BARNWELL INDUSTRIES INC — Proxy Solicitation & Information Statement 1996

Jan 18, 1996

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 4, 1996, 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; and (2) Any and all other business which may come before the meeting or any adjournment thereof. Only stockholders of record at the close of business on January 8, 1996, 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, 1995, 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 18, 1996 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 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 18, 1996. VOTING AT THE MEETING Only stockholders of record at the close of business on January 8, 1996, will be entitled to vote at the annual meeting and any adjournment thereof. As of the record date, 1,322,052 shares of Common Stock of the Company 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. If a broker indicates on the proxy that it does not have discretionary authority as to certain shares to vote on a particular proposal, those shares will not be considered as present at the meeting and will not be entitled to vote in respect of that proposal. ELECTION OF DIRECTORS At the meeting all nine directors of the Company are to be elected, each 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 vote of the Company's stockholders present 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. 1

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. William C. Warren, Chairman, and Messrs. Hunter, Jacobson, Anderson, 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, 1995, the Compensation Committee held one meeting. The members of the Audit Committee are Mr. Jacobson, Chairman, and Messrs. Emes, Yago 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, 1995, the Audit Committee held two meetings. 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, 1995, the Executive Committee held two meetings. The Board of Directors held two meetings during the fiscal year ended September 30, 1995. No director attended fewer than 75% of the aggregate of all meetings of the Board of Directors and of the Committees of the Board on which he served. 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.

3

4 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, 1995 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, 1995.

CERTAIN TRANSACTIONS 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 15.2% shareholder of the Company, $100,000 were purchased by Dr. R. David Sudarsky, an 8.7% shareholder of the Company, and $1,000,000 were purchased by Ingalls and Snyder, a 10.3% shareholder of the Company (1). The notes are payable in 20 consecutive equal quarterly installments beginning in October 1998. Interest is payable quarterly at an initial rate of 10% per annum until October 1, 1995, after which the interest rate will be adjusted quarterly to the greater of 10% per annum or 1% over the prime rate of interest. The notes are convertible into shares of the Company's 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 any time after July 1, 1997 at premiums declining 1% annually from 5% to 0% of the principal amount of the notes. In fiscal 1990 and 1991, two wholly-owned subsidiaries of the Company (each a "Subsidiary" and together the "Subsidiaries"), Mr. Martin Anderson, a director and shareholder of the Company ("Anderson"), and a corporation owned by Anderson ("MAPA"), formed two limited partnerships (the "Partnerships"), Pacific Tropical Products ("PTP") and Orchard Development ("Orchard"), to cultivate and process papaya in the State of Hawaii. A Subsidiary, MAPA and Anderson were the general partner, managing general partner and limited partner, respectively, of the Partnerships, and their initial partnership interests were 66-2/3 percent, 3-1/3 percent and 30 percent, respectively. Pursuant to an agreement effective August 1, 1992, among the Subsidiaries, MAPA and Anderson, the Company transferred the common stock of the Subsidiaries to Anderson, and thus the general partnership interests in the Partnerships, in consideration for (i) Anderson's assumption of the Subsidiaries' liabilities with respect to the Partnerships and (ii) MAPA's and Anderson's agreement to contribute additional capital to the partnerships thereafter. Simultaneously in March 1993, the Company acquired a 25 percent limited partnership interest in the Partnerships in consideration for $200 and the Company providing certain accounting and operational services to PTP and Orchard for a period of six months. On May 20, 1994, pursuant to an assignment agreement between the Company and Anderson, the Company transferred its 25 percent limited partnership interests in the Partnerships to Anderson in consideration for the release of the Company's future obligations with respect to the Partnerships. (1) See "Security Ownership of Certain Beneficial Owners, Directors and Officers", below. 5 The Company is contingently liable for a demand loan made by a Canadian bank to Dr. Joseph E. Magaro, a 15.2% 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 5.8125%. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND OFFICERS

6

7 OWNERSHIP REPORTS 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 ended September 30, 1996. This firm expects to have a representative available by telephone at the meeting who will have an opportunity to make a statement if he desires to do so and will be available to answer appropriate questions. 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 30, 1996. GENERAL No business other than that set forth in Item (1) 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 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 them. By Order of the Board of Directors, /s/ Alexander C. Kinzler ALEXANDER C. KINZLER Secretary Dated: January 18, 1996 Stockholders may obtain a copy, without charge, of the Company's Annual Report on Form 10-K, 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. 8 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 4, 1996, at 9:30 A.M., Shreveport 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) - -------------------------------------------------------------------------------- BACK OF CARD X Please mark your votes as in this example. ----- 1. The election of the 9 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 ----- ----- (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. 2. 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, 1996. 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. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. SIGNATURE DATE SIGNATURE DATE ------------------ -------- ------------------ -------- IF HELD JOINTLY (Signature(s) should agree with name on stock certificate as stenciled hereon. Executors, administrators, trustees, etc., should so indicate when signing.)