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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.
TGC INDUSTRIES, INC.
1304 Summit Avenue, Suite 2
Plano, Texas 75074
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 13, 2002
To Shareholders of
TGC INDUSTRIES, INC.:
The annual meeting of the shareholders of TGC Industries, Inc. (the
"Company") will be held at 1304 Summit Avenue, Suite 2, Plano, Texas on June
13, 2002, at 10:00 A.M., Central Daylight Savings Time, for the following
purposes:
1. To elect seven (7) 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;
and
3. 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 15, 2002, 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 26, 2002
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.
TGC INDUSTRIES, INC.
1304 Summit Avenue, Suite 2
Plano, Texas 75074
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS -- June 13, 2002
SOLICITATION OF PROXIES
This Proxy Statement is furnished to shareholders in connection with the
solicitation of proxies by the management of TGC Industries, Inc. (the
"Company" or "TGC") on behalf of the Board of Directors of the Company for the
Annual Meeting of Shareholders to be held at 1304 Summit Avenue, Suite 2,
Plano, Texas on June 13, 2002, and at any adjournment thereof, for the purpose
of submitting to a vote of the stockholders the actions and proposals set
forth in this Proxy Statement. The Notice of Meeting, the form of Proxy, and
this Proxy Statement are being mailed to the Company's shareholders on or
about April 26, 2002.
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 and Preferred Stock, and in such event the Company will
reimburse them for all accountable costs so incurred.
RECORD DATE AND VOTING SECURITIES
The Board of Directors of the Company has fixed the close of business on
April 15, 2002 (the "Record Date") as the date for determination of
shareholders entitled to notice of and to vote at the meeting. As of the
Record Date, there were 5,509,764 shares of the Company's Common Stock
outstanding, 58,100 shares of the Company's Series C 8% Convertible
Exchangeable Preferred Stock ("Series C Preferred Stock") outstanding and
2,560,445 of the Company's 8.5% Senior Convertible Preferred Stock ("Senior
Preferred Stock") outstanding.
The Company's Restated Articles of Incorporation authorize 25,000,000
shares of Common Stock with a par value of $.30 per share and 4,000,000 shares
of Preferred Stock with a par value of $1.00 per share. 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, Series C
Preferred Stock or Senior Preferred Stock held in his or her name on the
Record Date. The Company's Restated Articles of Incorporation prohibit
cumulative voting.
A copy of the Annual Report to shareholders of the Company for its fiscal
year ended December 31, 2001, is being mailed with this Proxy Statement to all
such shareholders entitled to vote.
ACTION TO BE TAKEN
AND VOTE REQUIRED
Action will be taken at the meeting to (1) elect seven (7) members to the
Board of Directors, (2) ratify the selection of Grant Thornton LLP as
independent auditors, and (3) 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 proxy
on which no directions are specified will be voted for the election of
directors named herein, 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, Series
C Preferred Stock and Senior Preferred Stock, voting together as a single
class, will constitute approval of all matters expected to come before the
meeting.
ELECTION OF DIRECTORS
Seven (7) directors are to be elected at the Annual Meeting of
Shareholders to comprise the entire membership of the Company's Board of
Directors. 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.
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. 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. Each executive officer of the Company is a nominee as
set forth below with the exception of Kenneth Uselton (age 58) who has served
as Controller since 1995 and Treasurer since August 1, 1996. The information
set forth below with respect to each of the nominees has been furnished by
each respective nominee.
Name, Age, and Positions with Company
Business Experience
______________________________________________________________________________
Allen T. McInnes, 64 Chairman of the Board and
Chairman of the Board since July 1993; Secretary
Secretary since November 1997; Chief Executive
Officer of the Company from August 1993 to
March 1996; Executive Vice-President and
Director of Tenneco, Inc. 1960-1992; President
and CEO of Tetra Technologies, Inc. from
April 1996 to August 2001; Director
of Tetra Technologies, 1996 to present;
Dean, Rawls College of Business,
Texas Tech University from August, 2001 to
present.
Wayne A. Whitener, 50 CEO and President
Chief Executive Officer of the Company since
January 1999; Chief Operating Officer of the
Company from July 1986 to December 1998;
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, 62 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 1966. Also a Director
of: Supreme Industries, Inc., a manufacturer of
specialized truck bodies and shuttle buses,
since 1979; and Rumson-Fair Haven
Bank and Trust Company, a New Jersey state
independent, commercial bank and trust company.
Herbert M. Gardner, 62 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. Also a Director of: Nu Horizons
Electronics Corp., an electronic component
distributor; Idine Rewards Network, Inc.,
formerly Transmedia Network, Inc., a
company that develops and markets transaction-
based dining and other consumer savings
programs; Hirsch International Corp., an
importer of computerized embroidery machines
and supplies, and developer of embroidery
machine application software; Co-Active
Marketing Group, Inc., a marketing and sales
promotion company; and Rumson-Fair Haven Bank
and Trust Company, a New Jersey state
independent, commercial bank and trust
company.
Edward L. Flynn, 67 None
Owner of Flynn Meyer Company, a management
company for the restaurant industry, since
1976, Director and Treasurer, Citri-Lite Co., a
soft drink company; and Director of Bioject
Medical Technologies, Inc., a drug delivery
system company.
William H. White, 48 None
President and Chief Executive Officer of
WEDGE Group, Inc., a diversified firm with
interests in oil and gas services, since 1997;
Founder and Chairman of the Board of Frontera
Resources Corporation and its predecessor, a
privately held international energy company,
since 1995, also served as President and Chief
Executive Officer of Frontera from 1995 to
1996; Deputy Secretary and Chief Operating
Officer of the U.S. Department of Energy from
1993 to 1995; Director of USEC Inc., world's
leading supplier of enriched uranium fuel for
commercial nuclear power plants since July
1998; and Director of Edge Petroleum
Corporation, an oil and gas exploration,
development, and production company, since May
1998.
Pasquale V. Scaturro, 48 None
Vice President and Chief Geophysicist of
Destiny Energy, since 1997; Co-Founder of
Tricon Geophysics, Inc., a full service
geophysical data processing company in 1995;
President of Seismic Specialists, Inc. and US
Seismic, companies involved in the acquisition,
management, and marketing on non-exclusive
seismic surveys from 1986 to 1995.
The Company's Board of Directors recommends that you vote FOR the nominees
named above for election to the Board of Directors.
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has appointed Grant Thornton LLP to serve as
auditors of the Company. 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, 2002.
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 April 15, 2002, of
more than five percent (5%) of the Company's Common Stock, Series C Preferred
Stock or Senior Preferred Stock. Such tabulation also sets forth the number
of shares of the Company's Common Stock or Series C Preferred Stock
beneficially owned as of April 15, 2002, by all of the Company's directors and
executive officers (naming them), 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, Series C Preferred Stock or Senior
Preferred Stock possess the sole voting and dispositive power in regard to
such stock. The $5.00 per share Series C Preferred Stock is freely
convertible into shares of Common Stock at the conversion price per share of
Common Stock of $3.75 if converted prior to the close of business on December
31, 2002, and at the conversion price per share of Common Stock at $6.00
thereafter. Ownership of the Series C Preferred Stock is deemed to be
beneficial ownership of Common Stock at the conversion price per share of
$3.75 under Rule 13d-3(d)(1) promulgated under the Securities Exchange Act of
1934. The Senior Preferred Stock is freely convertible into shares of Common
Stock at the conversion ratio of one (1) share of Common Stock for each share
of Senior Preferred Stock. Ownership of the Senior Preferred Stock is deemed
to be beneficial ownership of Common Stock at a conversion ratio of one (1)
share of Common Stock for each share of Senior Preferred Stock under Rule 13d-
3 (d) (1) promulgated under the Securities Exchange Act of 1934. As of April
15, 2002, there were 5,509,764 shares of Common Stock, 58,100 shares of Series
C Preferred Stock and 2,560,445 shares of Senior Preferred Stock outstanding.
The following tabulation also includes Common Stock covered by (i)
options granted under the Company's 1993 and 1999 Stock Option Plans, which
options are collectively referred to as "Stock Options," and (ii) stock
purchase warrants, which warrants are collectively referred to as "Stock
Purchase Warrants." The Stock Options and Stock Purchase Warrants have no
voting or dividend rights.
Name & Address Title of Class Amount & Nature Approximate
of Beneficial Owner of Beneficial % of
Ownership Class(1)
___________________ ______________ _______________ ___________
Allen T. McInnes Common 750,154 (2) 13.13%
TGC Industries, Inc.
1304 Summit Ave. Ste. 2
Plano, TX 75074
Wayne A. Whitener Common 115,365 (2) 2.06%
TGC Industries, Inc.
1304 Summit Ave., Ste 2
Plano, Texas 75074
Herbert M. Gardner Common 562,900 (2)(3) 9.85%
26 Broadway, Suite 829
New York, New York 10004
William J. Barrett Common 948,274 (2)(4) 16.60%
26 Broadway, Suite 829
New York, New York 10004
Edward L. Flynn Common 1,096,351 (2)(5) 19.19%
75-11 Myrtle Avenue
Glendale, New York 11385
Kenneth W. Uselton Common 12,890 (2) *
TGC Industries, Inc.
1304 Summit, Ste 2
Plano, Texas 75074
William H. White Common 3,333 (2) *
1415 Louisiana Ste 3000
Houston, Texas 77002
Pasquale V. Scaturro Common 3,333 (2) *
1415 Louisiana Ste 3000
Houston, Texas 77002
WEDGE Energy Common 2,560,445 (6) 31.73%
Services, L.L.C. Senior Pfd. 2,560,445 100%
__________________ ______
All directors and officers Common 3,492,600 54.29%
as a group of eight (8) (2)(3)(4)(5)
persons
* Less than 1%
(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 Senior Preferred Stock and certain
options and warrants were deemed to be currently outstanding solely with
respect to the holders of such Senior Preferred Stock, options, and warrants.
(2) 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.
Stock Options Warrants
_____________ ________
William J. Barrett 3,333 200,000
Edward L. Flynn 3,333 200,000
Herbert M. Gardner 3,333 200,000
Allen T. McInnes 3,333 200,000
Kenneth W. Uselton 7,666 -0-
William H. White 3,333 -0-
Pasquale V. Scaturro 3,333 -0-
Wayne A. Whitener 45,732 50,000
______ _______
All directors and officers
as a group 73,396 850,000
(3) Includes 35,261 shares of Common Stock owned by Herbert M.
Gardner's wife. Mr. Gardner has disclaimed beneficial ownership of these
shares.
(4) Includes 55,231 shares of Common Stock owned by William J.
Barrett's wife. Mr. Barrett has disclaimed beneficial ownership of these
shares.
(5) Includes 20,316 shares of Common Stock owned by Edward L. Flynn's
wife. Mr. Flynn has disclaimed beneficial ownership of these shares.
(6) Includes the number of shares of Common Stock which are deemed to
be beneficially owned as a result of ownership of Senior Preferred Stock.
Each share of Senior Preferred Stock is convertible into one share of Common
Stock.
Depositories such as The Depository Trust Company (Cede & Company) as of April
15, 2002 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.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has an Executive Committee comprised of Messrs.
McInnes, Barrett and White, an Audit Committee comprised of Messrs. McInnes,
Barrett and White, and a Stock Option Committee comprised of Messrs. McInnes,
Barrett and White.
The Executive Committee 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 which was formed in December, 1997, conducted four
meetings in 2001. 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 quarterly and 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.
REPORT OF THE AUDIT COMMITTEE
The responsibilities of the Audit Committee, which are set forth in the
Audit Committee Charter adopted by the Board of Directors, include providing
oversight to the Company's financial reporting process, the systems of
financial controls, the performance and independence of the independent
auditors, the annual audit of the Company's financial statements, and related
matters. The Audit Committee is composed of a majority of independent
Directors in accordance with the applicable independence standards of The
Nasdaq Stock Market, Inc.
The Audit Committee: (1) reviewed and discussed with management TGC's
audited financial statements for the year ended December 31, 2001; (2)
discussed with the independent auditors the matters required by Statement on
Auditing Standards No. 61, Communication with Audit Committees, as amended by
Statement on Auditing Standards No. 90, Audit Committee Communications; (3)
received the written disclosures and the letter from the independent auditors
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees; and (4) discussed with the auditors the
auditors' independence.
Based on the review and discussions described above with respect to the
Company's audited financial statements included in the Company's 2001 Annual
Report to Shareholders, the Audit Committee recommended to the Board of
Directors that the audited financial statements for the year ended December
31, 2001, be included in TGC's Annual Report on Form 10-KSB for filing with
the Securities and Exchange Commission.
The Audit Committee:
William J. Barrett, Chairman
Allen T. McInnes
William H. White
Audit Fees
The aggregate fees billed by the Company's independent accountants for
professional services rendered in connection with (i) the audit of the
Company's annual financial statements set forth in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 2001, and (ii) the review of
the Company's quarterly financial statements set forth in the Company's
Quarterly Reports on Form 10-QSB for the quarters ended March 31, 2001,
June 30, 2001, and September 30, 2001, were approximately $30,000.
All Other Fees
The aggregate fees for all other services rendered by its independent
accountants for the Company's most recent fiscal year were approximately
$12,500. These fees include work performed by the independent accountants
with respect to preparation of corporate income tax returns and tax
compliance.
The Audit Committee has advised the Company that it has determined that
the non-audit services rendered by the Company's independent accountants
during the Company's most recent fiscal year are compatible with maintaining
the independence of such accountants.
STOCK OPTION COMMITTEE
The Stock Option Committee had no meetings 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.
MEETINGS OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 2001, the Board of Directors
held four (4) 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.
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,
2001, to the Chief Executive Officer and any other executives whose salary and
bonus exceeded $100,000.
Summary Compensation Table
Name and Principal Annual Compensation Options/ All Other
Position Year Salary Bonus Stock SAR's Compensation
______________________________________________________________________________
Wayne A. Whitener 2001 $ 97,192 -0- -0- -0- $ 6,298 (1)
President 2000 $ 94,875 -0- -0- -0- $ 7,733 (2)
& CEO 1999 $ 94,875 $25,000 -0- -0- $ 7,419 (3)
(1) Represents personal use of Company vehicle ($5,522), Company's
payment for personal income tax preparation ($135), Company's
contribution to 401-K program ($365), and life insurance
premiums ($276) in 2001.
(2) Represents personal use of Company vehicle ($5,362), Company's
payment for personal income tax preparation ($125), Company's
contribution to 401-K program ($1,970), and life insurance
premiums ($276) in 2000.
(3) Represents personal use of Company vehicle ($5,216), Company's
payment for personal income tax preparation ($125), Company's
contribution to 401-K program ($1,898), and life insurance
premiums ($180) in 1999.
The Company does not presently, but has in the past, maintained Club
memberships for certain of its executive officers. Although these
memberships were utilized from time-to-time for non-business purposes, the
costs attributable to non-business purposes were not material. The Company
believes that the aggregate amounts of such personal benefits did not exceed
10% of cash compensation paid to any individual in the table or, with respect
to the group of all executive officers, 10% of the aggregate cash compensation
paid to the members of such group.
401(k) Plan
In 1987, the Company implemented a 401(k) salary deferral plan (the
"Plan") which covers all employees who have reached the age of 20-1/2 years
and have been employed by the Company for at least one year. The covered
employees may elect to have an amount deducted from their wages for investment
in a retirement plan. The Company has the option, at its discretion, to make
contributions to the Plan. Effective January 1, 1990, the Company determined
in its discretion to make a matching contribution to the Plan equal to 10% of
the employees' contributions up to 6% of those employees' compensation. On
July 24, 1991, to be effective August 5, 1991, the Board of Directors
increased the Company's matching contribution to the Plan to fifty cents
($.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 75% of each Participant's Salary reduction
contributions to the Plan for such Plan year which were not in excess of 3% of
the Participant's compensation for such Plan year, and 50% of each
Participant's salary reduction contributions to the Plan for such Plan Year
which were in excess of 3% of the Participant's compensation but not in excess
of 8% of the Participant's compensation for such Plan Year. As of January 1,
1999, the Company determined to make a contribution to the Plan equal to 100%
of each participant's salary reduction contributions to the Plan up to 2% of
the participant's compensation. The total amount of the Company's
contribution during 2001 for the one (1) executive officer of the Company
participating in the 401(k) Plan was as follows: Wayne A. Whitener - $365.
Options Granted in Last Fiscal Year
During the year ended December 31, 2001, no stock options or stock
appreciation rights were granted to any of the executive officers of the
Company.
Aggregate Options/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Options/SAR Values
The following table sets forth certain information regarding the year-end
value of Options held by the Company's executive officers during the fiscal
year ended December 31, 2001. There are no stock appreciation rights
outstanding.
Aggregated Options Exercised
and FY-End Options Values
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#) FY-End (2)
Shares
Name and Acquired on Value Exercisable/ Exercisable/
Principal Position Exercise (1) Realized($) Unexercisable Unexercisable
______________________________________________________________________________
Wayne A. Whitener -0- -0- 45,732/ $ -0-/
President & CEO 40,368 $ -0-
(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 31,2001
closing stock price which was $0.53.
TRANSACTIONS WITH MANAGEMENT
During the year ended December 31, 2001, the Company had no transactions
with management.
During 1999, the Company issued subordinated promissory notes payable in
an aggregate principal amount of $312,500 to certain officers and directors
for debt financing provided to the Company and, in connection therewith,
issued stock purchase warrants to such persons. The warrants cover 850,000
shares of Common Stock, are exercisable at $.30 per share, and expire on July
31, 2009. The subordinated promissory notes, which bore interest at 8% per
annum, were paid in full during December 1999. The notes and warrants were
issued as follows: Allen T. McInnes - $75,000 note and warrant for 200,000
shares; Wayne A. Whitener - $12,500 note and warrant for 50,000 shares;
William J. Barrett - $75,000 note and warrant for 200,000 shares; Herbert M.
Gardner - $75,000 note and warrant for 200,000 shares; and Edward L. Flynn -
$75,000 note and warrant for 200,000 shares.
STOCK OPTION PLANS
1986 Incentive and Nonqualified Stock Option Plan
In 1986 the Company adopted the 1986 Incentive and Nonqualified 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.
Stock options outstanding as of the date of termination of the 1986 Plan
remain outstanding until they are exercised, terminated, or expire.
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 covering 6,333 shares (adjusted for
one-for-three reverse stock split) which were outstanding on January 1, 2001,
expired unexercised during 2001.
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
283,333 shares of Common Stock (adjusted for the one-for-three reverse stock
split effective November 6, 1998), 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. At the present time, there are approximately 15
employees of the Company, including officers and directors of the Company,
who, in management's opinion, would be 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.
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
option 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.
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
exercisability 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 63,100
shares (adjusted for one-for-three reverse split) were outstanding at December
31, 2001. All 63,100 incentive stock options are outstanding to officers and
employees of the Company. 53,055 non-statutory stock options, that were
outstanding to officers and employees of the Company's former subsidiary,
Chase Packaging Corporation, expired unexercised during 2001. During 2001, no
stock options were granted under the Company's 1993 Stock Option Plan.
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
could exercise his or her incentive stock option. The 53,055 options not so
exercised were converted to non-statutory options and expired unexercised
during 2001.
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.
1999 Stock Option Plan
On December 14, 1999, the Company's Board of Directors approved and
adopted the Company's 1999 Stock Option Plan (the "1999 Plan"). At the 2000
Annual Meeting, the Company's shareholders approved the 1999 Plan. The
following paragraphs summarize certain provisions of the 1999 Plan and are
qualified in their entirety by reference thereto.
The 1999 Plan provides for the granting of options (collectively, the
"1999 Options") to purchase shares of the Company's Common Stock to certain
key employees of the Company and/or its affiliates, and certain individuals
who are not employees of the Company or its affiliates but who from time to
time provide substantial advice or other assistance or services to the Company
and/or its affiliates. The 1999 Plan authorizes the granting of options to
acquire up to 300,000 shares of Common Stock, subject to certain adjustments
described below, to be outstanding at any time. Subject to such limitations,
there is no limit on the absolute number of awards that may be granted during
the life of the 1999 Plan. At the present time, there are approximately 15
employees of the Company, including officers and directors of the Company,
who, in management's opinion, would be considered eligible to receive grants
under the 1999 Plan, although fewer employees may actually receive grants.
During 2000, 169,000 options were granted under the Company's 1999 Plan to
directors, officers and employees of the Company. During 2001, no stock
options were granted under the Company's 1999 Stock Option Plan. Granted
stock options under the 1999 Stock Option Plan covering 169,000 shares were
outstanding at December 31, 2001.
Authority to administer the 1999 Plan has been delegated to a committee
(the "Committee") of the Board of Directors. Except as expressly provided by
the 1999 Plan, the Committee has the authority, in its discretion, to award
1999 Options and to determine the terms and conditions (which need not be
identical) of such 1999 Options, including the persons to whom, and the time
or times at which, 1999 Options will be awarded, the number of 1999 Options to
be awarded to each such person, the exercise price of any such 1999 Options,
and the form, terms and provisions of any agreement pursuant to which such
1999 Options will be awarded. The 1999 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 a 1999 Option in connection with
the exercise thereof. Subject to the limitation set forth below, the exercise
price of the shares of stock covered by each 1999 Option will be determined by
the Committee on the date of the award.
Unless a Holder's option agreement provides otherwise, the following
provisions will apply to exercises 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 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 1999
Option that is not an ISO, Nonstatutory Stock Option ("NSO"), 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 a 1999 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 1999 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 1999 Option for a number of shares equal to the number of
shares delivered by such holder to pay the exercise price of the previous 1999
Option having an exercise price equal to not less than one hundred percent
(100%) of the fair market value of the Common Stock on the date of such
exercise. A 1999 Option so issued will not be exercisable until the later of
the date specified in an individual option agreement or six months after the
date of grant.
In addition, the 1999 Plan provides two methods for the cashless exercise
of options. Under the Sale Method, with the consent of the Committee, payment
in full of the exercise price of the option may be made through the Company's
receipt of a copy of instructions to a broker directing such broker to sell
the stock for which the option is being exercised, to remit to the Company an
amount equal to the aggregate exercise price of such option, with balance
being remitted to the holder. Under the Net Method, with consent of the
Committee, payment in full of the exercise price of the option may be made
based on written instructions received from the holder, by Company's issuance
to the holder of that number of shares of stock having a fair market value
equal to only the "profit portion" of his, her, or its option (i.e. the excess
of the then fair market value of the stock over the holder's exercise price).
The duration of each 1999 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 the award in the case of an ISO, and in either case may be exercised in
whole or in part at any time or only after a period of time or in
installments, as determined by the Committee at the time of award, except that
after the date of award, the Committee may accelerate the time or times at
which a 1999 Option may be exercised.
In the event of any change in the number of outstanding 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
the class of shares subject to each outstanding 1999 Option, and the exercise
price of each outstanding 1999 Option shall be automatically adjusted
accurately and equitably to reflect the effect thereon of such change. Unless
a holder's option agreement provides otherwise, a dissolution or liquidation
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, shall cause such
holder's 1999 Options then outstanding to terminate, but such holder shall
have the right, immediately prior to such transaction, to exercise such 1999
Options without regard to the determination as to the periods and installments
of exercisability made pursuant to such holder's option agreement if (and only
if) such options have not at that time expired or been terminated.
The 1999 Plan will terminate on December 14, 2009, or on such earlier
date as the Board of Directors may determine. Any stock options outstanding
at the termination date will remain outstanding until they have been
exercised, terminated, or have expired.
The 1999 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 that: (a) changes the
number of shares of Common Stock subject to the 1999 Plan, (b) changes the
designation of the class of employees eligible to receive 1999 Options, (c)
decreases the price at which ISOs may be granted, (d) removes the
administration of the 1999 Plan from the Committee, or (e) without the consent
of the affected holder, causes the ISOs granted under the 1999 Plan and
outstanding at such time that satisfied the requirements of Sec. 422 of the
Code to no longer satisfy such requirements.
RECOMMENDATION AND VOTE
It is the opinion of the Board of Directors that the (1) election of the
seven (7) members of the Board of Directors, and (2) ratification of the
selection of Grant Thornton LLP as independent auditors, are advisable and in
the best interests of the Company. As a result, the Board of Directors
recommends a vote FOR each of these items. The affirmative vote of the
holders of a majority of the outstanding shares of Common Stock, Series C
Preferred Stock and Senior Preferred Stock present, in person or by proxy, at
the annual meeting, is required for the shareholders to approve the election
of the seven (7) members to the Board of Directors and to ratify the selection
of Grant Thornton LLP as independent auditors.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Grant Thornton LLP to serve as
auditors of 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.
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 2003 must be received by the Company at its
principal executive offices in Plano, Texas on or before December 1, 2002 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, 2001 enclosed herewith.
Such financial statements are incorporated herein by reference.
By Order of the Board of Directors
/s/ Allen T. McInnes
Plano, Texas
April 26, 2002
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Front of Card
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COMMON STOCK PROXY
TGC INDUSTRIES, INC. (the "Company")
Proxy Solicited on Behalf of the Board of Directors for the
Annual Meeting of Shareholders, June 13, 2002
The undersigned hereby appoint(s) Allen T. McInnes or Wayne A. Whitener,
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 that may come before the annual meeting of the Shareholders of the
Company, to be held on June 13, 2002, 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 AND 2.
(Continued on other side)
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Back of Card
- -----------------------------------------------------------------------------
COMMON STOCK PROXY
/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 OF THE COMPANY.
____ FOR all nominees ____ Withhold authority Nominees:
listed at right to vote for all Allen T. McInnes
(except as marked nominees listed Wayne A. Whitener
to the contrary at right William J. Barrett
as indicated below) Herbert M. Gardner
Edward L. Flynn
William H. White
Pasquale V. Scaturro
INSTRUCTIONS: To withhold authority to vote for any
individual nominee, vote for all
nominees and strike a line through
the individual nominee's name listed
at right.
2. RATIFICATION OF SELECTION OF GRANT THORNTON LLP AS INDEPENDENT AUDITORS.
_____ FOR _____ AGAINST _____ ABSTAIN
Returned proxy forms when properly executed will be voted: (1) as
specified on the matters 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.
- ------------------------------------------------------------------------------
Front of Card
- ------------------------------------------------------------------------------
SERIES C PREFERRED STOCK PROXY
TGC INDUSTRIES, INC. (the "Company")
Proxy Solicited on Behalf of the Board of Directors for the
Annual Meeting of Shareholders, June 13, 2002
The undersigned hereby appoint(s) Allen T. McInnes or Wayne A.
Whitener, each with full power of substitution, as proxies, to vote all
Preferred Stock in TGC Industries, Inc. which the undersigned would be
entitled to vote on all matters that may come before the annual meeting
of the Shareholders of the Company, to be held on June 13, 2002,
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 and 2.
(Continued on other side)
- ------------------------------------------------------------------------------
Back of Card
- ------------------------------------------------------------------------------
SERIES C PREFERRED STOCK PROXY
/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 OF THE COMPANY.
____ FOR all nominees ____ Withhold authority Nominees:
listed at right to vote for all Allen T. McInnes
(except as marked nominees listed Wayne A. Whitener
to the contrary at right William J. Barrett
as indicated below) Herbert M. Gardner
Edward L. Flynn
William H. White
Pasquale V. Scaturro
INSTRUCTIONS: To withhold authority to vote for any
individual nominee, vote for all
nominees and strike a line through
the individual nominee's name listed
at right.
2. RATIFICATION OF SELECTION OF GRANT THORNTON LLP AS INDEPENDENT AUDITORS.
_____ FOR _____ AGAINST _____ ABSTAIN
Returned proxy forms when properly executed will be voted: (1) as specified
on the matters 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.