<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934, as amended
(Amendment No. ________)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
TEMTEX INDUSTRIES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] 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:*
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
* Set forth amount on which the filing is calculated and state
how it was determined.
[ ] 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.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
TEMTEX INDUSTRIES, INC.
3010 LBJ Freeway, Suite 650
Dallas, Texas 75234
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Temtex Industries, Inc.:
The Annual Meeting of Stockholders of Temtex Industries, Inc. (the
"Company"), will be held at the Courtyard by Marriott LBJ and
Josey, 2930 Forest Lane, Dallas,Texas 75234, Room A, at 10:00 a.m.
on March 6, 1996, for the following purposes:
(a) To elect six (6) directors to serve until the next
Annual Meeting of Stockholders and until their
respective successors shall be elected and shall
qualify;
(b) To transact such other business as may properly
come before the meeting.
Only holders of Common Stock of record at the close of business on
January 12, 1996 are entitled to notice of or to vote at the
meeting.
YOU ARE INVITED TO ATTEND THIS MEETING IN PERSON. HOWEVER, IF YOU
ARE UNABLE TO DO SO, PLEASE COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE. NO POSTAGE WILL BE
REQUIRED IF MAILED WITHIN THE UNITED STATES.
By Order of the Board of
Directors
James E. Upfield
Chairman of the Board
Dallas, Texas
February 2, 1996
<PAGE>
TEMTEX INDUSTRIES, INC.
3010 LBJ Freeway, Suite 650
Dallas, Texas 75234
PROXY STATEMENT
A proxy in the accompanying form is being solicited on behalf of
the Board of Directors of Temtex Industries, Inc. (the "Company"),
for use at the Company's Annual Meeting of Stockholders to be held
at the Courtyard by Marriott LBJ and Josey, 2930 Forest Lane,
Dallas, Texas 75234, Room A, at 10:00 a.m., central time zone, on
March 6, 1996, and at any adjournment(s) thereof. The Company will
bear the cost of such solicitation. In addition to solicitations
by mail, officers and regular employees of the Company may, to a
limited extent and without additional remuneration, solicit proxies
personally or by telephone or telegraph. Proxies, together with
copies of this Proxy Statement, are first being mailed to
stockholders of the Company on or about February 2, 1996.
Execution and return of the enclosed proxy will not in any way
affect a stockholder's right to attend the meeting and to vote in
person, and any stockholder giving a proxy has the power to revoke
it at any time before it is voted by filing with the Secretary of
the Company a written revocation or duly executed proxy bearing a
later date. A proxy, when executed and not revoked, will be voted
in accordance with the instructions thereon. In the absence of
specific instructions, proxies will be voted by those named in the
proxy (i) "FOR" the election as directors of those nominees named
in the Proxy Statement; (ii) in accordance with their best judgment
on all other matters that may properly come before the meeting.
VOTING SECURITIES AND QUORUM
Only stockholders of record at the close of business on January 12,
1996, will be entitled to notice of and to vote at the Annual
Meeting. On January 12, 1996, the Company had issued and
outstanding 3,464,141 shares of $0.20 par value Common Stock (the
"Common Stock"), which is the only class of its capital stock
outstanding. Each share of common stock is entitled to one vote on
each matter presented to the stockholders.
The presence, in person or by proxy, of the holders of a majority
of the issued and outstanding Common Stock is necessary to
constitute a quorum at the Annual Meeting. Abstentions and broker
non-votes are counted for purposes of determining the presence or
absence of a quorum for the transaction of business. Abstentions
are counted in the tabulations of votes cast on proposals presented
to stockholders, whereas broker non-votes are not counted for
purposes of determining whether a proposal has been approved.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The Company knows of no person owning beneficially more than 5% of
the Company's Common Stock, except for the following persons who
beneficially owned, as of January 12, 1996, the number of shares of
Common Stock of the Company set forth opposite each such person's
name in the table below:
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature
Title of Name and Address of Beneficial Percent
Class of Beneficial Owner Ownership (1) of Class
________ ___________________ _________________ ________
<S> <C> <C> <C>
Common Stock James E. Upfield 1,017,850 (2) 29.4%
3010 LBJ Freeway
Suite 650
Dallas, Texas 75234
Common Stock Kalmar Investments, Inc. 184,025 5.3%
1300 Market Street
Suite 500
Wilmington, Delaware 19801
Common Stock Kennedy Capital Management 181,225 5.2%
Inc.
425 N. New Ballas Road
Suite 181
St. Louis, Missouri 63141-6821
_________________
<FN>
(1) The nature of the beneficial ownership of the shares is
sole voting and investment power unless indicated otherwise.
(2) Includes 24,750 shares of Common Stock held of record by
HUTCO, a partnership comprised of Mr. Upfield and Mr. John D.
Howard, a former director of the Company. Mr. Upfield has shared
voting and investment power with respect to such shares of Common
Stock.
</FN>
</TABLE>
OWNERSHIP OF COMMON STOCK BY MANAGEMENT
The following table sets forth the beneficial ownership (as defined
by the rules of the Securities and Exchange Commission) of Common
Stock of the Company by the incumbent directors, nominees for
director, each of the named officers in the Summary Compensation
table below and all directors and officers as a group, together
with the percentage of the outstanding shares which such ownership
represents. Information is stated as of January 12, 1996.
<TABLE>
<CAPTION>
Amount and
Name or Identity Title of Nature of Beneficial Percent of
of Group Class Ownership (1) Class
________________ ________ ____________________ __________
<S> <C> <C> <C>
James E. Upfield Common Stock 1,017,850 (2) 29.4%
E. R. Buford Common Stock 89,062 (3) 2.6%
Joseph V. Mariner, Jr. Common Stock 5,225 (4) *
Larry J. Parsons Common Stock 5,500 (4) *
Scott K. Upfield Common Stock 28,000 (5) *
Richard W. Griner Common Stock 3,000 (5) *
R. N. Stivers Common Stock 22,543 (6) *
All present executive
officers and directors
as a group
(7 persons) Common Stock 1,171,180 (7) 33.8%
__________
<FN>
* Denotes less than 1%
-2-
<PAGE>
(1) The nature of the beneficial ownership of the
shares by the respective persons or group is
sole voting and investment power unless
otherwise indicated.
(2) Includes 24,750 shares of Common Stock over
which Mr. Upfield has shared voting and
investment power owned by HUTCO, a partnership
comprised of Mr. Upfield and Mr. Howard, a
former director of the Company.
(3) Includes 50,000 shares of Common Stock
issuable upon the exercise of options granted
under the 1990 Stock Plan for key employees of
Temtex Industries, Inc. and its subsidiaries
(the "1990 Plan").
(4) Includes 5,000 shares of Common Stock issuable
upon the exercise of options granted under the
Outside Director Stock Option Plan (the
"Outside Director Plan").
(5) Includes 2,500 shares of Common Stock issuable
upon the exercise of options granted under the
Outside Director Plan.
(6) Includes 10,000 shares of Common Stock issuable
upon the exercise of options granted under the
1990 Plan.
(7) Includes 75,000 shares of Common Stock issuable
upon the exercise of options granted under the
1990 Plan and the Outside Director Plan.
</FN>
</TABLE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors has two standing committees: the Audit
Committee and the Compensation Committee. The Company has no
formal nominating committee.
The Audit Committee recommends to the Board of Directors the
engagement of the Company's independent auditors and reviews with
the auditors the plan and scope of their audit for each year, the
results of the audit when completed and their fees for services
performed. The Audit Committee also reviews the Company's policies
and procedures designed to avoid improper conflicts of interest.
The Audit Committee is composed exclusively of directors who are
not officers or employees of the Company. The present members of
the Audit Committee are Messrs. Parsons (Chairman), Mariner, S. K.
Upfield and Griner. The Audit Committee held two meetings during
the twelve months ended August 31, 1995.
The Compensation Committee recommends to the Board of Directors
salaries and other compensation payable to certain officers of the
Company. The present members of the Compensation Committee are Mr.
Mariner (Chairman) and Messrs. Parsons, J. E. Upfield, S. K.
Upfield and Griner. The Compensation Committee held two meetings
during the twelve months ended August 31, 1995.
During the twelve months ended August 31, 1995, the full Board of
Directors held four meetings. Each incumbent director attended
more than 75% of the aggregate of (1) the total number of meetings
of the Board of Directors (held during the period for which he was
a director) and (2) the total number of meetings of all committees
of the Board on which he served (during the periods that he
served).
ELECTION OF DIRECTORS
(Item 1)
Six (6) directors will be elected at the Annual Meeting of
Stockholders by the holders of the Common Stock. Each director is
elected for a term of one year to serve until the next Annual
Meeting of Stockholders and until his successor is elected and has
qualified. The accompanying proxy (unless otherwise directed) will
be voted for the election of directors of the Company of the six
(6) persons named below. If any nominee shall be unable to serve,
the accompanying proxy will be voted for a substitute nominee and
for the other nominees named below. The management of the Company
has no reason to believe that any nominee will be unable to serve.
-3-
<PAGE>
The names of the directors and nominees for the office of director
and information about them, as furnished by the directors and
nominees themselves, are set forth below:
<TABLE>
<CAPTION>
First Positions and Offices with Company, Business
Became a Experience During Past Five Years and Other
Name Age Director in Directorships
____ ___ ___________ ____________________________________________
<S> <C> <C> <C>
James E. Upfield 75 1969 Chairman of the Board of the
Company for more than the past five
years; also Chairman of the Board
of Temco Fireplace Products, Inc.,
a wholly-owned subsidiary of the
Company; serves as a director of
Hunter Resources, Inc. (formerly
Interamerican Corporation) which is
engaged in the sale of oil, gas and
oilfield services.
E. R. Buford 60 1973 President of the Company for more
than five years and was elected
Chief Executive Officer of the
Company in February, 1986;
President and director of Temco
Fireplace Products, Inc., a wholly-
owned subsidiary of the Company,
for more than the past five years.
Joseph V. Mariner, Jr. 75 1979 Retired as Chairman and Chief
Executive Officer of Hydro-Metals,
Inc., when it was acquired by
Wallace Murray Corporation, a
manufacturer of plumbing ware and
cutting tools; serves as a director
of Peerless MFG Co., a manufacturer
of separators and filters used for
removing liquids and solids from
gases and air; the Dyson-Kissner-
Moran Corporation, a New York based
privately owned investment company;
Kearney National, Inc., a
manufacturer of electrical power
distribution products; El Chico
Restaurants, Inc., a Mexican
restaurant chain; Renters Choice,
Inc., operates Rent-To-Own Stores;
and Industrial Flexible Materials,
Inc., a manufacturer of rubber
crumbs from recycled tires.
Larry J. Parsons 66 1989 Retired in 1988 as partner of Ernst
& Whinney, (now known as Ernst &
Young LLP) an international public
accounting firm. Mr. Parsons was a
partner for more than five years
before his retirement and holds no
other directorships.
Scott K. Upfield 36 1992 President, Treasurer and a director
of Insurance Technologies
Corporation, a company principally
engaged in developing and marketing
software to the insurance industry
for more than the past five years.
-4-
<PAGE>
Richard W. Griner 57 1995 Director, President and Chief
Operating Officer of the Hart
Group, a privately owned company
which supplies managerial services
to privately owned Rmax, Inc. a
manufacturer and distributor of
insulation wall board for more than
five years; director and President
of HC Industries, Inc. and of HC
Industries NV., Inc. subsidiaries
of Rmax and director of Axon, Inc.
a multifaceted contracting and
service company. Mr. Griner is
also a director and President of
Rmax.
</TABLE>
Each of the above named nominees is a member of the present Board
of Directors and was elected to such office at the Annual Meeting
of Stockholders held March 7, 1995, except for Mr. Griner who was
elected to the board at a regularly scheduled meeting of the
Board on June 7, 1995. There are no family relationships among
any of the directors or among any of the directors and any
officers of the Company except Messrs. James E. Upfield and Scott
K. Upfield who are father and son.
EXECUTIVE COMPENSATION
EXECUTIVE OFFICERS
The executive officers of the Company are Messrs. James E.
Upfield, E. R. Buford and R. N. Stivers. Messrs. Upfield and
Buford positions are described above, Mr. Stivers, age 60, for
more than the past five years, has been Vice President-Finance,
Secretary, Treasurer and Chief Financial Officer of the Company.
The following table provides certain disclosure of all
compensation awarded to, earned by or paid to the chief executive
officer of the Company and to each of the Company's two most
highly compensated executive officers (other than the chief
executive officer) whose total salary and bonus exceed $100,000.
The Company had no other executive officer whose base salary and
bonus exceeded $100,000 in 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
_____________________________________
Annual Compensation Awards Payouts
___________________ _____________________________________
Other Securities All
Annual Restricted Underlying LTIP Other
Name and Compen- Stock Options Pay- Compen-
Principal Fiscal Salary Bonus sation Awards /SARs outs sation
Position Year ($) ($) ($) ($) (#) ($) ($)
_________ ______ ______ _____ _______ __________ __________ ____ _______
<S> <C> <C> <C> <C> <C> <C> <C> <C>
E.R.Buford 1993 185,000 65,000 N/A -0- -0- -0- N/A
Chief Executive Officer 1994 195,800 150,000 N/A -0- -0- -0- N/A
and President 1995 205,300 -0- N/A -0- -0- -0- N/A
_____________________________________________________________________________________________________________________
James E. Upfield 1993 135,000 -0- N/A -0- -0- -0- N/A
Chairman of 1994 145,000 25,000 N/A -0- -0- -0- N/A
the Board 1995 150,000 -0- N/A -0- -0- -0- N/A
_____________________________________________________________________________________________________________________
R. N. Stivers 1993 97,500 25,000 N/A -0- -0- -0- N/A
Chief Financial 1994 102,500 30,000 N/A -0- -0- -0- N/A
Officer and Vice 1995 107,800 -0- N/A -0- -0- -0- N/A
President-Finance
_____________________________________________________________________________________________________________________
</TABLE>
Other annual compensation did not exceed the lesser of either
$50,000 or 10% of total salary as disclosed in the Summary
Compensation Table.
-5-
<PAGE>
STOCK PLAN FOR KEY EMPLOYEES
In 1990, the Company adopted the 1990 Stock Plan for Key
Employees of Temtex Industries, Inc. and its Subsidiaries (the
"1990 Plan"). The 1990 Plan provides for the grant of stock
options, including "incentive stock options" within the meaning
of Section 422a of the Internal Revenue Code of 1986 and "non-
qualified stock options" which do not constitute incentive stock
options, the grant of stock appreciation rights in connection
therewith, and the allotment of shares of restricted stock, to
key employees of the Company.
The 1990 Plan is intended to attract, retain and provide
incentives for eligible key employees. The 1990 Plan is
administered by a committee of the Board of Directors not
eligible to receive awards under the 1990 Plan. Presently the
Compensation Committee administers the Plan. Such committee has
authority, in its discretion, to determine the individuals to
whom, and the time or times at which restricted stock will be
allotted or options or stock appreciation rights will be granted,
the number of shares to be subject to each allotment of
restricted stock, stock options and appreciation rights, the
option price for the duration of each option and other matters in
connection with the administration of the 1990 Plan and the grant
of awards thereunder. The exercise price of any option granted
under the 1990 Plan may not be less than the fair market value of
the Common Stock at the date of grant. Options and stock
appreciation rights may be granted and restricted stock allotted
under the 1990 Plan from time to time until December 31, 1999, on
which date such 1990 Plan will terminate, unless it is sooner
terminated as provided therein.
The stockholders at the annual meeting held March 7, 1995,
approved a proposal increasing the shares eligible for issuance
pursuant to the 1990 Plan from 95,000 shares to 195,000 shares of
Common Stock and the aggregate number of options (including stock
appreciation rights) or shares of restricted stock which may be
issued to any one employee in any fiscal year shall not exceed
25,000.
OPTION GRANTS DURING 1995 FISCAL YEAR
The following table specifies the grants of stock options made
during the last completed fiscal year to each of the Company's
executive officers named in the Summary Compensation Table.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Price Appreciation
Individual Grants for Option Term (1)
___________________________ __________________________
Number of % of Total
Securities Options/
Underlying SARs Granted
Options/ to Employees Exercise or
SARs in Fiscal Base Price Expiration
Name Granted (#) Year ($/Sh) Date 5% ($)(2) 10% ($)(3)
____ ___________ ____________ ___________ __________ __________ ___________
<S> <C> <C> <C> <C> <C> <C>
E. R. Buford 20,000 28.6% $4.94 7/1/05 $62,200 $157,600
James E. Upfield -0- -0- -0- -0- -0- -0-
R. N. Stivers 10,000 14.3% $4.94 7/1/05 $31,100 $ 78,800
<FN>
(1) The values shown are based on the indicated
assumed annual rates of appreciation compounded
annually. Actual gains realized, if any, on
stock option exercises and Common Stock holdings
are dependent on the future performance of the
Common Stock and overall stock market
conditions. There can be no assurance that the
values shown in this table will be achieved.
(2) Represents an assumed market price per share of
Common Stock of $8.05.
(3) Represents an assumed market price per share of
Common Stock of $12.82.
</FN>
</TABLE>
-6-
<PAGE>
The following table includes the number of shares received upon
exercise, or if no shares were received, the number of securities
with respect to which the options were exercised, the aggregate
dollar value realized upon exercise and the total value of
unexercised options held at the end of the last completed fiscal
year for each of the Company's executive officers named in the
Summary Compensation Table.
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Value of
Value of
Number of Securities Unexercised In-
Underlying Unexercised the-Money
Options/SARs at FY-End Options/SARs at
(#) FY-End ($)
______________________ _________________
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise (#) ($) Unexercisable Unexercisable
____ _______________ ______________ ______________________ _________________
<S> <C> <C> <C> <C>
E. R. Buford -0- -0- Exercisable 50,000 $175,000
Unexercisable 20,000 -0- (1)
J. E. Upfield -0- -0- -0- -0-
R. N. Stivers -0- -0- Exercisable 10,000 $ 35,000
Unexercisable 10,000 -0- (1)
<FN>
(1) The Company's stock price at August 31, 1995 was below the
option price.
</FN>
</TABLE>
SELECT MANAGEMENT EMPLOYEE SECURITY PLAN
Except for the Company's Select Management Employee Security Plan,
(the "Security Plan") the Company does not have any plans that
could be deemed long-term incentive plans or defined benefit or
actuarial plans under which benefits are determined primarily by
reference to final compensation. The Security Plan provides
certain death and retirement benefits to key employees of the
Company. During the fiscal year ended August 31, 1995, ten (10)
employees were participating in the Security Plan (including the
three named executive officers in the Summary Compensation Table
above). The Company's Compensation Committee has discretion to
select additional employees (not more frequently than annually) to
participate in the Security Plan.
The Security Plan provides for benefits to be paid to each
participant for a period of ten (10) years after retirement (or to
the beneficiary or estate of a participant for a period of ten (10)
years following the date of death of a participant) in an amount
during each such year equal to approximately 50% of the
participant's salary at the date of retirement or death. All
required benefit payments are provided by individual life
insurance, retirement insurance or annuity type policies. Pursuant
to the Security Plan, the Company makes all contributions to fund
the aggregate amount of insurance premiums required to purchase and
maintain all applicable insurance or annuity type policies.
Any participant in the Security Plan who ceases to be an employee
of the Company prior to attaining the age of fifty (50) and ten
(10) years of employment and before normal retirement date may
elect to purchase his insurance policy for one-third of its cash
value on the date of termination. Any participant who ceases to be
employed after attaining age fifty (50) and ten (10) years of
service but before normal retirement will be assigned his insurance
policy without any payment being required.
-7-
<PAGE>
EXECUTIVE OFFICERS EMPLOYMENT CONTRACT AGREEMENTS
The Company entered into three-year employment contracts with Mr.
E. R. Buford and Mr. R. N. Stivers (the "Executives") as of June 7,
1994. Under the terms of the agreements, Mr. Buford receives an
annual base salary of $201,300 and Mr. Stivers receives a base
salary of $105,000. During the term of the agreements, the Company
may increase the base salary of the Executives, but cannot reduce
the base amount of the salaries. The Executives will also be
eligible to participate in the regular employee benefit program now
or hereafter established by the Company.
On each anniversary of these agreements, the term shall be extended
for an additional period of one year unless the Board of Directors
elects, at the directors' meeting following the annual
stockholders' meeting, not to extend the agreements.
The agreements may be terminated by the Company without cause upon
thirty days prior written notice. In the event of termination
without cause, the Company shall for a period of two and one-half
years continue to pay Mr. Buford and for a period of one year
continue to pay Mr. Stivers their base salaries effective at the
time of termination.
If the Executives are involuntarily terminated, other than for
cause, in contemplation of, or within three years following, a
change of control, the Company shall pay the Executives (i) a lump
sum severance payment equal to two and one-half times the
Executives base salary in effect at the time of involuntary
termination, payable as a lump sum, and (ii) continuation of all
employee benefits, executive benefits and perquisites or benefits
reasonably equivalent thereto, for a period of two and one-half
years.
COMPENSATION OF DIRECTORS
DIRECTORS' REMUNERATION
Those directors who are regular salaried employees of the Company
receive no additional compensation for their services as directors
or as members of committees of the Board. Cash compensation
currently payable to the other directors for services in that
capacity consists of a retainer of $2,500 per year and a fee of
$750 (in addition to travel expenses) for each day of each meeting
of the Board of Directors attended. No additional retainers are
paid for serving on a committee; however, if one or more committee
meetings are held on a day other than one on which a Board meeting
is held, committee members are paid a fee of $750 (in addition to
travel expenses) for each day of such meeting or meetings.
Directors who are not regular salaried officers or employees who
render services to the Company in a capacity or capacities other
than that of a director (for example, as consultants or attorneys)
may be compensated for such other services, and such compensation
for other services shall not, except insofar as may be specified by
the Company in particular cases, affect the cash compensation
payable to such directors in their capacities as directors and
members of committees of the Board of Directors.
STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
In 1990, the Company also adopted the Outside Director Stock Option
Plan (the "Outside Director Plan"). The Outside Director Plan is
intended to encourage more extensive ownership of the Common Stock,
to provide incentives and to attract and retain eligible outside
directors of the Company. Under the Outside Director Plan, 30,000
shares of Common Stock were reserved and options exercisable for an
aggregate of 15,000 shares have been granted. The Outside Director
Plan is presently administered by the Board of Directors. The
Board of Directors has authority, in its discretion, to determine
the outside directors to whom, and the time or times in which,
options will be granted, the number of shares to be subject to each
option, and the purchase price of the shares covered by each
option. The exercise price of any option granted under the Outside
Director Plan may not be less than the fair market value of the
Common Stock at the date of the grant. Options granted under the
Outside Director Plan are non-qualified options for federal income
tax purposes.
-8-
<PAGE>
The following table shows stock options granted and presently
exercisable to outside directors from May 23, 1990 to August 31,
1995:
<TABLE>
<CAPTION>
Options
Granted and Value of Unexercised
Presently Option In-The-Money Options
Exercisable Price At Fiscal Year End
___________ ______ ____________________
<S> <C> <C> <C>
Joseph V. Mariner, Jr. 2,500 $2.00 $ 6,725
2,500 $1.44 8,125
_____ _______
5,000 $14,850
===== =======
Larry J. Parsons 2,500 $2.00 $ 6,725
2,500 $1.44 8,125
_____ _______
5,000 $14,850
===== =======
Scott K. Upfield 2,500 $1.44 $ 8,125
===== =======
Richard W. Griner 2,500 $4.81 -0- (1)
=====
<FN>
(1) The Company's stock price at August 31, 1995 was below the
option price.
</FN>
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
James E. Upfield was, during the fiscal year, an officer of the
Company and a member of the Compensation Committee of the Board of
Directors. Mr. Upfield has engaged in certain transactions with
the Company described under the heading "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS".
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors consists of
Mr. Mariner (Chairman), Mr. Parsons, Mr. James E. Upfield, Mr.
Scott K. Upfield and Mr. Griner. The Compensation Committee's
primary function is to review the compensation awarded to the
executive officers of the Company.
In determining executive compensation, the Compensation Committee
reviews the performance of the specific executive, the operating
performance of the Company, the compensation of executives of
companies which are comparable to the Company and the performance
of the Company's Common Stock. Particular emphasis is given to the
operating results of the Company. The Company's Compensation
Committee has access to, and review reports of, independent
financial consultants who assimilate and evaluate the compensation
of executive officers employed by companies which are generally
comparable to the Company. The cumulative weight of all such
factors is then generally considered to determine whether or not a
particular executive should receive an increase in compensation, an
incentive bonus under the Company's Executive Bonus Plan, a stock
option or stock grant under the Company's Stock Option Plan for Key
Employees, or any other compensation benefits.
The Compensation Committee believes that in order for the Company
to succeed, it must attract and retain qualified executives who can
not only perform satisfactorily on an individual basis but who can
also retain and manage a quality staff of other executive officers
and key employees. Thus, in addition to applying the criteria
generally applicable to all executive officers, in determining the
compensation of the chief executive officer the Compensation
Committee may also be influenced to a significant extent by the
overall performance of the Company's other executives and key
employees. After a review of all of such factors and with the
advice of independent compensation consultants, the Compensation
Committee recommended in 1994 that the Company enter into a three
year employment agreement with Mr. E. R. Buford (the Chief
Executive Officer), which provided for, among other things, a base
compensation of $201,300 per annum. Upon review of a report of
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<PAGE>
independent financial consultants dated February 24, 1995 which
opined that a base salary of $208,000 and total cash compensation
of $299,700 for the Chief Executive Officer would be "competitive",
the Compensation Committee recommended that the Chief Executive's
base salary be increased to $208,000 per annum but did not
recommend that any bonus be paid for fiscal 1995.
Mr. Joseph V. Mariner, Jr.
Mr. James E. Upfield
Mr. Scott K. Upfield
Mr. Larry J. Parsons
PERFORMANCE GRAPH
The following table compares the performance of the Company's
Common Stock with certain comparable indices:
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE
RETURN AMONG TEMTEX INDUSTRIES, INC.,
DOW JONES INDUSTRIAL AND
DOW JONES FURNISHINGS & APPLIANCES
<CAPTION>
Company/Index 1990 1991 1992 1993 1994 1995
- ------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
TEMTEX INDUSTRIES, INC. $100.00 $ 60.10 $ 66.48 $571.80 $571.80 $249.46
Dow Jones Industrial $100.00 $127.45 $142.40 $159.31 $176.98 $226.58
Dow Jones Furnishings
& Appliances $100.00 $160.35 $176.48 $282.36 $241.77 $277.41
</TABLE>
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<PAGE>
MANAGEMENT TRANSACTIONS
At the Annual Meeting of Stockholders of the Company held December
21, 1976, the Company's stockholders approved a Share Purchase
Agreement ("Agreement") among the Company, Mr. Upfield and Republic
National Bank of Dallas (succeeded by NationsBank of Texas, N.A.),
as trustee (the "Trustee"), pursuant to which the Company may
purchase, or may be required, following the death of Mr. Upfield,
to purchase from the estate of Mr. Upfield (the "Estate") up to
that maximum number of shares of Common Stock whose aggregate
purchase price (as computed below) does not exceed the lesser of
(a) the sum of (i) the estate, inheritance, legacy and succession
taxes (including any interest collected as a part of such taxes)
imposed because of Mr. Upfield's death and (ii) the amount of
funeral and administrative expenses allowable as deductions in
computing the taxable estate of Mr. Upfield under Section 2053 of
the Internal Revenue Code (the "Code"), or (b) the amount paid to
the Trustee pursuant to the Agreement upon and by reason of the
death of Mr. Upfield pursuant to a life insurance policy in the
amount of $500,000 carried by the Company on the life of Mr.
Upfield.
The purpose of the Agreement is to provide an orderly means for the
Estate to raise funds to pay all estate and inheritance taxes and
funeral and administrative expenses without necessitating the sale
of a large number of shares of Common Stock in the over-the-counter
market, an event which, in the opinion of the Company would have,
primarily because of the limited volume of trading in such shares,
a potentially serious adverse effect on the market price of the
Common Stock.
The purchase price of a share of Common Stock under the Agreement
is an amount equal to 90% of the mean between the highest and
lowest quoted selling price for a share of Common Stock in any
public securities exchange or market, if available, or otherwise
the mean between the bona fide closing bid and asked prices
therefor in said exchange or market, on the date of death of Mr.
Upfield, or if no such sales or bid and asked prices are available
on such date, then the weighted average of the mean between the
highest and lowest selling prices, or bona fide bid and asked
prices, as the case may be, for a share of Common Stock on the
nearest trading date before and the nearest trading date after the
date of death of Mr. Upfield (such average to be weighted inversely
by the respective number of trading dates between the selling dates
or the price quotation dates and such date of death in the same
manner used in determining the valuation of stock for federal
estate tax purposes as set forth in Treasury Regulation Section
20.2031-2(d) promulgated by the Commissioner of Internal Revenue
under Section 2031 of the Code). Such purchase price would have
been $3.81 if computed as of January 12, 1996.
The Estate will not be obligated to sell any shares of Common Stock
under the Agreement unless prior to the closing of such sale the
Estate has obtained a ruling from the Internal Revenue Service, or
an opinion of counsel satisfactory in form and content to the
Estate, to the effect that the purchase by the Company will be
treated as a distribution in full payment and exchange therefor
under Section 302(b) of the Code. The Company will not be required
to purchase any shares of Common Stock under the Agreement if and
to the extent that such a purchase would result in an impairment of
its capital or would otherwise be in violation of applicable state
law relative to the Company's purchase of its shares of Common
Stock.
The Company, pursuant to the Agreement, has transferred to the
Trustee, as beneficiary, an existing life insurance policy on the
life of Mr. Upfield in the amount of $500,000. The Company is the
owner of such insurance policy; however, under certain conditions
described below, Mr. Upfield will have the right to purchase all,
or any part, of such policy. The premium payable by the Company
for such insurance policy is $21,049 per year. The premiums paid
by the Company are not deductible by it for federal income tax
purposes, and the proceeds of the policy when paid to the Trustee
and used to purchase the shares of Common Stock under the Agreement
or transferred to the Company will not constitute income to the
Company for federal income tax purposes.
The Trustee is to hold in its custody until the death of Mr.
Upfield or termination of the Agreement (in which event it is to
return to the Company) the insurance policy on the life of Mr.
Upfield. Upon and after the death of Mr. Upfield, the Trustee is
to make claim for, collect, hold, deposit or invest, and pay over
the proceeds of
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<PAGE>
the insurance policy on the life of Mr. Upfield and
any deposits or investments thereof and interest earned thereon for
the account of the Company. In the event the proceeds from such
insurance policy are greater than the amount required to purchase
the shares of Common Stock from the Estate, such excess will be
paid to the Company. The Company will reimburse the Trustee for
its expenses in carrying out the provisions of the Agreement and
will pay reasonable and customary compensation to the Trustee for
its services under the Agreement.
The Agreement may be terminated (a) upon the determination of
bankruptcy or the dissolution of the Company, 7(b) upon the
cessation of regular business of the Company, (c) at the option of
the Company, in the event the purchase price thereunder exceeds
200% of the book value of a share of Common Stock, determined as of
the end of the fiscal quarter immediately preceding the date of
Upfield's death, (d) at the option of the Estate, in the event the
purchase price thereunder is less than 75% of the book value of a
share of Common Stock, determined as of the end of the fiscal
quarter immediately preceding the date of Mr. Upfield's death or
(e) by the mutual written consent of Mr. Upfield or the Estate and the
Company. In addition, if Mr. Upfield disposes, during this
lifetime, of all of the Common Stock he owned as of the date of the
Agreement, the Agreement will be terminated.
The Agreement provides that if it is terminated during Mr.
Upfield's life, he will have the right to purchase from the Company
any part or all of the insurance policy on his life and then
subject to the Agreement. The purchase price of such insurance
policy will be equal to its cash surrender value, net of any policy
indebtedness, plus any unearned premium thereon at the date of
purchase.
The manufacturing plant and related real property in Manchester,
Tennessee is leased by Temco Fireplace Products, Inc. ("TFPI")
formerly Temtex Products, Inc., from HUTCO, a California
partnership of which Mr. Upfield and a former director are the
general partners. The Manchester facility, which was originally
subject to a five-year lease with an option to purchase between
TFPI and the former owner, was acquired by HUTCO upon the
assignment to it of TFPI's option to purchase following TFPI's
inability to secure financing upon acceptable terms. The lease
between TFPI and HUTCO was for a twenty-five year term commencing
November 15, 1989 and provided for monthly rental payments of
$13,020 (subject to certain scheduled rent escalations based upon
increases in the consumer price index). During the 1994 fiscal
year, the Company entered into a new twenty-five year lease
agreement with HUTCO. The new lease agreement provides for a
30,000 square foot expansion to the facility with monthly rental
payments of $21,500 that commenced on January 1, 1995. The new
lease is subject to certain scheduled rent escalations based upon
increases in the consumer price index.
In the opinion of management of the Company, the lease of the TFPI
manufacturing facility from HUTCO was consummated on terms and
conditions as favorable to the Company as terms and conditions
obtainable from non-affiliated parties.
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<PAGE>
SECTION 16(a) REPORTING
Section 16(a) of the Exchange Act requires the Company's directors
and executive officers, and persons who own more than 10% of the
Company's Common Stock to file with the SEC initial reports of
ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors and
greater than 10% stockholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) reports they
file. To the Company's knowledge, based solely on review of the
copies of such reports furnished to the Company and written
representations that no other reports were required, during the
fiscal year ended August 31, 1995, all Section 16(a) filing
requirements applicable to its officers, directors and greater than
10% beneficial owners were complied with.
STOCKHOLDER PROPOSALS FOR
ANNUAL MEETING
Under current rules of the Securities and Exchange Commission,
stockholders wishing to submit proposals for inclusion in the Proxy
Statement of the Board of Directors for the Annual Meeting of
Stockholders of the Company to be held in 1997 must submit such
proposals so as to be received by the Company at 3010 LBJ Freeway,
Suite 650, L.B. 55, Dallas, Texas 75234 on or before November 22,
1996.
MISCELLANEOUS
The Board of Directors has appointed Ernst & Young LLP as the
independent auditors of the Company for the fiscal year ending
August 31, 1996. Ernst & Young acted as the Company's independent
auditors for the fiscal year ended August 31, 1995. A
representative of Ernst & Young will attend the annual meeting of
stockholders to be held March 6, 1996, will have an opportunity to
make a statement, and will respond to appropriate questions from
stockholders.
OTHER MATTERS
It is intended that, as to any other matter of business which may
be brought before the meeting, a vote may be cast pursuant to the
accompanying proxy in accordance with the discretion of the person
or persons voting the same.
Management of the Company does not know of any such other matters
of business.
By Order of the Board of
Directors
James E. Upfield
Chairman of the Board
February 2, 1996
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<PAGE>
TEMTEX INDUSTRIES, INC.
Proxy Solicited on Behalf of the Board of Directors
For Annual Meeting of Stockholders,
March 6, 1996
The undersigned hereby constitutes and appoints James E. Upfield
and E. R. Buford, and either of them, each with full power of
substitution and revocation, as the true and lawful attorneys and
proxies of the undersigned, to attend the Annual Meeting of
Stockholders of Temtex Industries, Inc. (the "Company"), to be held
at the Courtyard by Marriott LBJ and Josey, 2930 Forest Lane,
Dallas, Texas 75234, Room A, at 10:00 a.m. on March 6, 1996, and
any adjournments thereof, and to vote the shares of Common Stock of
the Company standing in the name of the undersigned with all powers
the undersigned would possess if personally present at the meeting.
(1) Election of Names of Nominees:
Directors James E. Upfield,
E. R. Buford,
Joseph V. Mariner, Jr.,
Larry J. Parsons,
For [ ] All Withhold [ ] Scott K. Upfield,
nominees Authority to Richard W. Griner
named (except vote for all (Instruction: To withhold
as marked to nominees authority to vote for any
the contrary) named individual nominee, write
the nominee's name on the
following line.)
__________________________
(2) In their discretion to vote upon such other business as may
properly come before the meeting.
(continued and to be signed on reverse)
<PAGE>
Please sign exactly as name appears below. When signing as
executor, administrator, attorney, trustee or guardian, please give
full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: _____________________ _________________________________
Signature
________________________________
Signature (if held jointly)
No postage is required if
returned in the enclosed
envelope and mailed in the
United States.
Stockholders who are present at
the meeting may withdraw their
proxy and vote in person if
they so desire.
