums). After the effective date of this Offering,
the Company will contract for these services on its own behalf.

SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDER

Prior to the Offering, management of the Company owned no shares of Common
Stock. Contemporaneously with the Offering, management of the Company will be
issued options to acquire shares of Common Stock or shares of restricted Common
Stock as set forth below, pursuant to the Employee Plan. See "Management -- Key
Employee Stock Option Plan." The following table sets forth as of the closing of
the Offering beneficial ownership of shares of Common Stock, and as a percentage
of outstanding Common Stock, of each of the Company's directors, each Named
Executive Officer, each beneficial owner of more than 5% of outstanding Common
Stock and all directors and executive officers as a group. Each person named has
sole voting and investment power with respect to the shares indicated except as
otherwise stated in the notes to the table.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
AFTER OFFERING
-----------------------
NAME OF BENEFICIAL OWNER SHARES PERCENTAGE
------------------------ --------- ----------
<S> <C> <C>
OYO Corporation(1).......................................... 3,000,000 59%
OYO Corporation U.S.A.(2)................................... 3,000,000 59
Gary D. Owens............................................... *
Michael J. Sheen(3)......................................... *
Thomas L. Davis(3).......................................... *
Ernest M. Hall, Jr.......................................... *
Katsuhiko Kobayashi(4)...................................... *
Satoru Ohya(5).............................................. 3,000,000 59
Charles H. Still(3)......................................... *
--------- --
Executive officers and directors as a group (9 people)...... 59%
========= ==
</TABLE>

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

* Less than one percent.

(1) The shares indicated as beneficially owned by OYO Corporation are held
directly by its wholly-owned subsidiary OYO Corporation U.S.A. The address
of OYO Corporation is Ichigay Building 2-6, Kudan-kita 4-chome, Chiyoda-ku,
Tokyo 102, Japan.

(2) The address of OYO Corporation U.S.A. is 7334 N. Gessner Road, Houston,
Texas 77040.

(3) To be elected as a director immediately prior to the closing of the
Offering.

(4) Mr. Kobayashi owns 2,420 ordinary shares of OYO Corporation.

(5) The Shares indicated as beneficially owned by Mr. Ohya are owned directly by
OYO U.S.A. and are included because of Mr. Ohya's affiliation with OYO
Japan. Mr. Ohya disclaims beneficial ownership of the shares of Common Stock
owned by OYO U.S.A. within the meaning of Rule 13d-3 under the

36
<PAGE> 38

Exchange Act. Mr. Ohya owns 311,300 ordinary shares of OYO Corporation, and
his wife and children collectively own 10,741 ordinary shares of OYO
Corporation. Mr. Ohya disclaims beneficial ownership of the shares of OYO
Corporation owned by his children within the meaning of Rule 13d-3 under the
Exchange Act.

SELLING STOCKHOLDER

Of the Shares being offered hereby, 1,000,000 are being offered by the
Selling Stockholder. Prior to the Offering, the Company has been a wholly-owned
subsidiary of the Selling Stockholder. See "Relationship with OYO Japan and
Related Transactions". Following the Offering, the Selling Stockholder will hold
3,000,000 shares of Common Stock, which will constitute approximately 59% of the
outstanding shares of Common Stock (or 2,850,000 shares and 55% if the
Underwriters' over-allotment option is exercised in full). The Company and the
Selling Stockholder will proportionately share the underwriting discount and the
expenses of the Offering.

DESCRIPTION OF CAPITAL STOCK

The following is a summary of certain provisions of the Restated
Certificate of Incorporation and the Bylaws of the Company which are included as
exhibits to the registration statement of which this Prospectus forms a part.

AUTHORIZED AND OUTSTANDING CAPITAL STOCK

The authorized capital stock of the Company consists of 20,000,000 shares
of Common Stock, par value $.01 per share, and 1,000,000 shares of Preferred
Stock, par value $.01 per share (the "Preferred Stock"). As of the date of this
Prospectus, 4,000,000 shares of Common Stock were issued and outstanding
(adjusted to give retroactive effect to the Stock Split) and held by one
stockholder of record. A total of 500,000 shares of Common Stock will be
reserved for grants of options and restricted stock awards under the Employee
Plan and the Director Plan. No shares of Preferred Stock have been issued.

COMMON STOCK

The holders of the Common Stock are entitled to one vote per share in the
election of directors and on all other matters on which stockholders are
entitled or permitted to vote. Such holders are not entitled to vote
cumulatively for the election of directors. Holders of Common Stock have no
redemption, conversion, preemptive or other subscription rights. Each share of
Common Stock entitles the holder thereof to one vote at all meetings of the
stockholders of OYO Geospace. The holders of Common Stock are not able to act by
written consent. The Bylaws provide that special meetings of stockholders may be
called only by the Board of Directors. Application has been made to have the
Common Stock approved for inclusion in the Nasdaq National Market under the
symbol "OYOG."

In the event of the liquidation, dissolution or winding up of the Company,
holders of Common Stock are entitled to share ratably in all of the assets of
the Company remaining, if any, after satisfaction of the debts and liabilities
of the Company and the preferential rights of the holders of the preferred
stock, if any, then outstanding. The outstanding shares of Common Stock are, and
the shares of Common Stock offered hereby will be, upon payment therefor as
contemplated herein, validly issued, fully paid and nonassessable. The Company
is subject to certain restrictions on payments to the holders of its Common
Stock under the provisions of its revolving credit facility.

PREFERRED STOCK

Preferred Stock may be issuable in one or more series from time to time at
the discretion of the Board of Directors. The Board of Directors is authorized
to fix the respective designations, relative rights, preferences,
qualifications, restrictions and limitations of each series. The issuance of
Preferred Stock could be used as an "anti-takeover" device without requiring
further action on the part of the holders of Common Stock.

37
<PAGE> 39

INDEMNIFICATION OF DIRECTORS AND OFFICERS AND LIMITATION OF DIRECTOR LIABILITY

The Restated Certificate of Incorporation contains provisions that
eliminate the personal liability of its directors for monetary damages resulting
from breaches of their fiduciary duty other than liability for breaches of the
duty of loyalty, acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, any unlawful payment of a
dividend or unlawful stock purchase or redemption under Section 174 of the
Delaware General Corporation Law or any transaction from which the director
derived an improper personal benefit. The Restated Certificate of Incorporation
contains provisions requiring the indemnification of the Company's directors and
officers to the fullest extent permitted by the Delaware General Corporation
Law, including circumstances in which indemnification is otherwise
discretionary. The Company intends to enter into Indemnification Agreements with
each of its directors and certain officers on the day before the closing of the
Offering. The Company believes that these provisions are necessary to attract
and retain qualified persons as directors and officers.

CLASSIFIED BOARD OF DIRECTORS

The Restated Certificate of Incorporation provides that the Board of
Directors shall be divided into three classes, the members of which will serve
staggered three-year terms. The Company believes that a classified board of
directors could help to assure the continuity and stability of the Board's and
the Company's business strategies and policies as determined by the Board of
Directors. The classified board provision could have the effect of making the
removal of incumbent directors more time-consuming and, therefore, discouraging
a third party from making a tender offer or otherwise attempting to obtain
control of the Company, even though such an attempt might be beneficial to the
Company and its stockholders. Thus, the classified board provision could
increase the likelihood that incumbent directors would retain their positions.
In addition, the Restated Certificate of Incorporation provides that directors
may be removed from office only "for cause" (as defined therein). Subject to
rights of any holders of preferred stock, newly created directors and vacancies
on the Board of Directors will be filled solely by the remaining directors then
in office.

ADVANCE NOTICE PROVISIONS FOR CERTAIN STOCKHOLDER ACTIONS

The Bylaws establish an advance notice procedure with regard to the
nomination, other than by or at the direction of the Board or a committee
thereof, of candidates for election as directors (the "Nomination Procedure")
and with regard to certain matters to be brought before an annual meeting of
stockholders of the Company (the "Business Procedure").

Under the Business Procedure, a stockholder seeking to have any business
conducted at an annual meeting must give prior written notice, in proper form,
to the Secretary of the Company. The requirements as to the form and timing of
that notice are specified in the Bylaws. If the Chairman or other officer
presiding at a meeting determines that other business was not properly brought
before such meeting in accordance with the Business Procedure, such business
will not be conducted at the meeting.

The Nomination Procedure requires that a stockholder give prior written
notice, in proper form, of a planned nomination for the Board to the Secretary
of the Company. The requirements as to the form and timing of that notice are
specified in the Bylaws. If the election inspectors determine that a person was
not nominated in accordance with the Nomination Procedure, such person will not
be eligible for election as a director.

Although the Bylaws do not give the Board any power to approve or
disapprove stockholder nominations for the election of directors or of any other
business desired by stockholders to be conducted at an annual or any other
meeting, the Bylaws (i) may have the effect of precluding a nomination for the
election of directors or precluding the conduct of business at a particular
annual meeting if the proper procedures are not followed, or (ii) may discourage
or deter a third party from conducting a solicitation of proxies to elect its
own slate of directors or otherwise attempting to obtain control of the Company,
even if the conduct of such solicitation or such attempt might be beneficial to
the Company and its stockholders.

38
<PAGE> 40

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, OYO Japan, through its wholly-owned
subsidiary OYO U.S.A., will own approximately 59% of the outstanding Common
Stock (55% if the Underwriters' over-allotment option is exercised in full).

OYO Japan and the Selling Stockholder, as well as the officers and
directors of the Company, have agreed pursuant to "lock-up" agreements that they
will not, without the prior written consent of the Underwriters, offer, sell,
contract to sell or grant any option to purchase or otherwise dispose of any
shares of Common Stock or any options exercisable for Common Stock for a period
of 120 days after the date of this Prospectus, other than the shares of Common
Stock to be sold to the Underwriters in the Offering. See "Underwriting."

Upon completion of the Offering, the Company will have 5,050,000 shares of
Common Stock outstanding (5,200,000 shares if the Underwriters' over-allotment
option is exercised in full). Of these shares, the 2,000,000 shares of Common
Stock sold in the Offering (2,300,000 shares if the Underwriters' over-allotment
option is exercised in full) will be freely tradeable in the public market
without restriction by persons other than affiliates of the Company. The
remaining 3,050,000 shares of Common Stock outstanding (2,900,000 if the
Underwriters' over-allotment option is exercised in full) will be "restricted
securities" within the meaning of Rule 144 under the Securities Act of 1933 (the
"Securities Act"). Consequently, such shares may not be resold unless they are
registered under the Securities Act or resold pursuant to an applicable
exemption from registration under the Securities Act, such as Rule 144.

The Company intends to file a registration statement on Form S-8 under the
Securities Act to register all of the shares of Common Stock then reserved for
future issuance under the Employee Plan and the Director Plan. Shares acquired
under such plan after the effective date of the registration statement generally
will be available for resale by non-affiliates in the public market. Shares
acquired by affiliates under such plan may not be resold unless they are
registered under the Securities Act or resold pursuant to an applicable
exemption from such registration, such as Rule 144.

The Company believes that all of the outstanding shares of Common Stock
will be immediately tradeable in accordance with the provisions of Rule 144 upon
expiration of the lock-up agreements described above. In general, under Rule 144
as currently in effect, a person (or persons whose shares are required to be
aggregated) who has been deemed to have beneficially owned, for at least one
year, shares of Common Stock that have not been registered under the Securities
Act or that were acquired from an "affiliate" of the Company, is entitled to
sell within any three-month period a number of shares of Common Stock that does
not exceed the greater of 1% of the number of then outstanding shares of Common
Stock (approximately 51,000 shares upon completion of the Offering if the
Underwriters' over-allotment option is not exercised) and the average weekly
reported trading volume in the Common Stock during the four calendar weeks
preceding such sale. Sales under Rule 144 also are subject to certain notice and
manner-of-sale requirements and to the availability of current public
information about the Company. A person (or persons whose shares are aggregated)
who is not an "affiliate" of the Company during the three months prior to resale
and who has been deemed to have beneficially owned such shares for at least two
years is entitled to sell such shares under Rule 144 without regard to the
requirements discussed above.

39
<PAGE> 41

The Company has agreed that, for a period of 120 days after the date of the
closing of the Offering, it will not, directly or indirectly, offer, sell,
contract to sell, grant any option to sell or otherwise dispose of any shares of
Common Stock (or any securities convertible into or exercisable or exchangeable
for, any rights to purchase or acquire, Common Stock, other than options under
the Employee Plan and the Director Plan) without the prior written consent of
the Underwriters.

Prior to the Offering, there has been no public market for the Common Stock
and no prediction can be made as to the effect, if any, that sales of shares of
Common Stock or the availability of such shares for sale will have on the market
price of the Common Stock prevailing from time to time. Nevertheless, sales of
substantial amounts of Common Stock in the public market could adversely affect
prevailing market prices.

40
<PAGE> 42

UNDERWRITING

The Underwriters named below (the "Underwriters") have severally agreed,
subject to the terms and conditions of the Underwriting Agreement, to purchase
from the Company and OYO U.S.A. the number of shares of Common Stock set forth
opposite their respective names below at the public offering price less the
underwriting discount set forth on the cover page of this Prospectus. The nature
of the obligations of the Underwriters is such that if any of the Shares are
purchased, all must be purchased.

<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
------------ ---------
<S> <C>
Rauscher Pierce Refsnes, Inc. ..............................
Raymond James & Associates, Inc. ...........................
---------
Total............................................. 2,000,000
=========
</TABLE>

The Underwriters propose initially to offer the Shares to the public at the
initial public offering price set forth on the cover page of this Prospectus.
The Underwriters may allow a concession to selected dealers who are members of
the National Association of Securities Dealers, Inc. ("NASD") not in excess of
$ per share, and the Underwriters may allow, and such dealers may
reallow, to members of the NASD a concession not in excess of $ per
share. After the initial public offering, the price to public, the concession
and the reallowance may be changed by the Underwriters.

Each of the Company and the Selling Stockholder has granted an option to
the Underwriters, exercisable within 30 days after the date of this Prospectus,
to purchase up to an additional 150,000 shares of Common Stock (an aggregate of
300,000 shares) at the initial public offering price, less the underwriting
discount set forth on the cover page of this Prospectus. The Underwriters may
exercise the option only for the purpose of covering over-allotments. To the
extent that the Underwriters exercise this option, each Underwriter will be
committed, subject to certain conditions, to purchase from the Company and OYO
U.S.A. that number of additional shares of Common Stock that is proportionate to
that Underwriter's initial commitment as indicated in the table above.

The Company, OYO U.S.A. and certain officers and directors of the Company
have agreed that, for a period of 120 days after the date of the closing of the
Offering, they will not, directly or indirectly, offer, sell, contract to sell,
grant any option to sell or otherwise dispose of any shares of Common Stock (or
any securities convertible into or exercisable or exchangeable for, any rights
to purchase or acquire, Common Stock, other than options under the Employee Plan
and the Director Plan) without the prior written consent of the Underwriters.

Prior to the Offering, there has been no public trading market for the
Common Stock, and there can be no assurance that an active trading market will
develop or be sustained upon the completion of the Offering. The initial public
offering price of the Shares will be determined by negotiations between the
Company and the Underwriters. The primary factors that will be considered in
determining such initial public offering price will include the history of and
prospects for the industry in which the Company competes, market valuation of
comparable companies, market conditions for public offerings, the history and
prospects for the Company's business, the Company's past and present operations
and earnings and the trend of its earnings, the prospects for future earnings of
the Company, the Company's current financial position, an assessment of the
Company's management, the general condition of the securities markets at the
time of the Offering, the demand for similar securities of comparable companies
and other relevant factors.

The Company has agreed to indemnify the Underwriters against certain
liabilities that may be incurred in connection with the Offering, including
liabilities under the Securities Act, or to contribute to payments that the
Underwriters may be required to make in respect thereof. The Company has agreed
to pay the Underwriters an accountable expense allowance of $75,000 upon
consummation of the Offering.

At the request of the Company, the Underwriters have reserved up to 300,000
shares of the Common Stock offered hereby for sale at the initial public
offering price to directors, officers, employees and business associates of the
Company and the Selling Stockholder. The number of shares available to the
general public

41
<PAGE> 43

will be reduced to the extent these persons purchase the reserved shares. Any
reserved shares that are not so purchased will be offered by the Underwriters to
the general public on the same basis as the other shares offered hereby.

In connection with the Offering, the Underwriters may purchase and sell
Common Stock in the open market. The transactions may include over-allotment and
stabilization transactions and purchases to cover syndicate short positions
created in connection with the Offering. Stabilizing transactions consist of
certain bids or purchases for the purpose of preventing or retarding a decline
in the market price of the Common Stock, and syndicate short positions involve
the sale by the Underwriters of a greater number of shares of Common Stock than
they are required to purchase from the Selling Stockholder and the Company in
the Offering. The Underwriters also may impose a penalty bid, whereby selling
concessions allowed to syndicate members or other broker-dealers in respect of
the shares of Common Stock sold in the Offering for their account may be
reclaimed by the syndicate if such shares of Common Stock are repurchased by the
syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Common Stock,
which may be higher than the price that might otherwise prevail in the open
market, and these activities, if commenced, may be discontinued at any time.
These transactions may be effected on the Nasdaq National Market, in the
over-the-counter market or otherwise.

LEGAL MATTERS

Certain legal matters with respect to the Common Stock have been passed
upon for the Company and the Selling Stockholder by Fulbright & Jaworski L.L.P.,
Houston, Texas. Charles H. Still, a partner of Fulbright & Jaworski L.L.P., is a
director and Secretary of the Company. Certain legal matters in connection with
the Offering will be passed upon for the Underwriters by Vinson & Elkins L.L.P.,
Houston, Texas.

EXPERTS

The combined and consolidated financial statements and financial statement
schedule of OYO Geospace Corporation and Subsidiaries at September 30, 1995 and
1996, and for each of the three years in the period ended September 30, 1996,
included in this Prospectus have been included herein in reliance on the reports
of Coopers & Lybrand L.L.P., independent accountants, given upon the authority
of such firm as experts in accounting and auditing.

AVAILABLE INFORMATION

Prior to the Offering, the Company has not been subject to the reporting
requirements of the Securities Exchange Act of 1934 (the "Exchange Act"). The
Company intends to furnish its stockholders with annual reports containing
audited consolidated financial statements examined and reported on, with an
opinion expressed by, independent public accountants following the end of each
fiscal year and such interim reports as it may determine to be necessary or
desirable.

OYO Geospace has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act with respect to the Shares and the
Offering. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all of the information contained in the Registration
Statement and in the exhibits and schedules thereto, certain portions of which
are omitted as permitted by the rules and regulations of the Commission. For
further information with respect to the Company and the Shares, reference is
made to the Registration Statement, including the exhibits thereto.

The Registration Statement and the exhibits and schedules thereto may be
inspected, without charge, and copies may be obtained at prescribed rates at the
Public Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549, and at the regional offices of the
Commission at Citicorp Center, 500 West Madison Street, 14th Floor, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10048. The Commission maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. This web site can be visited at
http://www.sec.gov.

42
<PAGE> 44

GLOSSARY

AIR GUN -- a seismic energy source that injects a bubble of highly compressed
air into the water.

ANALOG -- 1. a continuous physical variable (such as voltage) that bears a
direct relationship to another variable (such as motion of the earth) so that
one is proportional to the other; 2. continuous, as opposed to discrete or
digital.

BIT -- a binary digit, the smallest unit of information necessary to distinguish
between two choices such as 0 and 1, on and off, etc.

BOREHOLE SEISMOLOGY -- the process of generating and/or recording seismic waves
in existing well bores.

CHANNEL -- a single series of interconnected devices through which data can flow
from source to recorder.

DAS-1 -- the model designation for the Company's small data recorder with a
channel capacity of up to 144 channels and featuring 24-bit recording
capability.

DIGITAL FIELD MONITOR OR FIELD CAMERA -- an instrument normally located at the
central recorder that converts digitized seismic data into a visible pattern
representing electrical signals.

DPI -- dots per inch.

GEO-ENGINEERING -- analyses of the interaction of ground and structural factors.

GEOPHONE -- an instrument used to transform seismic energy into an electrical
voltage.

GEOPHONE STRING CONNECTOR -- a specialized electrical connector attached to the
end of a geophone string for the purpose of electrical interconnection into
the seismic recording system.

HYDROPHONE -- a seismic sensor used in water covered areas that generates a
voltage in response to variations in pressure caused by seismic waves.

LEADER WIRE -- electrically conductive cable used to interconnect geophones.

LITHOLOGY -- the character of a rock formation or a geological strata.

NIBS -- very small resistors closely spaced to control the heating of thermally
sensitive media in a manner that produces a high resolution image.

PIEZOELECTRIC MATERIALS -- dielectric materials that generate a voltage in
response to stress.

RASTERIZED DATA -- data obtained by scanning along narrowly spaced lines in both
a horizontal and vertical direction to determine whether the document is
either black or white at each crossing of the narrowly spaced lines, similar
to scanning an area with the sweep of a beam of a television tube.

SEISMIC -- having to do with energy waves transmitted through the body of an
elastic solid.

SEISMIC IMPEDANCE -- the product of the density and velocity (acoustic
impedance) of the subsurface strata.

SEISMIC REFLECTION -- the energy or wave from a seismic source that has been
reflected from an acoustic impedance contrast or series of contrasts within
the earth.

SEISMIC WAVE -- an elastic disturbance which is propagated from point to point
through the earth.

TELEMETRIC CABLE -- cable used to transmit digitized seismic data to the central
recording unit.

THERMAL IMAGING -- a process whereby the heating of thermally sensitive media is
controlled to graphically present data or images.

THREE-AXIS SEISMIC DATA ACQUISITION -- the acquisition of seismic data on three
axes to determine permeability and porosity of formations.

TIME LAPSE 3-D SEISMIC DATA ACQUISITION -- the acquisition of 3-D seismic data
repeated in the same area over time in order to track fluid movement in a
reservoir.

43
<PAGE> 45

TRACE -- a record of one seismic channel.

VIBRATOR -- a controlled mechanical oscillator used to generate a controlled
wave train of seismic energy.

VIBROSEIS -- an energy source whereby acoustic waves are mechanically produced
by machinery that vibrates on the earth's surface.

WELL LOG DATA -- indirect measurements of certain properties of subsurface
strata.

WIDE FORMAT THERMAL PLOTTER -- a thermal plotter capable of producing wide
displays by thermal imaging, usually 24 inches or wider.

44
<PAGE> 46

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
UNAUDITED PRO FORMA FINANCIAL DATA
Basis of Presentation....................................... F-2
Unaudited Pro Forma Condensed Balance Sheet Data............ F-3
Unaudited Pro Forma Condensed Statement of Income Data...... F-4
HISTORICAL FINANCIAL STATEMENTS
Report of Independent Accountants........................... F-5
Consolidated Balance Sheets as of September 30, 1995 and
1996 and June 30, 1997.................................... F-6
Combined and Consolidated Statements of Operations For The
Years Ended September 30, 1994, 1995 and 1996 and The Nine
Months Ended June 30, 1996 and 1997....................... F-7
Combined and Consolidated Statement of Stockholder's Equity
For The Years Ended September 30, 1994, 1995 and 1996..... F-8
Combined and Consolidated Statements of Cash Flows For The
Years Ended September 30, 1994, 1995 and 1996 and The Nine
Months Ended June 30, 1996 and 1997....................... F-9
Notes to Combined and Consolidated Financial Statements..... F-10
</TABLE>

F-1
<PAGE> 47

UNAUDITED PRO FORMA FINANCIAL DATA
BASIS OF PRESENTATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The following unaudited pro forma balance sheet data as of June 30, 1997
and unaudited pro forma statement of income data for the year ended September
30, 1996 and the nine months ended June 30, 1997 have been prepared to reflect
adjustments to the Company's historical financial position and results of
operations to give effect to the transactions described below. The unaudited pro
forma balance sheet data reflects such transactions as if they had occurred as
of June 30, 1997, and the unaudited pro forma statement of income data for the
year ended September 30, 1996 and the nine months ended June 30, 1997 reflect
such transactions as if they had occurred as of October 1, 1995.

In September 1997, the Company settled certain transactions and amounts
with OYO U.S.A. and affiliates of OYO Japan consisting of (i) the contribution
to equity by OYO U.S.A. of $4,447 of amounts owed by the Company, (ii) a cash
contribution to equity of $676, (iii) the payment by the Company of long-term
indebtedness to OYO U.S.A. totaling $7,532 and (iv) the collection by the
Company of a $2,799 receivable from OYO U.S.A. (classified as a reduction of
stockholder's equity).

In September 1997, the Company sold the secured portion of delinquent
installment and term notes receivable with a customer for $6,164 in cash. The
Company is required to provide purchase credit concessions or future sales to
the customer in the amount of $965.

The Company intends to sell 1,000 shares of common stock (the "Offering")
to the public. The unaudited pro forma balance sheet data as of June 30, 1997
gives effect to the issuance of 1,000 shares of common stock offered by the
Company hereby (at an assumed initial public offering price of $12 per share)
and the application of such proceeds, net of related offering costs, to reduce
outstanding indebtedness. In connection with the Offering, the Company also
intends to issue 50 shares of restricted common stock awards to certain
employees under the 1997 Key Employee Stock Option Plan.

The unaudited pro forma financial data have been prepared by the Company
based on historical financial statements of the Company. The pro forma financial
data are presented for illustrative purposes only and are not necessarily
indicative of the results that would have been obtained if the transactions had
occurred or would have occurred on the dates indicated or that may be realized
in the future. The unaudited pro forma financial data should be read in
conjunction with the Company's audited financial statements and the notes
thereto included elsewhere in this Prospectus.

F-2
<PAGE> 48

UNAUDITED PRO FORMA CONDENSED BALANCE SHEET DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
JUNE 30, 1997
----------------------------------------------------------------
PRO FORMA
PRO FORMA OFFERING AS
HISTORICAL ADJUSTMENTS PRO FORMA ADJUSTMENTS ADJUSTED
---------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Assets:

Cash and cash equivalents.............. $ 984 $ 984 9,123(g) $10,107
Other current assets................... 24,287 24,287 24,287
------- ------- -------
Total current assets........... 25,271 25,271 34,394
Property, plant and equipment.......... 3,227 2,432(e) 5,659 5,659
Other noncurrent assets................ 3,822 (2,080)(d) 1,742 1,742
------- ------- -------
Total assets........................... $32,320 $32,672 $41,795
======= ======= =======

Liabilities and Stockholders' Equity:
Notes payable to related parties,
current maturities.................. $ 3,097 (1,310)(a) $ 1,825 (1,825)(g) $ --
(287)(b)
325(f)
Accounts payable related parties....... 3,864 (3,137)(a) 727 727
Other current liabilities.............. 4,028 965(d) 4,993 4,993
------- ------- -------
Total current liabilities...... 10,989 7,545 5,720
Notes payable to related parties, net
of current maturities............... 7,245 (7,245)(b) -- --
------- ------- -------
Total liabilities.............. 18,234 7,545 5,720
------- ------- -------
Common stock........................... 40 40 10(g) 51
1(h)
Paid-in capital........................ 4,687 5,123(a) 9,810 10,938(g) 21,347
599(h)
Retained earnings...................... 12,379 3,119(d) 15,498 15,498
Receivable from Parent................. (2,799) 2,799(c) -- --
Cumulative foreign currency translation
adjustments......................... (221) (221) (221)
Restricted stock....................... -- -- (600)(h) (600)
------- ------- -------
Total stockholders' equity..... 14,086 25,127 36,075
------- ------- -------
Total liabilities and stockholders'
equity.............................. $32,320 $32,672 $41,795
======= ======= =======
</TABLE>

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

(a) Reflects the contribution to equity by OYO U.S.A. of $4,447 of amounts owed
by the Company plus a cash contribution of $676.

(b) Reflects the repayment of $7,532 of long-term indebtedness to OYO U.S.A.

(c) Reflects the collection by the Company of a $2,799 receivable due from OYO
U.S.A. (classified as a reduction of stockholders' equity in the
consolidated balance sheet).

(d) Reflects the collection of $6,164 of outstanding notes receivable from
Grant Geophysical, Inc. ("Grant") net of a $965 purchase credit concession
issued by the Company to Grant and the related adjustment to deferred
income tax of $2,080. The carrying value of such notes on the June 30, 1997
consolidated balance sheet was zero.

(e) Reflects the purchase of land and buildings from affiliates of OYO Japan
for $2,432.

(f) Reflects incremental borrowings by the Company under its credit lines to
fund the net impact of the transactions referred to in notes (a), (b), (c),
(d) and (e) above.

(g) Reflects the issuance of 1,000 shares of the Company's common stock in the
Offering (based on an assumed initial public offering price of $12 per
share) and the application of such proceeds, net of related offering costs
of $1,052, to reduce outstanding indebtedness.

(h) Reflects the pro forma adjustment resulting from the issuance of 50 shares
of restricted common stock as awards to certain employees under the 1997
Key Employee Stock Option Plan. These executive officers will not be
required to make any payment for the restricted stock awards, which vest
over four years in 25% increments.

F-3
<PAGE> 49

UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1996 NINE MONTHS ENDED JUNE 30, 1997
-------------------------------------- --------------------------------------
OFFERING PRO FORMA OFFERING PRO FORMA
HISTORICAL ADJUSTMENTS AS ADJUSTED HISTORICAL ADJUSTMENTS AS ADJUSTED
---------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Sales...................... $30,878 $30,878 $30,572 $30,572
Cost of sales.............. 17,278 17,278 16,706 16,706
------- ------- ------- -------
Gross profit............... 13,600 13,600 13,866 13,866
Selling, general and
administrative........... 6,729 150(a) 6,879 6,349 112(a) 6,461
Other operating expenses... 4,819 4,819 1,639 1,639
------- ------- ------- -------
Operating income........... 2,052 1,902 5,878 5,766
Other income (expense):
Interest expense......... (402) 402(b) -- (443) 443(b) --
Interest income.......... 137 137 72 72
Other, net............... (201) (201) 257 257
------- ------- ------- -------
Income before income
taxes.................... 1,586 1,838 5,764 6,095
Provision for income
taxes.................... 577 91(c) 668 2,317 132(c) 2,449
------- ------- ------- -------
Net income................. $ 1,009 $ 1,170 $ 3,447 $ 3,646
======= ======= ======= =======
Income per share........... $ 0.25 $ 0.28 $ 0.86 $ 0.87
======= ======= ======= =======
Weighted average shares
outstanding.............. 4,000 4,176(d) 4,000 4,202(d)
</TABLE>

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

(a) Reflects pro forma compensation expense resulting from the issuance of 50
shares of restricted common stock awards to certain employees under the
1997 Key Employee Stock Option Plan. These executive officers will not be
required to make any payment for the restricted stock awards, which vest
over four years in 25% increments.

(b) Reflects the pro forma reduction in interest expense resulting from the
application of proceeds from the Offering to repay outstanding
indebtedness.

(c) Reflects pro forma federal and state income taxes resulting from the pro
forma adjustments described in pro forma notes (a) and (b) above.

(d) Pro forma weighted average shares outstanding reflect the issuance of 126
shares in 1996 and 152 shares in 1997, the net proceeds of which would have
been used to repay debt, and 50 shares of restricted stock awards described
in note (a) above.

F-4
<PAGE> 50

REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors
OYO Geospace Corporation and Subsidiaries:

We have audited the accompanying consolidated balance sheets of OYO
Geospace Corporation (a wholly-owned subsidiary of OYO Corporation U.S.A.) and
Subsidiaries as of September 30, 1995 and 1996, and the related combined and
consolidated statements of operations, stockholder's equity and cash flows for
each of the three years in the period ended September 30, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of OYO Geospace
Corporation and Subsidiaries as of September 30, 1995 and 1996, and the combined
and consolidated results of their operations and their cash flows for each of
the three years in the period ended September 30, 1996, in conformity with
generally accepted accounting principles.

As discussed in Note 1, the accompanying financial statements exclude the
accounts of TrueTime, Inc., formerly a wholly-owned subsidiary that was
distributed to OYO Corporation U.S.A. on September 30, 1997.

COOPERS & LYBRAND L.L.P.

Houston, Texas
December 6, 1996, except for the
fourth paragraph above as to which
the date is September 30, 1997

F-5
<PAGE> 51

OYO GEOSPACE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

ASSETS

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
-------------------- AS OF JUNE 30,
1995 1996 1997
-------- -------- --------------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents................................ $ 953 $ 780 $ 984
Receivables:
Trade accounts and current portion of notes, net of
allowance of $1,086, $1,064 and $554................ 5,934 5,566 8,117
Related parties....................................... 458 179 380
Inventories.............................................. 11,108 12,864 14,622
Deferred income tax...................................... 871 962 996
Prepaid expenses and other............................... 142 92 172
------- ------- -------
Total current assets............................. 19,466 20,443 25,271
Rental equipment, net...................................... 1,220 1,279 1,959
Property, plant and equipment, net......................... 1,661 2,746 3,227
Trade notes receivable -- long-term portion................ 599 -- 85
Goodwill, net of accumulated amortization of $217, $249 and
$273..................................................... 1,070 1,038 1,014
Deferred income tax........................................ 183 713 713
Other assets............................................... 60 53 51
------- ------- -------
Total assets..................................... $24,259 $26,272 $32,320
======= ======= =======

LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
Notes payable to related parties, current maturities..... $ 2,932 $ 3,124 $ 3,097
Accounts payable:
Trade................................................. 1,037 607 1,018
Related parties....................................... 3,626 3,685 3,864
Accrued expenses......................................... 2,403 1,931 2,555
Income tax payable....................................... 202 378 455
------- ------- -------
Total current liabilities........................ 10,200 9,725 10,989
Notes payable to related parties, net of current
maturities............................................... 7,818 7,919 7,245
------- ------- -------
Total liabilities................................ 18,018 17,644 18,234
Commitments and contingencies
Stockholder's equity:
Common stock, $.01 par value, 20,000 shares authorized,
4,000 shares issued and outstanding................... 40 40 40
Preferred stock, 1,000 shares authorized, no shares
issued and outstanding................................ -- -- --
Additional paid-in capital............................... 4,687 4,687 4,687
Retained earnings........................................ 8,039 8,932 12,379
Receivable from Parent................................... (6,195) (4,746) (2,799)
Cumulative foreign currency translation adjustments...... (330) (285) (221)
------- ------- -------
Total stockholder's equity....................... 6,241 8,628 14,086
------- ------- -------
Total liabilities and stockholder's equity....... $24,259 $26,272 $32,320
======= ======= =======
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-6
<PAGE> 52

OYO GEOSPACE CORPORATION AND SUBSIDIARIES

COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30, JUNE 30,
------------------------------------ ------------------------
1994 1995 1996 1996 1997
---------- ---------- ---------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Sales....................................... $ 29,072 $ 32,615 $ 30,878 $ 23,094 $ 30,572
Cost of sales............................... 15,690 18,909 17,278 13,730 16,706
---------- ---------- ---------- ---------- ----------
Gross profit................................ 13,382 13,706 13,600 9,364 13,866
Operating expenses:
Selling, general and administrative
expenses................................ 6,035 5,854 6,729 4,984 6,349
Research and development expenses......... 1,697 1,988 1,959 1,400 1,521
Bad debt expense.......................... 73 1,013 2,860 2,427 118
Writedown of investment in foreign joint
venture................................. 1,712 -- -- -- --
---------- ---------- ---------- ---------- ----------
Total operating expenses........... 9,517 8,855 11,548 8,811 7,988
---------- ---------- ---------- ---------- ----------
Income from operations...................... 3,865 4,851 2,052 553 5,878
---------- ---------- ---------- ---------- ----------
Other income (expense):
Interest expense.......................... (388) (452) (402) (284) (443)
Interest income........................... 155 177 137 91 72
Withdrawn public offering costs........... -- (597) (358) (358) --
Other, net................................ 138 (59) 157 45 257
---------- ---------- ---------- ---------- ----------
Total other income (expense),
net.............................. (95) (931) (466) (506) (114)
---------- ---------- ---------- ---------- ----------
Income before provision for income taxes.... 3,770 3,920 1,586 47 5,764
Provision for income taxes.................. 1,487 1,579 577 19 2,317
---------- ---------- ---------- ---------- ----------
Net income.................................. $ 2,283 $ 2,341 $ 1,009 $ 28 $ 3,447
========== ========== ========== ========== ==========
Net income per share........................ $ .57 $ .59 $ .25 $ .01 $ .86
========== ========== ========== ========== ==========
Weighted average shares outstanding as
restated for stock split.................. 4,000 4,000 4,000 4,000 4,000
</TABLE>

The accompanying notes are an integral part of the combined and consolidated
financial statements.

F-7
<PAGE> 53

OYO GEOSPACE CORPORATION AND SUBSIDIARIES

COMBINED AND CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1995 AND 1996
(IN THOUSANDS)

<TABLE>
<CAPTION>
CUMULATIVE
FOREIGN
COMMON STOCK ADDITIONAL RECEIVABLE CURRENCY
--------------- PAID-IN RETAINED FROM TRANSLATION
SHARES AMOUNT CAPITAL EARNINGS PARENT ADJUSTMENTS TOTAL
------ ------ ---------- -------- ---------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Net assets, October 1, 1993...... -- $ -- $5,468 $ 3,415 $(1,802) $ (340) $6,741
Net income....................... -- -- -- 2,283 -- -- 2,283
Distributions.................... -- -- (741) -- -- -- (741)
Increase in receivable from
Parent......................... -- -- -- -- (4,895) -- (4,895)
Foreign currency translation
adjustments.................... -- -- -- -- -- 11 11
Issuance of common stock upon
formation of Company (restated
for stock split)............... 4,000 40 (40) -- -- -- --
----- ------ ------ ------- ------- ------- ------
Stockholder's equity, September
30, 1994....................... 4,000 40 4,687 5,698 (6,697) (329) 3,399
Net income....................... -- -- -- 2,341 -- -- 2,341
Increase in receivable from
Parent......................... -- -- -- -- 502 -- 502
Foreign currency translation
adjustments.................... -- -- -- -- -- (1) (1)
----- ------ ------ ------- ------- ------- ------
Stockholder's equity, September
30, 1995....................... 4,000 40 4,687 8,039 (6,195) (330) 6,241
Net income....................... -- -- -- 1,009 -- -- 1,009
Distribution to Parent........... -- -- -- (116) -- -- (116)
Decrease in receivable from
Parent......................... -- -- -- -- 1,449 -- 1,449
Foreign currency translation
adjustments.................... -- -- -- -- -- 45 45
----- ------ ------ ------- ------- ------- ------
Stockholder's equity, September
30, 1996....................... 4,000 $ 40 $4,687 $ 8,932 $(4,746) $ (285) $8,628
===== ====== ====== ======= ======= ======= ======
</TABLE>

The accompanying notes are an integral part of the combined and consolidated
financial statements.

F-8
<PAGE> 54

OYO GEOSPACE CORPORATION AND SUBSIDIARIES

COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED SEPTEMBER 30, JUNE 30,
------------------------ ---------------
1994 1995 1996 1996 1997
------ ------ ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income...................................... $2,283 $2,341 $1,009 $ 28 $3,447
Adjustments to reconcile net income to net cash
provided by operating activities:
Deferred income tax.......................... 2 8 (621) (51) (34)
Depreciation and amortization................ 1,009 891 1,025 781 1,124
Gain on disposal of rental equipment and
property, plant and equipment.............. (123) (81) (139) (29) (147)
Bad debt expense............................. 73 1,013 2,860 2,427 118
Writedown of investment in foreign joint
venture.................................... 1,712 -- -- -- --
Effects of changes in operating assets and
liabilities:
Accounts and notes receivable.............. 297 (3,281) (1,314) (600) (2,953)
Inventories................................ (1,101) (2,371) (1,523) (529) (1,758)
Prepaid expenses and other assets.......... 44 (113) 107 (11) (80)
Accounts payable........................... 677 2,922 (622) 106 590
Accrued expenses........................... 1,170 (193) (473) (72) 624
Income tax payable......................... 398 (327) 176 (170) 77
------ ------ ------ ------ ------
Net cash provided by operating
activities............................ 6,441 809 485 1,880 1,008
------ ------ ------ ------ ------
Cash flows from investing activities:
Proceeds from sale of rental equipment and
property, plant and equipment................ 548 325 1,087 103 595
Capital expenditures............................ (1,470) (1,391) (2,063) (1,852) (2,709)
Purchase of subsidiary, net of cash acquired.... (1,030) -- (968) -- --
------ ------ ------ ------ ------
Net cash used in investing activities... (1,952) (1,066) (1,944) (1,749) (2,114)
------ ------ ------ ------ ------
Cash flows from financing activities:
Proceeds received from notes payable to related
parties...................................... 2,120 489 2,500 -- 1,500
Principal payments on notes payable to related
parties...................................... (1,187) (659) (2,622) (1,121) (2,201)
Distribution to Parent.......................... -- -- (116) (116) --
Decrease (increase) in receivable from Parent... (4,895) 502 1,449 1,586 1,947
------ ------ ------ ------ ------
Net cash provided by (used in) financing
activities............................ (3,962) 332 1,211 349 1,246
------ ------ ------ ------ ------
Effect of exchange rate changes on cash........... (1) (61) 75 41 64
------ ------ ------ ------ ------
Increase (decrease) in cash and cash
equivalents..................................... 526 14 (173) 521 204
Cash and cash equivalents, beginning of period.... 413 939 953 953 780
------ ------ ------ ------ ------
Cash and cash equivalents, end of period.......... $ 939 $ 953 $ 780 $1,474 $ 984
====== ====== ====== ====== ======
</TABLE>

The accompanying notes are an integral part of
the combined and consolidated financial statements.

F-9
<PAGE> 55

OYO GEOSPACE CORPORATION AND SUBSIDIARIES

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The Company

OYO Geospace Corporation ("OYO") is a wholly-owned subsidiary of OYO
Corporation U.S.A. (the "Parent"). The Parent is a wholly-owned subsidiary of
OYO Corporation, a Japanese corporation ("OYO Japan"). OYO was formed in 1994,
and effective September 30, 1994, the Parent transferred its investments in
various wholly-owned subsidiaries to OYO. Through its subsidiaries, OYO designs,
manufactures and distributes instruments and equipment used primarily in the
acquisition and processing of seismic data in the oil and gas industry.

Effective September 30, 1997, in anticipation of a proposed initial public
offering of common stock, OYO distributed to the Parent its investment in
TrueTime, Inc. ("TrueTime"), a business segment that comprised the design,
manufacturing and distribution of precision time and frequency instruments.
TrueTime has separate management, operating facilities and administrative
functions, and none of its operating assets were retained. Accordingly, the
accompanying combined and consolidated financial statements exclude the accounts
of TrueTime for all periods presented. The results of operations applicable to
TrueTime that have been excluded from the accompanying financial statements are
as follows:

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------
1994 1995 1996
---- ------ ------
<S> <C> <C> <C>
Net income................................................. $258 $1,179 $1,157
Income per share........................................... $.06 $ .29 $ .29
</TABLE>

OYO and its subsidiaries, exclusive of TrueTime, are referred to
collectively as "OYO Geospace" or the "Company". The Company operates as a
single business segment. The significant accounting policies followed by the
Company are summarized below.

Basis of Presentation

The accompanying financial statements of the Company present the combined
accounts of the seismic equipment manufacturing operations of the Parent for the
year ended September 30, 1994, and the consolidated financial statements of the
Company for subsequent periods. Intercompany balances and transactions, except
those between the Company and TrueTime, have been eliminated.

Unaudited Interim Consolidated Financial Statements

The consolidated financial statements for the nine months ended June 30,
1996 and 1997, have been prepared from the Company's books and records without
audit. In the opinion of management, all adjustments, consisting only of normal
recurring items considered necessary for a fair presentation for the periods
indicated, have been included.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

F-10
<PAGE> 56

OYO GEOSPACE CORPORATION AND SUBSIDIARIES

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Cash and Cash Equivalents

The Company considers all highly liquid debt securities purchased with an
original maturity of three months or less to be cash equivalents. The Company
maintains its cash in bank deposit accounts which, at times, may exceed
federally insured limits.

Concentrations of Credit Risk

The Company sells products to customers throughout the United States and
various foreign countries. The Company's normal credit terms for trade
receivables are 30 days. In certain situations, credit terms may be extended to
60 days. The Company performs ongoing credit evaluations of its customers and
generally does not require collateral. Additionally, the Company provides
long-term financing in the form of promissory notes when competitive conditions
require such financing. Allowances are maintained for potential credit losses.
One customer accounted for a substantial portion of the Company's notes
receivable (see Note 4).

Inventories

Inventories are stated at the lower of cost (as determined by the first-in,
first-out method) or market. A single company is the sole supplier of a key
component of the Company's line of wide-body thermal plotters.

Property, Plant and Equipment and Rental Equipment

Property, plant and equipment and rental equipment are stated at cost.
Depreciation expense is provided by straight-line and accelerated methods over
the following estimated useful lives:

<TABLE>
<CAPTION>
YEARS
-------
<S> <C>
Rental equipment............................................ 3-5
Property, plant and equipment:
Machinery and equipment................................... 3-10
Buildings................................................. 25
Other..................................................... 5-10
</TABLE>

Expenditures for renewals and betterments are capitalized. Repairs and
maintenance are charged to expense as incurred. The cost and accumulated
depreciation of assets sold or otherwise disposed of are removed from the
accounts and any gain or loss thereon is reflected in operations.

Revenue Recognition

Revenue is primarily derived from the sale, short-term rental under
operating lease and service of seismic instruments and equipment. Revenue is
recognized when the products are shipped, the rentals occur or the service is
performed.

Foreign Currency Gains and Losses

The assets and liabilities of foreign subsidiaries have been translated to
U.S. dollars using the exchange rates in effect at the balance sheet date.
Results of operations have been translated using the average exchange rates
during the year. Resulting translation adjustments have been recorded as a
separate component of stockholder's equity as "Cumulative Foreign Currency
Translation Adjustments." Foreign currency transaction gains and losses are
included in the consolidated statement of operations as they occur.

F-11
<PAGE> 57

OYO GEOSPACE CORPORATION AND SUBSIDIARIES

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Income Taxes

The Company joins in the consolidated U.S. income tax return of the Parent.
Federal income taxes are provided as if a separate income tax return was filed.
Foreign subsidiaries file separate income tax returns in the applicable foreign
jurisdictions.

The Company follows the liability method of accounting for income taxes
whereby deferred tax assets and liabilities are determined based on the
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse. The Company provides a valuation
allowance, if necessary, to reduce deferred tax assets to their estimated
realizable value.

Research and Development Costs

Research and development costs are expensed as incurred.

Goodwill

Goodwill represents the excess of the purchase price of purchased
subsidiaries over the estimated fair value of the net assets at the date of
acquisition. Goodwill is amortized using the straight-line method over 40 years.
The Company reviews the carrying value of goodwill to determine whether there
has been an impairment since the date of acquisition by comparing the book value
of those assets to the anticipated future undiscounted cash flows of those
businesses or transactions which gave rise to the assets. If such undiscounted
cash flows are less than the book value of the asset, such asset is written down
to fair value.

Product Warranties

The Company sells products under warranties generally ranging from 1 year
to 3 years. The estimated future cost under existing warranties has been
provided for in the accompanying consolidated financial statements.

Financial Instruments

Financial instrument of the Company consist of cash and cash equivalents
and amounts receivable and payable. The fair value of financial instruments
approximates the amounts reported in the accompanying consolidated financial
statements.

Recent Accounting Pronouncements

F-12
<PAGE> 58

OYO GEOSPACE CORPORATION AND SUBSIDIARIES

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

information about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. The Company has not
determined the impact of SFAS 131 on its financial reporting practices.

2. RELATED PARTY ACQUISITION:

In May 1996, the Company purchased all of the outstanding common stock of
OYO UK Limited and OYO Investment UK Limited from OYO Japan for $1,567 in cash.
OYO UK Limited and OYO Investment UK Limited are incorporated in the United
Kingdom and are referred to collectively as "OYO UK". The operations of OYO UK
consist primarily of sales of the Company's products in foreign markets. The net
assets of OYO UK are included in the accompanying consolidated financial
statements subsequent to the acquisition date at historical cost in a manner
similar to a pooling of interests since OYO UK and the Company are under common
control. The purchase price paid exceeded the historical cost of OYO UK's net
assets by $116 and such excess has been recorded as a distribution to the Parent
in the accompanying consolidated financial statements. The results of operations
of OYO UK are included in the accompanying consolidated statement of operations
beginning January 1, 1996. The results of operations of OYO UK for the year
ended September 30, 1995, and for the period from October 1, 1995 through
December 31, 1995, were immaterial.

3. INVENTORIES:

Inventories consisted of the following:

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
--------------------
1995 1996
-------- --------
<S> <C> <C>
Finished goods and subcomponents............................ $ 2,780 $ 2,964
Work in process............................................. 1,992 2,143
Raw materials............................................... 6,336 7,757
------- -------
$11,108 $12,864
======= =======
</TABLE>

4. NOTES RECEIVABLE:

Notes receivable from customers consisted of the following:

<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30,
--------------
1995 1996
------ ----
<S> <C> <C>
Notes receivable with a customer under term and line of
credit agreements, net of deferred interest and allowance
for doubtful accounts, with various terms as described
below..................................................... $ 436 $ --
Various notes receivable from customers bearing interest
ranging from 8% per year to 12% per year, payable in
monthly installments with final installments ranging from
April 1997 to December 1997............................... 1,205 532
------ ----
1,641 532
Current maturities included in current trade accounts
receivable................................................ (1,042) (532)
------ ----
$ 599 $ --
====== ====
</TABLE>

Notes receivable with a customer under term and line of credit agreements
consist of two promissory notes with the following terms:

Term Note -- In fiscal 1992, the Company provided $5,000 under a line
of credit sales agreement to finance sales to the customer, bearing
interest at 12%. Interest and principal was payable monthly with principal
payments based on 5% of the outstanding balance as of the end of the
previous month. During the months of August 1993 through January 1994, the
Company temporarily modified the terms by

F-13
<PAGE> 59

OYO GEOSPACE CORPORATION AND SUBSIDIARIES

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

lowering the monthly principal payments to 2.5% of the outstanding balance
as of the end of the previous month. In December 1995, the line of credit
was terminated and the outstanding balance at termination of $3,416 was
converted into a term loan, bearing interest at 12% per year, and payable
in 48 monthly installments of $90, including interest, commencing January
16, 1996. The Company recorded a provision for loss of $1,500 as of
September 30, 1992, on the note receivable as a result of various defaults
by the customer. In addition, interest income has not been recognized for
periods subsequent to September 30, 1992. As of September 30, 1996, the
customer was in default of the term note agreement for failure to make
scheduled principal and interest payments.

Line of Credit -- In January 1996, the Company provided $3,000 under a
line of credit sales agreement, bearing interest at LIBOR + 3% and maturing
on September 30, 1996. At September 30, 1996, the customer was in default
for failure to make scheduled interest payments and failure to repay the
outstanding balance at maturity.

On December 6, 1996, the customer filed for protection under Chapter 11 of
the bankruptcy code. The Company believed there was substantial doubt regarding
the ability to recover any amounts on the notes receivable with the customer.
Accordingly, a provision for loss of $2,834 was recorded as of September 30,
1996, to reduce the combined carrying balance of the term and line of credit
notes receivable to zero. Following is an analysis of combined activity with
respect to the term and line of credit notes receivable:

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Contractual balance, beginning of period.............. $ 3,581 $ 3,355 $ 3,229
Sales to the customer................................. 1,077 1,229 2,862
Interest income added to principal.................... 455 420 567
Payments received..................................... (1,758) (1,775) (463)
------- ------- -------
Contractual balance, end of period.................... 3,355 3,229 6,195
Allowance for loss.................................... (1,500) (1,500) (4,334)
Interest income deferred.............................. (872) (1,293) (1,861)
------- ------- -------
Balance as reported, end of period.................... $ 983 $ 436 $ --
======= ======= =======
</TABLE>

5. RENTAL EQUIPMENT:

Rental equipment consisted of the following:

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
--------------------
1995 1996
-------- --------
<S> <C> <C>
Geophones and related products.............................. $3,982 $3,356
Accumulated depreciation.................................... (2,762) (2,077)
------ ------
$1,220 $1,279
====== ======
</TABLE>

F-14
<PAGE> 60

OYO GEOSPACE CORPORATION AND SUBSIDIARIES

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

6. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment consisted of the following:

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
-------------------
1995 1996
-------- --------
<S> <C> <C>
Land........................................................ $ 13 $ 422
Buildings................................................... 184 504
Machinery and equipment..................................... 3,372 4,325
Furniture and fixtures...................................... 391 416
Transportation equipment.................................... 158 183
Tools and molds............................................. 521 603
Leasehold improvements...................................... 294 320
------- -------
4,933 6,773
Accumulated depreciation and amortization................... (3,272) (4,027)
------- -------
$ 1,661 $ 2,746
======= =======
</TABLE>

7. INVESTMENT IN FOREIGN JOINT VENTURE:

The Company entered into a joint venture agreement in 1990 with
Geophyspribor Ufa Production Association (Russia), Vostok Cooperative Bank
(Russia) and Chori Company Ltd. (Japan) to form Oyo-Geo Impulse, Ltd. (the
"Joint Venture"), a joint venture formed under the Soviet Laws of Joint
Enterprises, for the purpose of producing and marketing geophones and geophone
related products in Russia. Through September 30, 1994, the Company had
contributed cash, production equipment, computer software, technology,
production training and technical support valued at $1,712 to the Joint Venture
for a 42% ownership share. Although the Company is under no obligation, it may,
at the discretion of management, provide additional financial support to the
foreign joint venture.

The Company's investment in the Joint Venture is accounted for using the
equity method. Since Russia has a highly inflationary economy, the financial
statements of the Joint Venture are prepared using the U.S. dollar as the
functional currency. As such, translation gains and losses resulting from the
remeasurement of ruble-based financial information into the functional currency
are included in results of operations of the Joint Venture. During the year
ended September 30, 1994, the Company's investment suffered an other than
temporary impairment as a result of the devaluation of the ruble and
uncertainties regarding the Company's ability to recover its investment.
Accordingly, the investment was written down to zero by a charge to operations
of $1,712 during the year ended September 30, 1994. Summarized financial
information of the Joint Venture is not provided due to the insignificance of
(1) the Company's investment in relation to the Company's total assets, (2) the
Company's proportionate share of total assets of the Joint Venture in relation
to the Company's total assets, and (3) the Company's equity in the operating
results of the Joint Venture in relation to the Company's income before income
taxes.

F-15
<PAGE> 61

OYO GEOSPACE CORPORATION AND SUBSIDIARIES

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

8. NOTES PAYABLE TO RELATED PARTIES:

Notes payable to related parties consisted of the following:

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
--------------------
1995 1996
-------- --------
<S> <C> <C>
Outstanding borrowings under bank lines of credit of the
Parent, bearing interest at a weighted average rate of
6.42% and 6.04% at September 30, 1995 and 1996,
respectively, principal and interest payable at various
dates from February 1997 through June 1997................ $ 2,610 $ 2,810
$6,950 line of credit from OYO Japan, bearing interest at
3.25% per year, interest payable quarterly, principal due
on demand, collateralized by substantially all of the
assets of the Company..................................... 6,950 6,950
$2,800 line of credit from OYO Japan, payable in 20
semi-annual installments of $140, plus interest due
quarterly at 3.25% per year, collateralized by
substantially all of the assets of the Company............ 1,120 840
Note payable to the Parent, bearing interest at 6% per year,
principal and interest payable in 20 annual installments,
collateralized by substantially all of the assets of OYO
UK........................................................ 416
Note payable to an affiliate, noninterest bearing, payable
in 120 monthly installments of CDN $787, maturing August
2000, collateralized by leasehold improvements............ 35 27
Other....................................................... 35 --
------- -------
10,750 11,043
Current maturities.......................................... (2,932) (3,124)
------- -------
$ 7,818 $ 7,919
======= =======
</TABLE>

9. ACCRUED EXPENSES:

Accrued expenses consisted of the following:

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
--------------------
1995 1996
-------- --------
<S> <C> <C>
Employee bonuses............................................ $ 601 $ 891
Product warranty............................................ 455 202
Compensated absences........................................ 273 167
Legal and professional fees................................. 460 150
Other....................................................... 614 521
------ ------
$2,403 $1,931
====== ======
</TABLE>

10. STOCKHOLDER'S EQUITY:

The Company participates in the cash management system of the Parent
whereby the net cash generated from daily operations is swept to the Parent's
concentration account and cash required for daily operations is provided from
the Parent's concentration account. There were no terms for interest or
repayment on the resulting intercompany balances. At September 30, 1995 and
1996, the Company had a net receivable from the Parent resulting from the cash
management system of $6,195 and $4,746, respectively. The receivable from the
Parent is presented as a component of stockholder's equity in the accompanying
consolidated balance sheet.

F-16
<PAGE> 62

OYO GEOSPACE CORPORATION AND SUBSIDIARIES

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

11. INCOME TAXES:

Components of income before income taxes were as follows:

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
United States............................................ $2,714 $3,341 $ 756
Foreign.................................................. 1,056 579 830
------ ------ ------
$3,770 $3,920 $1,586
====== ====== ======
</TABLE>

The provision for income taxes consisted of the following:

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Current:
Federal................................................ $ 797 $1,097 $ 707
Foreign................................................ 508 289 321
State.................................................. 180 185 170
------ ------ ------
1,485 1,571 1,198
------ ------ ------
Deferred:
Federal................................................ 48 (13) (376)
Foreign................................................ (46) 21 (29)
State.................................................. -- -- (216)
------ ------ ------
2 8 (621)
------ ------ ------
$1,487 $1,579 $ 577
====== ====== ======
</TABLE>

The differences between the effective tax rate reflected in the total
provision for income taxes and the statutory federal tax rate of 34% were as
follows:

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------
1994 1995 1996
------ ------ ----
<S> <C> <C> <C>
Provision for U.S. federal income tax at statutory rate.... $1,282 $1,333 $539
Effect of foreign income taxes............................. 68 55 64
State income taxes, net of federal income tax benefit...... 119 123 (30)
Nondeductible amortization................................. 14 11 12
Other, net................................................. 4 57 (8)
------ ------ ----
$1,487 $1,579 $577
====== ====== ====
</TABLE>

F-17
<PAGE> 63

OYO GEOSPACE CORPORATION AND SUBSIDIARIES

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Deferred income taxes under the liability method reflect the net tax
effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company's net deferred income tax asset
were as follows:

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
--------------------
1995 1996
-------- --------
<S> <C> <C>
Deferred income tax assets:
Allowance for doubtful accounts........................... $ 214 $ 193
Allowance for loss and deferred interest on notes
receivable............................................. 950 1,474
Inventory................................................. 444 649
Accrued product warranty.................................. 154 69
Accrued compensated absences.............................. 59 51
Other..................................................... 7 170
------ ------
1,828 2,606
Deferred income tax liabilities:
Property, plant and equipment and other................... 774 931
------ ------
Net deferred income tax asset............................... $1,054 $1,675
====== ======
</TABLE>

Deferred income taxes as of September 30, 1995 and 1996, are reported as
follows in the accompanying consolidated balance sheet:

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
--------------------
1995 1996
-------- --------
<S> <C> <C>
Current deferred income tax asset........................... $ 871 $ 962
Noncurrent deferred income tax asset........................ 183 713
------ ------
$1,054 $1,675
====== ======
</TABLE>

Under the liability method, a valuation allowance is provided when it is
more likely than not that some portion or all of the deferred tax assets will
not be realized. Based on the Company's historical taxable income record, and
the expectation that the deductible temporary differences will reverse during
periods in which the Company generates net taxable income or during periods in
which losses can be carried back to offset prior year taxes, management believes
that the Company will realize the benefit of net deferred tax assets.

The financial reporting bases of investments in foreign subsidiaries
exceeds their tax basis. A deferred tax liability is not recorded for this
temporary difference because the investment is essentially permanent. A reversal
of the Company's plans to permanently invest in the operations would cause the
excess to become taxable. At September 30, 1995 and 1996, the temporary
difference related to undistributed earnings for which no deferred taxes have
been provided was approximately $1,619 and $1,970, respectively. The
determination of the unrecognized deferred tax liability related to the
undistributed earnings is not practical.

12. RELATED PARTY TRANSACTIONS:

Sales to OYO Japan and other affiliated companies, including OYO UK prior
to the May 1996 acquisition, were approximately $3,300, $2,005 and $915 during
the years ended September 30, 1994, 1995 and 1996, respectively. Purchases of
inventory and equipment for resale from OYO Japan were approximately $1,265,
$2,802 and $2,875 during the years ended September 30, 1994, 1995 and 1996,
respectively.

The Company leases certain office and manufacturing facilities from
affiliates. Total rental expense related to these leases was approximately $213
in each of the years ended September 30, 1994, 1995 and 1996. The Company is
responsible for all utilities, property taxes and insurance coverage related to
these leases.

F-18
<PAGE> 64

OYO GEOSPACE CORPORATION AND SUBSIDIARIES

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Interest expense on the lines of credit from OYO Japan was approximately
$345, $272 and $256 during the years ended September 30, 1994, 1995 and 1996,
respectively.

13. COMMITMENTS:

Operating Leases

The Company leases certain office space and equipment under noncancelable
operating leases. The approximate future minimum rental commitments under
noncancelable operating leases are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
SEPTEMBER 30,
-------------
<S> <C>
1997..................................................... $353
1998..................................................... 337
1999..................................................... 147
2000..................................................... 12
----
$849
====
</TABLE>

Rent expense was approximately $427, $380 and $366 for the years ended
September 30, 1994, 1995 and 1996, respectively.

Retirement Plan

The Company's employees are participants in the Parent's 401(k) Retirement
Plan (the "Plan"), which covers substantially all eligible employees in the
United States. The Plan is a qualified salary reduction plan in which all
eligible participants may elect to have a percentage of their compensation
contributed to the Plan, subject to certain guidelines issued by the Internal
Revenue Service. The Company's share of discretionary contributions was
approximately $95, $238 and $174 for the years ended September 30, 1994, 1995
and 1996, respectively.

14. SUPPLEMENTAL CASH FLOW INFORMATION:

Supplemental cash flow information was as follows:

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Cash paid for:
Interest............................................... $ 377 $ 359 $ 409
Income taxes........................................... 1,246 2,616 2,095
Noncash investing activities:
Equipment and inventory contributed to foreign joint
venture............................................. 125 -- --
</TABLE>

Assets acquired, other than cash, and liabilities assumed with the May 1996
acquisition of OYO UK totaled $1,633 and $665, respectively.

F-19
<PAGE> 65

OYO GEOSPACE CORPORATION AND SUBSIDIARIES

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

15. FOREIGN OPERATIONS:

Summary financial information of the Company's foreign subsidiaries is
presented below:

<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED SEPTEMBER 30,
---------------------------------------------
1994 1995 1996
-------- -------- ---------------------
UNITED
CANADA CANADA KINGDOM CANADA
-------- -------- --------- --------
<S> <C> <C> <C> <C>
Total assets................................... $4,634 $3,821 $3,237 $4,048
Total liabilities.............................. 2,536 1,076 1,783 835
Total stockholder's equity..................... 2,098 2,745 1,454 3,213
Total sales.................................... 5,837 4,169 2,167 3,066
Net income (loss).............................. 620 311 (6) 432
</TABLE>

United Kingdom revenue and net income includes the results of OYO UK for
the period January 1, 1996 through September 30, 1996.

16. SUBSEQUENT EVENTS (UNAUDITED)

In conjunction with a planned initial public offering, the Company has
filed a registration statement with the Securities and Exchange Commission to
offer 2,000 common shares, including 1,000 common shares owned by Parent. The
Company and the Parent has each agreed to grant the underwriters options to
purchase up to 150 additional common shares (aggregate of 300 shares) to cover
over-allotments, if any.

In anticipation of the planned initial public offering, the board of
directors of the Company approved an increase in the authorized shares of the
Company's common stock thereby increasing the authorized number of shares to
20,000. In addition, the board of directors approved a 4,000-for-1 common stock
split thereby increasing the number of shares owned by Parent to 4,000. Earnings
per share information has been computed as if the Company's common stock, giving
effect to the stock split, had been outstanding for all periods presented.

In September 1997, the board of directors approved the 1997 Key Employee
Stock Option Plan and the 1997 Non-Employee Director Stock Plan and reserved an
aggregate of 500 shares for issuance thereunder. No options have been granted
under either plan.

In September 1997, the Company purchased real estate, consisting of land
and buildings used in the Company's operations, from affiliates for
approximately $2,432 in cash. The Company previously leased the facilities from
the affiliate and incurred rent expense of approximately $213 during each of the
years ended September 30, 1994, 1995 and 1996.

Effective September 30, 1997, the Company declared and distributed a
dividend of all of the outstanding common stock of TrueTime to Parent.

In September 1997, the Company settled various intercompany balances with
Parent and OYO Japan as follows:

-- Paid $7,532 to OYO Japan to retire the outstanding balance on the line
of credit plus accrued interest.

-- Collected the intercompany receivable from the Parent with a balance at
June 30, 1997, of $2,799 plus interest credited on the outstanding
balance during the period from June 30, 1994 through June 30, 1997 in
the amount of $676. The collection of interest was recorded as a capital
contribution.

-- Received a capital contribution totaling $4,447 consisting of various
obligations owed to the Parent.

F-20
<PAGE> 66

OYO GEOSPACE CORPORATION AND SUBSIDIARIES

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

In September 1997, the Company sold the secured portion of delinquent
installment and term notes receivable with a customer for $6,164 in cash. The
Company is required to provide purchase credit concessions on future sales to
the customer in the amount of $965. The cash collection, net of the future sales
credits, was recorded as a bad debt recovery and interest income.

In September 1997, the Company entered into uncommitted, unsecured line of
credit agreements with banks in the aggregate amount of $13,000. Outstanding
borrowings bear interest at the prime rate.

F-21
<PAGE> 67

===============================================================================

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFERING
DESCRIBED IN THIS PROSPECTUS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 8
The Company........................... 13
Use of Proceeds....................... 14
Dividend Policy....................... 14
Dilution.............................. 14
Capitalization........................ 15
Selected Financial Data............... 16
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 17
Business.............................. 21
Management............................ 30
Relationship With OYO Japan and
Related Transactions................ 35
Security Ownership of Management and
Principal Stockholder............... 36
Selling Stockholder................... 37
Description of Capital Stock.......... 37
Shares Eligible for Future Sale....... 39
Underwriting.......................... 41
Legal Matters......................... 42
Experts............................... 42
Available Information................. 42
Glossary.............................. 43
Index to Financial Statements......... F-1
</TABLE>

UNTIL , 1997 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.

================================================================================

2,000,000 SHARES

[OYO GEOSPACE LOGO]

COMMON STOCK

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

PROSPECTUS

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

RAUSCHER PIERCE REFSNES, INC.

RAYMOND JAMES & ASSOCIATES, INC.

, 1997

================================================================================
<PAGE> 68

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses in connection with the Offering are:

<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $ 9,061
NASD Filing Fee............................................. 3,490
Nasdaq National Market Listing Fee.......................... 16,500
Legal Fees and Expenses..................................... 150,000*
Accounting Fees and Expenses................................ 100,000*
Blue Sky Fees and Expenses (including legal fees)........... 10,000*
Printing Expenses........................................... 90,000*
Transfer Agent and Registrar Fees........................... 25,000*
Miscellaneous............................................... 20,949*
--------
TOTAL............................................. 425,000
========
</TABLE>

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

* estimated

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company's Restated Certificate of Incorporation contains a provision
that eliminates the personal liability of a director to the Company and its
stockholders for monetary damages for breach of his fiduciary duty as a director
to the extent currently allowed under the Delaware General Corporation Law. If a
director were to breach such duty in performing his duties as a director,
neither the Company nor its stockholder could recover monetary damages from the
director, and the only course of action available to the Company's stockholders
would be equitable remedies, such as an action to enjoin or rescind a
transaction involving a breach of fiduciary duty. To the extent certain claims
against directors are limited to equitable remedies, the provision in the
Company's Restated Certificate of Incorporation may reduce the likelihood of
derivative litigation and may discourage stockholders or management from
initiating litigation against directors for breach of their fiduciary duty.
Additionally, equitable remedies may not be effective in many situations. If a
stockholder's only remedy is to enjoin the completion of the Board of Directors'
action, the remedy would be ineffective if the stockholder does not become aware
of a transaction or event until after it has been completed. In such a
situation, it is possible that the stockholders and the Company would have no
effective remedy against the directors. Under the Company's Restated Certificate
of Incorporation, liability for monetary damages remains for (i) any breach of
the duty of loyalty to the Company or its stockholders, (ii) acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) payment of an improper dividend or improper repurchase of the
Company's stock under Section 174 of the Delaware General Corporation Law or
(iv) any transaction from which the director derived an improper personal
benefit. The Company's Restated Certificate of Incorporation further provides
that in the event the Delaware General Corporation Law is amended to allow the
further elimination or limitation of the liability of directors, then the
liability of the Company's directors shall be limited or eliminated to the
fullest extent permitted by the amended Delaware General Corporation Law.

Under the Company's Bylaws, each person who is or was a director or officer
of the Company or a subsidiary of the Company, or who serves or served any other
enterprise or organization at the request of the Company or a subsidiary of the
Company, shall be indemnified by the Company to the full extent permitted by the
Delaware General Corporation Law.

Under Delaware law, to the extent that a person is successful on the merits
in defense of a suit or proceeding brought against him by reason of the fact
that he is or was a director or officer of the Company, or serves or served any
other enterprise or organization at the request of the Company, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred in connection with such action.

II-1
<PAGE> 69

Under Delaware law, to the extent an indemnified person is not successful
in defense of a third party civil suit or a criminal suit, or if such suit is
settled, such person shall be indemnified against both (i) expenses, including
attorneys' fees, and (ii) judgments, fines and amounts paid in settlement if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Company and, with respect to any criminal
action, had no reasonable cause to believe his conduct was unlawful, except that
if such person is adjudged to be liable in such a suit for negligence or
misconduct in the performance of his duty to the Company, he cannot be made
whole even for expenses unless the court determines that he is fully and
reasonably entitled to indemnity for such expenses.

The Company intends to obtain insurance to protect officers and directors
from certain liabilities, including liabilities against which the corporation
cannot indemnify its directors and officers.

The Company will enter into indemnification agreements with each of the
directors of the Company. Pursuant to such agreements, the Company will agree to
indemnify and hold each such director harmless to the fullest extent permitted
by law, from any loss, damage or liability incurred in the course of his
respective service as a director of the Company. The amount paid by the Company
is reducible by the amount of insurance paid to or on behalf of such director
with respect to any event giving rise to indemnification. Each such director's
right to indemnification is to survive his respective death or termination as
director.

The Company's Bylaws provide for the indemnification of its officers and
directors and the advancement to them of expenses in connection with proceedings
and claims, to the fullest extent permitted under the Delaware General
Corporation Law. Such indemnification may be made even though directors and
officers would not otherwise be entitled to indemnification under other
provisions by the Bylaws.

The above discussion of the Delaware General Corporation Law and of the
Company's Restated Certificate of Incorporation and Bylaws is not intended to be
exhaustive and is qualified in its entirety by such statute and the Restated
Certificate of Incorporation and Bylaws.

Reference is made to the form of Underwriting Agreement filed as Exhibit
1.1 to the Registration Statement for certain provisions regarding the
indemnification of the Company, its officers and directors and any controlling
persons by the Underwriters against certain liabilities for information
furnished by the Underwriters.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Registrants
pursuant to the foregoing provisions, the Registrants have been informed that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

OYO Geospace Corporation was incorporated in Delaware on September 27, 1994
for the purpose of effecting the Offering. Upon its organization on September
30, 1994, OYO Corporation U.S.A. received 1,000 shares of Common Stock,
constituting all the outstanding shares thereof, in exchange for the transfer of
shares of the operating subsidiaries of the Company and certain additional
assets and liabilities.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
+1.1 -- Form of Underwriting Agreement.
*3.1 -- Restated Certificate of Incorporation of the Company.
*3.2 -- Restated Bylaws of the Company.
*4.1 -- Form of Common Stock Certificate.
</TABLE>

II-2
<PAGE> 70
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
*4.2 -- See Exhibits numbered 3.1 and 3.2 for provisions of the
Certificate of Incorporation and Bylaws of the Company
defining the rights of the holders of Common Stock.
+5.1 -- Opinion of Fulbright & Jaworski L.L.P.
*10.1 -- Employment Agreement between the Company and Gary D.
Owens.
*10.2 -- Employment Agreement between the Company and Michael J.
Sheen.
*10.3 -- OYO Geospace Corporation 1997 Key Employee Stock Option
Plan.
+10.4 -- OYO Geospace 1997 Non-Employee Director Stock Plan.
*10.5 -- Printhead Purchase Agreement dated November 10, 1995
between the Company and OYO Corporation.
*10.6 -- Master Sales Agreement dated November 10, 1995 between
the Company and OYO Corporation.
+10.7 -- Form of Director Indemnification Agreement.
+10.8 -- Transition Services Agreement, dated September , 1997
between the Company and OYO Corporation U.S.A.
+10.9 -- Tax Separation Agreement dated between the
Company and OYO Corporation U.S.A.
*21.1 -- List of subsidiaries of OYO Geospace Corporation.
*23.1 -- Consent of Coopers & Lybrand L.L.P.
+23.2 -- Consent of Fulbright & Jaworski L.L.P. (included in
Exhibit 5.1).
*23.3 -- Consent of named director (Thomas L. Davis)
*23.4 -- Consent of named director (Charles H. Still)
*24.1 -- Powers of Attorney from certain members of the Board of
Directors of the Company (contained on page II-5).
*27.1 -- Financial Data Schedule
</TABLE>

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

* Filed herewith.

+ To be filed by amendment.

(b) Financial Statement Schedules:

The following financial statement schedule is filed herewith.

Schedule II -- Valuation and Qualifying Accounts

All other schedules are omitted as the required information is
inapplicable or the information is presented in the Financial Statements or
the related Notes.

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such

II-3
<PAGE> 71

indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be a part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-4
<PAGE> 72

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on September 30, 1997.

OYO Geospace Corporation

By: /s/ GARY D. OWENS
----------------------------------
Gary D. Owens
Chairman of the Board, President
and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Gary D. Owens and Ernest M. Hall, Jr.,
and each of them, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same
and all exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting said attorney-in-fact and agent,
and each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent or either of them, or
their or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <C>

/s/ GARY D. OWENS Chairman of the Board, September 30, 1997
- ----------------------------------------------------- President and Chief
Gary D. Owens Executive Officer
(Principal Executive
Officer), Director

/s/ THOMAS T. MCENTIRE Chief Financial Officer September 30, 1997
- ----------------------------------------------------- (Principal Financial and
Thomas T. McEntire Accounting Officer)

/s/ SATORU OHYA Director September 30, 1997
- -----------------------------------------------------
Satoru Ohya

/s/ KATSUHIKO KOBAYASHI Director September 30, 1997
- -----------------------------------------------------
Katsuhiko Kobayashi

/s/ ERNEST M. HALL, JR. Director September 30, 1997
- -----------------------------------------------------
Ernest M. Hall, Jr.
</TABLE>

II-5
<PAGE> 73

REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors
OYO Geospace Corporation:

Our report on the combined and consolidated financial statements of OYO
Geospace Corporation and Subsidiaries as of September 30, 1996 and 1995, and for
each of the three years in the period ended September 30, 1996, is included on
page F-5 of this Registration Statement. In connection with our audits of such
financial statements, we have also audited the related financial statement
schedule listed in the index on page S-1 of this Registration Statement.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.

COOPERS & LYBRAND L.L.P.

Houston, Texas
December 6, 1996

S-1
<PAGE> 74

SCHEDULE II

OYO GEOSPACE CORPORATION

VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

<TABLE>
<CAPTION>
ADDITIONS
BALANCE ------------------------ BALANCE
AT CHARGED TO CHARGED AT END
BEGINNING COSTS AND TO OTHER OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
----------- --------- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C>
YEAR ENDED SEPTEMBER 30, 1994
Allowance for doubtful accounts on
accounts and notes receivables... $1,547 $ 73 $ -- $ (19) $1,601
Deferred interest on notes
receivable....................... 417 455(a) 872
YEAR ENDED SEPTEMBER 30, 1995
Allowance for doubtful accounts on
accounts and notes receivable.... 1,601 1,013 (28) 2,586
Deferred interest on notes
receivable....................... 872 421(a) 1,293
YEAR ENDED SEPTEMBER 30, 1996
Allowance for doubtful accounts on
accounts and notes receivable.... 2,586 2,860 (48) 5,398
Deferred interest on notes
receivable....................... 1,293 568(a) 1,861
</TABLE>

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

(a) Deferred interest on notes receivable charged against interest income.

S-2
<PAGE> 75

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
+1.1 -- Form of Underwriting Agreement.
*3.1 -- Restated Certificate of Incorporation of the Company.
*3.2 -- Restated Bylaws of the Company.
*4.1 -- Form of Common Stock Certificate.
*4.2 -- See Exhibits numbered 3.1 and 3.2 for provisions of the
Certificate of Incorporation and Bylaws of the Company
defining the rights of the holders of Common Stock.
+5.1 -- Opinion of Fulbright & Jaworski L.L.P.
*10.1 -- Employment Agreement between the Company and Gary D.
Owens.
*10.2 -- Employment Agreement between the Company and Michael J.
Sheen.
*10.3 -- OYO Geospace Corporation 1997 Key Employee Stock Option
Plan.
+10.4 -- OYO Geospace 1997 Non-Employee Director Stock Plan.
*10.5 -- Printhead Purchase Agreement dated November 10, 1995
between the Company and OYO Corporation.
*10.6 -- Master Sales Agreement dated November 10, 1995 between
the Company and OYO Corporation.
+10.7 -- Form of Director Indemnification Agreement.
+10.8 -- Transition Services Agreement, dated September , 1997
between the Company and OYO Corporation U.S.A.
+10.9 -- Tax Separation Agreement dated between the
Company and OYO Corporation U.S.A.
*21.1 -- List of subsidiaries of OYO Geospace Corporation.
*23.1 -- Consent of Coopers & Lybrand L.L.P.
+23.2 -- Consent of Fulbright & Jaworski L.L.P. (included in
Exhibit 5.1).
*23.3 -- Consent of named director (Thomas L. Davis)
*23.4 -- Consent of named director (Charles H. Still)
*24.1 -- Powers of Attorney from certain members of the Board of
Directors of the Company (contained on page II-5).
*27.1 -- Financial Data Schedule
</TABLE>

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

* Filed herewith.

+ To be filed by amendment.

<PAGE> 1

OYO GEOSPACE CORPORATION

RESTATED CERTIFICATE OF INCORPORATION

The original Certificate of Incorporation of OYO Geospace Corporation
(the "Corporation") was filed under the name "Seismic Group, Inc." on September
27, 1994, and was amended on March 30, 1995, to change the name to "OYO
Geospace Corporation." The Certificate of Incorporation was amended and
superseded in its entirety by a Restated Certificate of Incorporation on
November 13, 1995 and again on July 24, 1996. On September 29, 1997, the Board
of Directors and the sole stockholder of the Corporation adopted resolutions
authorizing the further amendment and the restatement and integration of the
provisions of the most recent Restated Certificate of Incorporation of the
Corporation and authorizing the filing of this Restated Certificate of
Incorporation, in accordance with Sections 242 and 245 of the General
Corporation Law of the State of Delaware. This Restated Certificate of
Incorporation amends and supersedes the most recent Restated Certificate of
Incorporation of the Corporation, as presently in effect, in its entirety as
follows:

ARTICLE 1

The name of the Corporation is OYO Geospace Corporation.

ARTICLE 2

The address of the registered office of the Corporation in the State
of Delaware is 1209 Orange Street, in the City of Wilmington, County of New
Castle. The name of its registered agent at that address is The Corporation
Trust Company.

ARTICLE 3

The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.

ARTICLE 4

The total number of shares of stock of all classes which the
Corporation has authority to issue is 21,000,000 shares, of which 20,000,000
shares shall be common stock, with a par value of $.01 per share ("Common
Stock"), and 1,000,000 shares shall be preferred stock, with a par value of
$.01 per share ("Preferred Stock").

The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions of the shares of each class of
stock are as follows:
<PAGE> 2
PREFERRED STOCK

Preferred Stock may be issued from time to time by the Board of
Directors as shares of one or more series. Subject to the provisions hereof
and the limitations prescribed by law, the Board of Directors is hereby vested
with the authority and is expressly authorized, prior to issuance, by adopting
resolutions providing for the issuance of, or providing for a change in the
number of, shares of any particular series and, if and to the extent from time
to time required by law, by filing a certificate pursuant to the General
Corporation Law of the State of Delaware (or other law hereafter in effect
relating to the same or substantially similar subject matter), to establish or
change the number of shares to be included in each such series and to fix the
designation and powers, preferences and rights and the qualifications and
limitations or restrictions thereof relating to the shares of each such series,
all to the maximum extent permitted by the General Corporation Law of the State
of Delaware as in effect on the date hereof or as hereafter amended. The
vested authority of the Board of Directors with respect to each series shall
include, but not be limited to, the determination of the following:

(a) the distinctive serial designation of such series and
the number of shares constituting such series (provided that the
aggregate number of shares constituting all series of Preferred Stock
shall not exceed 1,000,000);

(b) The annual dividend rate, if any, on shares of such
series and the preferences, if any, over any other series (or of any
other series over such series) with respect to dividends, and whether
dividends shall be cumulative and, if so, from which date or dates;

(c) whether the shares of such series shall be redeemable
and, if so, the terms and conditions of such redemption, including the
date or dates upon and after which such shares shall be redeemable,
and the amount per share payable in case of redemption, which amount
may vary under different conditions and at different redemption dates;

(d) the obligation, if any, of the Corporation to
purchase or redeem shares of such series pursuant to a sinking fund or
purchase fund and, if so, the terms of such obligation;

(e) whether shares of such series shall be convertible
into, or exchangeable for, shares of stock of any other class or
classes, any stock of any series of the same class or any other class
or classes or any evidences of indebtedness and, if so, the terms and
conditions of such conversion or exchange, including the price or
prices or the rate or rates of conversion or exchange and the terms of
adjustment, if any;

(f) whether the shares of such series shall have voting
rights in addition to the voting rights provided by law, and, if so,
the terms of such voting rights, including, without limitation,
whether such shares shall

2
<PAGE> 3
have the right to vote with the Common Stock on issues on an equal,
greater or lesser basis;

(g) the rights of the shares of such series in the event
of a voluntary or involuntary liquidation, dissolution, winding up or
distribution of assets of the Corporation;

(h) whether the shares of such series shall be entitled
to the benefit of conditions and restrictions upon (i) the creation of
indebtedness of the Corporation or any subsidiary, (ii) the issuance
of any additional stock (including additional shares of such series or
of any other series) or (iii) the payment of dividends or the making
of other distributions on the purchase, redemption or other
acquisition by the Corporation or any subsidiary of any outstanding
stock of the Corporation; and

(i) any other relative, rights, powers, preferences,
qualifications, limitations or restrictions thereof, including, but
not limited to, any that may be determined in connection with the
adoption of any stockholder rights plan after the date hereof,
relating to any such series.

Except where otherwise set forth in the resolution or resolutions
adopted by the Board of Directors providing for the issuance of any series of
Preferred Stock, the number of shares comprising such series may be increased
or decreased (but not below the number of shares then outstanding) from time to
time by like action of the Board of Directors. The shares of Preferred Stock
of any one series shall be identical with the other shares in such series in
all respects except as to the dates from and after which dividends thereon
shall cumulate, if cumulative.

Shares of any series of Preferred Stock that have been redeemed
(whether through the operation of a sinking fund or otherwise) or purchased by
the Corporation, or which, if convertible or exchangeable, have been converted
into, or exchanged for, shares of stock of any other class or classes or any
evidences of indebtedness shall have the status of authorized and unissued
shares of Preferred Stock and may be reissued as a part of the series of which
they were originally a part or may be reclassified and reissued as part of a
new series of Preferred Stock to be created by resolution or resolutions of the
Board of Directors or as part of any other series of Preferred Stock, all
subject to the conditions or restrictions on issuance set forth in the
resolution or resolutions adopted by the Board of Directors providing for the
issuance of any series of Preferred Stock and to any filing required by law.

The number of authorized shares of Preferred Stock may be increased or
decreased by the affirmative vote of the holders of a majority of the stock of
the Corporation entitled to vote without the separate vote of holders of
Preferred Stock as a class.

3
<PAGE> 4
COMMON STOCK

Subject to all of the rights of the Preferred Stock, and except as may
be expressly provided with respect to the Preferred Stock herein, by law or by
the Board of Directors pursuant to this Article 4:

(a) dividends may be declared and paid or set apart for
payment upon Common Stock out of any assets or funds of the
Corporation legally available for the payment of dividends and may be
payable in cash, stock or otherwise;

(b) the holders of Common Stock shall have the exclusive
right to vote for the election of directors (other than in the case of
newly created directorships and vacancies, which shall be filled
solely by the remaining directors as set forth in Article 6 hereof)
and on all other matters requiring stockholder action, each share
being entitled to one vote; and

(c) upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the net assets of the
Corporation shall be distributed pro rata to the holders of Common
Stock in accordance with their respective rights and interests.

DENIAL OF PREEMPTIVE RIGHTS AND CUMULATIVE VOTING

No holder of any stock of the Corporation shall be entitled as such,
as a matter of right, to subscribe for or purchase any part of any new or
additional issue of stock of any class whatsoever of the Corporation, or of
securities convertible into stock of any class whatsoever, whether now or
hereafter authorized, or whether issued for cash or other consideration or by
way of dividend.

No holder of any stock of the Corporation shall have the right of
cumulative voting at any election of directors or upon any other matter.

ARTICLE 5

The Corporation is to have perpetual existence.

ARTICLE 6

All power of the Corporation shall be vested in and exercised by or
under the direction of the Board of Directors except as otherwise provided
herein or required by law.

For the management of the business and for the conduct of the affairs
of the Corporation, and in further creation, definition, limitation and
regulation of the power of the Corporation and of its directors and
stockholders, it is further provided:

4
<PAGE> 5
Section 1. Elections of Directors. Elections of Directors need not
be by written ballot unless the Bylaws of the Corporation shall so provide.

Section 2. Number, Election and Terms of Directors. Except as
otherwise fixed pursuant to the provisions of Article 4 hereof relating to the
rights of the holders of any class or series of stock having a preference over
the Common Stock as to dividends or upon liquidation to elect additional
directors under specified circumstances, the number of directors of the
Corporation shall be fixed from time to time by or pursuant to the Bylaws;
provided that such number shall not be less than three nor more than twelve.
The directors, other than those who may be elected by the holders of any class
or series of stock having preference over the Common Stock as to dividends or
upon liquidation, shall be classified, with respect to the time for which they
severally hold office, into three classes, each as nearly equal in number as
possible, as shall be provided in the manner specified in the Bylaws, one class
(Class I) to hold office initially for a term expiring at the annual meeting of
stockholders to be held in 1998, another class (Class II) to hold office
initially for a term expiring at the annual meeting of stockholders to be held
in 1999, and another class (Class III) to hold office initially for a term
expiring at the annual meeting of stockholders to be held in 2000, with the
members of each class to hold office until their successors are elected and
qualified or until their earlier resignation or removal. At each annual
meeting of the stockholders of the Corporation, the successors to the class of
directors whose term expires at that meeting shall be elected to hold office
for a term expiring at the annual meeting of stockholders to be held in the
third year following the year of their election.

Section 3. Stockholder Nomination of Director Candidates. Advance
notice of nominations for the election of Directors, other than by the Board of
Directors or a Committee thereof, shall be given in the manner provided in the
Bylaws.

Section 4. Newly Created Directorships and Vacancies. Except as
otherwise fixed pursuant to the provisions of Article 4 hereof relating to the
rights of the holders of any class or series of stock having a preference over
Common Stock as to dividends or upon liquidation to elect directors under
specified circumstances, newly created directorships resulting from any
increase in the number of directors and any vacancies on the Board of Directors
resulting from death, resignation, disqualification, removal or other cause
shall be filled solely by the affirmative vote of at least two- thirds (rounded
up to the nearest whole number) of the remaining directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of directors in which the new directorship was
created or the vacancy occurred and until such director's successor shall have
been elected and qualified or until their earlier resignation or removal. No
decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.

Section 5. Removal of Directors. Subject to the rights of any class
or series of stock having preference over Common Stock as to dividends or upon
liquidation to elect directors under specified circumstances, any director may
be removed from office only for cause. Except as may otherwise be provided by
law, cause for removal shall be construed to exist only if during a director's
term as a director of the Corporation: (a) the director whose removal is
proposed has been convicted of a felony by a court of

5
<PAGE> 6
competent jurisdiction and such conviction is no longer subject to direct
appeal; (b) such director has been adjudicated by a court of competent
jurisdiction to be liable for gross negligence, recklessness or misconduct in
the performance of his or her duty to the Corporation in a manner of
substantial importance to the Corporation and such adjudication is no longer
subject to direct appeal; or (c) such director has been adjudicated by a court
of competent jurisdiction to be mentally incompetent, which mental incompetency
directly affects his or her ability as a director of the Corporation, and such
adjudication is no longer subject to direct appeal.

Section 6. Stockholder Action. Any action required or permitted to
be taken by the stockholders of the Corporation must be effected at a duly
called annual or special meeting of such holders and may not be effected by any
consent in writing by such holders. Except as otherwise required by law and
subject to the rights of holders of any class or series of stock having a
preference over Common Stock as to dividends or upon liquidation, special
meetings of stockholders of the Corporation may be called only by the Chairman
of the Board, the Chief Executive Officer or the Board of Directors pursuant to
a resolution approved by a majority of the entire Board of Directors.

Section 7. Bylaw Amendments. The Board of Directors shall have the
power to make, alter, amend and repeal the Bylaws (except so far as the Bylaws
adopted by the stockholders shall otherwise provide). Any Bylaws made by the
Board of Directors under the powers conferred hereby may be altered, amended or
repealed by the directors or by the stockholders; provided, however, that the
Bylaws shall not be altered, amended or repealed and no provision inconsistent
therewith shall be adopted (i) by stockholder action without the affirmative
vote of the holders of at least 66 2/3% of the voting power of all the shares
of the Corporation entitled to vote generally in the election of directors,
voting together as a single class or (ii) by director action without the
affirmative vote of at least two-thirds (rounded up to the nearest whole
number) of the directors then in office.

Section 8. Liability of Directors.

A. No director of the Corporation shall be liable to the
Corporation or any of its stockholders for monetary damages for breach
of fiduciary duty as a director; provided that this Article 6 shall
not eliminate or limit the liability of a director of the Corporation:
(i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in
good faith or that involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation
Law of the State of Delaware, or (iv) for any transaction from which
the director derived an improper personal benefit.

B. If the General Corporation Law of the State of
Delaware hereafter is amended to authorize the further elimination or
limitation of the liability of directors of the Corporation, then the
liability of a director of the Corporation shall be limited to the
fullest extent permitted by the General Corporation Law of the State
of Delaware, as so amended, and such limitation of liability shall be
in addition to, and not in lieu of, the limitation on the liability of
a director of the Corporation provided by the provisions of this
Section 8 of this Article 6.

6
<PAGE> 7
C. Any repeal or modification of this Section 8 of this
Article 6 shall be prospective only and shall not adversely affect any
right or protection of a director of the Corporation existing at the
time of such repeal or modification.

D. The Corporation shall be obligated at all times to
maintain the effectiveness of Bylaw provisions providing for the
mandatory indemnification of the directors of the Corporation to the
maximum extent permitted by the General Corporation Law of the State
of Delaware.

Section 9. Amendment, Repeal, etc. Notwithstanding anything
contained in this Restated Certificate of Incorporation to the contrary, the
affirmative vote of the holders of at least 66 2/3% of the voting power of all
shares of the Corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be required to alter,
amend, adopt any provision inconsistent with, or repeal, this Article 6 or any
provision hereof.

ARTICLE 7

The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Restated Certificate of Incorporation, in the
manner now or hereafter prescribed by statute and this Restated Certificate of
Incorporation, and all rights conferred upon stockholders herein are granted
subject to this reservation.

IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be signed by its President and attested to by
its Secretary this 30th day of September, 1997.

OYO GEOSPACE CORPORATION

By: /s/ GARY D. OWENS
---------------------------------
Gary D. Owens,
Chairman, President and
Chief Executive Officer

ATTEST:

/s/ CHARLES H. STILL
- -----------------------------------
Charles H. Still
Secretary

<PAGE> 1
EXHIBIT 3.2

BYLAWS

OYO GEOSPACE CORPORATION
(a Delaware Corporation)

RESTATED AS OF SEPTEMBER 30, 1997

OFFICES

1. The Corporation shall at all times maintain a registered
office in the State of Delaware.

2. The Corporation may also have offices at such other places
within or outside of the State of Delaware as the Board of Directors shall from
time to time appoint or the business of the Corporation require.

CAPITAL STOCK

3. The Board of Directors may authorize the issuance of the
capital stock of the Corporation at such times, for such consideration, and on
such terms and conditions as the Board may deem advisable, subject to any
restrictions and provisions of law, the Certificate of Incorporation, as
amended and restated from time to time (the "Certificate of Incorporation"), of
the Corporation or any other provisions of these Bylaws.

4. The shares of the Corporation shall be represented by
certificates, provided that the Board of Directors may provide by resolution or
resolutions that some or all of any or all classes or series of its stock shall
be uncertificated shares. Any such resolution shall not apply to shares
represented by a certificate until such certificate is surrendered to the
Corporation. Notwithstanding the adoption of such a resolution by the Board of
Directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to have a certificate
signed by, or in the name of the Corporation by, the chairman or vice-chairman
of the board of directors, or the president or vice-president, and by the
treasurer or an assistant treasurer, or the secretary or an assistant secretary
of the Corporation representing the number of shares registered in certificate
form. Any or all of the signatures on the certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue. The certificates shall
otherwise be in such form as may be determined by the Board of Directors, shall
be issued in numerical order, shall be entered in the books of the Corporation
as they are issued and shall exhibit the holder's name and number of shares.

5. The shares of the capital stock of the Corporation are
transferable only on the books of the Corporation upon surrender, in the case
of certificated shares, of

1
<PAGE> 2
the certificates therefor properly endorsed for transfer, or otherwise properly
assigned, and upon the presentation of such evidences of ownership of the
shares and validity of the assignment as the Corporation may require.

6. The Corporation shall be entitled to treat the person in whose
name any share of stock is registered as the owner thereof for purposes of
dividends and other distributions in the course of business or in the course of
recapitalization, consolidation, merger, reorganization, liquidation, or
otherwise, and for the purpose of votes, approvals and consents by
stockholders, and for the purpose of notices to stockholders, and for all other
purposes whatsoever, and shall not be bound to recognize any equitable or other
claim to or interest in such share on the part of any other person, whether or
not the Corporation shall have notice thereof, save as expressly required by
the laws of the State of Delaware.

7. The Board of Directors may appoint one or more transfer agents
and registrars, and may require certificates for shares to bear the signature
of such transfer agent(s) and registrar(s).

8. Upon the presentation to the Corporation of a proper affidavit
attesting the loss, destruction or mutilation of any certificate for shares of
stock of the Corporation, the Board of Directors may direct the issuance of a
new certificate or uncertificated shares in lieu of and to replace the
certificate so alleged to be lost, destroyed or mutilated. The Board of
Directors may require as a condition precedent to the issuance of a new
certificate or uncertificated shares any or all of the following: (a)
additional evidence of the loss, destruction or mutilation claimed; (b)
advertisement of the loss in such manner as the Board of Directors may direct
or approve; (c) a bond or agreement of indemnity, in such form and amount and
with such surety (or without surety) as the Board of Directors may direct or
approve; and (d) the order or approval of a court.

STOCKHOLDERS AND MEETINGS OF STOCKHOLDERS

9. All meetings of stockholders shall be held at such place
within or outside of the State of Delaware as shall be fixed by the Board of
Directors and stated in the notice of meeting.

10. The Annual Meeting of Stockholders of the Corporation shall be
held on such date and at such time as is fixed by the Board of Directors and
stated in the notice of meeting. Directors shall be elected in accordance with
the provisions of the Certificate of Incorporation of the Corporation and these
Bylaws and such other business shall be transacted as may properly come before
the meeting.

11. The Annual Meeting of Stockholders may be adjourned by the
presiding officer of the meeting for any reason (including, if the presiding
officer determines that it would be in the best interests of the Corporation to
extend the period of time for the solicitation of proxies) from time to time
and place to place until the presiding officer shall determine that the
business to be conducted at the meeting is completed, which determination shall
be conclusive.

2
<PAGE> 3
12. At an Annual Meeting of the Stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. To
be properly brought before an Annual Meeting, business must be (a) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the Board of Directors, (b) otherwise properly brought before the meeting by
or at the direction of the Board of Directors or (c) otherwise properly brought
before the meeting by a stockholder of the Corporation. For business to be
properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation, not
less than 60 days nor more than 180 days prior to the anniversary date of the
immediately preceding annual meeting; provided, however, that in the event that
the date of the annual meeting is more than 60 days later than the anniversary
date of the immediately preceding annual meeting, notice by the stockholder to
be timely must be received not later than the close of business on the tenth
day following the earlier of the date on which a written statement setting
forth the date of the annual meeting was mailed to stockholders or the date on
which it is first disclosed to the public. A stockholder's notice to the
Secretary shall set forth as to each matter the stockholder proposes to bring
before the annual meeting (a) a brief description of the business desired to be
brought before the annual meeting, (b) the name and address, as they appear on
the Corporation's books, of the stockholder proposing such proposal, (c) the
class and number of shares of the Corporation that are beneficially owned by
the stockholder and (d) any material interest of the stockholder in such
business. In addition, if the stockholder's ownership of shares of the
Corporation, as set forth in the notice, is solely beneficial, documentary
evidence of such ownership must accompany the notice. Notwithstanding anything
in these Bylaws to the contrary, no business shall be conducted at an annual
meeting except in accordance with the procedures set forth in this Section 12.
The presiding officer of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that any business that was not properly
brought before the meeting is out of order and shall not be transacted at the
meeting.

13. A special meeting of stockholders may only be called by the
Chairman of the Board, the Chief Executive Officer or the Board of Directors
pursuant to a resolution adopted by two-thirds of the directors then in office.
The notice of every special meeting of stockholders shall state the purpose for
which it is called. At any special meeting of stockholders, only such business
shall be conducted as shall be provided for in the resolution or resolutions
calling the special meeting or, where no such resolution or resolutions have
been adopted, only such business shall be conducted as shall be provided in the
notice to stockholders of the special meeting. Any special meeting of
stockholders may be adjourned by the presiding officer of the meeting for any
reason (including, if the presiding officer determines that it would be in the
best interests of the Corporation to extend the period of time for the
solicitation of proxies) from time to time and from place to place until the
presiding officer shall determine that the business to be conducted at the
meeting is completed, which determination shall be conclusive.

14. Written notice of each meeting of stockholders shall be mailed
to each stockholder of record at his last address as it appears on the books of
the Corporation at least ten days prior to the date of the meeting.

3
<PAGE> 4
15. The Board of Directors shall have the power to close the stock
transfer books of the Corporation for a period not more than sixty nor less
than ten days preceding the date of any meeting of stockholders, or the date
for payment of any dividend, or the date for the allotment of rights, or the
date when any reclassification or change or conversion or exchange of capital
stock shall go into effect; provided, however, that in lieu of closing the
stock transfer books as aforesaid, the Board of Directors may fix in advance a
date not more than sixty nor less than ten days preceding the date of any
meeting of stockholders, or the date for any payment of dividends, or the date
for allotment of rights, or the date when any reclassification or change or
conversion or exchange of capital stock shall go into effect, as a record date
for the determination of the stockholders entitled to vote at any such meeting
or entitled to receive payment of any such dividend or to any such allotment of
rights, or to exercise the rights in respect of any such reclassification,
change, conversion or exchange of capital stock, and in such cases only such
stockholders as shall be stockholders of record on the date so fixed shall be
entitled to vote at such meeting, or to receive payment of such dividend, or to
receive such allotment of rights, or to exercise such rights or to participate
in the effect of any such transaction, as the case may be, notwithstanding any
transfer of any stock on the books of the Corporation after any such record
date fixed as aforesaid. This Bylaw shall in no way affect the rights of a
stockholder and his transferee or transferor as between themselves.

16. The holders of a majority of the outstanding shares of stock
of the Corporation having voting power with respect to a subject matter
(excluding shares held by the Corporation for its own account) present or
represented by proxy shall constitute a quorum at the meeting of stockholders
for the transaction of business with respect to such subject matter; provided,
however, that if the subject matter is one as to which a higher vote is
required (as contemplated by Section 17 hereof), then the holders of that
number of shares equal to at least that higher number of outstanding shares of
stock of the Corporation having voting power with respect to such subject
matter (excluding shares held by the Corporation for its own account) present
or represented by proxy shall constitute a quorum at the meeting of
stockholders solely for the transaction of business with respect to such
subject matter. In the absence of a quorum with respect to a particular
subject matter, the presiding officer of the meeting shall have power to
adjourn the meeting from time to time, without notice other than an
announcement at the meeting, until a quorum is present with respect to that
subject matter. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting. At such adjourned meeting, any business may be transacted
that might have been transacted at the meeting as originally notified.

17. When a quorum is present or represented at any meeting of
stockholders, the affirmative vote of the holders of a majority of the shares
present in person or represented by proxy at the meeting and entitled to vote
on the subject matter shall be the act of the stockholders in all matters,
unless the matter is one upon which, by express provision of the corporation
laws of the State of Delaware, of the Certificate of Incorporation or of these
Bylaws, a different vote is required, in which case such express provision
shall govern and control the decision of that matter. Directors shall be
elected by a plurality of the votes of the shares present in person or
represented by proxy and entitled to vote on the election of directors.

4
<PAGE> 5
18. Every stockholder having the right to vote shall be entitled
to vote in person, or by proxy appointed by an instrument in writing subscribed
by such stockholder (which for purposes of this paragraph may include a
signature and form of proxy pursuant to a facsimile or telegraphic form of
proxy or any other instruments acceptable to the Judge of Election), bearing a
date not more than three years prior to voting, unless such instrument provides
for a longer period, and filed with the Secretary of the Corporation before, or
at the time of, the meeting. If such instrument shall designate two or more
persons to act as proxies, unless such instrument shall provide to the
contrary, a majority of such persons present at any meeting at which their
powers thereunder are to be exercised shall have and may exercise all the
powers of voting thereby conferred, or if only one be present, then such powers
may be exercised by that one; or, if an even number attend and a majority do
not agree on any particular issue, each proxy so attending shall be entitled to
exercise such powers in respect of the same portion of the shares as he is of
the proxies representing such shares.

19. Unless otherwise provided by the Certificate of Incorporation
or by the corporation laws of the State of Delaware, each stockholder of the
Corporation shall, at every meeting of stockholders, be entitled to one vote in
person or by proxy for each share of capital stock of the Corporation
registered in his name.

20. Any other corporation owning voting shares in this Corporation
may vote the same by its President or by proxy appointed by him, unless some
other person shall be appointed to vote such shares by resolution of the Board
of Directors of such stockholder corporation. A partnership holding shares of
this Corporation may vote such shares by any general partner or by proxy
appointed by any general partner.

21. Shares standing in the name of a deceased person may be voted
by the executor or administrator of such deceased person, either in person or
by proxy. Shares standing in the name of a guardian, conservator or trustee
may be voted by such fiduciary, either in person or by proxy, but no such
fiduciary shall be entitled to vote shares held in such fiduciary capacity
without a transfer of such shares into the name of such fiduciary. Shares
standing in the name of a receiver may be voted by such receiver. A
stockholder whose shares are pledged shall be entitled to vote such shares,
unless in the transfer by the pledgor on the books of the Corporation, he has
expressly empowered the pledgee to vote thereon, in which case only the
pledgee, or his proxy, may represent the stock and vote thereon.

22. The order of business and all other matters of procedure at
every meeting of the stockholders may be determined by the presiding officer of
the meeting, who shall be the Chairman of the Board, or in his absence the
Chief Executive Officer, or in the absence of both of them such other officer
of the Corporation as designated by the Board. The presiding officer of the
meeting shall have all the powers and authority vested in a presiding officer
by law or practice without restriction, including, without limitation, the
authority, in order to conduct an orderly meeting, to impose reasonable limits
on the amount of time at the meeting taken up in remarks by any one stockholder
and to declare any business not properly brought before the meeting to be out
of order.

23. The Board shall appoint one or more Judges of Election to
serve at every meeting of the stockholders.

5
<PAGE> 6

DIRECTORS AND MEETINGS OF DIRECTORS

24. The business of the Corporation shall be managed by a Board of
Directors (herein the "Board of Directors" or the "Board") who shall exercise
all the powers of the Corporation not reserved to or conferred on the
stockholders by statute, the Certificate of Incorporation or the Bylaws of the
Corporation.

25. Except as otherwise fixed pursuant to the provisions of the
Certificate of Incorporation relating to the rights of the holders of any class
or series of stock having a preference over the Common Stock as to dividends or
upon liquidation to elect additional directors under specified circumstances,
the number of directors shall be as fixed from time to time by resolution of
the Board adopted by the affirmative vote of at least two-thirds of the
directors then in office, provided the number shall be not less than the
minimum or more than the maximum number permitted by the Certificate of
Incorporation, provided further that if no such minimum or maximum number is
stated in the Certificate of Incorporation the number shall not be less than
three nor more than 12. The directors, other than those who may be elected by
the holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation, shall be divided into three classes
as nearly equal in number as possible, with the term of office of one class
expiring each year. The term of office of each director shall expire at the
third Annual Meeting after election of the class to which he belongs. During
the intervals between Annual Meetings of Stockholders, any vacancy occurring in
the Board of Directors caused by resignation, removal, death or other
incapacity, and any newly-created directorships resulting from an increase in
the number of directors, shall be filled by a two-thirds vote of the directors
then in office, whether or not a quorum. Each director chosen to fill a
vacancy shall hold office for the unexpired term in respect of which such
vacancy occurs. Each director chosen to fill a newly-created directorship
shall hold office until the next election of the class for which such director
shall have been chosen.

26. Subject to the rights of holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation, nominations for the election of directors may be made by the Board
of Directors or a committee appointed by the Board of Directors or by any
stockholder entitled to vote in the election of directors generally. However,
any stockholder entitled to vote in the election of directors generally may
nominate one or more persons for election as directors at a meeting only if
written notice of such stockholder's intent to make such nomination or
nominations has been given, either by personal delivery or by United States
mail, postage prepaid, to the Secretary of the Corporation not later than 90
days prior to the anniversary date of the date of the immediately preceding
annual meeting of stockholders. Notwithstanding the foregoing if an existing
director is not standing for reelection to a directorship that is the subject
of an election at such meeting, then a stockholder may make a nomination with
respect to such directorship at anytime not later than the close of business on
the tenth day following the date on which a written statement setting forth the
fact that such directorship is to be elected and the name of the nominee
proposed by the Board of Directors is first mailed to stockholders. Each
notice of a nomination from a stockholder shall set forth: (a) the name and
address of the stockholder who intends to make the nomination and of the person
or persons to be nominated; (b) a representation that the stockholder is a
holder of record of stock

6
<PAGE> 7
of the Corporation entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to nominate the person or persons specified
in the notice; (c) a description of all arrangements or understandings between
the stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the stockholder; (d) such other information regarding each nominee
proposed by such stockholder as would be required to be included in a proxy
statement filed pursuant to the Securities Exchange Act of 1934 and the rules
and regulations thereunder (or any subsequent provisions replacing such Act,
rules or regulations); and (e) the consent of each nominee to serve as a
director of the Corporation if so elected. The presiding officer of the
meeting may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedure.

27. Any director may be removed from office as a director at any
time, but only for cause (as set forth in the Certificate of Incorporation), by
the affirmative vote of stockholders of record holding a majority of the
outstanding shares of stock of the Corporation entitled to vote in elections of
directors at a meeting of the stockholders called for that purpose.

28. Regular meetings of the Board of Directors shall be held at
such times and at such place or places as the directors shall, from time to
time, determine at a prior meeting. Special meetings of the Board may be
called by the Chairman of the Board or President of the Corporation and shall
be called by either of said officers upon the written request of any two
directors. Special meetings shall be held at the office of the Corporation or
at such place as is stated in the notice of the meeting. No notice shall be
required for regular meetings of the Board. Notices of special meetings shall
be given by mail at least five days before the meeting or by telephone,
telecopy or telegram at least 24 hours before the meeting. Notices may be
waived. Notices need not include any statement of the purpose of the meeting.

29. When all of the directors shall be present at any meeting,
however called or notified, they may act upon any business that might lawfully
be transacted at regular meetings of the Board, or at special meetings duly
called, and action taken at such meetings shall be as valid and binding as if
legally called and notified. Members of the Board of Directors may participate
in a meeting of the Board by means of conference telephone or similar
communications equipment to the full extent and with the same effect as
authorized and permitted by Delaware law.

30. One-third of the total number of the members of the Board of
Directors (but in no event less than three directors) shall constitute a quorum
for the transaction of business, and the acts of a majority of the directors
present at any meeting at which there is a quorum present shall be the acts of
the Board; provided, however, that the directors may act in such other manner,
with or without a meeting, as may be permitted by the laws of the State of
Delaware and provided further, that if all of the directors shall consent in
writing to any action taken by the Corporation, such action shall be as valid
as though it had been authorized at a meeting of the Board.

31. Directors shall receive such compensation and reimbursement
for expenses for attendance at meetings of the Board or of committees thereof
and such other compensation as shall be fixed by a majority of the entire
Board.

7
<PAGE> 8

COMMITTEES OF DIRECTORS

32. The Board of Directors shall establish an Audit Committee and
a Compensation Committee, and may establish an Executive Committee, a
Nominating Committee and such other committees as may be established by
resolution of a majority of the whole Board. Each of such committees shall
consist of one or more members of the Board. Members of committees of the
Board of Directors shall be elected annually by vote of a majority of the
Board. The Chief Executive Officer shall be an ex-officio nonvoting member of
each committee (except the Audit and Compensation Committees) of which he is
not elected as an official voting member. With respect to any committee
(including the Audit and Compensation Committees) of which the Chief Executive
Officer is not an official voting member, the Chief Executive Officer shall be
given notice of all committee meetings at the same time notice is given to
committee members, and the Chief Executive Officer shall be afforded the
opportunity to speak at the committee meeting. Presence of a majority of the
committee members (not counting any ex-officio nonvoting members) shall
constitute a quorum. Committees may act by majority vote of the voting members
present at a meeting. Each of such committees shall have and may exercise such
of the powers of the Board of Directors in the management of the business and
affairs of the Corporation as may be provided in these Bylaws or by resolution
of the Board of Directors. Each of such committees may authorize the seal of
the Corporation to be affixed to any document or instrument. The Board of
Directors may designate one or more directors as alternate members of any such
committee, who may replace any absent or disqualified member at any meeting of
such committee. Meetings of committees may be called by any member of a
committee by written, telegraphic or telephonic notice to all members of the
committee and the Chief Executive Officer and shall be held at such time and
place as shall be stated in the notice of meeting. Any member of a committee
may participate in any meeting by means of conference telephone or similar
communications equipment. In the absence or disqualification of a member of
any committee the member or members thereof present at any meeting and not
disqualified from voting, whether or not constituting a quorum may, if deemed
advisable, unanimously appoint another member of the Board to act at the
meeting in the place of the disqualified or absent member. Each committee may
fix such other rules and procedures governing conduct of meetings as it shall
deem appropriate.

33. The Executive Committee of the Board of Directors, if one is
established, shall consist of not less than three directors. The Executive
Committee shall have and exercise the authority of the Board of Directors
between meetings of the Board, subject to such limitations and restrictions
required by Delaware law or as the Board may impose in a resolution duly
adopted by the Board.

34. The Audit Committee shall consist of not less than two members
of the Board of Directors, none of whom shall be employees of the Corporation.
The Audit Committee shall be responsible for recommending to the entire Board
engagement and discharge of independent auditors of the financial statements of
the Corporation, shall review the professional service provided by independent
auditors, shall review the independence of independent auditors, shall review
with the auditors the plan and results of the auditing engagement, shall
consider the range of audit and non- audit fees, shall review the adequacy of
the Corporation's system of internal accounting controls,

8
<PAGE> 9
shall review the results of procedures for internal auditing and shall consult
with the internal auditor of the Corporation with respect to all aspects of the
Corporation's internal auditing program. In addition, the Audit Committee
shall direct and supervise special investigations as deemed necessary by the
Audit Committee.

35. The Compensation Committee shall consist of not less than two
members of the Board of Directors, none of whom shall be employees of the
Corporation. The Compensation Committee shall recommend to the Board the
compensation to be paid to officers and key employees of the Corporation and
the compensation of members of the Board of Directors. Except as otherwise
provided in any specific plan adopted by the Board, the Compensation Committee
shall be responsible for administration of executive incentive compensation
plans, stock option plans and other forms of direct or indirect compensation of
officers and key employees, and each member of the Compensation Committee shall
have the power and authority to execute and bind the Company to such documents,
agreements and instruments related to such plans and compensation as are
approved by the Compensation Committee. In the alternative, the Compensation
Committee may authorize any officer of the Company to execute such documents,
agreements and instruments on behalf of the Company. In addition, the
Compensation Committee shall review levels of pension benefits and insurance
programs for officers and key employees.

36. The Nominating Committee, if one is established, shall
recommend to the Board nominees for election as directors. The Nominating
Committee shall consider performance of incumbent directors and shall recommend
to the Board whether an incumbent director whose term expires shall be
nominated for reelection.

37. Any action required or permitted to be taken at any meeting of
any committee of the Board of Directors may be taken without a meeting if a
consent in writing, setting forth the action so taken, is signed by all of the
members of such committee.

OFFICERS

38. The Board of Directors shall elect a President and a
Secretary, and may elect a Chairman of the Board, a Treasurer, one or more vice
presidents, including an Executive Vice President and Chief Financial Officer,
a General Counsel, a Controller, one or more assistant secretaries and
assistant treasurers, and such other officers as the Board of Directors shall
deem appropriate. The Chairman of the Board shall be a director of the
Corporation. Other officers need not be directors.

39. Officers of the Corporation shall hold office until their
successors are chosen and qualified or until their earlier resignation or
removal. Any officer, agent or employee may be removed at any time, with or
without cause, by the Board but such removal shall be without prejudice to the
contractual rights, if any, of the person so removed. Election or appointment
of an officer or agent shall not of itself create contract rights. Vacancy
occurring in any office or position at any time may be filled by the Board.
All officers, agents and employees of the Corporation shall respectively have
such authority and perform such duties in the conduct and management of the
Corporation as may be delegated by the Board of Directors or by these Bylaws.

9
<PAGE> 10
40. Officers shall receive such compensation as may from time to
time be determined by the Board of Directors. Agents and employees shall
receive such compensation as may from time to time be determined by the Chief
Executive Officer.

41. The Chairman of the Board, if one is elected, may preside, or
may direct that the President so preside, at all meetings of the stockholders
and at all meetings of the directors. In the absence of the Chairman of the
Board, or if no Chairman of the Board is elected, the President shall so
preside. If the Board of Directors shall elect a person to be the Chairman of
the Board and shall designate such person the Chief Executive Officer of the
Corporation, the Chairman of the Board shall supervise and direct the
operations of the business of the Corporation in accordance with the policies
determined by the Board of Directors.

42. Unless the Board of Directors shall have elected a Chairman of
the Board of Directors and designated such person the Chief Executive Officer
of the Corporation, the President shall be the Chief Executive Officer of the
Corporation, supervising and directing the operations of the business of the
Corporation in accordance with the policies determined by the Board of
Directors. If the Board of Directors shall have elected a person as Chairman
of the Board and designated such person as a Chief Executive Officer of the
Corporation, the President shall be the Chief Operating Officer of the
Corporation and shall be responsible for the general supervision and control of
the business and the affairs of the Corporation subject to the directions of
the Chairman of the Board and the Board of Directors. If the Board of
Directors shall have elected a person Chairman of the Board and shall designate
such person the Chief Executive Officer of the Corporation, the President, in
the absence or incapacity of such Chairman of the Board, shall perform the
duties of that office.

43. A Vice President, if one is elected, in the absence or
incapacity of the President, shall perform the duties of the President. If
there be more than one Vice President, the Board of Directors shall designate
the Vice President who is to perform the duties of the President in the event
of his absence or incapacity. Each Vice President shall have such other duties
and authority as shall be assigned by the Chief Executive Officer or may be
delegated by the Board of Directors. The Executive Vice President and Chief
Financial Officer, if one is elected, shall be responsible for and direct,
either directly or indirectly through any Treasurer, Controller or Director of
Data Processing of the Corporation, all treasury, accounting, cost and
budgeting, and data collection functions. He will report directly to the
President with a report and policy relationship to the Chairman of the Board
and the Board of Directors.

44. The Secretary shall attend all meetings of the Board of
Directors and all meetings of stockholders and shall record all votes and
minutes from all proceedings in a book to be kept for that purpose. He shall
keep in safe custody the seal of the Corporation and affix the same to any
instrument requiring it, and when so affixed, it shall be attested by his
signature or by the signature of the Treasurer or an Assistant Secretary;
provided, however, that the affixing of the seal of the Corporation to any
document or instrument specifically shall not be required in order for such
document or instrument to be binding on or the official act of the Corporation,
and the signature of any authorized officer, without the seal of the
Corporation, shall be sufficient for such purposes. The Secretary shall
perform such other duties and have such other authorities as are delegated to
him by the Board of Directors.

10
<PAGE> 11
45. The Treasurer, if one is elected, shall be responsible for the
care and custody of all funds and other financial assets, taxes, corporate
debt, order entry and sales invoicing including credit memos, credit and
collection of accounts receivable, cash receipts, and the banking and insurance
functions of the Corporation. He shall report directly to and perform such
other duties as shall be assigned by the Executive Vice President and Chief
Financial Officer, if one is elected, or otherwise the President.

46. The Controller, if one is elected, shall be responsible for
the installation and supervision of all general accounting records of the
Corporation, preparation of financial statements and the annual and operating
budgets and profit plans, continuous audit of accounts and records of the
Corporation, preparation and interpretation of statistical records and reports,
taking and costing of all physical inventories and administering the inventory
levels, supervision of accounts payable and cash disbursements function and
hourly and salary payrolls. He shall report directly to and perform such other
functions as shall be assigned him by the Executive Vice President and Chief
Financial Officer, if one is elected, or otherwise the President.

47. The Board of Directors of the Corporation may require any
officer, agent or employee to give bond for the faithful discharge of his duty
and for the protection of the Corporation, in such sum and with such surety as
the Board deems advisable.

BANKING, CHECKS AND OTHER INSTRUMENTS

48. The Board of Directors shall by resolution designate the bank
or banks in which the funds of the Corporation shall be deposited, and such
funds shall be deposited in the name of the Corporation and shall be subject to
checks drawn as authorized by resolution of the Board of Directors.

49. The Board of Directors may in any instance designate the
officers and agents who shall have authority to execute any contract,
conveyance, or other instrument on behalf of the Corporation; or may ratify or
confirm any execution. When the execution of any instrument has been
authorized without specification of the executing officer or agents, the
Chairman of the Board, if designated as the Chief Executive Officer of the
Corporation, President or any Vice President, and the Secretary or Assistant
Secretary or Treasurer or Assistant Treasurer may execute the same in the name
and on behalf of the Corporation and may affix the corporate seal thereto;
provided, however, that the affixing of the seal of the Corporation to any
document or instrument specifically shall not be required in order for such
document or instrument to be binding on or the official act of the Corporation,
and the signature of any authorized officer, without the seal of the
Corporation, shall be sufficient for such purposes.

FISCAL YEAR

50. The fiscal year of the Corporation shall begin on the first
day of October and end on the thirtieth day of September.

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<PAGE> 12
BOOKS AND RECORDS

51. The proper officers and agents of the Corporation shall keep
and maintain such books, records and accounts of the Corporation's business and
affairs and such stock ledgers and lists of stockholders as the Board of
Directors shall deem advisable and as shall be required by the laws of the
State of Delaware or other states or jurisdictions empowered to impose such
requirements.

INDEMNIFICATION

52. Each director or officer of the Corporation or a subsidiary of
the Corporation who was or is made a party or is threatened to be made a party
to or is involved in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or a subsidiary of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (the "DGCL"), (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted the Corporation to
provide prior to such amendment), against all expenses, (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his or her heirs, executors and
administrators. The right to indemnification conferred in this Section shall
be a contract right and shall include the right to be paid by the Corporation
the expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, if the DGCL requires, the payment of such
expenses incurred by a director or officer in his or her capacity as a director
or officer (and not in any other capacity in which service was or is rendered
by such person while a director or officer, including, without limitation,
service to an employee benefit plan) in advance of the final disposition of a
proceeding, shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such director or officer, to repay all amounts
so advanced if it shall ultimately be determined that such director or officer
is not entitled to be indemnified under the applicable provisions of the DGCL.
The Corporation may, by action of its Board of Directors, provide
indemnification to employees and agents of the Corporation or a subsidiary of
the Corporation with the same scope and effect as the foregoing indemnification
of directors and officers.

53. The indemnification and advancement of expenses provided in
paragraph 52 of these Bylaws shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of expenses may be
entitled under any agreement, vote of stockholders, vote of disinterested
directors, insurance arrangement or otherwise, both as to action in his or her
official capacity and as to action in another capacity.

12
<PAGE> 13

AMENDMENTS

54. Except as otherwise provided in the Certificate of
Incorporation, these Bylaws may be altered, amended or repealed and new Bylaws
may be adopted at any regular meeting of the stockholders or Board of
Directors; or at any special meeting of the stockholders or Board of Directors;
provided that notice of such proposed making, alteration or repeal be included
in the notice of such special meeting. The Board of Directors may take such
action by the vote of two-thirds of those Directors present and voting at a
meeting where a quorum is present. Subject to applicable provisions of the
Certificate of Incorporation, the stockholders may make new Bylaws, or adopt,
alter, amend, or repeal Bylaws adopted by either the stockholders or the Board
of Directors by the affirmative vote of the holders of not less than two-thirds
(66 2/3%) of the voting power of all of the then outstanding shares of capital
stock of the Corporation then entitled to vote generally in the election of
directors.

<PAGE> 1
[SPECIMEN]

COMMON STOCK COMMON STOCK

OYO GEOSPACE CORPORATION

INCORPORATED UNDER THE
LAWS OF THE STATE OF DELAWARE
NUMBER INDEX, INC. SHARES

CUSIP
SEE REVERSE FOR
CERTAIN DEFINITIONS

THIS CERTIFIES THAT

is the owner of

FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK,
PAR VALUE $.01 EACH OF

OYO GEOSPACE CORPORATION

transferable on the books of the Corporation by the holder hereof in person or
by a duly authorized attorney, upon surrender of this Certificate properly
endorsed. This certificate is not valid unless countersigned and registered by
the Transfer Agent and Registrar.

IN WITNESS WHEREOF, the Corporation has caused the facsimile
signatures of its duly authorized officers and its facsimile seal to be affixed
hereto.

Dated:

Countersigned and Registered

Transfer Agent and Registrar

[OYO GEOSPACE CORPORATION CORPORATE SEAL]

/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
Secretary President

By
Authorized Officer

<PAGE> 2
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
TEN ENT - as tenants by the ------ --------
entireties (Cust) (Minor)
JT TEN - as joint tenants with under Uniform Gifts to
right of survivorship Minors
and not as tenants Act
in common ------------------
(State)

Additional abbreviations may also be used though not in the above list.

For Value Received, hereby sell, assign and transfer unto
--------

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]

----------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)

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

Shares
----------------------------------------------------------------------
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
--------------------------------------------------------------------
to transfer the said shares on the books of the within named Corporation
with full power of substitution in the premises.

Dated
---------------------------------

X
-------------------------------------------

X
-------------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR
WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER.

ALL GUARANTEES MUST BE MADE BY A FINANCIAL
INSTITUTION (SUCH AS A BANK OR BROKER)
WHICH IS A PARTICIPANT IN THE SECURITIES
TRANSFER AGENTS MEDALLION PROGRAM
("STANDING IN THE NEW YOURK STOCK EXCHANGE,
INC. MEDALLION SIGNATURE PROGRAM ("MSP"),
OR THE STOCK EXCHANGES MEDALLION
PROGRAM ("EMP") AND MUST NOT BE DATED.
GUARANTEES BY A NOTARY PUBLIC ARE NOT
ACCEPTABLE

<PAGE> 1
EXHIBIT 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of the 1st day
of August, 1997 between OYO GEOSPACE CORPORATION, a Delaware corporation having
its principal operating offices at 7334 N. Gessner, Houston, Texas 77040 (the
"Company"), and Gary D. Owens ("Employee"), having a mailing address at 1
Flamingo Island Drive, Missouri City, Texas 77459;

W I T N E S S E T H:

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

WHEREAS, in order to induce Employee to remain in the employ of the
Company under the terms as set forth herein, the Company is willing to agree to
provide certain severance benefits to Employee in the event Employee's
employment is terminated under the circumstances described below;

NOW, THEREFORE, in consideration of the mutual premises and conditions
contained herein, the parties hereto agree as follows:

1. TERM

1.1 Contract Term. This Agreement shall commence on the date

hereof and shall continue until December 31, 1998; provided, however,
that commencing January 1, 1999, and each January 1 thereafter the
term of this Agreement shall automatically be extended for an
additional two years unless no fewer than thirty (30) days prior to
such January 1 date, the Company shall have given notice that it does
not wish to extend this Agreement.

1.2 Consideration by Employee. In consideration of the
Company's entering into this Agreement, Employee hereby agrees that,
for the period commencing on the date hereof and extending through
December 31, 1998, Employee will not voluntarily terminate employment
with the Company, except in the event of a substantial change in
Employee's position, duties, compensation or benefits which would be
deemed "Good Reason" for Employee to terminate his employment in
accordance with Section 2.3, without the Company's consenting
<PAGE> 2
to such termination. As further consideration, Employee hereby agrees
to the Restrictions set forth in Section 4 hereof.

2. TERMINATION OF EMPLOYMENT

Employee shall be entitled to the benefits provided in section
3 hereof upon the termination of his employment, unless such
termination is (a) because of his death, "Disability" or "Retirement"
(as defined in Section 2.1 below), (b) by the Company for "Cause" (as
defined in Section 2.2 below), or (c) by Employee other than for "Good
Reason" (as defined in Section 2.3 hereof).

2.1 Disability, Retirement.

2.1.1 If, as a result of Employee's incapacity due to
physical or mental illness, Employee shall have been absent
from his duties with the Company on a full-time basis for 120
consecutive business days, and within thirty (30) days after
written notice of termination is given Employee shall not have
returned to the full-time performance of his duties, the
Company may terminate his employment for "Disability."

2.1.2 Termination by the Company or Employee of his
employment based on "Retirement" shall mean termination because
Employee has retired after reaching age 65.

2.2 Cause. The Company may terminate Employee's employment for

"Cause." For the purposes of this Agreement, the Company shall have
"cause" to terminate Employee's employment hereunder upon (A) the
willful and continued failure by Employee to perform his duties with
the Company (other than any such failure resulting from incapacity due
to physical or mental illness), after a demand for substantial
performance is delivered to Employee by the Board of Directors of the
Company (the "Board") which specifically identifies the manner in which
the Board believes that he has not substantially performed his duties,
or (B) the willful engaging by Employee in gross misconduct materially
and demonstrably injurious to the Company. For purposes of this
paragraph, no act, or failure to act, on Employee's part shall be
considered "willful" unless done, or omitted to be done, by him not in
good faith and without reasonable belief that his action or omission
was not in the best interest of the Company. Notwithstanding the
foregoing, Employee shall not be deemed to have been terminated for
Cause unless and until there shall have been delivered to him a

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copy of a resolution duly adopted by the affirmative vote of not less
than two-thirds (2/3) of the entire authorized membership of the Board
at a meeting of the Board called and held for the purpose (after
reasonable notice and an opportunity for Employee, together with
counsel, to be heard before the Board), finding that in the good faith
opinion of the Board he was guilty of conduct set forth above in
clauses (A) or (B) of the second sentence of this paragraph and
specifying the particulars thereof in detail.

2.3 Good Reason. Employee may terminate his employment for
Good Reason. For purposes of this Agreement, "Good Reason" shall mean:

2.3.1 Without his express written consent, the
assignment to Employee of any duties inconsistent with his
positions, duties, responsibilities and status with the
Company, or a change in his reporting responsibilities, titles
or offices, or any removal of Employee from or failure to re-
elect Employee to any of such positions, except in connection
with the termination of his employment for cause, Disability or
Retirement or as a result of his death or by Employee other
than for Good Reason;

2.3.2 A reduction by the Company in Employee's base
salary as in effect on the date hereof or as the same may be
increased from time to time;

2.3.3 The Company's requiring Employee to be based
anywhere other than the Company's office at which he was based
except for required travel on the Company's business to an
extent substantially consistent with the business travel
obligations of a company engaged in the Company's businesses,
as they may from time to time be engaged in, and consistent
with the Company's current circumstance as an indirect
wholly-owned subsidiary of a Japanese company based in Tokyo,
Japan, or, in the event Employee consents to any relocation,
the failure by the Company to pay (or reimburse Employee) for
all reasonable moving expenses incurred by him relating to a
change of his principal residence in connection with such
relocation and to indemnify Employee against any loss (defined
as the difference between the actual net sale price of such
residence after commissions and other closing costs and the
higher of (a) his aggregate investment in such residence or (b)
the fair market value of such residence as determined by a real
estate appraiser designated by Employee and reasonably
satisfactory to the Company) realized on the sale of Employee's
principal residence in connection with any such change of
residence;

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2.3.4 The failure by the Company to continue in
effect any benefit or compensation plan (including but not
limited to any stock option plan, 401(k) plan, life insurance
plan, health and accident plan or disability plan) in which
Employee is participating (or plans providing substantially
similar benefits) unless there is put in place by the Company a
substitute plan therefor which is designed to provide similar
economic benefits to Employee, the taking of any action by the
Company which would adversely affect Employee's participation
in or materially reduce his benefits under any of such plans or
deprive him of any material fringe benefit enjoyed by him
unless the Employee is given the opportunity to participate in
a plan that provides a similar economic benefit or is given an
economically equivalent fringe benefit, or the failure by the
Company to provide Employee with the number of paid vacation
days to which he is then entitled on the basis of years of
service with the Company in accordance with the Company's
normal vacation policy in effect on the date hereof;

2.3.5 Any failure of the Company to obtain the
assumption of, or the agreement to perform, this Agreement by
any successor as contemplated in Section 5 hereof; or

2.3.6 Any purported termination of Employee's
employment which is not affected pursuant to a Notice of
Termination satisfying the requirements of Section 2.4 below
(and, if applicable, Section 2.2 above).

2.4 Notice of Termination. Any termination by the Company
pursuant to Sections 2.1 and 2.2 above or by Employee pursuant to
Sections 2.1.2 and 2.3 above shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement,
a "Notice of Termination" shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and shall
set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Employee's employment under the
provision so indicated. In the event that Employee seeks to terminate
his employment with the Company pursuant to Section 2.3 above, he must
communicate his written Notice of Termination to the Company within
sixty (60) days of being notified of such action or actions by the
Company which constitute Good Reason for termination.

2.5 Date of Termination. "Date of Termination" shall mean
(i) if this Agreement is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that Employee shall not
have returned to the

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<PAGE> 5
performance of his duties on a full-time basis during such thirty (30)
day period); and (ii) if Employee's employment is terminated for any
other reason, the date on which a Notice of Termination is given.

3. COMPENSATION UPON TERMINATION OR DURING DISABILITY.

3.1 Disability. During any period that Employee fails to
perform his duties hereunder as a result of incapacity due to physical
or mental illness, he shall continue to receive his full base salary at
the rate then in effect and any installments of deferred portions of
awards under any incentive, bonus, or other compensation plan paid
during such period until this Agreement is terminated pursuant to
Section 2 hereof. Thereafter, Employee's benefits shall be determined
in accordance with the Company's long term disability income
insurance plan, or a substitute plan then in effect.

3.2 Termination for Cause. If Employee's employment shall be
terminated for Cause, the Company shall pay Employee his full base
salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given and the Company shall have no
further obligations to Employee under this Agreement.

3.3 Termination Without Cause. If the Company shall terminate
Employee's employment other than pursuant to Sections 2.1 or 2.2
hereof or if Employee shall terminate his employment for Good Reason,
then the Company shall pay to Employee as severance pay in a lump sum
not later than the tenth (10th) day following the Date of Termination,
the following amounts:

3.3.1 Employee's full base salary through the Date of
Termination at the rate in effect at the time the Notice of
Termination is given;

3.3.2 In lieu of any further salary payments to
Employee for periods subsequent to the Date of Termination, an
amount equal to the product of (a) Employee's annual base
salary at the rate in effect as of the Date of Termination plus
the amount of the management incentive bonus to which Employee
would have been entitled for the fiscal year in which the
Notice of Termination is given, pro rated for his period of
service, or if higher the amount of the management incentive
bonus paid to Employee in respect of the previous fiscal year,
multiplied by (b) two (2);

3.3.3 The Company shall also pay (i) all relocation and
indemnity payments as set forth in Section 2.3.3 hereof, and
(ii) all legal fees and

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<PAGE> 6
expenses incurred by Employee as a result of such termination
(including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to
obtain or enforce any right or benefit provided by this
Agreement plus pre-judgment and post-judgment interest at the
prime rate of interest in effect at the Date of Termination as
announced by Texas Commerce Bank of Houston (the "Prime Rate");
provided, however, that Employee shall not be entitled to the
payments provided for in clause (ii) if Employee shall have
given Notice of Termination for Good Reason, but it shall
finally be determined, pursuant to Section 11 hereof, that Good
Reason did not exist.

3.3.4 In the event the Employee is subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code"), an amount equal to the
product of (a) 25% multiplied by (b) the amount of any "excess
parachute payment" received or receivable by the Employee under
this Agreement, under any stock option agreement, or under any
other agreement, arrangement, or plan in which the Employee
participates; for purposes of this Agreement, "excess parachute
payment" has the meaning given to such term by Section 280G(b)
of the Code.

3.4 Benefit Plans. Unless Employee is terminated for Cause,
the Company shall maintain in full force and effect for the continued
benefit of Employee, for a two-year period after the Date of
Termination, all employee benefit plans and programs or arrangements in
which Employee was entitled to participate immediately prior to the
Date of Termination provided that his continued participation is
possible under the general terms and provisions of such plans and
programs. In the event that Employee's participation in any such plan
or program is barred, the Company shall arrange to provide Employee
with benefits substantially similar to those which he is entitled to
receive under such plans and programs.

3.5 Mitigation of Amounts Payable Hereunder. Employee shall
not be required to mitigate the amount of any payment provided for in
this Section 3 by seeking other employment or otherwise, nor shall the
amount of any payment provided for in this Section 3 be reduced by any
compensation earned by Employee as the result of employment by another
employer after the Date of Termination, or otherwise.

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<PAGE> 7
3.6 Late Payments. In the event any amount to be paid to Employee
hereunder is not paid by the date specified herein, such amount shall bear
interest at the Prime Rate.

3.7 Determination of Base Salary. In the event Employee terminates
this Agreement pursuant to Section 2.3.2 hereof, Employee's base salary for
purposes of determining benefits pursuant to this Section 3 shall be Employee's
base salary in effect prior to its reduction by the Company.

4. OWNERSHIP OF INTELLECTUAL PROPERTY - CONFIDENTIALITY

4.1 Definitions. As used in this Section 4, the following words or
phrases shall have the following definitions:

4.1.1 The term "Business Entity" shall mean any corporation,
partnership, joint venture, proprietorship, or other incorporated or
unincorporated organization, association or entity, including any
division or business operated by any of the foregoing under a trade or
assumed name.

4.1.2 The term "Subsidiaries" shall mean and include any
Business Entities in which the Company owns an interest, directly or
indirectly.

4.1.3 The term "Company" shall mean and include OYO GEOSPACE
CORPORATION, its successors and assigns, its subsidiaries, its parent
companies, and any of the foregoing operating under a trade or assumed
name.

4.1.4 The term "Employee of the Company" shall mean any
person employed by the Company in any capacity at any time during the
term of this Agreement, or any renewal or extension thereof.

4.1.5 The term "Customer" shall mean any person, or Business
Entity which has, in the past or at any time during the term of this
Agreement or any renewal or extension hereof, contracted, including by
purchase order, with the Company for the development, manufacture,
lease, repair, sale or purchase of any Product or the license from the
Company of any Intellectual Property.

4.1.6 The term "Product" shall mean a Seismic Data
Acquisition System and/or any other equipment, machine, service,
product, instrument or system researched, developed, conceived,
manufactured, assembled, sold or distributed by the Company at any
time.

4.1.7 The term "Seismic Data Acquisition System(s)" shall
mean and include (i) all systems, machines, instruments and equipment
capable of (a) acquiring a multiplicity of input, (b) formatting a
multiplicity of input analog data, and (c) filtering, digitizing and
storing input data on

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<PAGE> 8
suitable storage devices, (ii) peripheral processors, such as field
correlators, summing processors and other support equipment
manufactured, leased, repaired or sold by the Company, and (iii)
support equipment developed by the Company before the date of the
termination of this Agreement.

4.1.8 The term "Intellectual Property" shall mean all
methods, patents, formulae, inventions, designs, systems, processes,
trade secrets, copyrights, know-how, proprietary information, rights,
trademarks, and trade names relating to any Product conceived,
developed, completed or established by the Company, or by Employee
(whether solely or jointly with others) during the term of this
Agreement (including any renewal or extension hereof) (i) at the
Company's expense, (ii) at the Company's request, (iii) using the
Company's time, data, facilities and/or materials, or (iv) based upon
knowledge or information obtained from the Company, and shall include
all modifications and improvements thereof made at any time.

4.2 Intellectual Property of the Company. Employee agrees:

4.2.1 That all Intellectual Property, and all notes,
drawings, software, prototypes or other objects, information or
writings relating thereto are the sole property of Company;

4.2.2 To communicate and explain to the Company, promptly and
fully, all Intellectual Property;

4.2.3 To execute and deliver to Company such assignments or
other documents as may be reasonably required to evidence or confirm
the ownership of all Intellectual Property by the Company;

4.2.4 To perform such acts and execute such documents as may
be reasonably required to allow the Company to prosecute an application
for patent or registration of copyright on any such Intellectual
Property, from the United States and from any other government, and to
cooperate fully with the company in the prosecution of any such
application or registration, which obligation shall survive the
termination of Employee's employment with the Company.

4.2.5 All inventions or discoveries, if any, patented or
unpatented, which Employee has made prior to this employment by the
Company are described on Exhibit "A". All Intellectual Property other
than those items specifically described on Exhibit "A" shall constitute
the property of the Company.

4.3 Confidentiality.

4.3.1 Employee acknowledges that the Company's continued
operations and success in the development, manufacture, leasing,
repair, and sale of its Products is dependent upon (i) certain
processes, formulae,

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<PAGE> 9
specifications, designs, systems, and confidential information of the
Company which are valuable, special and unique assets and (ii) the
Company's continuing relationship with, and knowledge about, Customers
and prospective Customers and the goodwill these relationships create.
Employee acknowledges that all of the following information is
confidential and a valuable, special, and unique asset of the Company's
business: (i) the names, addresses and telephone numbers of Customers,
their employees, and their representatives, (ii) the nature of the
business and operations of any Customer, (iii) the amount, nature,
volume, and other information regarding any Products purchased, leased
or otherwise acquired by any Customer or required by any Customer; (iv)
the nature of the internal business operations of the Company; (v) the
methods, processes, formulae, specifications, designs, systems, and
know-how used, developed, or acquired by the Company for the
development, manufacture, and repair of any Product; (vi) the Company's
prices or charges to Customers for its Products; (vii) the
Intellectual Property developed or acquired by the Company and (viii)
information regarding the salaries, bonuses or other compensation paid
by the Company to its employees.

4.3.2 Employee acknowledges that all of the information
described in Section 4.3.1 is "Confidential Information," which
together with the Intellectual Property is the sole and exclusive
property of the Company. Employee acknowledges that all Confidential
Information and the Intellectual Property is revealed to Employee in
trust, based solely upon the confidential relationship existing between
the Company and the Employee. Employee agrees: (i) that all writings
or other records concerning Confidential Information and the
Intellectual Property are the sole and exclusive property of the
Company; (ii) that all manuals, forms, and supplies furnished to or
used by the Employees and all data or information placed thereon by
Employee or any other person are the Company's sole and exclusive
property, (iii) that, upon termination of this Agreement howsoever such
termination is brought about, or upon request of the Company at any
time, Employee shall deliver to the Company all such writings, records,
forms, manuals, and supplies and all copies of such writings; (iv) that
the Employee will not make or retain any copies of such writings for
his own or personal use, or take the originals or copies of any such
writings from the offices of the Company upon termination of this
Agreement; and (v) that Employee will not, either during or after the
term of this Agreement, publish, distribute or deliver any of such
writings or records to any other person or entity, or disclose to any
person or entity the contents of such records or writings or any of the
Confidential Information nor any information regarding the Intellectual
Property.

4.4 Reasonableness of Restrictions. Employee acknowledges that
the restrictions contained in Section 4.2 and 4.3 hereof (the "Restrictions"),
in view

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of the nature of the business in which the Company is engaged, are reasonable
and necessary in order to protect the legitimate interests of the Company, and
that any violation thereof would result in irreparable injury to the Company,
and Employee therefore further acknowledges that, in the event Employee
violates, or threatens to violate, any of such Restrictions, the Company shall
be entitled to obtain from any court of competent jurisdiction, without the
posting of any bond or other security, preliminary and permanent injunctive
relief as well as damages and an equitable accounting of all earnings, profits
and other benefits arising from such violation, which rights shall be
cumulative and in addition to any other rights or remedies in law or equity to
which the Company or any affiliate or subsidiary of the Company may be
entitled. If Employee violates any of the Restrictions, the restricted period
shall not run in favor of Employee from the time of commencement of any such
violation until such time as such violation shall be cured by Employee to the
satisfaction of the Company.

4.5 Severability of Restrictions. If any Restriction, or any part
thereof, is determined in any judicial or administrative proceeding to be
invalid or unenforceable, the remainder of the Restrictions shall not thereby
be affected and shall be given full effect, without regard to the invalid
provisions. If the period of time or scope of activity in the Restrictions
should be adjudged unreasonable in any judicial or administrative proceeding,
then the court or administrative body shall have the power to reduce the period
of time or the scope covered and, in its reduced form, such provision shall
then be enforceable and shall be enforced.

4.6 Intellectual Property of Others. Employee recognizes that the
Company has a long standing policy to not knowingly violate the valid
intellectual property rights, including patents, trade secrets and copyrights,
of other persons. In order to comply with such policy, Employee covenants that
he will comply with such policy and that his willful breach of this covenant
could constitute "Cause" within the meaning of Section 2.2 hereof. Employee
covenants, represents and warrants in these regards as follows:

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4.6.1 Exhibit B hereto contains a true, complete and accurate
list of all inventions, copyrights and patents of Employee relevant to
the subject matter of the employment of Employee by Oyo Geospace
Corporation that have been made or conceived or first reduced to
practice by Employee alone or jointly with others prior to the
employment of Employee by the Company. If disclosure of any such
inventions on Exhibit B would cause Employee to violate any prior
confidentiality agreement, Employee understands that such inventions
are not to be listed on Exhibit B but Oyo Geospace Corporation is to be
informed that all such inventions have not been listed for that reason.

4.6.2 Employee's performance of all of the duties and
obligations of employment at Oyo Geospace Corporation does not and will
not breach any agreement or duty to keep in confidence confidential
information acquired by Employee in confidence or in trust prior to the
employment of Employee by Oyo Geospace Corporation. During Employee's
work with the Company, Employee will not improperly use or disclose any
confidential information or trade secrets of any former employer or any
other person to whom Employee has an obligation of confidentiality, and
Employee will not bring onto the premises of the Company any
unpublished documents or any property belonging to any former employer
or any other person to whom Employee has an obligation of
confidentiality unless consented to in writing by that former employer
or person. Employee will use in the performance of duties only
information which is generally known and used by persons with training
and experience comparable to Employee's, which is common knowledge in
the industry or otherwise legally in the public domain, or which is or
was developed by Employee free of any confidential obligations to
former employers or other persons.

4.6.3 Employee is not restricted from being employed by Oyo
Geospace Corporation or entering into this Agreement. Employee has not
entered into, and agrees not to enter into, any agreement either
written or oral in conflict herewith.

4.6.4 Employee represents and warrants that, other than as
set forth on Exhibit B hereto, Employee has not brought to the Company
and covenants that Employee will not bring to the Company or use in the
performance of Employee's responsibilities any confidential
information, materials or documents of any former employers or other
persons that are not generally available to the public, unless Employee
has obtained prior written authorization from the former employers or
other persons. Employee hereby covenants that Employee shall not
breach any obligation of confidentiality or duty that Employee may have
to former employers or other persons.

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5. SUCCESSORS; BINDING AGREEMENT.

5.1 Successors of the Company. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to Employee, expressly
to assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Employee to compensation from the Company in the
same amount and on the same terms as Employee would be entitled hereunder if
Employee terminated his employment for Good Reason, except that for purposes or
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in this Agreement,
"Company" shall mean the company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which executes and delivers the
agreement provided for in this Section 5 or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law.

6. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Company shall be directed to the
attention of the Chairman of the Board of the Company with a copy to the
Secretary of the Company, except that notices of change of address shall be
effective only upon receipt.

7. MISCELLANEOUS. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by Employee and such officer as may be specifically designated
by the Board of Directors of the Company. No waiver by either party hereto at

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any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth expressly in this
Agreement.

8. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

10. GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the State of Texas.

11. ARBITRATION. Except as contemplated by Section 4.4 hereof, any dispute
or controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration in Houston, Texas (in accordance with the
rules of the American Arbitration Association then in effect). Notwithstanding
the pendency of any such dispute or controversy, the Company will continue to
pay Employee his full compensation in effect when the notice giving rise to the
dispute was given and continue Employee as a participant in all compensation,
benefit and insurance plans in which he was participating when the notice
giving rise to the dispute was given, until the dispute is finally resolved.
Amounts paid under this paragraph are in addition to all other amounts due
under this Agreement and shall not be offset against or reduce any other
amounts due under this Agreement. Judgment may be entered on the arbitrator's
award in any court having jurisdiction; provided, however, that Employee shall
be entitled to seek specific performance of his right to be paid until the Date
of Termination during the pendency of any dispute or controversy arising under
or in connection with this Agreement.

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12. CAPTIONS AND GENDER. The use of captions and Section headings herein
is for the purpose of convenience only and shall not affect the interpretation
or substance of any provision contained herein. Similarly, the use of the
masculine gender with respect to pronouns in this Agreement is for the purpose
of convenience and includes either sex who may be a signatory.

13. PRIOR AGREEMENTS. This Agreement supersedes all prior agreements
entered into between the Company and Employee with regard to the subject matter
set forth herein; provided, however, that this Agreement shall not supersede
that letter agreement dated July 15, 1997, between the Company and Employee,
which shall continue in full force and effect as to the matters covered thereby
and for the period contemplated thereby.

IN WITNESS WHEREOF, the parties hereof have signed this Agreement as of
the 31st day of July 1997.

OYO GEOSPACE CORPORATION

By /s/ ERNEST M. HALL
--------------------------------
Name Ernest M. Hall, Jr.
-------------------------------
Title President
------------------------------

(EMPLOYEE)

/s/ GARY D. OWENS
-----------------------------------

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<PAGE> 1
EXHIBIT 10.2

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of the 1st day of
August, 1997 between OYO GEOSPACE CORPORATION, a Delaware corporation having
its principal operating offices at 7334 N. Gessner, Houston, Texas 77040 (the
"Company"), and Michael J. Sheen ("Employee"), having a mailing address at
11910 North Hanworth, Houston, Texas 77031;

W I T N E S S E T H:

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

NOW, THEREFORE, in consideration of the mutual premises and conditions
contained herein, the parties hereto agree as follows:

1. TERM

1.1 Contract Term. This Agreement shall commence on the date
hereof and shall continue until December 31, 1998; provided, however,
that commencing January 1, 1999, and each January 1 thereafter the term
of this Agreement shall automatically be extended for an additional two
years unless no fewer than thirty (30) days prior to such January 1 date,
the Company shall have given notice that it does not wish to extend this
Agreement.

1.2 Consideration by Employee. In consideration of the Company's
entering into this Agreement, Employee hereby agrees that, for the period
commencing on the date hereof and extending through December 31, 1998,
Employee will not voluntarily terminate employment with the Company,
except in the event of a substantial change in Employee's position,
duties, compensation or benefits which would be deemed "Good Reason" for
Employee to terminate his employment in accordance with Section 2.3,
without the Company's consenting
<PAGE> 2
to such termination. As further consideration, Employee hereby agrees to
the Restrictions set forth in Section 4 hereof.

2. TERMINATION OF EMPLOYMENT

Employee shall be entitled to the benefits provided in section 3
hereof upon the termination of his employment, unless such termination is
(a) because of his death, "Disability" or "Retirement" (as defined in
Section 2.1 below), (b) by the Company for "Cause" (as defined in Section
2.2 below), or (c) by Employee other than for "Good Reason" (as defined
in Section 2.3 hereof).

2.1 Disability, Retirement.

2.1.1 If, as a result of Employee's incapacity due to
physical or mental illness, Employee shall have been absent from
his duties with the Company on a full-time basis for 120
consecutive business days, and within thirty (30) days after
written notice of termination is given Employee shall not have
returned to the full-time performance of his duties, the Company
may terminate his employment for "Disability."

2.1.2 Termination by the Company or Employee of his
employment based on "Retirement" shall mean termination because
Employee has retired after reaching age 65.

2.2 Cause. The Company may terminate Employee's employment for
"Cause." For the purposes of this Agreement, the Company shall have
"cause" to terminate Employee's employment hereunder upon (A) the willful
and continued failure by Employee to perform his duties with the Company
(other than any such failure resulting from incapacity due to physical or
mental illness), after a demand for substantial performance is delivered
to Employee by the Board of Directors of the Company (the "Board") which
specifically identifies the manner in which the Board believes that he
has not substantially performed his duties, or (B) the willful engaging
by Employee in gross misconduct materially and demonstrably injurious to
the Company. For purposes of this paragraph, no act, or failure to act,
on Employee's part shall be considered "willful" unless done, or omitted
to be done, by him not in good faith and without reasonable belief that
his action or omission was not in the best interest of the Company.
Notwithstanding the foregoing, Employee shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to
him a

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<PAGE> 3
copy of a resolution duly adopted by the affirmative vote of not less
than two-thirds (2/3) of the entire authorized membership of the Board at
a meeting of the Board called and held for the purpose (after reasonable
notice and an opportunity for Employee, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the
Board he was guilty of conduct set forth above in clauses (A) or (B) of
the second sentence of this paragraph and specifying the particulars
thereof in detail.

2.3 Good Reason. Employee may terminate his employment for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean:

2.3.1 Without his express written consent, the assignment
to Employee of any duties inconsistent with his positions, duties,
responsibilities and status with the Company, or a change in his
reporting responsibilities, titles or offices, or any removal of
Employee from or failure to re-elect Employee to any of such
positions, except in connection with the termination of his
employment for cause, Disability or Retirement or as a result of
his death or by Employee other than for Good Reason;

2.3.2 A reduction by the Company in Employee's base salary
as in effect on the date hereof or as the same may be increased
from time to time;

2.3.3 The Company's requiring Employee to be based anywhere
other than the Company's office at which he was based except for
required travel on the Company's business to an extent
substantially consistent with the business travel obligations of a
company engaged in the Company's businesses, as they may from time
to time be engaged in, and consistent with the Company's current
circumstance as an indirect wholly-owned subsidiary of a Japanese
company based in Tokyo, Japan, or, in the event Employee consents
to any relocation, the failure by the Company to pay (or reimburse
Employee) for all reasonable moving expenses incurred by him
relating to a change of his principal residence in connection with
such relocation and to indemnify Employee against any loss
(defined as the difference between the actual net sale price of
such residence after commissions and other closing costs and the
higher of (a) his aggregate investment in such residence or (b)
the fair market value of such residence as determined by a real
estate appraiser designated by Employee and reasonably
satisfactory to the Company) realized on the sale of Employee's
principal residence in connection with any such change of
residence;

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<PAGE> 4
2.3.4 The failure by the Company to continue in effect any
benefit or compensation plan (including but not limited to any
stock option plan, 401(k) plan, life insurance plan, health and
accident plan or disability plan) in which Employee is
participating (or plans providing substantially similar benefits)
unless there is put in place by the Company a substitute plan
therefor which is designed to provide similar economic benefits to
Employee, the taking of any action by the Company which would
adversely affect Employee's participation in or materially reduce
his benefits under any of such plans or deprive him of any
material fringe benefit enjoyed by him unless the Employee is
given the opportunity to participate in a plan that provides a
similar economic benefit or is given an economically equivalent
fringe benefit, or the failure by the Company to provide Employee
with the number of paid vacation days to which he is then entitled
on the basis of years of service with the Company in accordance
with the Company's normal vacation policy in effect on the date
hereof;

2.3.5 Any failure of the Company to obtain the assumption
of, or the agreement to perform, this Agreement by any successor
as contemplated in Section 5 hereof; or

2.3.6 Any purported termination of Employee's employment
which is not affected pursuant to a Notice of Termination
satisfying the requirements of Section 2.4 below (and, if
applicable, Section 2.2 above).

2.4 Notice of Termination. Any termination by the Company
pursuant to Sections 2.1 and 2.2 above or by Employee pursuant to
Sections 2.1.2 and 2.3 above shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and shall
set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Employee's employment under the
provision so indicated. In the event that Employee seeks to terminate
his employment with the Company pursuant to Section 2.3 above, he must
communicate his written Notice of Termination to the Company within sixty
(60) days of being notified of such action or actions by the Company
which constitute Good Reason for termination.

2.5 Date of Termination. "Date of Termination" shall mean (i) if
this Agreement is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that Employee shall not have
returned to the

3. COMPENSATION UPON TERMINATION OR DURING DISABILITY.

3.1 Disability. During any period that Employee fails to perform
his duties hereunder as a result of incapacity due to physical or mental
illness, he shall continue to receive his full base salary at the rate
then in effect and any installments of deferred portions of awards under
any incentive, bonus, or other compensation plan paid during such period
until this Agreement is terminated pursuant to Section 2 hereof.
Thereafter, Employee's benefits shall be determined in accordance with
the Company's long term disability income insurance plan, or a substitute
plan then in effect.

3.2 Termination for Cause. If Employee's employment shall be
terminated for Cause, the Company shall pay Employee his full base salary
through the Date of Termination at the rate in effect at the time Notice
of Termination is given and the Company shall have no further obligations
to Employee under this Agreement.

3.3 Termination Without Cause. If the Company shall terminate
Employee's employment other than pursuant to Sections 2.1 or 2.2 hereof
or if Employee shall terminate his employment for Good Reason, then the
Company shall pay to Employee as severance pay in a lump sum not later
than the tenth (10th) day following the Date of Termination, the
following amounts:

3.3.1 Employee's full base salary through the Date of
Termination at the rate in effect at the time the Notice of
Termination is given;

3.3.2 In lieu of any further salary payments to Employee
for periods subsequent to the Date of Termination, an amount equal
to the product of (a) Employee's annual base salary at the rate in
effect as of the Date of Termination plus the amount of the
management incentive bonus to which Employee would have been
entitled for the fiscal year in which the Notice of Termination is
given, pro rated for his period of service, or if higher the
amount of the management incentive bonus paid to Employee in
respect of the previous fiscal year, multiplied by (b) two (2);

3.3.3 The Company shall also pay (i) all relocation and
indemnity payments as set forth in Section 2.3.3 hereof, and (ii)
all legal fees and

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<PAGE> 6
expenses incurred by Employee as a result of such termination
(including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to
obtain or enforce any right or benefit provided by this Agreement
plus pre-judgment and post-judgment interest at the prime rate of
interest in effect at the Date of Termination as announced by
Texas Commerce Bank of Houston (the "Prime Rate"); provided,
however, that Employee shall not be entitled to the payments
provided for in clause (ii) if Employee shall have given Notice of
Termination for Good Reason, but it shall finally be determined,
pursuant to Section 11 hereof, that Good Reason did not exist.

3.3.4 In the event the Employee is subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code"), an amount equal to the product of (a) 25%
multiplied by (b) the amount of any "excess parachute payment"
received or receivable by the Employee under this Agreement, under
any stock option agreement, or under any other agreement,
arrangement, or plan in which the Employee participates; for
purposes of this Agreement, "excess parachute payment" has the
meaning given to such term by Section 280G(b) of the Code.

3.4 Benefit Plans. Unless Employee is terminated for Cause, the
Company shall maintain in full force and effect for the continued benefit
of Employee, for a two-year period after the Date of Termination, all
employee benefit plans and programs or arrangements in which Employee was
entitled to participate immediately prior to the Date of Termination
provided that his continued participation is possible under the general
terms and provisions of such plans and programs. In the event that
Employee's participation in any such plan or program is barred, the
Company shall arrange to provide Employee with benefits substantially
similar to those which he is entitled to receive under such plans and
programs.

3.5 Mitigation of Amounts Payable Hereunder. Employee shall not
be required to mitigate the amount of any payment provided for in this
Section 3 by seeking other employment or otherwise, nor shall the amount
of any payment provided for in this Section 3 be reduced by any
compensation earned by Employee as the result of employment by another
employer after the Date of Termination, or otherwise.

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<PAGE> 7
3.6 Late Payments. In the event any amount to be paid to
Employee hereunder is not paid by the date specified herein, such amount
shall bear interest at the Prime Rate.

3.7 Determination of Base Salary. In the event Employee
terminates this Agreement pursuant to Section 2.3.2 hereof, Employee's
base salary for purposes of determining benefits pursuant to this Section
3 shall be Employee's base salary in effect prior to its reduction by the
Company.

4. OWNERSHIP OF INTELLECTUAL PROPERTY - CONFIDENTIALITY

4.1 Definitions. As used in this Section 4, the following words
or phrases shall have the following definitions:

4.1.1 The term "Business Entity" shall mean any
corporation, partnership, joint venture, proprietorship, or other
incorporated or unincorporated organization, association or
entity, including any division or business operated by any of the
foregoing under a trade or assumed name.

4.1.2 The term "Subsidiaries" shall mean and include any
Business Entities in which the Company owns an interest, directly
or indirectly.

4.1.3 The term "Company" shall mean and include OYO
GEOSPACE CORPORATION, its successors and assigns, its
subsidiaries, its parent companies, and any of the foregoing
operating under a trade or assumed name.

4.1.4 The term "Employee of the Company" shall mean any
person employed by the Company in any capacity at any time during
the term of this Agreement, or any renewal or extension thereof.

4.1.5 The term "Customer" shall mean any person, or
Business Entity which has, in the past or at any time during the
term of this Agreement or any renewal or extension hereof,
contracted, including by purchase order, with the Company for the
development, manufacture, lease, repair, sale or purchase of any
Product or the license from the Company of any Intellectual
Property.

4.1.7 The term "Seismic Data Acquisition System(s)" shall
mean and include (i) all systems, machines, instruments and
equipment capable of (a) acquiring a multiplicity of input, (b)
formatting a multiplicity of input analog data, and (c) filtering,
digitizing and storing input data on

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<PAGE> 8
suitable storage devices, (ii) peripheral processors, such as
field correlators, summing processors and other support equipment
manufactured, leased, repaired or sold by the Company, and (iii)
support equipment developed by the Company before the date of the
termination of this Agreement.

4.1.8 The term "Intellectual Property" shall mean all
methods, patents, formulae, inventions, designs, systems,
processes, trade secrets, copyrights, know-how, proprietary
information, rights, trademarks, and trade names relating to any
Product conceived, developed, completed or established by the
Company, or by Employee (whether solely or jointly with others)
during the term of this Agreement (including any renewal or
extension hereof) (i) at the Company's expense, (ii) at the
Company's request, (iii) using the Company's time, data,
facilities and/or materials, or (iv) based upon knowledge or
information obtained from the Company, and shall include all
modifications and improvements thereof made at any time.

4.2 Intellectual Property of the Company. Employee agrees:

4.2.1 That all Intellectual Property, and all notes,
drawings, software, prototypes or other objects, information or
writings relating thereto are the sole property of Company;

4.2.2 To communicate and explain to the Company, promptly
and fully, all Intellectual Property;

4.2.3 To execute and deliver to Company such assignments or
other documents as may be reasonably required to evidence or
confirm the ownership of all Intellectual Property by the Company;

4.2.4 To perform such acts and execute such documents as
may be reasonably required to allow the Company to prosecute an
application for patent or registration of copyright on any such
Intellectual Property, from the United States and from any other
government, and to cooperate fully with the company in the
prosecution of any such application or registration, which
obligation shall survive the termination of Employee's employment
with the Company.

4.2.5 All inventions or discoveries, if any, patented or
unpatented, which Employee has made prior to this employment by
the Company are described on Exhibit "A". All Intellectual
Property other than those items specifically described on Exhibit
"A" shall constitute the property of the Company.

4.3 Confidentiality.

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<PAGE> 9
specifications, designs, systems, and confidential information of
the Company which are valuable, special and unique assets and (ii)
the Company's continuing relationship with, and knowledge about,
Customers and prospective Customers and the goodwill these
relationships create. Employee acknowledges that all of the
following information is confidential and a valuable, special, and
unique asset of the Company's business: (i) the names, addresses
and telephone numbers of Customers, their employees, and their
representatives, (ii) the nature of the business and operations of
any Customer, (iii) the amount, nature, volume, and other
information regarding any Products purchased, leased or otherwise
acquired by any Customer or required by any Customer; (iv) the
nature of the internal business operations of the Company; (v) the
methods, processes, formulae, specifications, designs, systems,
and know-how used, developed, or acquired by the Company for the
development, manufacture, and repair of any Product; (vi) the
Company's prices or charges to Customers for its Products; (vii)
the Intellectual Property developed or acquired by the Company and
(viii) information regarding the salaries, bonuses or other
compensation paid by the Company to its employees.

4.3.2 Employee acknowledges that all of the information
described in Section 4.3.1 is "Confidential Information," which
together with the Intellectual Property is the sole and exclusive
property of the Company. Employee acknowledges that all
Confidential Information and the Intellectual Property is revealed
to Employee in trust, based solely upon the confidential
relationship existing between the Company and the Employee.
Employee agrees: (i) that all writings or other records
concerning Confidential Information and the Intellectual Property
are the sole and exclusive property of the Company; (ii) that all
manuals, forms, and supplies furnished to or used by the Employees
and all data or information placed thereon by Employee or any
other person are the Company's sole and exclusive property, (iii)
that, upon termination of this Agreement howsoever such
termination is brought about, or upon request of the Company at
any time, Employee shall deliver to the Company all such writings,
records, forms, manuals, and supplies and all copies of such
writings; (iv) that the Employee will not make or retain any
copies of such writings for his own or personal use, or take the
originals or copies of any such writings from the offices of the
Company upon termination of this Agreement; and (v) that Employee
will not, either during or after the term of this Agreement,
publish, distribute or deliver any of such writings or records to
any other person or entity, or disclose to any person or entity
the contents of such records or writings or any of the
Confidential Information nor any information regarding the
Intellectual Property.

4.4 Reasonableness of Restrictions. Employee acknowledges that
the restrictions contained in Section 4.2 and 4.3 hereof (the
"Restrictions"), in view

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<PAGE> 10
of the nature of the business in which the Company is engaged, are
reasonable and necessary in order to protect the legitimate interests of
the Company, and that any violation thereof would result in irreparable
injury to the Company, and Employee therefore further acknowledges that,
in the event Employee violates, or threatens to violate, any of such
Restrictions, the Company shall be entitled to obtain from any court of
competent jurisdiction, without the posting of any bond or other
security, preliminary and permanent injunctive relief as well as damages
and an equitable accounting of all earnings, profits and other benefits
arising from such violation, which rights shall be cumulative and in
addition to any other rights or remedies in law or equity to which the
Company or any affiliate or subsidiary of the Company may be entitled.
If Employee violates any of the Restrictions, the restricted period shall
not run in favor of Employee from the time of commencement of any such
violation until such time as such violation shall be cured by Employee to
the satisfaction of the Company.

4.5 Severability of Restrictions. If any Restriction, or any
part thereof, is determined in any judicial or administrative proceeding
to be invalid or unenforceable, the remainder of the Restrictions shall
not thereby be affected and shall be given full effect, without regard to
the invalid provisions. If the period of time or scope of activity in
the Restrictions should be adjudged unreasonable in any judicial or
administrative proceeding, then the court or administrative body shall
have the power to reduce the period of time or the scope covered and, in
its reduced form, such provision shall then be enforceable and shall be
enforced.

4.6 Intellectual Property of Others. Employee recognizes that
the Company has a long standing policy to not knowingly violate the valid
intellectual property rights, including patents, trade secrets and
copyrights, of other persons. In order to comply with such policy,
Employee covenants that he will comply with such policy and that his
willful breach of this covenant could constitute "Cause" within the
meaning of Section 2.2 hereof. Employee covenants, represents and
warrants in these regards as follows:

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<PAGE> 11
4.6.1 Exhibit B hereto contains a true, complete and
accurate list of all inventions, copyrights and patents of
Employee relevant to the subject matter of the employment of
Employee by Oyo Geospace Corporation that have been made or
conceived or first reduced to practice by Employee alone or
jointly with others prior to the employment of Employee by the
Company. If disclosure of any such inventions on Exhibit B would
cause Employee to violate any prior confidentiality agreement,
Employee understands that such inventions are not to be listed on
Exhibit B but Oyo Geospace Corporation is to be informed that all
such inventions have not been listed for that reason.

4.6.2 Employee's performance of all of the duties and
obligations of employment at Oyo Geospace Corporation does not and
will not breach any agreement or duty to keep in confidence
confidential information acquired by Employee in confidence or in
trust prior to the employment of Employee by Oyo Geospace
Corporation. During Employee's work with the Company, Employee
will not improperly use or disclose any confidential information
or trade secrets of any former employer or any other person to
whom Employee has an obligation of confidentiality, and Employee
will not bring onto the premises of the Company any unpublished
documents or any property belonging to any former employer or any
other person to whom Employee has an obligation of confidentiality
unless consented to in writing by that former employer or person.
Employee will use in the performance of duties only information
which is generally known and used by persons with training and
experience comparable to Employee's, which is common knowledge in
the industry or otherwise legally in the public domain, or which
is or was developed by Employee free of any confidential
obligations to former employers or other persons.

4.6.3 Employee is not restricted from being employed by Oyo
Geospace Corporation or entering into this Agreement. Employee
has not entered into, and agrees not to enter into, any agreement
either written or oral in conflict herewith.

4.6.4 Employee represents and warrants that, other than as
set forth on Exhibit B hereto, Employee has not brought to the
Company and covenants that Employee will not bring to the Company
or use in the performance of Employee's responsibilities any
confidential information, materials or documents of any former
employers or other persons that are not generally available to the
public, unless Employee has obtained prior written authorization
from the former employers or other persons. Employee hereby
covenants that Employee shall not breach any obligation of
confidentiality or duty that Employee may have to former employers
or other persons.

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<PAGE> 12

5. SUCCESSORS; BINDING AGREEMENT.

5.1 Successors of the Company. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets
of the Company, by agreement in form and substance satisfactory to
Employee, expressly to assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the Company
to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle Employee
to compensation from the Company in the same amount and on the same terms
as Employee would be entitled hereunder if Employee terminated his
employment for Good Reason, except that for purposes or implementing the
foregoing, the date on which any such succession becomes effective shall
be deemed the Date of Termination. As used in this Agreement, "Company"
shall mean the company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which executes and delivers the
agreement provided for in this Section 5 or which otherwise becomes bound
by all the terms and provisions of this Agreement by operation of law.

6. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by
United States registered or certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses set forth on the
first page of this Agreement, provided that all notices to the Company
shall be directed to the attention of the Chairman of the Board of the
Company with a copy to the Secretary of the Company, except that notices
of change of address shall be effective only upon receipt.

7. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by Employee and such officer as may be
specifically designated by the Board of Directors of the Company. No
waiver by either party hereto at

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<PAGE> 13
any time of any breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party
which are not set forth expressly in this Agreement.

8. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force and
effect.

9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.

10. GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Texas.

11. ARBITRATION. Except as contemplated by Section 4.4 hereof, any
dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by arbitration in Houston, Texas (in
accordance with the rules of the American Arbitration Association then in
effect). Notwithstanding the pendency of any such dispute or
controversy, the Company will continue to pay Employee his full
compensation in effect when the notice giving rise to the dispute was
given and continue Employee as a participant in all compensation, benefit
and insurance plans in which he was participating when the notice giving
rise to the dispute was given, until the dispute is finally resolved.
Amounts paid under this paragraph are in addition to all other amounts
due under this Agreement and shall not be offset against or reduce any
other amounts due under this Agreement. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however,
that Employee shall be entitled to seek specific performance of his right
to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this
Agreement.

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<PAGE> 14
12. CAPTIONS AND GENDER. The use of captions and Section headings
herein is for the purpose of convenience only and shall not affect the
interpretation or substance of any provision contained herein.
Similarly, the use of the masculine gender with respect to pronouns in
this Agreement is for the purpose of convenience and includes either sex
who may be a signatory.

13. PRIOR AGREEMENTS. This Agreement supersedes all prior agreements
entered into between the Company and Employee with regard to the subject
matter set forth herein; provided, however, that this Agreement shall not
supersede that letter agreement dated July 15, 1997, between the Company
and Employee, which shall continue in full force and effect as to the
matters covered thereby and for the period contemplated thereby.

IN WITNESS WHEREOF, the parties hereof have signed this Agreement
as of the 31st day of July 1997.

OYO GEOSPACE CORPORATION

By /s/ ERNEST M. HALL
-------------------------------------

Name Ernest M. Hall, Jr.
-----------------------------------

Title President
----------------------------------

(EMPLOYEE)

/s/ MICHAEL J. SHEEN
---------------------------------------

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<PAGE> 1
EXHIBIT 10.3

OYO GEOSPACE CORPORATION

1997 KEY EMPLOYEE STOCK OPTION PLAN
<PAGE> 2
OYO GEOSPACE CORPORATION

1997 KEY EMPLOYEE STOCK OPTION PLAN

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Section
-------
<S> <C>
ARTICLE I - PLAN

Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Effective Date of Plan . . . . . . . . . . . . . . . . . . . . . . . 1.2

ARTICLE II - DEFINITIONS

Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . 2.2
Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6
Disinterested Person . . . . . . . . . . . . . . . . . . . . . . . . 2.7
Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8
Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . 2.9
Incentive Option . . . . . . . . . . . . . . . . . . . . . . . . . 2.10
Nonqualified Option . . . . . . . . . . . . . . . . . . . . . . . 2.11
Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12
Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 2.13
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.14
Restricted Stock . . . . . . . . . . . . . . . . . . . . . . . . . 2.15
Restricted Stock Agreement . . . . . . . . . . . . . . . . . . . . 2.16
Restricted Stock Purchase Price . . . . . . . . . . . . . . . . . 2.17
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.18
Stock Award . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.19
Voting Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.20
10% Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . 2.21

ARTICLE III - ELIGIBILITY

ARTICLE IV - GENERAL PROVISIONS RELATING TO OPTIONS AND STOCK AWARDS

Authority to Grant Options and Stock Awards . . . . . . . . . . . . 4.1
Dedicated Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2
Non-Transferability . . . . . . . . . . . . . . . . . . . . . . . . 4.3
Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . 4.4
Changes in the Company's Capital Structure . . . . . . . . . . . . . 4.5
Election Under Section 83(b) of the Code . . . . . . . . . . . . . . 4.6
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V - OPTIONS

Type of Option . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1
Option Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2
Duration of Options . . . . . . . . . . . . . . . . . . . . . . . . 5.3
Amount Exercisable . . . . . . . . . . . . . . . . . . . . . . . . . 5.4
Exercise of Options . . . . . . . . . . . . . . . . . . . . . . . . 5.5
Exercise on Termination of Employment . . . . . . . . . . . . . . . 5.6
Substitution Options . . . . . . . . . . . . . . . . . . . . . . . . 5.7
No Rights as Stockholder . . . . . . . . . . . . . . . . . . . . . . 5.8

ARTICLE VI - STOCK AWARDS

Stock Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2
Stock Certificate . . . . . . . . . . . . . . . . . . . . . . . . . 6.3
Rights as Stockholder . . . . . . . . . . . . . . . . . . . . . . . 6.4
Lapse of Restrictions . . . . . . . . . . . . . . . . . . . . . . . 6.5
Restriction Period . . . . . . . . . . . . . . . . . . . . . . . . . 6.6

ARTICLE VII - ADMINISTRATION

ARTICLE VIII - AMENDMENT OR TERMINATION OF PLAN

ARTICLE IX - MISCELLANEOUS

No Establishment of a Trust Fund . . . . . . . . . . . . . . . . . . 9.1
No Employment Obligation . . . . . . . . . . . . . . . . . . . . . . 9.2
Forfeiture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3
Tax Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4
Written Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 9.5
Indemnification of the Committee and the
Board of Directors . . . . . . . . . . . . . . . . . . . . 9.6
Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.7
Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.8
Other Compensation Plans . . . . . . . . . . . . . . . . . . . . . . 9.9
Other Options or Awards . . . . . . . . . . . . . . . . . . . . . 9.10
Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 9.11
</TABLE>

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ARTICLE I

PLAN

1.1 PURPOSE. This Plan is a plan for key employees
(including officers and employee directors) of the Company and its Affiliates
and is intended to advance the best interests of the Company, its Affiliates,
and its stockholders by providing those persons who have substantial
responsibility for the management and growth of the Company and its Affiliates
with additional incentives and an opportunity to obtain or increase their
proprietary interest in the Company, thereby encouraging them to continue in
the employ of the Company or any of its Affiliates.

1.2 EFFECTIVE DATE OF PLAN. The Plan is effective
November 15, 1997, if within one year of that date it shall have been approved
by at least a majority vote of stockholders voting in person or by proxy at a
duly held stockholders' meeting, or if the provisions of the corporate charter,
by-laws or applicable state law prescribes a greater degree of stockholder
approval for this action, the approval by the holders of that percentage, at a
duly held meeting of stockholders. No Incentive Option, Nonqualified Option, or
Stock Award shall be granted pursuant to the Plan after November 14, 2007.

ARTICLE II

DEFINITIONS

The words and phrases defined in this Article shall have the
meaning set out in these definitions throughout this Plan.

2.1 "AFFILIATE" means any parent corporation and any
subsidiary corporation. The term "parent corporation" means any corporation
(other than the Company) in an unbroken chain of corporations ending with the
Company if, at the time of the action or transaction, each of the corporations
other than the Company owns stock possessing more than 50% of the total
combined voting power of all classes of stock in one of the other corporations
in the chain. The term "subsidiary corporation" means any corporation (other
than the Company) in an unbroken chain of corporations beginning with the
Company if, at the time of the action or transaction, each of the corporations
other than the last corporation in the unbroken chain owns stock possessing
more than 50% of the total combined voting power of all classes of stock in one
of the other corporations in the chain.

2.2 "BOARD OF DIRECTORS" means the board of directors of
the Company.

2.3 "CHANGE OF CONTROL" means the occurrence of one or
more of the following events:

(a) Any "person" (other than the Company or a subsidiary
thereof or any employee benefit plan thereof or OYO Corporation
(Japan) or OYO Corporation U.S.A.), including a "syndicate" or "group"
as those

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terms are used in Section 13(d) of the Securities Exchange Act of 1934
(the"Exchange Act"), is or becomes the "beneficial owner" (as that
term is defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more of
the combined voting power of the Company's then outstanding Voting
Stock;

(b) The Company is merged or consolidated or combined in
any other manner with another corporation or entity and immediately
after giving effect to the merger or consolidation either (i) less
than 80% of the outstanding Voting Stock of the surviving or resulting
entity are then beneficially owned in the aggregate by (x) the
stockholders of the Company immediately prior to such merger or
consolidation, or (y) if a record date has been set to determine the
stockholders of the Company entitled to vote on such merger or
consolidation, the stockholders of the Company as of such record date,
or (ii) the Board of Directors, or similar governing body, of the
surviving or resulting entity does not have as a majority of its
members the persons specified in clause (c)(a) and (b) below;

(c) If at any time the following do not constitute a
majority of the Board of Directors of the Company (or any successor
entity referred to in clause (b) above):

a. persons who are directors of the Company on
November 15, 1997; and

b. persons who, prior to their election as
directors of the Company (or successor entity if applicable)
were nominated, recommended or endorsed by a formal resolution
of the Board of Directors of the Company;

(d) If at any time during a calendar year a majority of
the directors of the Company are not persons who were directors at the
beginning of the calendar year;

(e) the Company transfers (whether by sale, lease,
exchange or otherwise) substantially all of its assets to another
corporation which is a less than 80%-owned, direct or indirect,
subsidiary of the Company; or

(f) the Company shall adopt or undertake any plan of
liquidation or dissolution.

2.4 "CODE" means the Internal Revenue Code of 1986, as
amended.

2.5 "COMMITTEE" means the Compensation Committee of the
Board of Directors, such other committee of two or more individuals, as
designated by the Board of Directors. The Committee shall be comprised (a)
solely of at least two members who are Disinterested Persons or (b) of the
entire Board of Directors.

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2.6 "COMPANY" means OYO Geospace Corporation, a Delaware
corporation.

2.7 "DISINTERESTED PERSON" means a "disinterested person"
as that term is defined in Rule 16b-3 under the Exchange Act.

2.8 "EMPLOYEE" means a person employed by the Company or
any Affiliate to whom an Option or a Stock Award is granted.

2.9 "FAIR MARKET VALUE" of the Stock as of any date means
(a) the closing price of the Stock on that date on the principal securities
exchange on which the Stock is listed; or (b) if the Stock is not listed on a
securities exchange, the average of the high and low sale prices of the Stock
on that date as reported on the NASDAQ National Market System; or (c) if the
Stock is not listed on the NASDAQ National Market System, the average of the
high and low bid quotations for the Stock on that date as reported by the
National Quotation Bureau Incorporated; or (d) if none of the foregoing is
applicable, an amount at the election of the Committee equal to (x) the average
between the closing bid and ask prices per share of stock on the last preceding
date on which those prices were reported or (y) that amount as determined by
the Committee.

2.10 "INCENTIVE OPTION" means an option granted under this
Plan which is designated as an "Incentive Option" and satisfies the
requirements of Section 422 of the Code.

2.11 "NONQUALIFIED OPTION" means an option granted under
this Plan other than an Incentive Option.

2.12 "OPTION" means both an Incentive Option and a
Nonqualified Option granted under this Plan to purchase shares of Stock.

2.13 "OPTION AGREEMENT" means the written agreement which
sets out the terms of an Option.

2.14 "PLAN" means the OYO Geospace Corporation 1997 Key
Employee Stock Option Plan, as set out in this document and as it may be
amended from time to time.

2.15 "RESTRICTED STOCK" means stock awarded or purchased
under a Restricted Stock Agreement entered into pursuant to this Plan, together
with (i) all rights, warranties or similar items attached or accruing thereto
or represented by the certificate representing the stock and (ii) any stock or
securities into which or for which the stock is thereafter converted or
exchanged. The terms and conditions of the Restricted Stock Agreement shall be
determined by the Committee consistent with the terms of the Plan.

2.16 "RESTRICTED STOCK AGREEMENT" means an agreement
between the Company or any Affiliate and the Employee pursuant to which the
Employee receives a Stock Award subject to Article VI.

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<PAGE> 7
2.17 "RESTRICTED STOCK PURCHASE PRICE" means the purchase
price, if any, per share of Restricted Stock subject to an Award. The
Restricted Stock Purchase Price shall be determined by the Committee. It may be
greater than or less than the Fair Market Value of the Stock on the date of the
Stock Award.

2.18 "STOCK" means the common stock of the Company, $.01
par value or, in the event that the outstanding shares of common stock are
later changed into or exchanged for a different class of stock or securities of
the Company or another corporation, that other stock or security.

2.19 "STOCK AWARD" means an award of Restricted Stock.

2.20 "VOTING STOCK" means shares of capital stock of the
Company the holders of which are entitled to vote for the election of directors
of the Company, but excluding shares entitled to so vote only upon the
occurrence of a contingency unless that contingency shall have occurred.

2.21 "10% STOCKHOLDER" means an individual who, at the
time an Incentive Option is granted, owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or of any
Affiliate. An individual shall be considered as owning the stock owned,
directly or indirectly, by or for his brothers and sisters (whether by the
whole or half blood), spouse, ancestors, and lineal descendants; and stock
owned, directly or indirectly, by or for a corporation, partnership, estate, or
trust, shall be considered as being owned proportionately by or for its
stockholders, partners, or beneficiaries.

ARTICLE III

ELIGIBILITY

The individuals who shall be eligible to receive Incentive
Options, Nonqualified Options, and Stock Awards shall be those key employees of
the Company or any of its Affiliates as the Committee shall determine from time
to time. However, no member of the Committee shall be eligible to receive any
Option or Stock Award or to receive stock, stock options, or stock appreciation
rights under any other plan of the Company or any of its Affiliates, if to do
so would cause the individual not to be a Disinterested Person. The Board of
Directors may designate one or more individuals who shall not be eligible to
receive any Option or Stock Award under this Plan or under other similar plans
of the Company.

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<PAGE> 8
ARTICLE IV

GENERAL PROVISIONS RELATING TO OPTIONS AND STOCK AWARDS

4.1 AUTHORITY TO GRANT OPTIONS AND STOCK AWARDS. The
Committee may grant to those key employees of the Company or any of its
Affiliates as it shall from time to time determine, Options or Stock Awards
under the terms and conditions of this Plan. Subject only to any applicable
limitations set out in this Plan, the number of shares of Stock to be covered
by any Option or Stock Award to be granted to an Employee shall be as
determined by the Committee.

4.2 DEDICATED SHARES. The total number of shares of Stock
with respect to which Options and Stock Awards may be granted under the Plan
shall be 425,000. The shares may be treasury shares or authorized but unissued
shares. The number of shares stated in this Section 4.2 shall be subject to
adjustment in accordance with the provisions of Section 4.5.

In the event that any outstanding Option or Stock Award shall
expire or terminate for any reason or any Option or Stock Award is surrendered,
the shares of Stock allocable to the unexercised portion of that Option or
Stock Award may again be subject to an Option or Stock Award under the Plan.

4.3 NON-TRANSFERABILITY. Options shall not be
transferable by the Employee otherwise than by will or under the laws of
descent and distribution, and shall be exercisable, during the Employee's
lifetime, only by him. Restricted Stock shall be purchased by and/or become
vested under a Restricted Stock Agreement during the Employee's lifetime, only
by him. Any attempt to transfer a Stock Award other than under the terms of the
Plan and the Restricted Stock Agreement shall terminate the Stock Award and all
rights of the Employee to that Restricted Stock.

4.4 REQUIREMENTS OF LAW. The Company shall not be
required to sell or issue any Stock under any Option or Stock Award if issuing
that Stock would constitute or result in a violation by the Employee or the
Company of any provision of any law, statute, or regulation of any governmental
authority. Specifically, in connection with any applicable statute or
regulation relating to the registration of securities, upon exercise of any
Option or pursuant to any Stock Award, the Company shall not be required to
issue any Stock unless the Committee has received evidence satisfactory to it
to the effect that the holder of that Option or Stock Award will not transfer
the Stock except in accordance with applicable law, including receipt of an
opinion of counsel satisfactory to the Company to the effect that any proposed
transfer complies with applicable law. The determination by the Committee on
this matter shall be final, binding and conclusive. The Company may, but shall
in no event be obligated to, register any Stock covered by this Plan pursuant
to applicable securities laws of any country or any political subdivision. In
the event the Stock issuable on exercise of an Option or pursuant to a Stock
Award is not registered, the Company may imprint on the certificate evidencing
the Stock any legend that counsel for the Company considers necessary or
advisable to comply with applicable law. The Company shall not be obligated to
take any other affirmative action in order to cause the exercise of an

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<PAGE> 9
Option or vesting under a Stock Award, or the issuance of shares under either
of them, to comply with any law or regulation of any governmental authority.

4.5 CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The
existence of outstanding Options or Stock Awards shall not affect in any way
the right or power of the Company or its stockholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Stock or its rights, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.

If the Company shall effect a subdivision or consolidation of
shares or other capital readjustment, the payment of a stock dividend, or other
increase or reduction of the number of shares of the Stock outstanding, without
receiving compensation for it in money, services or property, then (a) the
number, class, and per share price of shares of Stock subject to outstanding
Options under this Plan shall be appropriately adjusted in such a manner as to
entitle an Employee to receive upon exercise of an Option, for the same
aggregate cash consideration, the equivalent total number and class of shares
he would have received had he exercised his Option in full immediately prior to
the event requiring the adjustment; and (b) the number and class of shares of
Stock then reserved to be issued under the Plan shall be adjusted by
substituting for the total number and class of shares of Stock then reserved,
that number and class of shares of Stock that would have been received by the
owner of an equal number of outstanding shares of each class of Stock as the
result of the event requiring the adjustment.

If the Company is merged or consolidated with another
corporation, and the Company is not the surviving corporation, or if the
Company is liquidated or sells or otherwise disposes of substantially all its
assets while unexercised Options remain outstanding under this Plan, (a)
subject to the provisions of clause (c) below, after the effective date of the
merger, consolidation, liquidation, sale or other disposition, as the case may
be, each holder of an outstanding Option shall be entitled, upon exercise of
the Option, to receive, in lieu of shares of Stock, the number and class or
classes of shares of stock or other securities or property to which the holder
would have been entitled if, immediately prior to the merger, consolidation,
liquidation, sale or other disposition, the holder had been the holder of
record of a number of shares of Stock equal to the number of shares as to which
the Option shall be so exercised; (b) the Board of Directors may waive any
limitations set out in or imposed under this Plan so that all Options, from and
after a date prior to the effective date of the merger, consolidation,
liquidation, sale or other disposition, as the case may be, specified by the
Board of Directors, shall be exercisable in full; and (c) all outstanding
Options may be canceled by the Board of Directors as of the effective date of
any merger, consolidation, liquidation, sale or other disposition, if (i)
notice of cancellation shall be given to each holder of an Option and (ii) each
holder of an Option shall have the right to exercise that Option in full
(without regard to any limitations set out in or imposed under this Plan or the
Option Agreement granting that Option) during a period set by the Board of
Directors preceding the effective date of the merger, consolidation,
liquidation, sale

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<PAGE> 10
or other disposition and, if in the event all outstanding Options may not be
exercised in full under applicable securities laws without registration of the
shares of Stock issuable on exercise of the Options, the Board of Directors may
limit the exercise of the Options to the number of shares of Stock, if any, as
may be issued without registration. The method of choosing which Options may
be exercised, and the number of shares of Stock for which Options may be
exercised, shall be solely within the discretion of the Board of Directors.

After a merger of one or more corporations into the Company or
after a consolidation of the Company and one or more corporations in which the
Company shall be the surviving corporation, each Employee shall be entitled to
have his Restricted Stock appropriately adjusted based on the manner the Stock
was adjusted under the terms of the agreement of merger or consolidation.

The issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services either upon direct sale or upon the exercise of rights
or warrants to subscribe for them, or upon conversion of shares or obligations
of the Company convertible into shares or other securities, shall not affect,
and no adjustment by reason of such issuance shall be made with respect to, the
number, class, or price of shares of Stock then subject to outstanding Options
or Stock Awards.

4.6 ELECTION UNDER SECTION 83(B) OF THE CODE. No Employee
shall exercise the election permitted under Section 83(b) of the Code without
written approval of the Committee. Any Employee doing so shall forfeit all
Options and/or Stock Awards issued to him under this Plan.

ARTICLE V

OPTIONS

5.1 TYPE OF OPTION. The Committee shall specify whether a
given option shall constitute an Incentive Option or a Nonqualified Option.

5.2 OPTION PRICE. The price at which Stock may be
purchased under an Incentive Option shall not be less than the greater of: (a)
100% of the Fair Market Value of the shares of Stock on the date the Option is
granted or (b) the aggregate par value of the shares of Stock on the date the
Option is granted. The Committee in its discretion may provide that the price
at which shares of Stock may be purchased under an Incentive Option shall be
more than 100% of Fair Market Value. In the case of any 10% Stockholder, the
price at which shares of Stock may be purchased under an Incentive Option shall
not be less than 110% of the Fair Market Value of the Stock on the date the
Incentive Option is granted.

The price at which shares of Stock may be purchased under a
Nonqualified Option shall not be less than the greater of: (a) 100% of the Fair
Market Value of the shares of Stock on the date the Option is granted or (b)
the aggregate par value of the shares of Stock on the date the Option is
granted. The Committee in its discretion may

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<PAGE> 11
provide that the price at which shares of Stock may be purchased under a
Nonqualified Option shall be more than 100% of Fair Market Value.

5.3 DURATION OF OPTIONS. No Option shall be exercisable
after the expiration of 10 years from the date the Option is granted. In the
case of a 10% Stockholder, no Incentive Option shall be exercisable after the
expiration of five years from the date the Incentive Option is granted.

5.4 AMOUNT EXERCISABLE. Each Option may be exercised from
time to time, in whole or in part, in the manner and subject to the conditions
the Committee, in its sole discretion, may provide in the Option Agreement, as
long as the Option is valid and outstanding, provided that no Option may be
exercisable within six (6) months of the date of grant. Unless provided
otherwise in the Option Agreement, 25% of the shares of Stock in an Option
shall become exercisable on the first anniversary of the date of grant, and an
additional 25% shall become exercisable on each of the next three anniversary
dates. Notwithstanding any other provisions of this Plan, in the event of a
Change of Control, each Option shall become immediately exercisable in full.

INCENTIVE OPTION. To the extent that the aggregate
Fair Market Value (determined as of the time an Incentive Option is granted) of
the Stock with respect to which Incentive Options first become exercisable by
the Optionee during any calendar year (under this Plan and any other incentive
stock option plan(s) of the Company or any Affiliate) exceeds $100,000, the
Incentive Options shall be treated as Nonqualified Options. In making this
determination, Incentive Options and such other incentive stock options shall
be taken into account in the order in which they were granted.

5.5 EXERCISE OF OPTIONS. Each Option shall be exercised
by the delivery of written notice to the Committee setting forth the number of
shares of Stock with respect to which the Option is to be exercised, together
with: (a) cash, check, bank draft, or postal or express money order payable to
the order of the Company for an amount equal to the option price of the shares,
(b) Stock at its Fair Market Value on the date of exercise, and/or (c) any
other form of payment which is acceptable to the Committee, and specifying the
address to which the certificates for the shares are to be mailed. As promptly
as practicable after receipt of written notification and payment, the Company
shall deliver to the Employee certificates for the number of shares with
respect to which the Option has been exercised, issued in the Employee's name.
If shares of Stock are used in payment, the aggregate Fair Market Value of the
shares of Stock tendered must be equal to or less than the aggregate exercise
price of the shares being purchased upon exercise of the Option, and any
difference must be paid by cash, check, bank draft, or postal or express money
order payable to the order of the Company. Delivery of the shares shall be
deemed effected for all purposes when a stock transfer agent of the Company
shall have deposited the certificates in the United States mail, addressed to
the Employee, at the address specified by the Employee.

Whenever an Option is exercised by exchanging shares of Stock
owned by the Employee, the Employee shall deliver to the Company certificates
registered in the name of the Employee representing a number of shares of Stock
legally and beneficially owned by the Employee, free of all liens, claims, and
encumbrances of every kind,

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<PAGE> 12
accompanied by stock powers duly endorsed in blank by the record holder of the
shares represented by the certificates (with signature guaranteed by a
commercial bank or trust company or by a brokerage firm having a membership on
a registered national stock exchange). The delivery of certificates upon the
exercise of Options is subject to the condition that the person exercising the
Option provide the Company with the information the Company might reasonably
request pertaining to exercise, sale or other disposition.

5.6 EXERCISE ON TERMINATION OF EMPLOYMENT. Unless it is
expressly provided otherwise in the Option Agreement, Options shall terminate
one day less than three months after severance of employment of the Employee
from the Company and all Affiliates for any reason, with or without cause,
other than death or retirement or disability under the then established rules
of the Company. Whether authorized leave of absence or absence on military or
government service shall constitute severance of the employment of the Employee
shall be determined by the Committee at that time.

In determining the employment relationship between the Company
and the Employee, employment by any Affiliate shall be considered employment by
the Company, as shall employment by a corporation issuing or assuming a stock
option in a transaction to which Section 424(a) of the Code applies, or by a
parent corporation or subsidiary corporation of the corporation issuing or
assuming a stock option (and for this purpose, the phrase "corporation issuing
or assuming a stock option" shall be substituted for the word "Company" in the
definitions of parent corporation and subsidiary corporation in Section 2.1,
and the parent-subsidiary relationship shall be determined at the time of the
corporate action described in Section 424(a) of the Code).

DEATH. If, before the expiration of an Option, the Employee,
whether in the employ of the Company or after he has retired or was severed for
disability, dies, the Option shall continue until the earlier of the Option's
expiration date or one year following the date of his death, unless it is
expressly provided otherwise in the Option Agreement. After the death of the
Employee, his executors, administrators or any persons to whom his Option may
be transferred by will or by the laws of descent and distribution shall have
the right, at any time prior to the Option's expiration or termination,
whichever is earlier, to exercise it, to the extent to which he was entitled to
exercise it immediately prior to his death, unless it is expressly provided
otherwise in the Option Agreement.

RETIREMENT. If, before the expiration of an Incentive Option,
the Employee shall be retired in good standing from the employ of the Company
under the then established rules of the Company, the Incentive Option shall
terminate on the earlier of the Option's expiration date or one year after his
retirement. An Incentive Option may become a Nonqualified Option if exercised
more than three months after termination of employment.

Unless it is expressly provided otherwise in the Option
Agreement, if before the expiration of a Nonqualified Option, the Employee
shall be retired in good standing from the employ of the Company under the then
established rules of the Company, the Nonqualified Option shall terminate on
the earlier of the Nonqualified Option's expiration date or one year after his
retirement. In the event of retirement,

9
<PAGE> 13
the Employee shall have the right prior to the expiration or termination of the
Nonqualified Option to exercise the Nonqualified Option, to the extent to which
he was entitled to exercise it immediately prior to his retirement, unless it
is expressly provided otherwise in the Option Agreement.

DISABILITY. If, before the expiration of an Option, the
Employee shall be severed from the employ of the Company for disability, the
Option shall terminate on the earlier of the Option's expiration date or one
day less than one year after the date he was severed because of disability,
unless it is expressly provided otherwise in the Option Agreement. In the event
that the Employee shall be severed from the employ of the Company for
disability, the Employee shall have the right prior to the termination of the
Option to exercise the Option, to the extent to which he was entitled to
exercise it immediately prior to his severance of employment for disability,
unless it is expressly provided otherwise in the Option Agreement.

5.7 SUBSTITUTION OPTIONS. Options may be granted under
this Plan from time to time in substitution for stock options held by employees
of other corporations who are about to become employees of or affiliated with
the Company or any Affiliate as the result of a merger or consolidation of the
employing corporation with the Company or any Affiliate, or the acquisition by
the Company or any Affiliate of the assets of the employing corporation, or the
acquisition by the Company or any Affiliate of stock of the employing
corporation as the result of which it becomes an Affiliate of the Company. The
terms and conditions of the substitute Options granted may vary from the terms
and conditions set out in this Plan to the extent the Committee, at the time of
grant, may deem appropriate to conform, in whole or in part, to the provisions
of the stock options in substitution for which they are granted.

5.8 NO RIGHTS AS STOCKHOLDER. No Employee shall have any
rights as a stockholder with respect to Stock covered by his Option until the
date a stock certificate is issued for the Stock.

ARTICLE VI

STOCK AWARDS

6.1 STOCK AWARDS. The Committee may issue shares of Stock
to an eligible employee subject to the terms of a Restricted Stock Agreement.
The Restricted Stock may be issued for no payment by the Employee or for a
payment below the Fair Market Value on the date of grant. Restricted Stock
shall be subject to restrictions as to sale, transfer, alienation, pledge or
other encumbrance and generally will be subject to vesting over a period of
time specified in the Restricted Stock Agreement. The Committee shall determine
the period of vesting, the number of shares, the price, if any, of Stock
included in a Stock Award, and the other terms and provisions which are
included in a Restricted Stock Agreement. Notwithstanding any other provisions
of the Plan, in the event of a Change of Control, each Stock Award shall become
immediately vested.

10
<PAGE> 14
6.2 RESTRICTIONS. Restricted Stock shall be subject to
the following terms and conditions as determined by the Committee, including
without limitation any or all of the following:

(a) a prohibition against the sale, transfer,
alienation, pledge or other encumbrance of the shares of
Restricted Stock, such prohibition to lapse (i) at such time
or times as the Committee shall determine (whether in annual
or more frequent installments, at the time of the death,
disability or retirement of the holder of such shares, or
otherwise);

(b) a requirement that the holder of shares of
Restricted Stock forfeit, or in the case of shares sold to an
Employee, resell back to the Company at his cost, all or a
part of such shares in the event of termination of the
holder's employment during any period in which the shares
remain subject to restrictions;

(c) a prohibition against employment of the
holder of Restricted Stock by any competitor of the Company or
its Affiliates, or against such holder's dissemination of any
secret or confidential information belonging to the Company or
an Affiliate; and

(d) unless stated otherwise in the Restricted
Stock Agreement, (i) if restrictions remain at the time of
severance of employment with the Company and all Affiliates,
other than for reason of disability or death, the Restricted
Stock shall be forfeited; and (ii) if severance of employment
is by reason of disability or death, the restrictions on the
shares shall lapse and the Employee or his heirs or estate
shall be 100% vested in the shares subject to the Restricted
Stock Agreement.

6.3 STOCK CERTIFICATE. Shares of Restricted Stock shall
be registered in the name of the Employee receiving the Stock Award and
deposited, together with a stock power endorsed in blank, with the Company.
Each such certificate shall bear a legend in substantially the following form:

The transferability of this certificate and the shares of
Stock represented by it is restricted by and subject to the
terms and conditions (including conditions of forfeiture)
contained in the OYO Geospace Corporation 1997 Key Employee
Stock Option Plan, and an agreement entered into between the
registered owner and the Company. A copy of the Plan and
agreement is on file in the office of the Secretary of the
Company.

11
<PAGE> 15
6.4 RIGHTS AS STOCKHOLDER. Subject to the terms and
conditions of the Plan, each Employee receiving a certificate for Restricted
Stock shall have all the rights of a stockholder with respect to the shares of
Stock included in the Stock Award during any period in which such shares are
subject to forfeiture and restrictions on transfer, including without
limitation, the right to vote such shares. Dividends paid with respect to
shares of Restricted Stock in cash or property other than stock in the Company
or rights to acquire stock in the Company shall be paid to the Employee
currently. Dividends paid in stock in the Company or rights to acquire stock in
the Company shall be added to and become a part of the Restricted Stock.

6.5 LAPSE OF RESTRICTIONS. At the end of the time period
during which any shares of Restricted Stock are subject to forfeiture and
restrictions on sale, transfer, alienation, pledge, or other encumbrance, such
shares shall vest and will be delivered in a certificate, free of all
restrictions, to the Employee or to the Employee's legal representative,
beneficiary or heir; provided the certificate shall bear such legend, if any,
as the Committee determines is reasonably required by applicable law.

By accepting a Stock Award and executing a Restricted Stock
Agreement, the Employee agrees to remit when due any federal and state income
and employment taxes required to be withheld or to satisfy this obligation in a
manner acceptable to the Committee.

6.6 RESTRICTION PERIOD. No Stock Award may provide for
restrictions continuing beyond 10 years from the date of the Stock Award.

ARTICLE VII

ADMINISTRATION

The Plan shall be administered by the Committee. All questions
of interpretation and application of the Plan, Options or Stock Awards shall be
subject to the determination of the Committee. A majority of the members of the
Committee shall constitute a quorum. All determinations of the Committee shall
be made by a majority of its members. Any decision or determination reduced to
writing and signed and dated by all of the members shall be as effective as if
it had been made by a majority vote at a meeting properly called and held. This
Plan shall be administered in such a manner as to permit the Options granted
under it which are designated to be Incentive Options to qualify as Incentive
Options. In carrying out its authority under this Plan, the Committee shall
have full and final authority and discretion, including but not limited to the
following rights, powers and authorities, to:

(a) determine the Employees to whom and the time
or times at which Options or Stock Awards will be made,

(b) determine the number of shares and the
purchase price of Stock covered in each Option or Stock Award,
subject to the terms of the Plan,

12
<PAGE> 16
(c) determine the terms, provisions and
conditions of each Option and Stock Award, which need not be
identical,

(d) accelerate the time at which any outstanding
Option may be exercised,

(e) define the effect, if any, on an Option or
Stock Award of the death, disability, retirement, or
termination of employment of the Employee,

(f) prescribe, amend and rescind rules and
regulations relating to administration of the Plan, and

(g) make all other determinations and take all
other actions deemed necessary, appropriate, or advisable for
the proper administration of the Plan.

The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Article and all other Articles of this Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive
and binding on all parties.

ARTICLE VIII

AMENDMENT OR TERMINATION OF PLAN

The Board of Directors of the Company may amend, terminate or
suspend this Plan at any time, in its sole and absolute discretion; provided,
however, that, to the extent required to qualify this Plan under Rule 16b-3
promulgated under Section 16 of the Exchange Act, no amendment that would (a)
materially increase the number of shares of Stock that may be issued under this
Plan, (b) materially modify the requirements as to eligibility for
participation in this Plan, or (c) otherwise materially increase the benefits
accruing to participants under this Plan, shall be made without the approval of
the Company's stockholders; provided further, however, that, to the extent
required to maintain the status of any Incentive Option under the Code, no
amendment that would (a) change the aggregate number of shares of Stock which
may be issued under Incentive Options, (b) change the class of employees
eligible to receive Incentive Options, or (c) decrease the Option price for
Incentive Options below the Fair Market Value of the Stock at the time it is
granted, shall be made without the approval of the Company's stockholders.
Subject to the preceding sentence, the Board shall have the power to make any
changes in the Plan and in the regulations and administrative provisions under
it or in any outstanding Incentive Option as in the opinion of counsel for the
Company may be necessary or appropriate from time to time to enable any
Incentive Option granted under this Plan to continue to qualify as an incentive
stock option or such other stock option as may be defined under the Code so as
to receive preferential federal income tax treatment.

13
<PAGE> 17
ARTICLE IX

MISCELLANEOUS

9.1 NO ESTABLISHMENT OF A TRUST FUND. No property shall
be set aside nor shall a trust fund of any kind be established to secure the
rights of any Employee under this Plan. All Employees shall at all times rely
solely upon the general credit of the Company for the payment of any benefit
which becomes payable under this Plan.

9.2 NO EMPLOYMENT OBLIGATION. The granting of any Option
or Stock Award shall not constitute an employment contract, express or implied,
nor impose upon the Company or any Affiliate any obligation to employ or
continue to employ any Employee. The right of the Company or any Affiliate to
terminate the employment of any person shall not be diminished or affected by
reason of the fact that an Option or Stock Award has been granted to him.

9.3 FORFEITURE. Notwithstanding any other provisions of
this Plan, if the Committee finds by a majority vote after full consideration
of the facts that the Employee, before or after termination of his employment
with the Company or an Affiliate for any reason (a) committed or engaged in
fraud, embezzlement, theft, commission of a felony, or proven dishonesty in the
course of his employment by the Company or an Affiliate, which conduct damaged
the Company or Affiliate, or disclosed trade secrets of the Company or an
Affiliate, or (b) participated, engaged in or had a material, financial or
other interest, whether as an employee, officer, director, consultant,
contractor, stockholder, owner, or otherwise, in any commercial endeavor in the
United States which is competitive with the business of the Company or an
Affiliate without the written consent of the Company or Affiliate, the Employee
shall forfeit all outstanding Options and all outstanding Restricted Stock, and
including all exercised Options and other situations pursuant to which the
Company has not yet delivered a stock certificate. Clause (b) shall not be
deemed to have been violated solely by reason of the Employee's ownership of
stock or securities of any publicly traded corporation, if that ownership does
not result in effective control of the corporation.

The decision of the Committee as to the cause of the
Employee's discharge, the damage done to the Company or an Affiliate, and the
extent of the Employee's competitive activity shall be final. No decision of
the Committee, however, shall affect the finality of the discharge of the
Employee by the Company or an Affiliate in any manner.

9.4 TAX WITHHOLDING. The Company or any Affiliate shall
be entitled to deduct from other compensation payable to each Employee any sums
required by federal, state, or local tax law to be withheld with respect to the
grant or exercise of an Option or lapse of restrictions on Restricted Stock. In
the alternative, the Company may require the Employee (or other person
exercising the Option or receiving the Restricted Stock) to pay the sum
directly to the employer corporation. If the Employee (or other person
exercising the Option or receiving the Restricted Stock) is required to pay the
sum directly, payment in cash or by check of such sums for taxes shall be
delivered within 10 days after the date of exercise or lapse of restrictions.
The Company

14
<PAGE> 18
shall have no obligation upon exercise of any Option or lapse of restrictions
on Restricted Stock until payment has been received, unless withholding (or
offset against a cash payment) as of or prior to the date of exercise or lapse
of restrictions is sufficient to cover all sums due with respect to that
exercise. The Company and its Affiliates shall not be obligated to advise an
Employee of the existence of the tax or the amount which the employer
corporation will be required to withhold.

9.5 WRITTEN AGREEMENT. Each Option and Stock Award shall
be embodied in a written Option Agreement or Restricted Stock Agreement which
shall be subject to the terms and conditions of this Plan and shall be signed
(i) by the Employee and (ii) by a member of the Committee on behalf of the
Committee and the Company, or by an executive officer of the Company other than
the Employee on behalf of the Company. The Option Agreement or Restricted Stock
Agreement may contain any other provisions that the Committee in its discretion
shall deem advisable which are not inconsistent with the terms of this Plan.

9.6 INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF
DIRECTORS. With respect to administration of this Plan, the Company shall
indemnify each present and future member of the Committee and the Board of
Directors against, and each member of the Committee and the Board of Directors
shall be entitled without further act on his part to indemnity from the Company
for, all expenses (including attorney's fees, the amount of judgments and the
amount of approved settlements made with a view to the curtailment of costs of
litigation, other than amounts paid to the Company itself) reasonably incurred
by him in connection with or arising out of any action, suit, or proceeding in
which he may be involved by reason of his being or having been a member of the
Committee and/or the Board of Directors, whether or not he continues to be a
member of the Committee and/or the Board of Directors at the time of incurring
the expenses -- including, without limitation, matters as to which he shall be
finally adjudged in any action, suit or proceeding to have been found to have
been negligent in the performance of his duty as a member of the Committee or
the Board of Directors. However, this indemnity shall not include any expenses
incurred by any member of the Committee and/or the Board of Directors in
respect of matters as to which he shall be finally adjudged in any action, suit
or proceeding to have been guilty of gross negligence or willful misconduct in
the performance of his duty as a member of the Committee and the Board of
Directors, or in respect of any matter in which any settlement is effected, to
an amount in excess of the amount approved by the Company on the advice of its
legal counsel. In addition, no right of indemnification under this Plan shall
be available to or enforceable by any member of the Committee and the Board of
Directors unless, within 60 days after institution of any action, suit or
proceeding, he shall have offered the Company, in writing, the opportunity to
handle and defend same at its own expense. This right of indemnification shall
inure to the benefit of the heirs, executors or administrators of each member
of the Committee and the Board of Directors and shall be in addition to all
other rights to which a member of the Committee and the Board of Directors may
be entitled as a matter of law, contract, or otherwise.

9.7 GENDER. If the context requires, words of one gender
when used in this Plan shall include the others and words used in the singular
or plural shall include the other.

15
<PAGE> 19
9.8 HEADINGS. Headings of Articles and Sections are
included for convenience of reference only and do not constitute part of the
Plan and shall not be used in construing the terms of the Plan.

9.9 OTHER COMPENSATION PLANS. The adoption of this Plan
shall not affect any other stock option, incentive or other compensation or
benefit plans in effect for the Company or any Affiliate, nor shall the Plan
preclude the Company from establishing any other forms of incentive or other
compensation for employees of the Company or any Affiliate.

9.10 OTHER OPTIONS OR AWARDS. The grant of an Option or
Stock Award shall not confer upon the Employee the right to receive any future
or other Options or Stock Awards under this Plan, whether or not Options or
Stock Awards may be granted to similarly situated Employees, or the right to
receive future Options or Stock Awards upon the same terms or conditions as
previously granted.

9.11 GOVERNING LAW. The provisions of this Plan shall be
construed, administered, and governed under the laws of the State of Texas.

<PAGE> 1
EXHIBIT 10.5

===============================================================================

PRINTHEAD PURCHASE AGREEMENT

BY AND BETWEEN

OYO GEOSPACE CORPORATION

AND

OYO CORPORATION

===============================================================================

NOVEMBER 10, 1995
<PAGE> 2
PRINTHEAD PURCHASE AGREEMENT

THIS PRINTHEAD PURCHASE AGREEMENT is made and entered into this 10th day
of November, 1995, by and between OYO Geospace Corporation, a Delaware
corporation ("Purchaser"), with its principal office located at 7334 N. Gessner
Road, Houston, Texas 77040, and OYO Corporation, a company organized and
existing under the laws of Japan ("Seller"), with its principal office located
at Ichigaya Building, 2-6, Kudan-Kita 4-chome, Chiyoda-ku, Tokyo 102, Japan.

W I T N E S S E T H :

WHEREAS, Purchaser is in the business of designing and manufacturing
instruments and equipment used in (i) the acquisition and processing of seismic
data and (ii) certain other applications

WHEREAS, Seller is in the business of providing engineering and
consulting services primarily for the investigation of the earth's subsurface;
and

WHEREAS, Seller desires to resell certain printheads (i) suitable for
incorporation into thermal plotters manufactured by Purchaser and (ii) acquired
from the manufacturer thereof to Purchaser, and Purchaser desires to purchase
printheads from Seller for use in Purchaser's line of thermal plotters;

NOW, THEREFORE, in consideration of the premises, the mutual agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, the parties hereby
agree as follows:

ARTICLE 1
DEFINITIONS

1.1 Definitions. For the purposes of this Agreement, in addition to
the terms defined elsewhere herein, the following terms shall have the
following meanings:

(a) "Affiliate" means any Person that controls, is controlled by
or is under common control with any other Person;

(b) "Agreement" means this Printhead Purchase Agreement, as the
same may subsequently be amended, modified or supplemented in accordance
with its terms;

(c) "Encumbrances" means any mortgage, pledge, lien, claim,
encumbrance, charge or other security interest, option, defect or other
right of any third Person of any nature whatsoever, other than inchoate
mechanic's, materialmen's and similar liens arising in the ordinary
course of business;
<PAGE> 3
(d) "Manufacturer" means various Japanese corporations or U.S.
Affiliates thereof that manufacture Products or any successor Person of
any of such Persons that carries on the business of manufacturing the
Product;

(e) "Party" means either Purchaser or Seller, and "Parties"
means both Purchaser and Seller;

(f) "Person" means a natural person or any entity of any kind,
including (without limitation) joint stock companies, corporations,
partnerships, limited liability companies, governmental entities and any
other entity organized or formed under the law of any jurisdiction; and

(g) "Product" means printheads manufactured on the date hereof
by the Manufacturers or any improved or succeeding models of such
printheads that are used by, or are useful to, Purchaser in its
manufacture of thermal plotters.

1.2 Other Definitional Provisions.

(a) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall, unless a specific
provision is expressly referenced, refer to this Agreement as a whole and
not to any particular provision of this document, and Article references
contained in this Agreement are references to the Articles in this
Agreement, unless otherwise specified.

(b) All words used herein in the singular shall extend to and
include the plural, and all words used herein in the plural shall extend
to and include the singular.

ARTICLE 2
SALE AND PURCHASE

2.1 Sale and Purchase Obligations.

(a) Seller agrees to sell to Purchaser, and Purchaser agrees to
purchase from Seller, all of Purchaser's requirements for the Product
during the term of this Agreement and in accordance with the terms and
provisions hereof.

(b) If Seller is unable to supply Purchaser with all of
Purchaser's requirements for the Product within 30 days of receipt of an
order from Purchaser, Purchaser may purchase the Products from another
source or manufacture such Products itself. If the sum of (i) the number
of Products held by Seller at the time it receives such order plus (ii)
the number of Products that Seller is able to acquire through the
exercise of reasonable commercial efforts during such 30-day period is
insufficient to satisfy the requirements of Purchaser

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<PAGE> 4
and, to the extent applicable, Seller's other customers, Seller shall
allocate its supply of Products first to fill Purchaser's requirements of
the Product.

2.2 Orders and Deliveries. All orders, processing and deliveries of
the Product shall be made in accordance with the following procedures unless
otherwise agreed in writing by both Parties:

(a) An order may be placed at any time. Each order shall
specify the type and quantity of the Product ordered, the type of
packaging therefor, the requested delivery date, the destination of
delivery and the method of delivery.

(b) All shipments of Product shall be F.O.B. Seller's shipping
point.

(c) Seller shall maintain commercially reasonable insurance that
insures the value of Products shipped to Purchaser. Solely for the
purposes of this Article 2.2(c), the value of a Product shall be deemed
to be the Purchase Price.

(d) Seller acknowledges that delivery on or before the date
specified in Purchaser's order is essential and agrees to use its best
efforts to meet such specified delivery date.

(e) Each order and purchase of the Product will be subject to
the terms and conditions of this Agreement only, unless otherwise agreed
in writing by both Parties.

2.3 Pricing and Payment.

(a) The purchase price payable by Purchaser for each unit of the
Product (the "Purchase Price") shall be equal to (i) Seller's cost of
purchasing one unit of the Product from the Manufacturer plus (ii) 10% of
such per unit purchase cost.

(b) Seller shall provide Purchaser reasonable access to its
books and records to allow Purchaser to confirm Seller's purchasing
costs.

(c) Seller shall be responsible for the payment of all customs
charges and taxes related to the sale and purchase of the Products.

2.4 Risk of Loss. The risk of loss from any casualty to the Products,
regardless of the cause, shall be on Seller up to the time of receipt of the
Products by

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<PAGE> 5
Purchaser at Purchaser's delivery destination and until Purchaser has completed
any proper inspection without rejection of the Products.

2.5 Force Majeure. If any act or condition beyond the reasonable
control of Purchaser or Seller prevents, restricts or interferes with the
performance of this Agreement, and the Party then directly affected promptly
gives notice to the other Party, the directly affected Party will be
temporarily excused from performance to the extent of the prevention,
restriction or interference. The affected Party must, however, use its
reasonable effort to avoid or remove the causes of nonperformance and must
continue performance with the utmost dispatch when the causes are removed.
Causes beyond a Party's reasonable control include, without limitation, war,
acts of God, hurricanes, tornadoes, typhoons, earthquakes, embargoes, export,
shipping or remittance restrictions, cessations or interruptions for any reason
in the manufacture, or sale to Seller, by Manufacturers of the Product,
strikes, lockouts, accidents, fires, riot, delays or defaults caused by
carriers, floods, governmental seizure, control or rationing or compliance with
any law, ruling, order, regulation, requirement, or instruction of any
national, federal, state, provincial or municipal government, or any department
or agency thereof.

2.6 Indemnification. Seller agrees to defend, indemnify and hold
harmless Purchaser, its affiliates and their respective directors, officers,
employees, agents, successors and assigns from and against any and all claims,
losses, damages, liabilities, reasonable counsel fees and costs incident
thereto incurred by or asserted against Purchaser as a result of damage to the
property of Purchaser or others, or personal injuries to or injuries resulting
in the death of any person or persons, including directors, officers, employees
and agents of Purchaser relating to the Products; provided, however, Seller
shall not have any liability (whether direct or indirect, in contract, tort or
otherwise) to Purchaser unless such claims, losses, damages, liabilities,
counsel fees or costs are determined, in a final judgment by a court of
competent jurisdiction (not subject to further appeal), to have resulted
primarily and directly from the gross negligence or willful misconduct of
Seller or its directors, officers, employees or agents.

2.7 Warranties. Seller will, in the case of all Products sold by it
to Purchaser, use its best efforts to secure for Purchaser the benefit of all
warranties Seller receives in connection with its original purchase of such
Products.

ARTICLE 3
TERM AND TERMINATION

3.1 Term. The term of this Agreement shall commence on the date
hereof and continue for a period of one (1) year after such date (the "Initial
Term"). Subject to the rights of early termination set forth in this
Agreement, this Agreement shall be automatically renewed on a year-to-year
basis after the Initial Term (the term of each such renewal referred to as a
"Renewal Term"), unless either Party provides written notice of termination to
the other Party on or before ninety (90) days prior to the end of the Initial
Term or any Renewal Term.

-4-
<PAGE> 6
3.2 Termination. Either Party may terminate this Agreement by giving
written notice to the other Party after the occurrence of one of the following
events:

(a) any breach of this Agreement by the other Party that, if
capable of being cured, is not cured within 60 days after written notice
of such breach is received by the breaching Party;

(b) any material breach of this Agreement by the other Party
that is not capable of being cured;

(c) initiation of liquidation, dissolution, reorganization,
insolvency, bankruptcy or similar proceedings by or against the other
Party; or

(d) the appointment of a trustee or receiver for the other
Party.

3.3 Termination Not Exclusive Remedy. The termination of this
Agreement shall not release either Party from its liability to the other Party
under this Agreement arising from a breach of this Agreement.

3.4 Survival. Each of the Parties' obligations under this Agreement
shall survive the expiration or termination of this Agreement to the extent
such obligations should have been performed during the term of this Agreement
and were not so performed. Notwithstanding the expiration or termination of
this Agreement, this Agreement shall remain in full force in effect until each
Party has discharged all of its obligations hereunder.

ARTICLE 4
CONFIDENTIAL INFORMATION

4.1 Non-disclosure. Either Party may from time to time provide to the
other Party certain advice, technical information, know-how, and other
proprietary data and information with respect to the Products. Inasmuch as
various of these materials and advice (all of which will herein be referred to
as the "Confidential Information") contain confidential information and trade
secrets, it is hereby agreed that any Confidential Information that one Party
discloses to the other is valuable, proprietary property belonging to the
disclosing Party, and the receiving Party agrees that it will neither use nor
disclose to any third party (except in the performance of its duties hereunder)
any Confidential Information, except on prior written consent of the other
Party.

4.2 Return of Information. The Parties agree, either upon the
termination of this Agreement or upon request, to surrender to the other all
documentary material including Confidential Information, price lists,
catalogues, technical literature, sales literature, samples and any other
documents, papers or other properties of the other Party, however previously
supplied.

-5-
<PAGE> 7
4.3 Survival of Article. The obligations of the Parties pursuant to
this Article shall continue in full force and effect after the termination of
this Agreement regardless of how this Agreement is terminated.

ARTICLE 5
GOVERNING LAW

THE PARTIES ACKNOWLEDGE THAT THE TRANSACTIONS WHICH ARE THE SUBJECT
MATTER OF THIS AGREEMENT BEAR A REASONABLE RELATION TO THE STATE OF TEXAS AND
AGREE THAT THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND ALL
DISPUTES HEREUNDER SHALL BE GOVERNED BY, INTERPRETED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS.

ARTICLE 6
ARBITRATION

The Parties agree that any and all disputes arising in connection with
this Agreement including, but not limited to, the validity of this provision or
the performance by either Party of any obligations, commitments or promises
hereunder, which cannot be resolved through good faith negotiations to the
mutual satisfaction of both Parties within thirty (30) calendar days (or such
longer period as may be mutually agreed upon by the Parties) after the
complaining Party has notified the other Party of the complaint, shall be
submitted to final and binding arbitration. Any such dispute, claim or
disagreement subject to arbitration pursuant to the terms of this paragraph
shall be resolved by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association (the "AAA Rules"). Within ten
days of the initiation of an arbitration hereunder, each Party will designate
an arbitrator pursuant to the AAA Rules. The appointed arbitrators will
appoint a neutral arbitrator from the panel in the manner prescribed in the AAA
Rules. The Parties agree that the decision of the arbitrators selected
hereunder will be final and binding on both Parties. The place of arbitration
shall be Houston, Texas, and each Party shall pay its individual costs and fees
arising therefrom. Judgment upon the award resulting from arbitration may be
entered in any court having jurisdiction for direct enforcement, or any
application may be made to a court for a judicial acceptance of the award and
an order of enforcement, as the case may be.

ARTICLE 7
GENERAL PROVISIONS

7.1 Notices. To be effective, all notices, consents or communications
required (other than routine orders and invoices for Products, which shall be
delivered in accordance with the customary manner as in the case of orders and
invoices by Purchaser and Seller in the ordinary course of their businesses)
shall be in writing and shall be delivered by hand or sent by first-class
prepaid certified or registered mail, return receipt requested, overnight
delivery service or facsimile (confirmed by first-class

-6-
<PAGE> 8
prepaid letter sent within 24 hours of dispatch) to the Parties at their
respective addresses or facsimile numbers and to the attention of the persons
set forth below. Any Party may change its address or facsimile number for
purposes hereof by notice to all other Parties in the manner provided above.
Notice will be effective upon receipt.

Purchaser

OYO Geospace Corporation
7334 N. Gessner Road
Houston, Texas 77040
Facsimile: (713) 937-8262
Attention: Mr. C. Robert Bunch

Seller

OYO Corporation
Ichigaya Building
2-6, Kudan-Kita 4-chome
Chiyoda-ku, Tokyo 102
Japan
Facsimile: 81-3-3262-5169
Attention: Mr. Katsuhiko Kobayashi

7.2 Severability. Should any provision of this Agreement be held
unenforceable or invalid, then the Parties hereto agree that such provision
shall be deemed modified to the extent necessary to render it lawful and
enforceable, or if such a modification is not possible without materially
altering the intention of the Parties hereto, then such provision shall be
severed from this Agreement. In such case the validity of the remaining
provisions shall not be affected and this Agreement shall be construed as if
such provision were not contained herein.

7.3 Headings. All headings used herein are for the convenience of
reference only, do not constitute substantive provisions of this Agreement, and
shall not be used in construing the meaning or intent of the terms or
provisions hereof.

7.4 Assignment. This Agreement and the rights granted hereunder
shall not be assigned in whole or in part, either voluntarily, by operation of
law or otherwise, without the prior written consent of both Parties, except
that this Agreement may be assigned to Affiliates of a Party without prior
written consent from the other Party. Any attempt to make an assignment
without the consent required hereunder shall be null and void and may be
treated by the other Party as a breach of a material provision of this
Agreement.

7.5 Beneficiaries. This Agreement shall be binding on and inure
to the benefit of the Parties and their respective successors and permitted
assigns. This Agreement is intended solely for the benefit of Purchaser and
Seller and their respective successors and permitted assigns.

-7-
<PAGE> 9
7.6 Entire Agreement. This Agreement (including any other
referenced documents) constitutes the entire agreement between Purchaser and
Seller concerning the subject of this Agreement. This Agreement supersedes all
prior and contemporaneous agreements, communications, statements,
representations and understandings, whether oral or written, on this subject.

7.7 Amendments. Purchaser and Seller, by mutual agreement in
writing, may amend, modify or supplement this Agreement. No modification or
amendment of this Agreement is effective unless made in writing and signed by
the Party to be bound, with such written modification or amendment stating the
expressed intent to modify this Agreement. A course of dealing or performance
is not a modification unless expressed in an appropriate written document and
signed by the Party to be bound.

7.8 No Waiver of Rights. A Party's failure in one or more
instances to exercise or enforce any right provided by this Agreement or by law
does not waive its right to exercise the right in any later instance. No
waiver of any breach of this Agreement shall be held to constitute a waiver of
any other or subsequent breach. To be effective, a waiver must be expressly
written and signed by the Party to be bound. A course of dealing or
performance is not a waiver unless ratified in writing by the Party to be
bound.

7.9 Import/Export Regulations. The Parties agree that they will
comply with the import and export laws and regulations of the United States of
America and will not export or re-export any article, product, data or
information to any proscribed country listed pursuant to or under such laws and
regulations.

7.10 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, and
shall become a binding agreement when one or more counterparts have been signed
by each Party and delivered to the other Party. Delivery of this Agreement by
a Party may be effected by sending the other Party a facsimile copy of this
Agreement as executed by the delivering Party.

-8-
<PAGE> 10
IN WITNESS WHEREOF, Purchaser and Seller have executed this Agreement
as of the date first written above.

OYO GEOSPACE CORPORATION

By: /s/ C. ROBERT BUNCH
----------------------------------------
C. Robert Bunch
Executive Vice President and
Chief Operating Officer

OYO CORPORATION

By: /s/ KATSUHIKO KOBAYASHI
----------------------------------------
Katsuhiko Kobayashi
Joint General Manager

-9-

<PAGE> 1
EXHIBIT 10.6

================================================================================

MASTER SALES AGREEMENT

BY AND BETWEEN

OYO GEOSPACE CORPORATION

AND

OYO CORPORATION

================================================================================

NOVEMBER 10, 1995

<PAGE> 2
MASTER SALES AGREEMENT

THIS MASTER SALES AGREEMENT is made and entered into this 10th day of
November, 1995, by and between OYO Geospace Corporation, a Delaware corporation
("OYO Geospace"), with its principal office located at 7334 N. Gessner Road,
Houston, Texas 77040, and OYO Corporation, a company organized and existing
under the laws of Japan ("OYO Japan"), with its principal office located at
Ichigaya Building, 2-6, Kudan-Kita 4-chome, Chiyoda-ku, Tokyo 102, Japan.

W I T N E S S E T H :

WHEREAS, OYO Geospace is in the business of designing and manufacturing
instruments and equipment used in (i) the acquisition and processing of seismic
data, (ii) time measurement and (iii) certain other applications;

WHEREAS, OYO Japan is in the business of (i) providing engineering and
consulting services primarily for the investigation of the earth's subsurface
primarily for construction projects and (ii) manufacturing and selling
geotechnical instruments;

WHEREAS, OYO Geospace desires from time to time to sell to certain of
its products on a non-exclusive basis to OYO Japan, and OYO Japan desires from
time to time to purchase certain products from OYO Geospace; and

WHEREAS, OYO Japan desires from time to time to sell to certain of its
products on a non-exclusive basis or resell certain products to OYO Geospace,
and OYO Geospace desires from time to time to purchase certain products from
OYO Japan;

ARTICLE 1
DEFINITIONS

1.1 Definitions. For the purposes of this Agreement, in addition to
the terms defined elsewhere herein, the following terms shall have the
following meanings:

(a) "Affiliate" means any Person that controls, is controlled
by or is under common control with any other Person;

(b) "Agreement" means this Master Sales Agreement, as the same
may subsequently be amended, modified or supplemented in accordance with
its terms;

(c) "Encumbrances" means any mortgage, pledge, lien, claim,
encumbrance, charge or other security interest, option, defect or other
right of
<PAGE> 3
any third Person of any nature whatsoever, other than inchoate
mechanic's, materialmen's and similar liens arising in the ordinary
course of business;

(d) "Party" means either OYO Geospace or OYO Japan, and
"Parties" means both OYO Geospace and OYO Japan;

(e) "Person" means a natural person or any entity of any kind,
including (without limitation) joint stock companies, corporations,
partnerships, limited liability companies, governmental entities and any
other entity organized or formed under the law of any jurisdiction;

(f) "Product" means any product manufactured or resold by a
Party (including improved and succeeding models of such products) as may
be agreed upon by the Parties in writing from time to time, other than
printheads which are the subject of a separate agreement between the
Parties;

(g) "Purchaser" means (i) OYO Geospace, if OYO Geospace is
purchasing Products from OYO Japan pursuant to the terms and conditions
of this Agreement, and includes all subsidiaries thereof, or (ii) OYO
Japan, if OYO Japan is purchasing Products from OYO Geospace pursuant to
the terms and conditions of this Agreement, and includes all
subsidiaries and Affiliates thereof other than OYO Geospace and its
subsidiaries; and

(h) "Seller" means (i) OYO Geospace, if OYO Geospace is
selling Products to OYO Japan pursuant to the terms and conditions of
this Agreement, and includes all subsidiaries thereof, or (ii) OYO
Japan, if OYO Japan is selling Products to OYO Geospace pursuant to the
terms and conditions of this Agreement, and includes all subsidiaries
and Affiliates thereof other than OYO Geospace and its subsidiaries.

1.2 Other Definitional Provisions.

(a) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall, unless a specific
provision is expressly referenced, refer to this Agreement as a whole
and not to any particular provision of this document, and Article
references contained in this Agreement are references to the Articles in
this Agreement, unless otherwise specified.

(b) All words used herein in the singular shall extend to and
include the plural, and all words used herein in the plural shall extend
to and include the singular.

-2-
<PAGE> 4
ARTICLE 2
SALE AND PURCHASE

2.1 Sale and Purchase Obligations.

(a) Seller agrees to sell to Purchaser, upon Purchaser's order
and Purchaser thereafter agrees to purchase from Seller, any Product of
Seller at any time during the term of this Agreement and in accordance
with the terms and provisions hereof.

(b) If Seller is unable, for any reason other than a
volitional declination to do so, to supply Purchaser with Purchaser's
requirements for any Product within 30 days of receipt of an order from
Purchaser, then the obligations to purchase and sell hereunder shall
cease in respect of such order and shall be of no further effect or
force.

(c) No provision of this Agreement shall be construed to
impair Seller's right to supply any Product to any person other than
Purchaser.

2.2 Orders and Deliveries. All orders, processing and deliveries of
the Product shall be made in accordance with the customary and routine handling
of orders, processing and deliveries to third parties in respect of the
particular Product or type of Product, unless otherwise agreed in writing by
both Parties

2.3 Pricing and Payment.

(a) The purchase price payable by Purchaser for each unit of
the Product shall be as set forth in Schedule A hereto with respect to
the Products identified therein.

(b) Seller shall provide Purchaser reasonable access to its
books and records to allow Purchaser to confirm Seller's cost of
manufacturing or purchasing, as the case may be, the Product.

(c) Purchaser shall be responsible for the payment of all
customs charges and taxes related to the sale and purchase of the
Products.

(d) Seller shall send Purchaser an invoice within 30 days
after the delivery of Products pursuant to any order setting forth the
types and quantities of Products shipped by Seller to Purchaser during
the previous month. Within 30 days after the receipt of such invoice,
Purchaser shall remit payment for such Products to Seller. All payments
shall be made in United States dollars in respect of purchases from OYO
Geospace and in Japanese Yen in respect of purchasers from OYO Japan
except for purchases from other U.S. Affiliates of OYO Japan, which
shall be in U.S. dollars.

-3-
<PAGE> 5
2.4 Inspection and Rejection.

(a) Purchaser reserves the right to reject or revoke
acceptance of any shipment of Product as a result of any defect or
nonconformity thereof. If any Product is rejected or its acceptance is
revoked, Purchaser shall notify Seller of such rejection or revocation
of acceptance within 60 days of receipt of such Product, specifying with
particularity the grounds for its rejection or revocation of acceptance.

(b) Seller shall immediately replace any such Product or
immediately refund the price therefor, at Purchaser's option. If Seller
is unable to replace any such Product within 60 days of Purchaser's
rejection or revocation of acceptance for any reason other than a
volitional declination to do so, then the obligations to sell and
purchase in respect of such Product shall cease and be of no further
effect or force.

(c) All rejected Products shall be returned by Purchaser to
Seller, at Seller's sole cost, within 30 days Purchaser's rejection or
revocation of acceptance of such Products.

2.5 Warranties of Seller.

(a) Seller extends to Purchaser the ordinary and customary
warranty in respect of each Product sold by Seller to Purchaser as if
Purchaser were a third party; provided, however, that such warranty
applies only to Products that are manufactured by the Seller and not to
Products that are manufactured by a third party and resold by the
Seller.

(b) Seller warrants to Purchaser that the Products, at the
time of delivery to Purchaser, will be free from any Encumbrances.

2.6 Risk of Loss. The risk of loss from any casualty to the
Products, regardless of the cause, shall be on Seller up to the time of receipt
of the Products by Purchaser at Purchaser's delivery destination and until
Purchaser has completed any proper inspection without rejection of the
Products.

2.7 Indemnification. Seller agrees to defend, indemnify and hold
harmless Purchaser, its affiliates and their respective directors, officers,
employees, agents, successors and assigns from and against any and all claims,
losses, damages, liabilities, reasonable counsel fees and costs incident
thereto incurred by or asserted against Purchaser as a result of damage to the
property of Purchaser or others, or personal injuries to or injuries resulting
in the death of any person or persons, including directors, officers, employees
and agents of Purchaser relating to the Products; provided, however, Seller
shall not have any liability (whether direct or indirect, in contract, tort or
otherwise) to Purchaser unless such claims, losses, damages, liabilities,
counsel fees or costs are determined, in a final judgment by a court of
competent jurisdiction (not subject to further appeal), to have resulted
primarily and directly from

-4-
<PAGE> 6
the gross negligence or willful misconduct of Seller or its directors,
officers, employees or agents.

ARTICLE 3
TERM AND TERMINATION

3.2 Termination. Either Party may terminate this Agreement by giving
written notice to the other Party after the occurrence of one of the following
events:

(a) any material breach of this Agreement by the other Party
that is not capable of being cured;

(b) any breach of this Agreement by the other Party that, if
capable of being cured, is not cured within 60 days after written notice
of such breach is received by the breaching Party;

(c) initiation of liquidation, dissolution, reorganization,
insolvency, bankruptcy or similar proceedings by or against the other
Party; or

(d) the appointment of a trustee or receiver for the other
Party.

ARTICLE 4
CONFIDENTIAL INFORMATION

-5-
<PAGE> 7
advice (all of which will herein be referred to as the "Confidential
Information") contain confidential information and trade secrets, it is hereby
agreed that any Confidential Information that one Party discloses to the other
is valuable, proprietary property belonging to the disclosing Party, and the
receiving Party agrees that it will neither use nor disclose to any third party
(except in the performance of its duties hereunder) any Confidential
Information, except on prior written consent of the other Party.

4.3 Survival of Article. The obligations of the Parties pursuant to
this Article shall continue in full force and effect after the termination of
this Agreement regardless of how this Agreement is terminated.

ARTICLE 5
GOVERNING LAW

ARTICLE 6
ARBITRATION

The Parties agree that any and all disputes arising in connection with
this Agreement including, but not limited to, the validity of this provision or
the performance by either Party of any obligations, commitments or promises
hereunder, which cannot be resolved through good faith negotiations to the
mutual satisfaction of both Parties within thirty (30) calendar days (or such
longer period as may be mutually agreed upon by the Parties) after the
complaining Party has notified the other Party of the complaint, shall be
submitted to final and binding arbitration. Any such dispute, claim or
disagreement subject to arbitration pursuant to the terms of this paragraph
shall be resolved by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association (the "AAA Rules"). Within ten
days of the initiation of an arbitration hereunder, each Party will designate
an arbitrator pursuant to the AAA Rules. The appointed arbitrators will
appoint a neutral arbitrator from the panel in the manner prescribed in the AAA
Rules. The arbitrators shall not have any authority to award consequential,
exemplary or punitive damages. The Parties agree that the decision of the
arbitrators selected hereunder will be final and binding on both Parties. The
place of arbitration shall be Houston, Texas, and each Party shall pay its
individual costs and fees arising therefrom. Judgment upon the award resulting
from

-6-
<PAGE> 8
arbitration may be entered in any court having jurisdiction for direct
enforcement, or any application may be made to a court for a judicial
acceptance of the award and an order of enforcement, as the case may be.

ARTICLE 7
GENERAL PROVISIONS

7.1 Notices. To be effective, all notices, consents or
communications required (other than routine orders and invoices for Products,
which shall be delivered in the customary manner as in the case of orders and
invoices to third parties) shall be in writing and shall be delivered by hand
or sent by first-class prepaid certified or registered mail, return receipt
requested, overnight delivery service or facsimile (confirmed by first-class
prepaid letter sent within 24 hours of dispatch) to the Parties at their
respective addresses or facsimile numbers and to the attention of the persons
set forth below. Any Party may change its address or facsimile number for
purposes hereof by notice to all other Parties in the manner provided above.
Notice will be effective upon receipt.

OYO Geospace
------------

OYO Geospace Corporation
7334 N. Gessner Road
Houston, Texas 77040
Facsimile: (713) 937-8262
Attention: Mr. C. Robert Bunch

OYO Japan
---------

OYO Corporation
Ichigaya Building
2-6, Kudan-Kita 4-chome
Chiyoda-ku, Tokyo 102
Japan
Facsimile: 81-3-3262-5169
Attention: Mr. Katsuhiko Kobayashi

-7-
<PAGE> 9
7.3 Headings. All headings used herein are for the convenience of
reference only, do not constitute substantive provisions of this Agreement, and
shall not be used in construing the meaning or intent of the terms or
provisions hereof.

7.5 Beneficiaries. This Agreement shall be binding on and inure to
the benefit of the Parties and their respective successors and permitted
assigns. This Agreement is intended solely for the benefit of Purchaser and
Seller and their respective successors and permitted assigns.

7.6 Entire Agreement. This Agreement constitutes the entire
agreement between Purchaser and Seller concerning the subject of this
Agreement. This Agreement supersedes all prior and contemporaneous agreements,
communications, statements, representations and understandings, whether oral or
written, on this subject.

7.8 No Waiver of Rights. A Party's failure in one or more instances
to exercise or enforce any right provided by this Agreement or by law does not
waive its right to exercise the right in any later instance. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach. To be effective, a waiver must be expressly written and
signed by the Party to be bound. A course of dealing or performance is not a
waiver unless ratified in writing by the Party to be bound.

-8-
<PAGE> 10
effected by sending the other Party a facsimile copy of this Agreement as
executed by the delivering Party.

IN WITNESS WHEREOF, OYO Geospace and OYO Japan have executed this
Agreement as of the date first written above.

OYO GEOSPACE CORPORATION

By: /s/ C. ROBERT BUNCH
---------------------------------
C. Robert Bunch
Executive Vice President and
Chief Operating Officer

OYO CORPORATION

By: /s/ KATSUHIKO KOBAYASHI
---------------------------------
Katsuhiko Kobayashi
Joint General Manager

-9-
<PAGE> 11
SCHEDULE A

<TABLE>
<CAPTION>
PRICE (REFLECTED AS A
PRODUCT PERCENTAGE OF THE CURRENT LIST PRICE)
------- -------------------------------------
<S> <C>
Data Acquisition System 80% (if sold to OYO Japan)

Geophones, Hydrophones, 90-95%
Connectors and Cables

Parts and Supplies for 90%
Products

All other Products sold 80%
between the Parties
</TABLE>

A-1

<PAGE> 1
EXHIBIT 21.1

Subsidiaries of
OYO Geospace Corporation

Geo Space Canada, Inc., an Alberta corporation

Geo Space Corporation, a Texas corporation

Houston Geophysical Products, Inc., a Texas corporation

OYO Instruments Canada, Inc., an Alberta corporation

OYO Instruments, Inc., a Texas corporation

OYO Investment UK Limited, a United Kingdom company

OYO UK Limited, a United Kingdom company

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-1
(File No. XXX-XXXXX) of our reports dated December 6, 1996, on our audits of the
combined and consolidated financial statements and financial statement schedule
of OYO Geospace Corporation, as restated to exclude, for all periods presented,
the accounts of TrueTime, Inc., formerly a wholly-owned subsidiary that was
distributed to the Company's stockholder on September 30, 1997. We also consent
to the reference to our firm under the caption "Experts."

/s/ COOPERS & LYBRAND L.L.P

Houston, Texas
September 30, 1997

<PAGE> 1
EXHIBIT 23.3

CONSENT

In connection with the initial public offering (the "Offering") of
common stock of OYO Geospace Corporation, a Delaware corporation (the
"Company"), and the filing of a Registration Statement on Form S-1 with the
Securities and Exchange Commission (the "Registration Statement"), the
undersigned consents to be named in the Registration Statement as a person who
will be elected as a director immediately prior to the closing of the Offering.
The undersigned further consents to serve as a director of the Company, if
elected, and to the filing of this consent as an exhibit to the Registration
Statement.

Dated: September 24, 1997.

/s/ TOM DAVIS
------------------------------------
Tom Davis

<PAGE> 1
EXHIBIT 23.4

CONSENT

Dated: September 24, 1997.

/s/ CHARLES H. STILL
------------------------------------
Charles H. Still

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR
<FISCAL-YEAR-END> SEP-30-1997 SEP-30-1996
<PERIOD-START> OCT-01-1996 OCT-01-1995
<PERIOD-END> JUN-30-1997 SEP-30-1996
<CASH> 984 780
<SECURITIES> 0 0
<RECEIVABLES> 9,051 6,809
<ALLOWANCES> 551 1,064
<INVENTORY> 14,622 12,864
<CURRENT-ASSETS> 25,271 20,443
<PP&E> 7,600 2,746
<DEPRECIATION> 4,373 4,027
<TOTAL-ASSETS> 32,320 26,272
<CURRENT-LIABILITIES> 10,989 9,725
<BONDS> 0 0
0 0
0 0
<COMMON> 40 40
<OTHER-SE> 3,020 (5,031)
<TOTAL-LIABILITY-AND-EQUITY> 14,086 26,272
<SALES> 30,572 30,878
<TOTAL-REVENUES> 30,572 30,878
<CGS> 16,706 17,278
<TOTAL-COSTS> 7,988 11,548
<OTHER-EXPENSES> 114 466
<LOSS-PROVISION> 118 2,860
<INTEREST-EXPENSE> 443 402
<INCOME-PRETAX> 5,764 1,586
<INCOME-TAX> 2,317 577
<INCOME-CONTINUING> 3,447 1,009
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,447 1,009
<EPS-PRIMARY> .86 .25
<EPS-DILUTED> .86 .25

</TABLE>