SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for use of
/X/ Definitive Proxy Statement the Commission only (as
/ / Definitive Additional Materials permitted by Rule
/ / Soliciting Material Pursuant to 14a-6 (e)(2)
Rule 14a-11 (c) or Rule 14a-12
TGC INDUSTRIES, INC.
- ---------------------------------------------------------------------------
- --
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- ---------------------------------------------------------------------------
- --
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
/X/ No fee required.
// Fee computed on table below per Exchange Act Rules 14a-6 (i) (4) and 0-11
(1) Title of each class of securities to which transaction applies.
(2) Aggregate number of securities to which transaction applies.
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined).
(4) Proposed maximum aggregate value of transaction.
(5) Total fee paid.
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a) (2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
<PAGE>
TGC INDUSTRIES, INC.
1304 Summit Avenue, Suite 2
Plano, Texas 75074
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 4, 1998
To the Shareholders of
TGC INDUSTRIES, INC.
The annual meeting of the shareholders of TGC Industries, Inc. (Company)
will be held at The India House, One Hanover Square, New York, New York on
June 4, 1998, at 10:00 A.M., New York time, for the following purposes:
1. To elect five (5) directors to serve until the next annual meeting
of shareholders and until their respective successors shall be
elected and qualified;
2. To ratify the selection of Grant Thornton LLP as independent
auditors;
3. To approve an amendment to the Company's 1993 Stock Option Plan;
and
4. To transact such other business as may properly come before the
meeting and any adjournment thereof.
Information regarding matters to be acted upon at this meeting is
contained in the accompanying Proxy Statement. Only shareholders of record
at the close of business on April 21, 1998, are entitled to notice of and to
vote at the meeting and any adjournment thereof.
All shareholders are cordially invited to attend the meeting. Whether
or not you plan to attend, please complete, sign, and return promptly the
enclosed proxy in the accompanying addressed envelope for which postage is
prepaid. You may revoke the proxy at any time before the commencement of the
meeting.
By Order of the Board of Directors:
Allen T. McInnes
Secretary
Plano, Texas
April 21, 1998
IMPORTANT
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING REGARDLESS
OF THE NUMBER OF SHARES YOU HOLD. PLEASE COMPLETE, SIGN, AND RETURN PROMPTLY
THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE, WHETHER OR NOT YOU INTEND TO
BE PRESENT AT THE MEETING.
<PAGE>
TGC INDUSTRIES, INC.
1304 Summit Avenue, Suite 2
Plano, Texas 75074
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS -- June 4, 1998
This Proxy Statement is furnished to shareholders in connection with
the solicitation of proxies by the management of TGC Industries, Inc. (the
"Company") for use at the annual meeting of shareholders to be held at The
India House, One Hanover Square, New York, New York on June 4, 1998, and at
any adjournment thereof. The Notice of Meeting, the form of Proxy, and
this Proxy Statement are being mailed to the Company's shareholders on or
about April 27, 1998.
COSTS OF PROXY SOLICITATION
Although solicitation (the total expense of which will be borne by the
Company) is to be made primarily through the mail, the Company's officers
and/or employees and those of its transfer agent may solicit proxies by
telephone, telegram, or personal contact, but in such event no additional
compensation will be paid by the Company for such solicitation. Further,
brokerage firms, fiduciaries, and others may be requested to forward
solicitation material regarding the meeting to beneficial owners of the
Company's Common Stock, and in such event the Company will reimburse them for
all accountable costs so incurred.
ACTION TO BE TAKEN
Action will be taken at the meeting to (1) elect a Board of Directors,
(2) ratify the selection of Grant Thornton LLP as independent auditors, (3)
approve an amendment to the Company's 1993 Stock Option Plan (See "Stock
Option Plans - 1993 Stock Option Plan"), and (4) transact such other business
as may properly come before the meeting and any adjournment thereof. The
proxy will be voted in accordance with the directions specified thereon, and
otherwise in accordance with the judgment of the persons designated as
proxies. Any person executing the enclosed proxy may nevertheless revoke it
at any time prior to the actual voting thereof by filing with the Secretary
of the Company either a written instrument expressly revoking it or a duly
executed proxy bearing a later date. Furthermore, such person may
nevertheless elect to attend the meeting and vote in person, in which event
the proxy will be suspended. The affirmative vote of the holders of a
majority of the outstanding shares of the Company's Common Stock and
Preferred Stock, voting together as a single class, will constitute approval
of all matters expected to come before the meeting.
<PAGE>
OUTSTANDING STOCK
The Company's Restated Articles of Incorporation authorize 25,000,000
shares of Common Stock with a par value of $.10 per share and 4,000,000
shares of Preferred Stock with a par value of $1.00 per share. As of April
21, 1998 (the "Record Date"), which is the date as of which the record of
shareholders entitled to vote at the meeting was determined, there were
6,475,485 shares of the Company's Common Stock outstanding and 1,129,350
shares of the Company's Preferred Stock outstanding.
In voting on all matters expected to come before the meeting, a
shareholder will be entitled to one vote, in person or by proxy, for each
share of Common Stock and Preferred Stock held in his name on the Record
Date. The Company's Restated Articles of Incorporation prohibit cumulative
voting.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following tabulation sets forth the names of those persons who are
known to Management to be the beneficial owner(s) as of March 10, 1998, of
more than five percent (5%) of the Company's Common Stock or Preferred Stock.
Such tabulation also sets forth the number of shares of the Company's Common
Stock or Preferred Stock beneficially owned as of March 10, 1998, by all of
the Company's directors and nominees (naming them), executive officers, and
all directors and officers of the Company as a group (without naming them).
Persons having direct beneficial ownership of the Company's Common Stock or
Preferred Stock possess the sole voting and dispositive power in regard to
such stock. The $5.00 per share Preferred Stock is freely convertible into
shares of Common Stock at the conversion price per share of Common Stock of
$0.75 if converted prior to close of business on July 1, 1998, at the
conversion price per share of Common Stock of $1.25 if converted after
July 1, 1998, but prior to close of business on July 1, 1999, and at the
conversion price per share of Common Stock of $2.00 thereafter. Ownership of
Preferred Stock is deemed to be beneficial ownership of Common Stock at the
conversion price per share of $0.75 under Rule 13d-3(d)(1) promulgated under
the Securities Exchange Act of 1934. As of March 10, 1998, there were
6,475,485 shares of Common Stock and 1,129,350 shares of Preferred Stock
outstanding.
<TABLE>
<S> <C> <S> <C> <C> <C>
Name & Address Title of Class Amount & Nature Approximate
of Beneficial Owner of Beneficial % of Class(1)
- ------------------- -------------- Ownership -------------
----------------
Allen T. McInnes Common Stock 1,597,284 (2)(3) 22.61%
Tetra Technologies Preferred Stock 63,162 5.59%
25025 Interstate 45 North
The Woodlands, TX 77380
Robert J. Campbell Common Stock 264,429 (2)(3)(4) 4.04%
TGC Industries, Inc. Preferred Stock 5,000 (4) *
1304 Summit Ave., Ste 2
Plano, Texas 75074
Wayne A. Whitener Common Stock 84,484 (2)(3) 1.29%
TGC Industries, Inc. Preferred Stock 3,000 *
1304 Summit Ave., Ste 2
Plano, Texas 75074
William J. Barrett Common Stock 1,218,853 (2)(3)(6) 17.42%
26 Broadway, Suite 829 Preferred Stock 60,000 (6) 5.31%
New York, New York 10004
Herbert M. Gardner Common Stock 898,471 (2)(3)(5) 13.08%
26 Broadway, Suite 829 Preferred Stock 42,000 (5) 3.72%
New York, New York 10004
David P. Williams Common Stock 6,667 (3) *
TGC Industries, Inc.
1304 Summit Ave, Suite 2
Plano, TX 75074
Ken Uselton Common Stock 20,339 (3) *
TGC Industries, Inc.
1304 Summit, Ste 2
Plano, Texas 75074
Gerlach & Co. Common Stock 933,333 (2) 13.32%
111 Wall Street, 8th Fl. Preferred Stock 80,000 7.08%
New York, NY
Special Situations Cayman Common Stock 333,333 (2) 4.90%
Fund L.P. Preferred Stock 50,000 4.43%
Special Situation Fund III Common Stock 1,000,000 (2) 13.38%
L.P. Preferred Stock 150,000 13.28%
All directors and officers Common Stock 4,090,527 50.34%
as a group (7 persons) Preferred Stock 173,162 15.33%
*Denotes less than 1% beneficial ownership.
</TABLE>
<PAGE>
(1) The percentage calculations have been made in accordance with
Rule 13d-3(d)(1) promulgated under the Securities Exchange Act of 1934. In
making these calculations, shares of Common Stock beneficially owned by a
person as a result of the ownership of Preferred Stock and certain options
and warrants were deemed to be currently outstanding solely with respect to
the holders of such Preferred Stock, options, and warrants.
(2) Includes the number of shares of Common Stock which are deemed to
be beneficially owned as a result of ownership of shares of Preferred
Stock, which Preferred shares ($5.00 per share) are freely convertible into
shares of Common Stock at the conversion price per shares of Common Stock
of $.75 through July 1, 1998.
(3) Includes the number of Shares of Common Stock set forth opposite
the person's name in the following table, which shares are beneficially
owned as a result of the ownership of Stock Options and Stock Purchase
Warrants.
<TABLE>
<S> <C> <C> <C>
Stock Warrants
Options
Allen T. McInnes -0- 168,674
Robert J. Campbell 30,333 12,500
Wayne A. Whitener 41,333 -0-
David P. Williams 6,667 -0-
Herbert M. Gardner -0- 111,850
William J. Barrett -0- 119,350*
Ken Uselton 4,666 -0-
------ --------
All directors and officers
as a group (7 persons) 82,999 412,374
</TABLE>
- -----------------------
*Includes 7,500 Warrants owned by Mr. Barrett's wife. Mr. Barrett
disclaims beneficial ownership of such Warrants.
(4) Includes 28,625 shares of Common Stock owned by Robert J.
Campbell's wife and also includes 13,333 shares of Common Stock purchasable
upon the conversion of 2,000 shares of Preferred Stock owned by Mr.
Campbell's wife. Mr. Campbell has disclaimed beneficial ownership of these
shares.
(5) Includes 83,848 shares of Common Stock owned by Herbert M.
Gardner's wife and also includes 13,333 of Common Stock shares purchasable
upon the conversion of 2,000 shares of Preferred Stock owned by Mr.
Gardner's wife. Mr. Gardner has disclaimed beneficial ownership of these
shares.
(6) Includes 71,775 shares of Common Stock owned by William J.
Barrett's wife and also includes 66,666 shares of Common Stock purchasable
upon the conversion of 10,000 shares of Preferred Stock owned by Mr.
Barrett's wife. Mr. Barrett has disclaimed beneficial ownership of these
shares.
Depositories such as The Depository Trust Company (Cede & Company) as of
March 10, 1998 held, in the aggregate, more than five percent (5%) of the
Company's then outstanding Common Stock voting shares. The Company
understands that such depositories hold such shares for the benefit of
various participating brokers, banks, and other institutions which are
entitled to vote such shares according to the instructions of the
beneficial owners thereof. The Company has no reason to believe that any
of such beneficial owners hold more than five percent (5%) of the Company's
outstanding voting securities.
MANAGEMENT AND NOMINEES FOR DIRECTOR
Five (5) directors, comprising the entire membership of the Company's
Board of Directors, are to be elected at the annual meeting of shareholders.
Unless otherwise instructed, the proxy holders will vote the proxies received
by them for the nominees shown below for a term of one year and until their
successors are duly elected and have qualified.
<PAGE>
Although it is not contemplated that any nominee will be unable to serve
as a director, in such event the proxies will be voted by the holders thereof
for such other person as may be designated by the current Board of Directors.
The Management of the Company has no reason to believe that any of the
nominees will be unable or unwilling to serve if elected to office, and to
the knowledge of Management, the nominees intend to serve the entire term for
which election is sought. There are no family relationships by blood,
marriage, or adoption between any director or executive officer, or person
nominated or chosen to become a director or executive officer. Only five (5)
nominees for director are named, even though the Company's bylaws allow a
maximum of nine, since the proposed size of the board is deemed adequate to
meet the requirements of the Board of Directors. Up to two vacancies may be
filled by the Board of Directors under Texas law during the time between any
two successive annual shareholder meetings if suitable persons are
designated. The information set forth below with respect to each of the
nominees has been furnished by each respective nominee. Each executive
officer of the Company is a nominee as set forth below with the exception of
Ken Uselton (age 54) who has served as Division Controller since 1995 and
Treasurer since August 1, 1996, and David P. Williams (age 43) who has served
as Marketing Manager since 1991 and Vice President of Marketing since
November, 1997.
<TABLE>
<S> <C> <C> <C> <C> <S>
Served as
Name, Age, and Executive Positions
Business Experience Officer Since with Company
- ------------------- ------------- -------------
Allen T. McInnes, 60 July 1993 Chairman of the
Chairman of the Board since July Board and Secretary
1993; Secretary since November 1997; of the Company
Chief Executive Officer of the
Company from August 1993 to March
1996; Executive Vice-President and
Director of Tenneco, Inc. 1960-1992;
Director of Tetra Technologies,
President and CEO since April 1,
1996; Director of NationsBank
1990-1993.
Robert J. Campbell, 66 1986 Vice-Chairman
Chief Executive Officer of the of the Board
Company since March 1996 and and CEO
Vice-Chairman of the Board since
August 1993; Chairman of the Board
And CEO of the Company from
July 1986 to July 1993; from
1979 to 1986 served as President
and Chief Executive Officer of
Supreme Industries, Inc., a
Manufacturer of specialized truck
bodies and shuttle buses; Director
of Supreme Industries, Inc.
<PAGE>
</TABLE>
<TABLE>
<S> <C> <C> <C> <S>
Served as
Name, Age, and Executive Positions
Business Experience Officer Since with Company
- -------------------- ------------- ------------
Wayne A. Whitener, 46 1986 President of the
President, Director, and Chief Company and COO
Operating Officer of the Company;
President of the Geophysical
Division since 1984; served as
Vice President of TGC from 1983
to 1984; Area Manager for Grant
Geophysical Co. from December 1978
until July 1983.
William J. Barrett, 58 1986 None
Director of the Company, Secretary
of the Company from 1986 to
November 1997; Senior Vice President
of Janney Montgomery Scott Inc.,
investment bankers, since 1976,
and a Director of Supreme
Industries, Inc., a manufacturer
of specialized truck bodies and
shuttle buses, since 1979; and
Director of American Country
Holdings Company,Inc., a specialized
property and casualty
insurance company.
Herbert M. Gardner, 58 1986 None
Director of the Company;
Senior Vice President of
Janney Montgomery Scott Inc.,
investment bankers, since
1978; Chairman of the Board
and a Director of Supreme
Industries, Inc., a manufacturer
of specialized truck bodies
and shuttle buses, since 1979,
and President since 1992;
Director of Nu Horizons
Electronics Corp., an electronic
component distributor; Director
of Transmedia Network, Inc., a
company that markets a charge card
offering savings to the company's
card members at participating
restaurants and also provides savings
on certain other products and services;
Director of Hirsch International Corp.,
an importer of computerized
embroidery machines and supplies, and
developer of embroidery machine
application software; and Director of
American Country Holdings Company,Inc., a
property and casualty insurance
holding company.
</TABLE>
The Company's Board of Directors recommends that you vote FOR the
nominees named above for election to the Board of Directors.
<PAGE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has an Executive Committee comprised of Messrs.
McInnes, Campbell, Barrett and Gardner, a recently formed Audit Committee
comprised of Messrs. McInnes, Barrett and Gardner, and a Stock Option
Committee comprised of Messrs. McInnes, Barrett and Gardner.
The Executive Committee, which met two times during the fiscal year
ended December 31, 1997, is charged by the Company's bylaws with the
responsibility of exercising such authority of the Board of Directors as is
specifically delegated to it by the Board, subject to certain limitations
contained in the bylaws.
The Audit Committee was formed in December, 1997, and will conduct
meetings as necessary in 1998. The purpose and functions of the Audit
Committee are to recommend the appointment of independent auditors; review
the scope of the audit proposed by the independent auditors; review year-end
financial statements prior to issuance; consult with the independent auditors
on matters relating to internal financial controls and procedures; and make
appropriate reports and recommendations to the Board of Directors. Prior to
formation of the Audit Committee, these duties were performed by the
Executive Committee.
The Stock Option Committee met once during the year. The Committee is
responsible for awarding Stock Options to key employees or individuals who
provide substantial advice or other assistance to the Company so that they
will apply their best efforts for the benefit of the Company.
The Board of Directors does not have nominating or compensation
committees.
During the fiscal year ended December 31, 1997, the Board of Directors
held six (6) special meetings in addition to its regular meeting. All of the
Directors listed herein attended 75% or more of the total meetings of the
Board and of the committees on which they serve.
<PAGE>
EXECUTIVE COMPENSATION
The table below sets forth on an accrual basis all cash and cash
equivalent remuneration paid by the Company during the year ended December
31, 1997, to the Chief Executive Officer and any other executives whose
salary and bonus exceeded $100,000.
Summary Compensation Table
Annual Compensation
<TABLE>
<S><C> <C> <C> <C> <S> <C> <C> <C>
Name and Principal Options/ All Other
Position Year Salary Bonus Stock SAR's Compensation
R.J. Campbell 1997 $97,083 $10,000 -0- -0- $10,513 (1)
Vice-Chairman 1996 $95,580 -0- -0- -0- $ 8,721 (2)
& CEO 1995 $93,600 $18,500 (4) -0- -0- $ 7,482 (3)
Wayne A. Whitener 1997 $94,527 $20,000 -0- -0- $ 8,209 (5)
President 1996 $87,736 -0- -0- -0- $ 5,753 (6)
& COO 1995 $82,212 -0- -0- -0- $ 5,572 (7)
</TABLE>
(1) Represents personal use of Company vehicle ($3,748), Company's
payment for personal income tax preparation ($900), Company's
contribution to 401-K program ($4,668), and life insurance premiums
($1,197) in 1997.
(2) Represents personal use of Company vehicle ($2,593), Company's
payment for personal income tax preparation ($900), Company's
contribution to 401-K program ($3,149) and life insurance premiums
($2,079) in 1996.
(3) Represents personal use of Company vehicle ($1,254), Company's
payment for personal income tax preparation ($900), Company's
contribution to 401-K program ($3,924) and life insurance premiums
($1,404) in 1995.
(4) A 1994 bonus of $18,500 paid in 1995.
(5) Represents personal use of Company vehicle ($3,242), Company's
payment for personal income tax preparation ($113), Company's
contribution to 401-K program ($4,506) and life insurance premiums
($348) in 1997.
(6) Represents personal use of Company vehicle ($2,418), Company's
payment for personal income tax preparation ($110), Company's
contribution to 401-K program ($2,877) and life insurance premiums
($348) in 1996.
(7) Represents personal use of Company vehicle ($2,556), Company's
payment for personal income tax preparation ($110), Company's
contribution to 401-K program ($2,702) and life insurance premiums
( 204) in 1995.
<PAGE>
The Company maintains Club memberships for certain of its executive
officers. Although these memberships may be utilized from time-to-time for
non-business purposes, the costs attributable to non-business purposes were
not material. The Company believes that the aggregate amounts of such
personal benefits do not exceed 10% of cash compensation paid to any
individual in the table or, with respect to the group of all executive
officers, ten percent (10%) of the aggregate cash compensation paid to the
members of such group.
401(k) PLAN
In 1987, the Company implemented a 401(k) salary deferral plan (the
Plan) which covers all employees who have reached the age of 20-1/2 years and
have been employed by the Company for at least one year. The covered
employees may elect to have an amount deducted from their wages for
investment in a retirement plan. The Company has the option, at its
discretion, to make contributions to the Plan. Effective January 1, 1990,
the Company determined in its discretion to make a matching contribution to
the Plan equal to 10% of the employees' contributions up to 6% of those
employees' compensation. On July 24, 1991, to be effective August 5, 1991,
the Board of Directors increased the Company's matching contribution to the
Plan to fifty cents ($.50) for every one dollar ($1.00) of compensation a
participant defers under the Plan up to 6% of those employees' compensation.
Beginning January 4, 1993, the Board of Directors discontinued the matching
contribution to the Plan. Concurrently with the acquisition of the Company's
former subsidiary, Chase Packaging Corporation, the Board of Directors
reinstated contributions to the 401(k) salary deferral plan. The Company
made a matching contribution to the Plan equal to the sum of seventy-five
percent (75%) of each Participant's salary reduction contributions to the
Plan for such Plan year which are not in excess of three percent (3%) of the
Participant's compensation for such Plan year, and fifty percent (50%) of
each Participant's salary reduction contributions to the Plan for such Plan
Year which are in excess of three percent (3%) of the Participant's
compensation but not in excess of eight percent (8%) of the Participant's
compensation for such Plan Year. As of January 1, 1997, the Company
determined to make a contribution to the Plan equal to one hundred percent
(100%) of each participant's salary reduction contributions to the Plan up to
4.75% of the participant's compensation. The total amount of the Company's
contribution during 1997 for the two (2) executive officers of the Company
participating in the 401(k) Plan was as follows: Robert J. Campbell -
$4,668.30 and Wayne A. Whitener - $4,506.56.
<PAGE>
STOCK OPTION PLANS
1986 Incentive and Nonqualified Stock Option Plan
In 1986 the Company adopted the 1986 Incentive and Non-Qualifying Stock
Option Plan (the "1986 Plan"). The term of the 1986 Plan was for a period of
ten years with the result that the 1986 Plan terminated on July 24, 1996.
The provisions which were contained in the 1986 Plan were comparable to
the provisions contained in the 1993 Plan (hereafter described) which
succeeded the 1986 Plan.
Options granted under the 1986 Plan cover 37,000 shares which are
currently outstanding. Stock options outstanding as of the date of
termination of the 1986 Plan remain outstanding until they are exercised,
terminated, or expire.
1993 Stock Option Plan
On June 3, 1993, the Company's Board of Directors approved and adopted
the Company's 1993 Stock Option Plan (the "1993 Plan"). At the 1994 Annual
Meeting, the Company's shareholders approved the 1993 Stock Option Plan. The
following paragraphs summarize certain provisions of the 1993 Stock Option
Plan and are qualified in their entirety by reference thereto.
The 1993 Plan provides for the granting of options (collectively, the
"Options") to purchase shares of the Company's Common Stock to certain key
employees of the Company (and/or any of its affiliates), and certain
individuals who are not employees of the Company but who from time-to-time
provide substantial advice or other assistance or services to the Company
(and/or any of its affiliates). The 1993 Stock Option Plan authorizes the
granting of options (both statutory and non-statutory) to acquire up to
750,000 shares of Common Stock, subject to certain adjustments described
below, to be outstanding at any time. Subject to the foregoing, there is no
limit on the absolute number of awards that may be granted during the life of
the 1993 Stock Option Plan. Currently, there are approximately 108 employees
of the Company, including five officers of the Company (three of whom are
also directors), who, in management's opinion, are considered eligible to
receive grants under the 1993 Plan, although fewer employees may actually
receive grants.
Authority to administer the 1993 Plan has been delegated to a committee
(the "Committee") of the Board of Directors. Except as expressly provided by
the 1993 Stock Option Plan, the Committee has the authority, in its
discretion, to award Options and to determine the terms and conditions (which
need not be identical) of such Options, including the person to whom, and the
time or times at which, Options will be awarded, the number of Options to be
awarded to each such person, the exercise price of any such Options, and the
form, terms, and provisions of any agreement pursuant to which such Options
are awarded. The 1993 Plan also provides that the Committee may be
authorized by the Board of Directors to make cash awards as specified by the
Board of Directors to the holder of an Option in connection with the exercise
thereof.
<PAGE>
Subject to the limitations set forth below, the exercise price of the
shares of stock covered by each 1993 Option will be determined by the
Committee on the date of award.
Unless a holder's option agreement provides otherwise, the following
provisions will apply to exercise by the holder of his or her option: No
options may be exercised during the first twelve months following grant.
During the second year following the date of grant, options covering up to
one-third of the shares covered thereby may be exercised, and during the
third year following the date of grant, options covering up to two-thirds of
such shares may be exercised. Thereafter, and until the options expire, the
optionee may exercise options covering all of the shares. Persons over
sixty-five on the date of grant may exercise options covering up to one-half
of the shares during the first year and thereafter may exercise all optioned
shares. Subject to the limitations just described, options may be exercised
as to all or any part of the shares covered thereby on one or more occasions,
but, as a general rule, options cannot be exercised as to less than one-
hundred shares at any one time.
The exercise price of the shares of stock covered by each incentive
stock option ("ISO"), within the meaning of Sec. 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), will not be less than the fair market
value of stock on the date of award of such ISO except that an ISO may not be
awarded to any person who owns stock possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company
unless the exercise price is at least one hundred ten percent (110%) of the
fair market value of the stock at the time the ISO is awarded and the ISO is
not exercisable after the expiration of five years from the date it is
awarded. The exercise price of the shares of Common Stock covered by each
Option that is not an ISO will not be less than fifty percent (50%) of the
fair market value of the stock on the date of award.
Payment for Common Stock issued upon the exercise of an Option may be
made in cash or with the consent of the Committee, in whole shares of Common
Stock owned by the holder of the Option for at least six months prior to the
date of exercise or, with the consent of the Committee, partly in cash and
partly in such shares of Common Stock. If payment is made, in whole or in
part, with previously-owned shares of Common Stock, the Committee may issue
to such holder a new Option for a number of shares equal to the number of
shares delivered by such holder to pay the exercise price of the previous
Option having an exercise price equal to at least one-hundred percent (100%)
of the fair market value per share of the Common Stock on the date of the
exercise of the previous Option.
<PAGE>
The duration of each Option will be for such period as the Committee
determines at the time of award, but not for more than ten years from the
date of award in the case of an ISO.
In the event of any change in the number of shares of Common Stock
effected without receipt of consideration therefor by the Company by reason
of a stock dividend, or split, combination, exchange of shares or other
recapitalization, merger, or otherwise, in which the Company is the surviving
Corporation, the aggregate number and class of reserved shares, the number
and class of shares subject to each outstanding Option, and the exercise
price of each outstanding Option will be automatically adjusted to reflect
the effect thereon of such change. Unless a holder's option agreement
provides otherwise, a dissolution or liquidation of the Company, certain
sales of all or substantially all of the assets of the Company, certain
mergers or consolidations in which the Company is not the surviving
corporation, or certain transactions in which another corporation becomes the
owner of fifty percent (50%) or more of the total combined voting power of
all classes of stock of the Company, will cause such holder's Options then
outstanding to terminate, but such holder may, immediately prior to such
transaction, exercise such options without regard to the period and
installments of exerciseability applicable pursuant to such holder's option
agreement.
The 1993 Plan will terminate on June 3, 2003, or such earlier date as
the Board of Directors may determine. Any stock option outstanding at the
termination date will remain outstanding until it has been exercised,
terminated, or has expired.
The 1993 Plan may be terminated, modified, or amended by the Board of
Directors at any time without further shareholder approval, except that
shareholder approval is required for any amendment which: (a) changes the
number of shares of Common Stock subject to the 1993 Stock Option Plan other
than by adjustment provisions provided therein, (b) changes the designation
of the class of employees eligible to receive Options, (c) decreases the
price at which ISO's may be granted, (d) removes the administration of the
1993 Stock Option Plan from the Committee, or (e) without the consent of the
affected holder, causes the ISO's granted under the 1993 Stock Option Plan
and outstanding at such time that satisfied the requirements of Sec. 422 of
the Code no longer to satisfy such requirements.
Granted stock options under the 1993 Stock Option Plan covering 339,167
shares were outstanding at December 31, 1997. 180,000 incentive stock
options are outstanding to officers and employees of the Company, and 159,167
non-statutory stock options are outstanding to officers and employees of the
Company's former subsidiary, Chase Packaging Corporation. During 1997 no
stock options were granted under the Company's 1993 Stock Option Plan to
officers and employees of the Company.
<PAGE>
Effective July 31, 1996, the Company's wholly owned subsidiary, Chase
Packaging Corporation ("Chase"), was spun off to the Company's shareholders.
In view of this situation, and in order to provide the employees of both
Chase and the Company with the maximum period available under the tax laws
for exercising their options after a termination of employment, the 1993 Plan
was amended to extend from thirty days to three months, the period of time
following termination of employment, during which the terminating employee
can exercise his or her incentive stock option. The 159,167 options not so
exercised options were converted to non-statutory options.
The purpose of the 1993 Plan is to provide an incentive for key
employees of the Company to remain in the service of the Company and to apply
their best efforts for the benefit of the Company so as to improve the
Company's financial performance. However, of the original 750,000 shares of
the Company's Stock authorized to be issued under the 1993 Plan upon exercise
of options granted under such Plan, nearly all of such 750,000 shares are
covered by options already granted under the Plan. In order to permit the
grant of additional options under the Plan for the purpose of furthering key
employees incentives, the Board of Directors of the Company has approved an
amendment to the 1993 Plan increasing the number of shares of the Company's
Common Stock authorized to be issued under the 1993 Plan from 750,000 to
850,000 shares. As is required under the 1993 Plan, no such amendment can
become effective unless approved by the holders of a majority of the
outstanding shares of the Company's capital stock. For this reason, the
proposed amendment to the 1993 Plan for the purpose of increasing the number
of shares of the Company's Common Stock which may be issued under the Plan
from 750,000 to 850,000 shares will be submitted to the shareholders of the
Company for their approval at the forthcoming annual meeting of shareholders.
The Company's Board of Directors recommends that you vote FOR approval
of the amendment to the Company's 1993 Stock Option Plan.
<PAGE>
Options Granted in Last Fiscal Year
No stock options were granted in 1997 to officers of the Company.
Aggregate Options/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Options/SAR Values
The following table shows certain information with respect to options
to acquire TGC's Common Stock which were exercised in 1997 and which were
held at December 31, 1997 by the Company's Vice-Chairman and CEO and the
Company's President and COO.
Aggregated Options Exercised
and FY-End Options Values
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
FY-End # FY-End $ (2)
Shares
Name and Acquired on Value Exercisable/ Exercisable/
Principal Position Exercise # (1) Realized $ Unexercisable Unexercisable
Robert J. Campbell 40,500 (3) $16,125 30,333/ $ 651
Vice Chairman & CEO - - 6,667 $ 420
Wayne A. Whitener 52,168 (4) $23,668 41,333/ $ 3,534
President & COO 46,667 $ 2,940
</TABLE>
(1) The exercise price and tax withholding obligations related to
exercise may be paid by delivery of already owned shares, subject
to certain conditions.
(2) The value of outstanding options is based on the December 31, 1997
closing stock price which was $1.063.
(3) On October 6, 1997, options for 3,000 and 37,500 shares of Common
Stock at an exercise price of $ .375 and $ .40 respectively per
share were exercised. The Company received 10,750 shares of its
Common Stock at a market value of $1.50 per share as payment for
the exercise of the options.
(4) On January 7, 1997, options for 4,668 shares and 47,500 shares of
Common Stock at an exercise price of $1.00 and $ .40 respectively
per share were exercised. The Company received 14,025 shares of
its Common Stock at a market value of $1.6875 per share as payment
for the exercise of the options.
<PAGE>
<PAGE>
TRANSACTIONS WITH MANAGEMENT
The Company had no transactions with management in 1997.
In 1996, the Company had outstanding Subordinated Notes payable in the
amount of $365,812 to certain executive officers and directors. Interest
expense of $18,579 was paid on this debt during 1996. In July 1996, the
holders exchanged this debt for 73,162 shares of Series C 8% Convertible
Exchangeable Preferred Stock in connection with the Private Placement.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Grant Thornton LLP to serve as
auditors for the Company. It is expected that a representative of Grant
Thornton LLP will be present at the shareholders' meeting with the
opportunity to make a statement if he/she desires to do so and also will be
available to respond to appropriate questions at the meeting.
The Company's Board of Directors recommends that you vote FOR
ratification of the selection of Grant Thornton LLP as the Company's
auditors for the fiscal year ending December 31, 1998.
OTHER MATTERS
The Company's management knows of no other matters that may properly
be, or which are likely to be, brought before the meeting. However, if any
other matters are properly brought before the meeting, the persons named in
the enclosed proxy, or their substitutes, will vote in accordance with
their best judgment on such matters.
SHAREHOLDER PROPOSALS
A shareholder proposal intended to be presented at the Company's
Annual Meeting of Shareholders in 1999 must be received by the Company at
its principal executive offices in Plano, Texas on or before December 1,
1998 in order to be included in the Company's proxy statement and form of
proxy relating to that meeting.
FINANCIAL STATEMENTS
Financial statements of the Company are contained in the Annual Report
to Shareholders for the fiscal year ended December 31, 1997 enclosed
herewith.
By Order of the Board of Directors
Allen T. McInnes
Secretary
Plano, Texas
April 21, 1998
<PAGE>
- --------------------------------------------------------------------------
Front of Card
- --------------------------------------------------------------------------
TGC INDUSTRIES, INC.
Proxy Solicited on Behalf of the Board of Directors for the
Annual Meeting of Shareholders, June 4, 1998
The undersigned hereby appoint(s) Allen T. McInnes or Robert J.
Campbell, each with full power of substitution, as proxies, to vote all
Common Stock in TGC Industries, Inc. which the undersigned would be
entitled to vote on all matters which may come before the 1998 Annual
Meeting of the Shareholders of the Company and any adjournments thereof.
THE PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE
THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
(Continued on other side)
- ---------------------------------------------------------------------------
Back of Card
- ---------------------------------------------------------------------------
/X/ Please mark your
votes as in this
example.
The Board of Directors recommends a vote FOR each
of the following items:
1. ELECTION OF DIRECTORS.
______ FOR all nominees ______ Withhold authority Nominees:
listed at right to vote for the Allen T. McInnes
(except as marked nominees listed Robert J. Campbell
to the contrary at right Wayne A. Whitener
below). William J. Barrett
Herbert M. Gardner
INSTRUCTIONS: To withhold authority to vote for any
individual nominee, vote for all
nominees and strike a line through
the individual nominees's name listed
at right.
2. RATIFICATION OF SELECTION OF
GRANT THORNTON LLP AS _____ FOR _____ AGAINST _____ ABSTAIN
INDEPENDENT AUDITORS.
3. APPROVAL OF AN AMENDMENT TO THE
1993 STOCK OPTION PLAN. _____ FOR _____ AGAINST _____ ABSTAIN
Returned proxy forms when properly executed will be voted: (1) as
specified on the mailer(s) listed above; (2) in accordance with the
Directors' recommendations where a choice is not specified; and (3) in
accordance with the judgment of the proxies on any other matters that may
properly come before the meeting.
PLEASE COMPLETE, SIGN, DATE AND RETURN THE CARD PROMPTLY.
Signature(s) _____________________________________ Date:______________
Note: Executors, trustees and others signing in a representative capacity
should include their names and capacity in which they sign. PLEASE DATE
AND SIGN AS SHOWN HERE AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
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