SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 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
BARNWELL 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)(1) 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.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
BARNWELL INDUSTRIES, INC.
-------------------
Notice of Annual Meeting of Stockholders
-------------------
To the Stockholders of BARNWELL INDUSTRIES, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
BARNWELL INDUSTRIES, INC., a Delaware corporation, will be held on March 8,
1999, at 9:30 A.M., Central Standard Time, at the Sheraton Shreveport Hotel,
1419 East 70th Street, Shreveport, Louisiana, for the purpose of considering and
acting upon:
(1) The election of a Board of Directors to serve until the next
Annual Meeting of Stockholders and until their successors shall have been
elected and qualified;
(2) The adoption of the 1998 Stock Option Plan; and
(3) Any and all other business which may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on January 11,
1999, are entitled to notice of and to vote at this meeting or any adjournment
thereof. The Company's Annual Report to Stockholders for the fiscal year ended
September 30, 1998, which includes consolidated financial statements, is
enclosed herewith.
We will be pleased to have you attend the meeting. However, if you are
unable to do so, please sign and return the enclosed Proxy in the enclosed
addressed envelope.
By Order of the Board of Directors,
/s/ Alexander C. Kinzler
------------------------
ALEXANDER C. KINZLER
Secretary
Dated: January 21, 1999
2
<PAGE>
BARNWELL INDUSTRIES, INC.
SUITE 2900
1100 ALAKEA STREET
HONOLULU, HAWAII 96813
PROXY STATEMENT
SOLICITATION AND REVOCATION OF PROXIES
The accompanying Proxy is solicited by the Board of Directors of
Barnwell Industries, Inc., a Delaware corporation (the "Company"), and the
Company will bear the cost of such solicitation. Solicitation of proxies will be
primarily by mail. Proxies may also be solicited by regular employees of the
Company by telephone at a nominal cost. Brokerage houses and other custodians,
nominees and fiduciaries will be requested to forward soliciting material to the
beneficial owners of Common Stock (as defined below) and will be reimbursed for
their expenses. All properly executed proxies will be voted as instructed.
Stockholders who execute proxies may revoke them by delivering
subsequently dated proxies or by giving written notice of revocation to the
Secretary of the Company at any time before such proxies are voted. No proxy
will be voted if the stockholder attends the meeting and elects to vote in
person.
This Proxy Statement and the accompanying Form of Proxy are first being
sent to stockholders on or about January 21, 1999.
VOTING AT THE MEETING
Only stockholders of record at the close of business on January 11,
1999, will be entitled to vote at the annual meeting and any adjournment
thereof. As of the record date, 1,316,952 shares of common stock, par value
$0.50, of the Company (the "Common Stock") were issued and outstanding. Each
share of Common Stock outstanding as of the record date is entitled to one vote
on any proposal presented at the meeting. With respect to abstentions, the
shares will be considered present at the meeting for a particular proposal, but
since they are not affirmative votes for the proposal, they will have the same
effect as a vote withheld on the election of directors or a vote against such
other proposal, as the case may be. Brokers and nominees may be precluded from
exercising their voting discretion with respect to certain matters to be acted
upon and, thus, in the absence of specific instructions from the beneficial
owner of the shares, will not be empowered to vote the shares on such matters
and, therefore, will not be counted in determining the number of shares
necessary for approval. Shares represented by such broker nonvotes will,
however, be counted for purposes of determining whether there is a quorum.
ELECTION OF DIRECTORS
At the meeting all ten directors of the Company are proposed to be
elected, each elected director to hold office until the next annual meeting and
until his successor is elected and qualified. The persons named as proxies in
the enclosed Proxy are executive officers of the Company and, unless contrary
instructions are given, they will vote the shares represented by the Proxy for
the election to the Board of Directors of the persons named below. The election
of directors will require a plurality of the votes cast at the meeting. The
Board of Directors has no reason to believe that any of the nominees for the
office of Director will be unable to serve; however, in the event any of the
nominees should withdraw or otherwise become unavailable for reasons not
presently known, the persons named as proxies will vote for other persons in
place of such nominees.
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<PAGE>
<TABLE>
<CAPTION>
DIRECTORS AND NOMINEES TO THE BOARD OF DIRECTORS
The following table sets forth as to the directors and nominees for
election: (1) such person's name; (2) the year in which such person was first
elected a director of the Company; (3) such person's age; (4) all positions and
offices with the Company held by such person; (5) the business experience of
such person during the past five years; and (6) certain other directorships, if
any, held by such person.
Director All other Present Positions with
Name Since Age the Company and Principal Occupations
- ---------------------------- -------- ----- --------------------------------------------------
<S> <C> <C> <C>
Morton H. Kinzler 1956 73 Chairman of the Board of the Company since 1980,
President and Chief Executive Officer since
1971. Mr. Kinzler is the father of Alexander C.
Kinzler, Executive Vice President and Secretary
of the Company.
Alan D. Hunter 1977 61 Partner, Code Hunter Wittmann, Calgary, Alberta
(attorneys).
H. Whitney Boggs, Jr. 1977 71 Surgeon
Erik Hazelhoff-Roelfzema 1977 81 Investor
William C. Warren 1980 88 Dean Emeritus, Columbia University School of
Law, and private practice of law, New York, New
York; Director, C.S.S. Industries, Inc.
(producer of paper products and forms); Sterling
National Bank and Trust Co.; Sterling Bancorp;
and Guardian Life Insurance Company of America.
Daniel Jacobson 1981 70 Partner, Richard A. Eisner & Company, LLP, New
York, New York (Accountants and Consultants),
since June 1, 1994; Partner, Shulman, Jacobson &
Co., New York, New York (Certified Public
Accountants) and an independent consultant
between December 1, 1990 and May 31, 1994.
Martin Anderson 1985 75 Partner, Goodsill Anderson Quinn & Stifel,
Honolulu, Hawaii (attorneys); Trustee, Hawaii
Pacific University; and Director, Bishop Street
Funds.
Barry E. Emes 1987 53 Partner, Stikeman, Elliott, Calgary, Alberta
(attorneys); Director, Prime West Energy Inc.
Glenn Yago, Ph. D. 1990 48 Director of Capital Studies/Senior Economist,
Milken Institute, since August, 1996; Professor,
Baruch College - City University of New York
Graduate School between September, 1994 and
September, 1996; Director, Economic Research
Bureau, and associate professor of management,
State University of New York - Stony Brook, for
the prior 5 years; Director, American Passage
Media Corporation (targeted media and
publishing) and Media Passage Holdings, Inc.
(diversified media).
Murray C. Gardner, Ph. D. 1996 66 Independent consultant and investor since
October 1, 1995; Director, Geothermex, Inc.
(geothermal exploration and development
services) and an independent consultant and
investor between October 1, 1994 and September
30, 1995; Director, Executive Vice President and
Treasurer, Geothermex, Inc., for the prior 5
years.
</TABLE>
4
<PAGE>
The Board of Directors has a standing Compensation Committee, a standing
Audit Committee, and a standing Executive Committee. It has no standing
nominating committee. The members of the Compensation Committee are Mr. Warren,
Chairman, and Messrs. Hunter, Jacobson, Anderson, Gardner and Kinzler, with Mr.
Kinzler being a non-voting member. The Compensation Committee determines the
annual compensation of the Company's senior officers, recommends, if
appropriate, new employee benefit plans to the Board of Directors, administers
all employee benefit plans and makes determinations in connection therewith as
may be necessary or advisable. During the fiscal year ended September 30, 1998,
the Compensation Committee held one meeting.
The members of the Audit Committee are Mr. Jacobson, Chairman, and
Messrs. Emes, Yago, Gardner and Kinzler, with Mr. Kinzler being a non-voting
member. The Audit Committee recommends the independent accountants appointed by
the Board of Directors to audit the consolidated financial statements of the
Company, and reviews with such accountants the scope of their audit and report
thereon, including any questions and recommendations that may arise relating to
such audit and report or the Company's internal accounting and auditing
procedures. It also reviews periodically the performance of the Company's
accounting and financial personnel. During the fiscal year ended September 30,
1998, the Audit Committee held one meeting.
The members of the Executive Committee are Mr. Kinzler, Chairman, and
Messrs. Anderson, Hazelhoff-Roelfzema, and Warren. The Executive Committee is
empowered to exercise all of the authority of the Board of Directors, except for
certain items enumerated in the Company's By-Laws. During the fiscal year ended
September 30, 1998, the Executive Committee held one meeting.
The Board of Directors held two meetings during the fiscal year ended
September 30, 1998. Other than Dr. Boggs, who attended one Board meeting, all
directors attended all meetings of the Board of Directors and of the Committees
of the Board on which he served.
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the names and ages of all executive
officers of the Company, their positions and offices with the Company and the
period during which each has served.
Name Age Position with the Company
- ------------------------- --- -------------------------
<S> <C> <C>
Morton H. Kinzler (1) 73 Chairman of the Board since 1980 and President
and Chief Executive Officer since 1971.
Russell M. Gifford 44 Executive Vice President since December 1997,
Treasurer since November 1986 and Chief
Financial Officer since August 1985. Served as
Vice President of the Company from March 1985 to
December 1997.
Alexander C. Kinzler (1) 40 Executive Vice President since December 1997 and
Secretary since November 1986. Served as Vice
President of the Company from November 1986 to
December 1997.
<FN>
(1) Alexander C. Kinzler is the son of Morton H. Kinzler.
</FN>
</TABLE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following summary compensation table sets forth the annual
compensation paid or accrued by the Company to the Chief Executive Officer and
to executive officers whose annual compensation exceeded $100,000 for the fiscal
year ended September 30, 1998 (collectively the "Named Executive Officers") for
services during the fiscal years ended September 30, 1998, 1997 and 1996:
5
<PAGE>
Annual Compensation
---------------------------------
Other
Annual
Name and Compen-
Principal Position Year Salary Bonus sation
----------------------------- ---- -------- --------- --------
Morton H. Kinzler 1998 $300,000 $ - $12,497
Chairman of the Board, 1997 300,000 40,000 12,497
President and Chief 1996 300,000 60,000 7,290
Executive Officer
Russell M. Gifford 1998 186,875 $ -
Executive Vice President, 1997 176,250 25,000
Chief Financial Officer 1996 171,250 20,000
and Treasurer
Alexander C. Kinzler 1998 184,375 $ -
Executive Vice President 1997 173,750 25,000
and Secretary 1996 168,750 20,000
Martin L. Jokl (1) 1998 115,758 $ -
Vice President and 1997 158,750 -
Director of Research 1996 153,750 20,000
(1) Effective June 19, 1998, Mr. Jokl resigned his employment as the Vice
President and Director of Research.
Directors who are not officers of the Company receive an annual fee of
$7,500 and are reimbursed for expenses incurred with respect to meeting
attendance. The Chairmen of the Compensation and Audit Committees receive an
additional $7,500 annual fee. The members of the Executive and Compensation
Committees, other than the Chairmen, receive an additional $1,250 annual fee.
The members of the Audit Committee, other than the Chairman, receive an
additional $3,750 annual fee. In lieu of payment of such fees to Mr.
Hazelhoff-Roelfzema, the Company reimburses him for certain expenses incurred in
connection with his service as a director.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
The following table sets forth information related to the number of
shares of Common Stock acquired during the fiscal year ended September 30, 1998
by the Named Executive Officers pursuant to the exercise of stock options, the
value realized by the Named Executive Officers on exercise of such stock options
and the number and value of unexercised stock options held by the Named
Executive Officers at the end of the fiscal year ended September 30, 1998:
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Shares September 30, 1998 September 30, 1998
Acquired on Value ------------------ ------------------
Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
------------ ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Morton H. Kinzler ---- ---- - / - - / -
Russell M. Gifford ---- ---- 17,500/ - - / -
Alexander C. Kinzler ---- ---- 12,000/16,000 - / -
</TABLE>
6
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 17, 1998, the Company agreed to repurchase 5,100 shares of
Common Stock from Mr. Martin Anderson, a Director and 6.7% shareholder of the
Company, at a price of $16.625 per share, the closing price of the Common Stock
on the American Stock Exchange on that day, for a total purchase price of
$84,787.50.
In November, 1996, the Company, through a wholly-owned subsidiary,
entered into an agreement with KEP Energy Resources, LLC, for the exploration
and development of certain oil and gas properties located in northwestern
Michigan ("Michigan Basin Prospect"). The Company's participation in the
Michigan Basin Prospect was conditioned upon the Company purchasing more than a
5% interest in the prospect. The Board of Directors determined, however, that it
would not be financially prudent for the Company to purchase more than a 5%
interest in the Michigan Basin Prospect. Therefore, in order to enable the
Company to invest in the prospect, the Company entered into a joint venture
agreement with investors, including certain executive officers, directors and
beneficial owners of more than 5% of the Company's Common Stock ("Affiliated
Participants"), who paid a total of $1,575,000 for interests in the Michigan
Basin Prospect. The Company then acquired a 12.5% interest in the prospect
(although it could have acquired a substantially greater interest) and committed
to an exploratory program for an investment of approximately $2,625,000, and
allocated 60% of the Company's 12.5% interest to the investors, including the
Affiliated Participants. The investors, including the Affiliated Participants,
acquired their interests in the Michigan Basin Prospect through the Company, at
the same price and upon terms substantially the same and no more favorable than
those under which the Company acquired its interest in the Michigan Basin
Prospect, except that after the investors, including the Affiliated
Participants, receive a return of their entire investment ("Payout"), 30% of
their interest in the Michigan Basin Prospect will revert to the Company (see
table below).
In fiscal 1997, one new well was drilled and seven existing well bores
were re-entered with the goal of producing natural gas. In September 1997, the
venture raised approximately $900,000, of which $378,000 came from the Company
and $522,000 came from investors, including the Affiliated Participants, through
the exercise of a cash call.
Set forth below is the name, position with the Company, amount of
initial investment, fiscal 1997 investment and pre-Payout and post-Payout
interest in the Michigan Basin Prospect of each Affiliated Participant:
<TABLE>
<CAPTION>
Positions with the Company
(and percentage of Common Fiscal
Stock beneficially owned if Initial 1997 Interest
Name a more than 5% stockholder) Investment Investment in Venture
- ------------------------ ---------------------------- ------------ ---------- ---------------------
<S> <C> <C> <C> <C> <C>
Morton H. Kinzler Chairman of the Board, $131,250 $45,000 .625% pre-Payout
President, Chief Executive .4375% post-Payout
Officer and Director; 17.1%
stockholder
Alexander C. Kinzler (1) Executive Vice President $52,500 $18,000 .250% pre-Payout
and Secretary .1750% post-Payout
Cynthia M. Grillot (2) Assistant Vice President $78,750 $27,000 .375% pre-Payout
.2625% post-Payout
Martin Anderson Director; 6.7% stockholder $131,250 $45,000 .625% pre-Payout
.4375% post-Payout
Joseph E. Magaro 15.4% stockholder $131,250 $45,000 .625% pre-Payout
.4375% post-Payout
R. David Sudarsky 8.8% stockholder $131,250 $45,000 .625% pre-Payout
.4375% post-Payout
<FN>
(1) Alexander C. Kinzler is the son of Morton H. Kinzler.
(2) Cynthia M. Grillot is the daughter of Morton H. Kinzler.
</FN>
</TABLE>
7
<PAGE>
In June, 1995, the Company issued $2,000,000 of convertible notes due
July 1, 2003 for an aggregate price of $2,000,000. $400,000 of such notes were
purchased by Mr. Morton H. Kinzler, President, Chief Executive Officer and
Chairman of the Board of Directors of the Company, $200,000 were purchased by
Mr. Martin Anderson, a director of the Company, $200,000 were purchased by Dr.
Joseph E. Magaro, a 15.4% shareholder of the Company, $100,000 were purchased by
Dr. R. David Sudarsky, an 8.8% shareholder of the Company, and $1,000,000 were
purchased by Ingalls and Snyder, a 10.1% shareholder of the Company. See
"Security Ownership of Certain Beneficial Owners and Management", below. The
notes are payable in 20 consecutive equal quarterly installments beginning in
October 1998. Interest, which is adjusted quarterly to the greater of 10% per
annum or 1% over the prime rate of interest, is payable quarterly. Throughout
fiscal year 1998, the notes bore interest at the rate of 10% per annum. The
notes are convertible into shares of Common Stock at a price of $20.00 per
share, subject to adjustment for certain events including a stock split of, or
stock dividend on, the Common Stock. The notes are redeemable, at the option of
the Company, at premiums declining 1% annually, beginning in 1997, from 5% to 0%
of the principal amount of the notes.
The Company is contingently liable for a demand loan made by a Canadian
bank to Dr. Joseph E. Magaro, a 15.4% shareholder of the Company, in the amount
of $100,000 in connection with the development of certain oil and gas properties
in Canada in which he participated. The loan is secured by Dr. Magaro's interest
in those oil and gas properties, the value of which, in the Company's opinion,
far exceeds the amount of the loan. The annual rate of interest currently
applicable to this loan is 6.4375%.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
<CAPTION>
The following table sets forth information as of December 8, 1998, with
respect to the beneficial ownership of the Common Stock, the sole voting
security of the Company, by (i) each person known to the Company who
beneficially owns more than 5% of the Common Stock, (ii) each director and
nominee of the Company, (iii) the Named Executive Officers and (iv) all
directors and executive officers of the Company as a group.
Amount and Nature of Percent
Name and Address of Beneficial Owner Beneficial Ownership (1) of Class
- ----------------------------------------------------------------- ----------------------- ---------
<S> <C> <C> <C>
Joseph E. Magaro 401 Riversville Road 219,510 (2) 15.4%
Greenwich, Connecticut
R. David Sudarsky 3050 North Ocean Boulevard 125,600 (3) 8.8%
Ft. Lauderdale, Florida
Morton H. Kinzler 1100 Alakea Street, Suite 2900 244,460 (4) 17.1%
Honolulu, Hawaii
<FN>
(1) A person is deemed to be the beneficial owner of securities that such
person can acquire as of and within the 60 days following the date of
this table upon the exercise of options or rights of conversion. Each
beneficial owner's percentage of ownership is determined by assuming
that options or conversion rights that are held by such person (but
not those held by any other person) and which are exercisable as of
and within 60 days following the date of this table have been
exercised. For purposes of the footnotes that follow, "currently
exercisable" means options that are exercisable as of and within 60
days following the date of this table and "currently convertible"
means conversion rights that are exercisable as of and within 60 days
following the date of this table. Except as indicated in the footnotes
that follow, shares listed in the table are held with sole voting and
investment power.
(2) Includes a note in the principal amount of $180,000 that is currently
convertible into 9,000 shares of Common Stock at a conversion price of
$20.00 per share.
(3) Includes a note in the principal amount of $90,000 that is currently
convertible into 4,500 shares of Common Stock at a conversion price of
$20.00 per share.
(4) Includes (i) a note in the principal amount of $360,000 that is
currently convertible into 18,000 shares of Common Stock at a
conversion price of $20.00 per share, and (ii) 11,000 shares of Common
Stock held by an estate of which Mr. Kinzler is a co-executor, as to
which shares Mr. Kinzler may be deemed to share voting and investment
power. Mr. Kinzler disclaims beneficial ownership of the shares held
by such estate.
</FN>
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Address Beneficial Ownership of Class
- ----------------------------------------------------------------- ----------------------- ---------
<S> <C> <C> <C>
Alan D. Hunter 44 Medford Place, S.W. 400 *
Calgary, Alberta, Canada
H. Whitney Boggs, Jr. 1801 Fairfield Avenue, Suite 401 4,342 *
Shreveport, Louisiana
Erik Hazelhoff-Roelfzema 1120, 639 Fifth Avenue S.W. 400 *
Calgary, Alberta, Canada
William C. Warren Roberts & Holland 28,000 2.0%
Worldwide Plaza
825 Eighth Avenue
New York, New York
Daniel Jacobson 575 Madison Avenue, 7th floor 5,000 *
New York, New York
Martin Anderson 1099 Alakea Street, Suite 1800 95,945 (5) 6.7%
Honolulu, Hawaii
Barry E. Emes 1227 Baldwin Crescent 1,000 *
Calgary, Alberta, Canada
Glenn Yago, Ph.D. 1250 Fourth Street, 2nd Floor 300 *
Santa Monica, California
Murray C. Gardner, Ph. D. P. O. Box 1657 1,400 *
Kamuela, Hawaii
Russell M. Gifford 7497 Maka'a Street 7,800 (6) *
Honolulu, Hawaii
Alexander C. Kinzler 671 Puuikena Drive 33,670 (7) 2.4%
Honolulu, Hawaii
Ingalls & Snyder 61 Broadway 144,800 (8) 10.1%
New York, New York
All directors and executive officers as a group (12 persons) 424,217 (9) 29.7%
<FN>
(5) Includes a note in the principal amount of $180,000 that is currently
convertible into 9,000 shares of Common Stock at a conversion price of
$20.00 per share.
(6) Includes currently exercisable options to acquire 5,000 shares of
Common Stock.
(7) Includes currently exercisable options to acquire 16,000 shares of
Common Stock.
(8) Includes a note in the principal amount of $900,000 that is currently
convertible into 45,000 shares of Common Stock at a conversion price
of $20.00 per share.
(9) Includes currently exercisable options held by executive officers of
the Company to acquire 21,000 shares of the Common Stock, and notes in
the aggregate principal amount of $540,000 held by directors of the
Company currently convertible into 27,000 shares of Common Stock at a
conversion price of $20.00 per share.
* Represents less than 1% of the outstanding shares of Common Stock of
the Company.
</FN>
</TABLE>
9
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
beneficial ownership on Forms 3, 4, and 5 with the Securities and Exchange
Commission and any national securities exchange on which such equity securities
are registered. Based solely on the Company's review of the copies of such forms
it has received and written representations from certain reporting persons that
they were not required to file reports on Form 5 during the most recently
completed fiscal year or prior years, the Company believes that all of its
officers, directors and greater than 10% beneficial owners complied with all
Section 16(a) filing requirements applicable to them during the Company's most
recently completed fiscal year.
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed KPMG Peat Marwick
LLP as the firm of independent public accountants to audit the accounts of the
Company for the year ending September 30, 1999. This firm expects to have a
representative available by telephone at the meeting who will have an
opportunity to make a statement if he or she desires to do so and will be
available to respond to appropriate questions.
PROPOSAL 1 - APPROVAL OF THE 1998 STOCK OPTION PLAN
On December 8, 1998, the Board of Directors adopted resolutions adopting
the Barnwell Industries, Inc. 1998 Stock Option Plan ( the "1998 Stock Option
Plan"), subject to approval by the Company's stockholders pursuant to Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). The Board of
Directors believes that the 1998 Stock Option Plan will provide an incentive to
executive officers of the Company to improve operating results, to remain in the
employ of the Company and to have a greater financial interest in the Company
through ownership of its Common Stock. The number of shares of Common Stock
which will be reserved for issuance upon the exercise of options granted under
the 1998 Stock Option Plan is 130,000 shares. The 1998 Stock Option Plan will
terminate on December 8, 2008, unless terminated earlier by the Board of
Directors.
The following summary of the 1998 Stock Option Plan is qualified in its
entirety by express reference to the text of the 1998 Stock Option Plan which is
annexed as Exhibit A hereto. The 1998 Stock Option Plan contemplates the
issuance of "incentive stock options" within the meaning of Section 422 of the
Code, as well as non-qualified stock options.
Purpose and Eligibility
The primary purpose of the 1998 Stock Option Plan is to attract and
retain capable executive officers by offering such persons a greater personal
interest in the Company's business through stock ownership. Executive officers
of the Company and its wholly-owned subsidiaries are eligible for grants of
stock options under the 1998 Stock Option Plan.
Administration
The 1998 Stock Option Plan will be administered by the Board of
Directors of the Company or a committee established for that purpose (the
"Committee"). The Committee, in its sole discretion, has the authority, among
other things, to prescribe the form of the agreement embodying awards of options
made under the 1998 Stock Option Plan, and to construe and interpret the terms
of the 1998 Stock Option Plan. Decisions of the Committee shall be final and
conclusive.
Terms and Conditions of Options
The exercise of an option granted under the 1998 Stock Option Plan will
be equal to the closing price of the Company's Common Stock on the trading day
prior to the date on which the option is granted (the "Exercise Price").
No option granted under the 1998 Stock Option Plan will be exercisable
earlier than the date six months following the date on which the option is
granted or after the expiration of ten years from the date on which the option
is granted. Subject to the foregoing, options granted under the 1998 Stock
Option Plan will become exercisable at the following times and in the following
amounts:
(i) 25% of the options granted will become exercisable on the first
anniversary of the date of grant of the options;
10
<PAGE>
(ii) 25% of the options granted will become exercisable on the second
anniversary of the date of grant of the options;
(iii) 25% of the options granted will become exercisable on the third
anniversary of the date of grant of the options; and
(iv) 25% of the options granted will become exercisable on the fourth
anniversary of the date of grant of the options.
Generally, if an optionee ceases to be employed by the Company for any
reason, any exercisable option held by the optionee will expire three months
from the date the optionee's employment terminates. If the Company or a
subsidiary has terminated the optionee for cause, all unexercised options shall
automatically lapse. In the event of death or disability of the optionee, the
option must be exercised within twelve months of the date of the optionee's
death or disability unless the option otherwise expires prior to the end of such
twelve month period.
Options granted under the 1998 Stock Option Plan are exercisable until
the earlier of (i) a date set by the Committee at the time of grant, or (ii) ten
years from their respective dates of grant. An incentive stock option granted to
an individual who owns, at the time of grant, stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
Company or a subsidiary (a "Ten Percent Shareholder") is exercisable for up to
five years after the date of grant unless a shorter period is designated by the
Committee.
The aggregate fair market value (determined at the time an option is
granted) of stock with respect to which incentive stock options are exercisable
for the first time by an optionee during any calendar year (under all such plans
of the Company or its subsidiaries) shall not exceed $100,000.
The Exercise Price of options granted under the 1998 Stock Option Plan
shall be determined by the Committee. In no event, however, may the Exercise
Price be less than the fair market value of the shares covered by options on the
date of grant. In the case of an incentive stock option granted to a Ten Percent
Shareholder, the Exercise Price cannot be less than 110% of such fair market
value on the date of grant. The Committee will determine the Exercise Price of
each option and the manner in which it may be exercised.
Payment for shares of Common Stock purchased upon exercise of an option
granted under the 1998 Stock Option Plan must be made in full at the time of
exercise. Payment of the Exercise Price must be made in cash (or an equivalent
acceptable to the Company) or, if approved by the Committee in its sole
discretion, in the form of shares of Common Stock. Upon the exercise of any
option, the optionee will be required to pay to the Company an amount sufficient
to pay all federal, state and local withholding taxes applicable to the exercise
of the option.
No award of options, or any right or interest therein, is assignable or
transferable except by will or the laws of descent and distribution. During the
lifetime of the optionee, options are exercisable only by the optionee or his
guardian or legal representative.
Adjustment for Changes in Capitalization, Merger, Etc.
Subject to any required action by the Company's stockholders, the
aggregate number of shares of Common Stock which may be purchased pursuant to
options granted under the 1998 Stock Option Plan, the number of shares of Common
Stock covered by each outstanding option and the per share Exercise Price shall
be adjusted by the Committee for any increase or decrease in the number of
outstanding shares of Common Stock if there is a change in the capital structure
of the Company.
Upon a sale of all or substantially all of the assets of the Company,
the discontinuance of business operations, the dissolution or liquidation of the
Company or a merger or consolidation in which the Company is not the surviving
corporation, the Board of Directors will amend or adjust the 1998 Stock Option
Plan and the outstanding options thereunder so as to terminate the 1998 Stock
Option Plan, or to continue the 1998 Stock Option Plan with respect to the
exercise of options which were exercisable at the date the Board of Directors
adopted the plan of sale, merger, consolidation or liquidation. In any case,
however, each optionee will be given either (i) a reasonable time in which to
exercise his options (to the extent possible under the options' terms) before
the effectiveness of the sale and discontinuation, merger, consolidation or
liquidation, or (ii) the right to obtain, upon payment of the Exercise Price, an
equivalent amount of any securities such optionee would have been entitled to
obtain in consequence of that event, had the optionee exercised the options (to
the extent possible under the options' terms) immediately before the plan of
sale and discontinuation, merger, consolidation or liquidation was adopted.
Terminations or Amendment
The Committee or the Board of Directors may from time to time amend, and
the Board of Directors may terminate, the 1998 Stock Option Plan at any time
without the approval of stockholders, provided that no such action shall
adversely affect options already granted thereunder without the consent of the
optionees and, provided further, that no amendment may be made without the
approval of the Company's stockholders if such stockholder approval of the
amendment is required to comply with applicable law.
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Federal Income Tax Considerations
The following is a summary of the federal income tax consequences of the
issuance and exercise of non-qualified stock options and incentive stock options
under the 1998 Stock Option Plan to optionees and to the Company under the Code.
THE FOLLOWING DISCUSSION DOES NOT PURPORT TO BE COMPLETE AND DOES NOT COVER,
AMONG OTHER THINGS, STATE AND LOCAL TAX TREATMENT OF PARTICIPATION IN THE 1998
STOCK OPTION PLAN. FURTHERMORE, DIFFERENCES IN OPTIONEES' FINANCIAL SITUATIONS
MY CAUSE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF PARTICIPATION IN THE 1998
STOCK OPTION PLAN TO VARY. THEREFORE, EACH OPTIONEE IN THE 1998 STOCK OPTION
PLAN IS URGED TO CONSULT HIS OWN ACCOUNTANT, LEGAL COUNSEL OR OTHER FINANCIAL
ADVISOR REGARDING THE PARTICULAR TAX CONSEQUENCES TO HIM OF PARTICIPATION IN THE
1998 STOCK OPTION PLAN, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE OR
LOCAL TAX LAWS, AND OF CHANGES IN APPLICABLE TAX LAWS.
Non-qualified Stock Options. The grant of a non-qualified stock
option will not result in the recognition of taxable income to the optionee for
federal income tax purposes or in a deduction to the Company. Upon the exercise
of a non-qualified stock option, the optionee will recognize ordinary income for
federal income tax purposes in an amount equal to the excess of the fair market
value of the shares of Common Stock over the option Exercise Price. Such amount
may be deductible by the Company if it complies with applicable withholding
requirements.
If an optionee disposes of any shares of Common Stock received
upon the exercise of a non-qualified stock option, such optionee will recognize
a capital gain or loss for federal income tax purposes equal to the difference
between the amount realized on the disposition of such shares and the fair
market value of such shares at the time the option was exercised. The gain or
loss will be either long-term or short-term, depending on the holding period.
The Company will not be entitled to any tax deduction in connection with such
disposition of shares.
Incentive Stock Option. In general no income will be recognized,
for federal income tax purposes, by the optionee and no deduction will be
allowed to the Company at the time of the grant or the time of exercise of an
incentive stock option.
When shares of Common Stock received upon the exercise of an
incentive stock option are sold, the optionee will recognize long-term capital
gain or loss for federal income tax purposes equal to the difference between the
amount realized and the option Exercise Price of the incentive stock option
relating to such shares, provided that the shares are not sold earlier than two
years from the date of grant of the option and one year from the date the shares
are transferred to the optionee. If the above-mentioned holding period
requirements of the Code are not met, the subsequent sale of the shares of
Common Stock received upon the exercise of an incentive stock option is a
"disqualifying disposition". In general, an optionee will recognize taxable
income for federal income tax purposes at the time of a disqualifying
disposition as follows: (i) ordinary income in an amount equal to the difference
between the option Exercise Price and the lessor of (a) the fair market value of
the shares of Common Stock on the date the incentive stock option was exercised
and (b) the amount realized on such disqualifying disposition and (ii) capital
gain or loss to the extent of any difference between the amount realized on such
disqualifying disposition and the fair market value of the shares of Common
Stock on the date the incentive stock option was exercised. Any capital gain or
loss will be long-term or short-term depending upon the holding period of the
shares that are sold. Under these circumstances, the Company may be entitled to
claim a deduction at the time of the disqualifying disposition equal to the
amount taxable to the optionee as ordinary income.
The difference between the option Exercise Price and the fair
market value of the shares of Common Stock on the date the option is exercised
will constitute an adjustment to taxable income for the year of exercise for
purposes of the alternative minimum tax imposed under the Code. In computing
alternative minimum taxable income in the year of disposition of the shares
acquired through the exercise of an incentive stock option, the tax basis of
such shares will be the fair market value on the date of exercise.
No Dissenters' Rights of Appraisal
Rights of appraisal will not be available under Delaware law with
respect to the proposed adoption of the 1998 Stock Option Plan.
VOTE REQUIRED
Approval of the adoption of the 1998 Stock Option Plan requires the
affirmative vote of a majority of the votes of holders of shares of Common Stock
represented at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" APPROVAL OF THE 1998
STOCK OPTION PLAN.
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STOCKHOLDER PROPOSALS
Any proposal submitted by a stockholder of the Company for action at the
next Annual Meeting of Stockholders will not be included in the proxy material
to be mailed to the Company's stockholders in connection with such meeting
unless such proposal is received at the principal office of the Company no later
than September 24, 1999.
GENERAL
No business other than those set forth in Item (1) and Item (2) of the
Notice of Annual Meeting of Stockholders is expected to come before the meeting,
but should any other matters requiring a vote of stockholders properly arise,
including a question of adjourning the meeting, the persons named in the
accompanying Proxy will vote thereon according to their best judgment in the
best interests of the Company.
Insofar as any of the information in this Proxy Statement may rest
peculiarly within the knowledge of persons other than the Company, the Company
has relied upon information furnished by such persons.
By Order of the Board of Directors,
/s/ Alexander C. Kinzler
------------------------
ALEXANDER C. KINZLER
Secretary
Dated: January 21, 1999
Stockholders may obtain a copy, without charge, of the Company's Annual
Report on Form 10-KSB, as filed with the Securities and Exchange Commission, by
writing to Alexander C. Kinzler, Barnwell Industries, Inc., 1100 Alakea Street,
Suite 2900, Honolulu, Hawaii 96813.
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EXHIBIT A
BARNWELL INDUSTRIES, INC.
1998 STOCK OPTION PLAN
1. Purpose. Barnwell Industries, Inc., a Delaware corporation (the
"Company"), intends that this 1998 Stock Option Plan (the "Plan") will provide
incentive to executive officers of the Company (which for purposes of the Plan
shall include its wholly-owned subsidiaries) to continue and increase their
efforts to improve operating results, to remain in the employ of the Company and
to have greater financial interest in the Company through ownership of its
Common Stock.
2. Administration. The Board of Directors of the Company or a committee
(the "Committee"), consisting of no fewer than two directors who are appointed
by the Board of Directors, shall administer the Plan. The Committee shall have
full power to construe and interpret the Plan and to establish and amend rules
and regulations for its administration. All action taken and decisions made by
the Committee pursuant to the Plan shall be final and conclusive. As used
herein, the word "Committee" shall be deemed to include the Board of Directors,
whether or not a committee shall have been appointed.
3. Eligibility. Persons eligible to receive options shall be executive
officers regularly providing services to the Company. Nothing contained in the
Plan shall be deemed to require the Company to continue the employment of, or
any other contractual arrangement with, any optionee.
4. Stock Subject to the Plan. Stock to be offered under the Plan shall
be shares of the Company's Common Stock, par value $.50 per share, which may be
authorized but unissued shares or shares acquired by the Company and held in its
treasury, as the Board of Directors may determine. Subject to Section 6 of the
Plan, not more than 130,000 shares of Common Stock shall be sold on exercise of
options granted under the Plan. For purposes of the Plan, the term "Common
Stock" includes any stock into which such Common Stock shall have been changed
or any stock resulting from any reclassification of such Common Stock.
5. Award of Options. The Committee may, in its discretion, grant options
under the Plan from time to time prior to the expiration of ten years from the
date on which the Company's Board of Directors adopts this Plan. The Committee
may grant options effective as of any date within such ten-year period as is
specified by the Committee in the Stock Option Agreement (defined below in
Section 7(1)) relating to such options. However, the Committee may not grant an
incentive stock option, as described in Section 8, if the grant of such option
would violate the requirement of Section 8(a). The shares covered by the
unexercised portion of any terminated or expired options shall become available
again for the grant of options under the Plan.
6. Adjustments.
(a) Subject to any required action by the stockholders of the
Company, in the event that the outstanding shares of Common Stock are hereafter
increased or decreased or changed into or exchanged for a different number or
kind of shares or other securities of the Company or of another corporation by
reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split, combination of shares, share dividends or the
sale of additional shares or conversion of securities convertible into such
shares the Committee shall adjust the number and kind of shares for the purchase
of which options may be granted under the Plan and the number and kind of shares
as to which outstanding options, or portions thereof then unexercised, shall be
exercisable. In any such case, the Committee shall make such adjustment in
outstanding options without change in the total price applicable to the
unexercised portion of the option and with a corresponding adjustment in the
option price per share.
(b) Should the Company sell all or substantially all of its
assets and discontinue its business, or merge or consolidate with another
entity, or liquidate or dissolve in connection with those events, then, in lieu
of its obligation under Section 6(a), the Company's Board of Directors shall
amend or adjust both the Plan and outstanding options so as to terminate the
Plan completely, or to continue the Plan with respect to the exercise of options
which were exercisable or became exercisable at the date the Board of Directors
adopted the plan of sale, merger, consolidation, or liquidation. In any such
case, however, each optionee will be given either (i) a reasonable time in which
to exercise his options (to the extent possible under the options' terms as set
forth in Section 7(c)) before the effectiveness of the sale and discontinuation,
merger, consolidation or liquidation, or (ii) the right to obtain, for his
payment of the option price, an equivalent amount of any securities such
optionee would have been entitled to obtain in consequence of that event, had he
exercised his options (to the extent possible under the options' terms as set
forth in Section 7(c)) immediately before the plan of sale and discontinuation,
merger, consolidation, or liquidation was adopted.
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(c) Should the Company be recapitalized in a transaction not
covered by Section 6(a) by the issuance of any other class or classes of
securities in exchange for Common Stock, the Board of Directors shall amend the
Plan and outstanding options to reflect an equivalent number of units of such
securities as being subject to the Plan and such options and to reflect an
adjusted option price per unit of such securities as would equitably be obtained
in accordance with the terms otherwise applicable to the actual exchange.
(d) Neither Section 6(b) nor 6(c) will require the Company to
issue any fractional share under the Plan or upon exercise of outstanding
options; and any amount payable for option exercise will be appropriately
reduced in respect of any such fractional shares otherwise required by operation
of those Sections, but not issued by reason of this Section 6(d).
7. Terms of Option. Except to the extent Section 8(b) hereof may
otherwise require with respect to incentive stock options to be granted to any
person who immediately before the grant of such option owns shares representing
more than 10% of the total combined voting power of all classes of shares of the
Company or any subsidiary, all options under the Plan shall be subject to the
following conditions and to such other conditions as the Committee and the
optionee may agree:
(a) Option Term. No option granted under the Plan will be
exercisable earlier than the date six months following the date on which the
option is granted or after the expiration of ten years from the date on which
the option is granted.
(b) Option Exercise Price. The exercise price of an option
granted hereunder shall be equal to the Closing Price (as hereinafter defined)
of the Company's Common Stock on the trading day prior to the date on which the
option is granted (the "Option Price"); provided, however, if on the date on
which the option is granted the Company's Common Stock is not listed on any
national securities exchange or quoted on an automated quotation system of a
registered securities association, the Option Price shall be the fair value per
share of the Common Stock as determined in good faith and on a reasonable basis
by the Board of Directors of the Company (the "Fair Market Value").
(c) Vesting Schedule. Options granted shall become exercisable at
such times and in such amounts as set forth below:
(i) 25% of the options granted shall become exercisable
on the first anniversary of the date of grant of such options.
(ii) 25% of the options granted shall become exercisable
on the second anniversary of the date of grant of such options.
(iii) 25% of the options granted shall become exercisable
on the third anniversary of the date of grant of such options.
(iv) 25% of the options granted shall become exercisable
on the fourth anniversary of the date of grant of such options.
Notwithstanding the preceding sentence, no incentive
stock option may be granted that would cause the limits of Section 8(a) to be
exceeded with respect to an optionee. The Committee, in its sole discretion, may
prescribe a different vesting schedule for any incentive stock option granted
under the Plan if necessary to prevent the option from violating the
requirements of Section 8(a). However, in no event shall any option become
exercisable earlier than the date six months following the date on which the
option is granted.
(d) Certain Definitions. For purposes of the Plan, the following
terms shall have the meanings set forth below:
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(i) "Cause", with respect to the termination of an
optionee's employment by the Company, shall mean (A) commission of a
significant act of dishonesty or deceit in the performance of the optionee's
duties to the Company; (B) willful failure by the optionee in any way to
substantially perform his duties to the Company (unless such failure is
curable and is cured within twelve days after the optionee receives
written notice of such failure); or (C) conviction of a felony, other than
a felony predicated upon the optionee' s vicarious liability;
(ii) "Closing Price" shall mean (i) the closing sale price
of the Company's Common Stock on any national securities exchange on which the
Company's Common Stock shall be registered and listed or (ii) if the Company's
Common Stock is traded in the over-the-counter market and quoted on the NASDAQ
Stock Market's National Market ("NASDAQ-NM"), the closing sale price of the
Common Stock on NASDAQ-NM or (iii) if the Company's Common Stock shall not at
the time be listed on any such exchange or quoted on NASDAQ-NM, but is traded in
the over-the-counter market and quoted on an automated quotation system of a
registered securities association, the closing price for such stock, as quoted
on such system; and
(iii) "Disability", with respect to the termination of an
optionee's employment by the Company, shall mean the optionee's physical or
mental inability, for a substantially consecutive period of one hundred eighty
(180) days in any consecutive twelve (12) month period, to render the services
to be performed by him for the Company.
When an installment of options has become exercisable,
the optionee may exercise that installment, in whole or in part, at any time
prior to the expiration or termination of the options. Subject to Section 7(a)
of the Plan and, in the case of incentive stock options, subject to Section
8(a), the Committee may accelerate the time at which outstanding options may be
exercised.
Notwithstanding any schedule for vesting stated above
or other exercise schedule or entitlement which effectively precludes full and
immediate exercise of the related option, any option will become immediately
exercisable in full upon the occurrence of the optionee's death, Disability,
termination of such optionee by the Company without Cause or a determination by
the Board of Directors that immediate exercisability would be in the best
interests of the Company and advisable for protection of the rights intended to
be granted under the option, provided that, in the case of an incentive stock
option, such acceleration would not cause the limits of Section 8(a) to be
violated.
(e) Exercise of Options. Only the optionee to whom the Company
has granted such rights or his guardian or legal representative may exercise
options. Shares may be purchased from time to time on the exercise of options
only by sending a written notice of election to exercise in the form attached to
the Stock Option Agreement, together with full payment of the option price
therefor, to the Secretary of the Company (i) in cash (or an equivalent check or
other form of payment acceptable to the Company), or (ii) if the Committee shall
approve in its sole discretion, other Common Stock of the Company currently
registered in the name of, or beneficially owned by, the holder and surrendered
in due form for transfer to the Company. In the case of payment in the Company's
Common Stock, such stock shall be valued at the Closing Price as of the date of
surrender of the Common Stock (or if no Closing Price was available for such
date, on the next preceding day for which a Closing Price was available);
provided, however, if on the date of surrender the Company's Common Stock is not
listed on any national securities exchange or quoted on an automated quotation
system of a registered securities association, then such stock shall be valued
at its then Fair Market Value.
(f) Termination of Options. Subject to Section 7(c) hereof, if an
optionee ceases to be employed by the Company for any reason, the exercise
period for all options theretofore granted to him shall expire three months
after his employment terminates and the number of shares into which such options
are exercisable will be limited to the number of shares into which such options
were exercisable by him on the date he ceased to be employed, except that: (i)
if an optionee is terminated for Cause, all unexercised options shall terminate
automatically on notice of termination and (ii) if the optionee's employment
shall have been terminated because of his Disability or death or, if the
optionee shall have died during the three month immediately following
termination of his employment (other that termination for Cause), the options
theretofore granted to him may be exercised by the optionee or, in the case of
death, by the estate of the optionee or by a person who acquired the right to
exercise such options by bequest, inheritance or by reason of the death of the
optionee, at any time within twelve months after the optionee's Disability or
death. Notwithstanding the provisions of this Section 7(f), nothing herein will
extend the terms of the options specified in Section 7(a) of the Plan.
(g) Payment of Taxes. Upon settlement of any options, it shall be
a condition to the obligation of the Company that the optionee pay to the
Company such amount as the Company may request for the purpose of satisfying its
liability to withhold federal, state or local income or other taxes.
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(h) Applicable Regulations. The Company shall not be obligated to
sell or issue any shares upon exercise of any option if the exercise thereof or
the delivery of shares thereunder would constitute a violation of any federal or
state securities law or listing requirements of any national securities exchange
or automated quotation system of a registered securities association on which
Common Stock may be listed or quoted.
(i) Purchase for Investment. In the event that the Company has
not registered the shares with respect to which options are being exercised
under the Securities Act of 1933, as amended, each optionee electing to purchase
such shares will be required to represent that he is acquiring such shares for
investment purposes only and not with a view to the sale or distribution
thereof, and to make such other representations as are deemed necessary by
counsel to the Company. Stock certificates evidencing such unregistered shares
acquired upon exercise of options shall bear a restrictive legend stating as
follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE PLEDGED OR HYPOTHECATED AND MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES
UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT, UNLESS IN THE OPINION
OF COUNSEL FOR THE COMPANY SUCH A LEGEND IS NOT NECESSARY.
(j) Rights as a Stockholder. The optionee shall have no rights as
a stockholder with respect to any shares covered by an option until the date of
issuance of a stock certificate for such shares. Without limiting the foregoing,
the Company shall make no adjustment for dividends or other rights for which the
record date is prior to the date such stock certificate is issued.
(k) Transfer of Option. A stock option shall not be transferable
other than by will or by the laws of descent and distribution.
(l) Form of Option. Options shall be evidenced by Stock Option
Agreements ("Stock Option Agreements") in such form as shall not be inconsistent
with the Plan. Any Stock Option Agreement entered into pursuant hereto may
contain such other terms, provisions and conditions not inconsistent herewith as
shall be determined by the Committee.
8. Incentive Stock Options. Options granted under the Plan to an
employee of the Company or any subsidiary may be incentive stock options (as
defined under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code")) or nonstatutory stock options, as determined by the Committee at the
time of grant of an option and subject to the applicable provisions of Section
422 of the Code and the regulations promulgated thereunder.
(a) Limit. No incentive stock option may be granted to an
optionee if the Closing Price in the aggregate at the date of grant of shares
with respect to which such option would first become exercisable in any calendar
year, when added to the Closing Price in the aggregate at the date of grant of
any other shares with respect to which an incentive stock option granted to such
optionee under this plan (or any other incentive stock option plan maintained by
the Company or any subsidiary) first becomes exercisable in such calendar year,
would exceed $100,000.
(b) 10% Stockholder. In the case of an incentive stock option
granted to an optionee who, immediately before the grant of such option, owns
shares representing more than 10% of the total combined voting power of all
classes of the shares of the Company, in no event shall the Option Price be less
than 110% of the Closing Price (as defined in Section 7(b) of the Plan) per
share of Common Stock on the date of grant, nor shall the option by its terms be
exercisable more than 5 years after the date such option is granted.
9. Use of Proceeds. Proceeds from the sale of Common Stock under the
Plan shall be added to the general funds of the Company.
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10. Indemnification of Committee. In addition to such other rights of
indemnification as they may have as members of the Board of Directors or as
members of the Committee, the Company shall indemnify the members of the
Committee against all costs and expenses reasonably incurred by them in
connection with any action, suit or proceeding to which they or any of them may
be party to by reason of any action taken or failure to act under or in
connection with the Plan or any award made under the Plan, and against all
amounts paid by them in satisfaction of a judgment in any such action, suit or
proceeding, except a judgment based upon a finding of bad faith. Upon the
institution of any such action, suit or proceeding, a Committee member shall
notify the Company in writing, giving the Company an opportunity, at its own
expense, to handle and defend the same before such Committee member undertakes
to handle it on his own behalf.
11. Successors in Interest. The Plan may be adopted and continued by any
successor or successors of the Company, whether by merger, consolidation, sale
of assets or otherwise. Whether or not the Plan is so adopted and continued, the
obligations of the Company under the Plan shall be binding upon any such
successor or successors, and for this purpose reference in the Plan to the
Company shall be deemed to include any such successors.
12. Amendment or Termination of the Plan. The Board of Directors may in
its discretion terminate the Plan with respect to any shares for which options
have not theretofore been granted. The Board of Directors and the Committee
shall have the right to alter or amend the Plan or any part thereof from time to
time; provided, however, no change which would impair the right of an optionee
may be made in any options theretofore granted, without the consent of such
optionee; and provided, further, that the Board of Directors or the Committee
may not, without appropriate approval of not less than a majority of the shares
of Common Stock (or other voting stock entitled to vote thereon at the time
outstanding) present in person or by proxy at a meeting of holders of such
shares, alter or modify the Plan so as to increase the maximum amount of Common
Stock which may be issued under the Plan, extend the term of the Plan or options
granted thereunder, reduce the price at which options may be granted or
exercised, or change the eligibility requirements for participation in the Plan.
13. Expenses. The Company shall bear the expenses of administering the
Plan, other than taxes or similar charges payable by any optionee.
14. Effective Date. The Plan shall be effective upon the date on which
the Board of Directors adopts the Plan. However, the Plan shall be effective
only if approved by the stockholders of the Company within twelve months of the
date the Plan is adopted by the Board of Directors, and options granted prior to
the date of such stockholder approval shall lapse and be of no further force or
effect if such approval is not obtained.
15. Funding. Anything herein contained to the contrary notwithstanding,
the Company shall not be required to set aside any amount at any time to fund
any obligations of the Company to make any payments to any optionee.
16. Right to Discharge Reserved. Nothing in the Plan shall confer upon
an optionee or any other person the right to continue in the employment of the
Company or any subsidiary or affect any right that the Company or such
subsidiary may have to terminate the employment of the optionee or any other
person.
17. Governing Law. All questions pertaining to the construction,
validity and effect of the Plan, or to the rights of any person under the Plan,
shall be determined in accordance with the laws of the State of New York.
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Appendix A
- ----------
FRONT OF CARD
PROXY
BARNWELL INDUSTRIES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned stockholder of Barnwell Industries, Inc., a Delaware
corporation, hereby appoints Morton H. Kinzler and Alexander C. Kinzler, and
each of them, attorneys, agents and proxies of the undersigned, with full
power of substitution to each of them, to vote all the shares of Common Stock
which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of the Company to be held at the Sheraton Shreveport Hotel, 1419
East 70th Street, Shreveport, Louisiana, on March 8, 1999, at 9:30 A.M.,
Central Standard time, and at any adjournment of such meeting, with all powers
which the undersigned would possess if personally present:
(Continued and to be signed on reverse side)
- -------------------------------------------------------------------------------
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BACK OF CARD
X Please mark your votes as in this example.
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1. The election of the 10 Directors listed at right:
FOR all nominees listed at right WITHHOLD AUTHORITY to vote
(except as marked to the contrary) for all nominees listed at right
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(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST AT RIGHT.)
Nominees:
Morton H. Kinzler, Barry E. Emes, Alan D. Hunter, H. Whitney Boggs, Jr., Erik
Hazelhoff-Roelfzema, William C. Warren, Daniel Jacobson, Martin Anderson,
Glenn Yago, Murray C. Gardner.
2. Approval of the 1998 Stock Option Plan.
For Against Abstain
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3. Upon any and all other business which may come before the meeting or any
adjournment thereof.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders, Proxy Statement of the Company for the Annual Meeting and the
Company's Annual Report to Stockholders for the fiscal year ended September
30, 1998.
This Proxy, when properly executed, will be voted in accordance with the
specification made hereon. If not otherwise specified, this Proxy will be
voted FOR the election of Directors as proposed herein and FOR the approval
of the 1998 Stock Option Plan.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
SIGNATURE DATE SIGNATURE DATE
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IF HELD JOINTLY
(Signature(s) should agree with name on stock certificate as stenciled hereon.
Executors, administrators, trustees, etc., should so indicate when signing.)
