<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of April, 2000
SANTA FE INTERNATIONAL CORPORATION
(Translation of registrant's name into English)
5420 LBJ Freeway, Suite 1100, Dallas, Texas 75240
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
--- ---
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No X
--- ---
<PAGE> 2
PROXY MATERIALS
Enclosed herewith as Exhibit 1 is a copy of the Registrant's proxy
materials dated April 21, 2000 for the 2000 Annual General Meeting of
Shareholders of Santa Fe International Corporation.
EXHIBITS
1 Proxy materials dated April 21, 2000.
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<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SANTA FE INTERNATIONAL
CORPORATION
(Registrant)
Date: April 28, 2000 By: /s/ CARY A. MOOMJIAN, JR.
--------------------------------------
Cary A. Moomjian, Jr.
Vice President, Secretary and
General Counsel
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<PAGE> 4
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
1 Proxy materials dated April 21, 2000.
</TABLE>
<PAGE> 1
EXHIBIT 1
SANTA FE INTERNATIONAL CORPORATION
Two Lincoln Centre
5420 LBJ Freeway, Suite 1100
Dallas, Texas 75240-2648 U.S.A.
Telephone: (972) 701-7300
Dear Shareholder:
You are cordially invited to attend the Annual General Meeting of
Shareholders of Santa Fe International Corporation on Tuesday, June 6, 2000, at
2:00 p.m., Central Daylight Time. The meeting will be held at Four Seasons
Resort and Club, Dallas at Las Colinas, 4150 N. MacArthur Blvd., Irving, Texas
75038 U.S.A. Your Board of Directors and management look forward to greeting
shareholders able to attend in person.
At the meeting, you will be asked to consider and elect three Class III
Directors to serve until the Annual General Meeting of Shareholders to be held
in 2003. Your Board of Directors has unanimously nominated these persons for
election as Directors. You also are being asked to ratify the appointment of
Ernst & Young LLP as the Company's independent auditors for the Company's fiscal
year ending December 31, 2000. Information about the business to be conducted at
the meeting is set forth in the accompanying Proxy Statement, which you are
urged to read carefully. During the meeting, management will review the business
affairs and progress of the Company during the fiscal year ended December 31,
1999. Officers of the Company will be present to respond to questions from
shareholders.
The vote of every shareholder is important. The Board of Directors
appreciates and encourages shareholder participation in the Company's affairs.
Whether or not you plan to attend the meeting, please sign, date and return the
enclosed proxy promptly in the envelope provided or otherwise deliver same to
the address therein. Your shares will then be represented at the meeting. If you
attend the meeting, you may, at your discretion, withdraw the proxy and vote in
person.
On behalf of the Board of Directors, I thank you for your anticipated
cooperation and continued support.
Sincerely,
/s/ GORDON M. ANDERSON
Gordon M. Anderson
April 21, 2000 Chairman of the Board
<PAGE> 2
SANTA FE INTERNATIONAL CORPORATION
Two Lincoln Centre
5420 LBJ Freeway, Suite 1100
Dallas, Texas 75240-2648 U.S.A.
Telephone: (972) 701-7300
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 6, 2000
The Annual General Meeting of Shareholders of Santa Fe International
Corporation, a company incorporated under the laws of the Cayman Islands (the
"Company"), will be held at Four Seasons Resort and Club, Dallas at Las Colinas,
4150 N. MacArthur Blvd., Irving, Texas 75038 U.S.A., on June 6, 2000, at 2:00
p.m., Central Daylight Time, for the following purposes:
(1) To elect three Class III Directors to hold office until
the Annual General Meeting of Shareholders to be held in 2003 or until
their successors have been duly qualified and elected;
(2) To consider and act upon a proposal to ratify the
appointment of Ernst & Young LLP as the independent auditors of the
Company to audit the accounts of the Company for the fiscal year ending
December 31, 2000; and
(3) To transact such other business as may properly come
before the meeting or any adjournments or postponements thereof.
Only holders of the Company's ordinary shares, par value $0.01 per
share, of record at the close of business on April 14, 2000 are entitled to
notice of, and to vote at, the meeting or any adjournments or postponements
thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED
TO FILL OUT, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. PROXIES
FORWARDED BY OR FOR BROKERS OR FIDUCIARIES SHOULD BE RETURNED AS REQUESTED BY
THEM. THE PROMPT RETURN OF PROXIES WILL SAVE THE EXPENSE INVOLVED IN FURTHER
COMMUNICATION.
By Order of the Board of Directors,
/s/ CARY A. MOOMJIAN, JR.
Cary A. Moomjian, Jr.
April 21, 2000 Vice President, General Counsel and Secretary
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<PAGE> 3
SANTA FE INTERNATIONAL CORPORATION
Two Lincoln Centre
5420 LBJ Freeway, Suite 1100
Dallas, Texas 75240-2648 U.S.A.
Telephone: (972) 701-7300
PROXY STATEMENT
FOR
ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 6, 2000
This Proxy Statement is furnished to holders of the ordinary shares,
par value $0.01 per share (the "Ordinary Shares"), in connection with the
solicitation of proxies by the Board of Directors of Santa Fe International
Corporation, a company incorporated under the laws of the Cayman Islands (herein
referred to individually and, where the context so requires, collectively with
its subsidiaries and predecessors, as the "Company"), with a registered office
at P.O. Box 309, Ugland House, South Church Street, George Town, Grand Cayman,
Cayman Islands, BWI, for use at the Annual General Meeting of Shareholders of
the Company to be held at Four Seasons Resort and Club, Dallas at Las Colinas,
4150 N. MacArthur Blvd., Irving, Texas 75038 U.S.A., on June 6, 2000, at 2:00
p.m., Central Daylight Time, and at any and all postponements or adjournments
thereof (the "Annual Meeting" or "Meeting") for the purposes of:
(1) To elect three Class III Directors to hold office until
the Annual General Meeting of Shareholders to be held in 2003 or until
their successors have been duly qualified and elected;
(2) To consider and act upon a proposal to ratify the
appointment of Ernst & Young LLP as the independent auditors of the
Company to audit the accounts of the Company for the fiscal year ending
December 31, 2000; and
(3) To transact such other business as may properly come
before the meeting or any adjournments or postponements thereof.
The approximate date on which this Proxy Statement and accompanying proxy card
are first being sent or given to shareholders is April 28, 2000.
Ordinary Shares represented by each proxy, if properly executed and
returned to the Company prior to the Meeting, will be voted as directed, but if
not otherwise specified, will be voted for the election of the three nominees
for Class III Director and to ratify the appointment of Ernst & Young LLP as
auditors of the Company for the fiscal year ending December 31, 2000, all as
recommended by the Board of Directors. Pursuant to the Company's Amended and
Restated Articles of Association (the "Articles of Association" or "Articles")
and Cayman Islands law, holders of Ordinary Shares may appoint their own proxy,
who need not be a holder of Ordinary Shares, by written instrument in any usual
or common form.
If the Annual Meeting is postponed or adjourned for any reason, at any
subsequent reconvening of the Annual Meeting all proxies will be voted in the
same manner as such proxies would have been voted at the original convening of
the Annual Meeting (except for proxies which have theretofore effectively been
revoked or withdrawn), notwithstanding that they may have been effectively voted
on the same or any other matter at a previous meeting.
<PAGE> 4
The Board of Directors knows of no other business to be presented at
the Annual Meeting. If any other business is properly presented, the persons
named in the enclosed proxy have authority to vote on such matters in accordance
with such persons' discretion. A shareholder executing the proxy may revoke it
at any time before it is voted by giving written notice to the Secretary of the
Company.
The solicitation of proxies in the enclosed form is made on behalf of
the Company's Board of Directors. The entire cost of soliciting these proxies,
including the costs of preparing, printing and mailing this Proxy Statement and
accompanying materials to shareholders, will be borne by the Company. In
addition to use of the mails, proxies may be solicited personally or by
telephone or otherwise by officers, Directors and employees of the Company, who
will receive no additional compensation for such activities. Arrangements will
also be made with brokerage houses and other custodians, nominees and
fiduciaries to forward solicitation materials to the beneficial owners of shares
held of record by such brokerage houses, custodians, nominees and fiduciaries.
Such parties will be reimbursed for their reasonable expenses incurred in
forwarding the proxy materials.
VOTE REQUIRED FOR APPROVAL;
SHARES ENTITLED TO VOTE; RECORD DATE
The affirmative vote of the holders of a majority of the outstanding
Ordinary Shares present or represented by proxy and entitled to vote at the
Annual Meeting at which a quorum is present is required to elect each of the
three Class III Directors nominated for reelection to the Company's Board of
Directors and to ratify the appointment of Ernst & Young LLP as auditors of the
Company for the fiscal year ending December 31, 2000. The Company's Directors
and executive officers, and their affiliates (including the Company's principal
shareholder, SFIC Holdings (Cayman), Inc.), had, as of February 29, 2000, a
beneficial interest in an aggregate of 74,705,695 Ordinary Shares, representing
approximately 65% of the Ordinary Shares outstanding at the close of business on
April 14, 2000 (the "Record Date") and entitled to vote on all proposals to be
presented at the Annual Meeting. The presence at the Annual Meeting, whether in
person or by proxy, of the holders of at least a majority of the outstanding
Ordinary Shares entitled to vote thereat constitutes a quorum for the
transaction of business.
At the Record Date, there were outstanding 115,142,620 Ordinary Shares.
Only holders of record of Ordinary Shares at the Record Date will be entitled to
notice of, and to vote at, the Annual Meeting. Each Ordinary Share is entitled
to one vote for each Director to be elected and upon all other matters to be
brought to a vote by the shareholders at the forthcoming Annual Meeting.
In the election of Directors, votes may be cast in favor of or withheld
with respect to each nominee. Votes that are withheld and broker non-votes with
respect to the election of Directors will be excluded entirely from the vote and
will have no effect. Abstentions may be specified on all proposals, except for
the election of Directors. Abstentions and broker non-votes will be counted as
present for purposes of determining the existence of a quorum. Abstentions on
the proposals to ratify the appointment of Ernst & Young LLP will have the
effect of a negative vote because approval requires the affirmative vote of the
majority of the Ordinary Shares present or represented at the Annual Meeting.
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<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table is furnished as of February 29, 2000, to indicate
beneficial ownership of the Company's Ordinary Shares by (i) each person who is
known by the Company to be a beneficial owner of more than 5% of the Company's
Ordinary Shares and (ii) all executive officers and Directors of the Company as
a group. The information in the following table was provided by such persons.
<TABLE>
<CAPTION>
TITLE OF CLASS IDENTITY OF PERSON OR GROUP AMOUNT OWNED PERCENT OF CLASS
-------------- --------------------------- ------------ ----------------
<S> <C> <C> <C>
Ordinary Shares SFIC Holdings (Cayman), Inc. 74,500,000 64.8%
Ordinary Shares Directors and executive officers 205,695(1) 0.2%
as a group (18 persons)
</TABLE>
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(1) Does not include 44,600 restricted shares or 1,078,567 options that are
not exercisable within 60 days. Includes 15,036 shares held in the
Company's Investment Savings and Profit Sharing Plan and 250 shares held
by a spouse in a custodial account for the benefit of a minor child. Does
not include 800 shares held of record by the spouse of Mr. Ferdinand A.
Berger, a Director of the Company. Mr. Berger disclaims beneficial
ownership of such 800 shares. Does not include 74,500,000 shares over
which Mr. Nader Hamad Sultan, a director of the Company, has the
authority to cast votes on behalf of Holdings at the Company's 2000
Annual General Meeting of Shareholders. Mr. Sultan disclaims beneficial
ownership of such 74,500,000 shares.
PROPOSALS FOR CONSIDERATION AND VOTING
PROPOSAL 1 - ELECTION OF DIRECTORS
The Board of Directors of the Company currently has nine members. The
Company's Articles of Association divide the Board of Directors into three
classes having staggered terms of three years each, with Classes III , I and II
having initial terms expiring at the Annual General Meeting of Shareholders in
2000, 2001 and 2002, respectively. The Articles also require the number of
Directors to be not less than nine nor more than 15 and provide that the Board
is to determine, from time to time, the number of Directors to be on the Board.
Pursuant to the Articles, three Class III Directors are to be elected
at the Annual Meeting. Unless otherwise instructed, the proxy holders intend to
vote the proxies received by them FOR the three nominees below.
C. Stedman Garber, Jr.
Maha A.R. Razzuqi
Robert E. Wycoff
Set forth below in "Directors and Executive Officers" is biographical
information about each of the Company's nominees for Directors.
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<PAGE> 6
Each nominee has consented to being named in this Proxy Statement and
to serve if elected. If any nominee becomes unavailable for any reason or if a
vacancy should occur before the election, the shares represented by the proxies
will be voted for such person, if any, as may be designated by the Board of
Directors. However, management of the Company has no reason to believe that any
nominee will be unavailable or that any vacancy on the Board of Directors will
occur. The three nominees will serve until the Annual General Meeting of
Shareholders to be held in 2003 and until their successors are elected.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
NOMINEES FOR DIRECTOR NAMED ABOVE.
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, upon the recommendation of its Audit Committee,
has appointed Ernst & Young LLP ("E&Y") as the independent auditors of the
Company for the fiscal year ending December 31, 2000. Shareholders are being
asked to ratify this appointment. The Company has been informed that E&Y are
independent with respect to the Company within the meaning of the applicable
published rules and regulations of the Securities and Exchange Commission, the
pronouncements of the Independence Standards Board, and Rule 101 of the American
Institute of Certified Public Accountants' Code of Professional Conduct, its
interpretations and rulings.
Representatives of E&Y are expected to be present at the Meeting with
the opportunity to make a statement if they so desire and to be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR THE COMPANY FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2000.
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<PAGE> 7
DIRECTORS AND EXECUTIVE OFFICERS
The following is a list of the Directors and executive officers of the
Company as of February 29, 2000.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------- --- -----------------------------------------------------------
<S> <C> <C>
Gordon M. Anderson 67 Chairman of the Board and Class I Director
C. Stedman Garber, Jr. 56 President, Chief Executive Officer and Class III Director
Richard N. Haass 48 Class I Director
Khaled R. Al-Haroon 50 Class I Director
Ferdinand A. Berger 61 Class II Director
Stephen J. Solarz 59 Class II Director
Nader H. Sultan 51 Class II Director
Maha A. R. Razzuqi 44 Class III Director
Robert E. Wycoff 69 Class III Director
Roger B. Hunt 50 Senior Vice President, Commercial Manager
Seals M. McCarty 53 Senior Vice President and Chief Financial Officer
Tom L. Seeliger 56 Senior Vice President, Drilling Operations
Ali Awad 59 Vice President and Regional Manager
James A. Blue 54 Vice President and Regional Manager
Roger K. P. De Freitas 45 Vice President and Regional Manager
Steven J. Gangelhoff 48 Vice President and Regional Manager
Cary A. Moomjian, Jr. 52 Vice President, General Counsel and Secretary
James E. Oliver 50 Vice President, Controller and Treasurer
</TABLE>
Gordon M. Anderson has served as a Director of the Company since 1969.
Mr. Anderson was appointed President and Chief Executive Officer in 1991 and
became Chairman of the Board of Directors in 1993. Mr. Anderson has worked with
the Company since June 1954. Following several international assignments, he was
appointed President of Santa Fe Drilling Company in 1972. Mr. Anderson retired
as Chief Executive Officer in December 1997 and currently serves as a
non-employee Director and Chairman of the Board.
C. Stedman Garber, Jr. has served as a Director of the Company since
1989. Mr. Garber was employed by Getty Oil Company between 1977 and 1984. Mr.
Garber joined the Company in 1984 as Vice President of Planning and Acquisition
and in 1989 was appointed President of Santa Fe Minerals, Inc., a former
subsidiary of the Company. Mr. Garber was named Executive Vice President and
Chief Operating Officer of the Company in 1991, was appointed President and
Chief Operating Officer in December 1995 and was appointed Chief Executive
Officer effective January 1, 1998. Mr. Garber also serves as a Director of the
American Petroleum Institute, as Secretary-Treasurer of the International
Association of Drilling Contractors. Mr. Garber also serves as a Trustee of the
American University in Cairo.
Richard N. Haass has served as a Director of the Company since November
1998. Dr. Haass is Director of Foreign Policy Studies at the Brookings
Institution. A widely quoted expert on contemporary American foreign policy, Dr.
Haass also consults for NBC News, is a frequent contributor to foreign affairs
journals and major newspapers and is an author of several books. Dr. Haass has
extensive government experience and served as Special Assistant to President
George Bush and Senior Director on the staff of the National Security Council.
He was awarded the Presidential Citizens Medal for his contribution to the
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<PAGE> 8
development of U.S. policy during Operations Desert Shield and Desert Storm, has
held various posts in the Departments of State and Defense, and was a
legislative aide in the U.S. Senate.
Khaled R. Al-Haroon has served as a Director of the Company since
November 1998. Mr. Al-Haroon serves on the Board of Kuwait Petroleum Corporation
("KPC") and as its Managing Director of International Operations. He also serves
as the Chairman-Oils Sector Loss Assessment Committee and is the Deputy Chairman
of KPC's Higher Tender Committee. His career began in 1974 with the
International Marketing Group of the Kuwait National Petroleum Company. Since
1980, Mr. Al-Haroon has held various management positions at KPC. Mr. Al-Haroon
also serves as a Director of Holdings (defined herein under "Certain
Relationships and Related Transactions").
Ferdinand A. Berger has served as a Director of the Company since
September 1997. Mr. Berger retired from the Shell Group of Companies at the end
of 1996, having served in various management positions in South America, the
Middle East and Europe since 1965. He was appointed Senior Vice President of
Shell International Trading Company in 1987 and served as a Director of Shell
International Petroleum Company Limited, with responsibility for overall Shell
Group activities in the Middle East, Africa and South Asia from 1992 until his
retirement. He is also a Director of Xpronet Inc., a privately owned oil and gas
exploration and production company.
Stephen J. Solarz has served as a Director of the Company since
November 1998. Mr. Solarz is President of Solarz Associates, an international
consulting firm. He also is a Director of the George Washington University
Foreign Policy Forum, Vice Chairman of the International Crisis Group, and a
Senior Counselor at APCO Associates, Inc. Mr. Solarz serves on the Board of
several corporations including Samsonite, IRI International and the First
Philippine Fund, and is a Director of the National Endowment for Democracy, the
International Rescue Committee, the National Democratic Institute and the Balkan
Action Council Steering Committee. Mr. Solarz has served in public office for
twenty-four years, both in the New York Assembly and in the U.S. House of
Representatives. As a Congressman, Mr. Solarz served on various committees,
including the House Foreign Affairs Committee where he chaired the Subcommittee
on Africa and the Subcommittee on Asian and Pacific Affairs. He was appointed by
President Clinton as Chairman of the Board of the Central Asian-American
Enterprise Fund, served as President Clinton's special envoy to Cambodia and
co-chaired the National Democratic Institute's election observer delegation.
Nader H. Sultan has served as a Director of the Company since January
1995. Since 1993, he has served as Deputy Chairman and Managing Director,
Planning and International Operations, of KPC and was appointed Chief Executive
Officer of KPC in 1998. Mr. Sultan also serves as a Director of KPC and
Holdings.
Maha A. R. Razzuqi has served as a Director of the Company since August
1999. Mrs. Razzuqi is the KPC Executive Assistant Managing Director for
International Business Development. Mrs. Razzuqi has been associated with KPC's
international operations since 1996, including service on the Kuwait Foreign
Petroleum Company Board of Directors, and has held various management positions
in planning and marketing between 1986 and 1996. Mrs. Razzuqi also serves as a
Director of Holdings.
Robert E. Wycoff has served as a Director of the Company since
September 1997. Mr. Wycoff retired from the Atlantic Richfield Company ("ARCO")
in 1993, having served with ARCO since 1953. After holding various engineering
and management positions, he was named Vice President and Resident Manager of
ARCO's Alaska Region in 1973. Mr. Wycoff served as a Director, President and
Chief Operating Officer of ARCO from 1986 until his retirement. He is also a
Director of MagneTek, Inc., a publicly traded company engaged in electronic
equipment and controls.
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<PAGE> 9
Roger B. Hunt joined the Company in 1970. During the period 1977
through 1982, he was assigned to Venezuela as Assistant Zone Manager. In 1983,
he was named Vice President and Manager of International Sales and in 1988 was
assigned regional operations responsibilities as Vice President and Regional
Manager for Asia, Australia, Venezuela, Azerbaijan, West Africa and the Gulf of
Mexico. He assumed his current responsibilities as Senior Vice President,
Commercial Manager, during September 1997.
Seals M. McCarty joined the Company in 1985 concurrently with the
purchase of Keydril Company from Gulf/Chevron. He had served as Vice President
of Finance for Keydril since 1982. Mr. McCarty held various financial positions
with the Company including Vice President and Controller, before he was named as
Senior Vice President and Chief Financial Officer in January 2000.
Tom L. Seeliger joined the Company in 1965. He has worked in
progressively more senior management positions, primarily internationally,
including assignments in Nigeria, the North Sea, Libya, Argentina, Trinidad,
Venezuela and London. Mr. Seeliger served as Vice President and Area Manager for
North Sea operations from 1993 until January 2000, when he was named Senior Vice
President, Drilling Operations.
Ali Awad joined the Company in 1974 following a distinguished career
with major oil companies operating locally in Egypt. He held several managerial
positions in Egypt, including Zone Manager from 1979 to 1993. Mr. Awad served as
Vice President and Area Manager for all offshore and land operations in Egypt
and the Mediterranean area from 1993 to March 1999, when he was promoted to Vice
President and Regional Manager with responsibility for all operations in the
Middle East, North Africa and Mediterranean region.
James A. Blue joined the Company in 1965. He initially served in
various assignments in England, Egypt, Libya, Scotland and Venezuela. He was
named Vice President and Regional Operations Manager in 1989. In 1997, he
assumed his current position of Vice President and Regional Manager with
responsibility for operations in Azerbaijan, the Gulf of Mexico, Venezuela and
West Africa.
Roger K. P. De Freitas joined the Company in 1974. He initially served
in various operational and supervisory assignments in Trinidad, Scotland, Great
Yarmouth, Egypt, Yemen and Singapore. Mr. De Freitas served as Operations
Manager in the North Sea and Zone Manager in Trinidad before assuming his
current position as Vice President and Regional Manager for Western
Europe/Canada in January 2000.
Steven J. Gangelhoff joined the Company in 1985 concurrently with the
purchase of Keydril Company from Gulf/Chevron. He served as Regional Manager,
Eastern Hemisphere for Keydril since 1982, and prior to that held various
operations positions with Keydril. Since 1985, he has held operations and
management positions with the Company in the U.S., South America, Malaysia and
Indonesia and served as Regional Marketing Manager Southeast Asia/Australia from
1991 to 1996. He assumed his current position as Vice President and Regional
Manager for Southeast Asia in January 2000.
Cary A. Moomjian, Jr. joined the Company in 1976. After two years as
Corporate Marine Counsel, Mr. Moomjian served as Santa Fe Drilling Company's
Senior Counsel and then Vice President, General Counsel. In 1983, Mr. Moomjian
was named Vice President, Contracts for Santa Fe Drilling Company. In January
1994, Mr. Moomjian was named Vice President, General Counsel and Secretary.
James E. Oliver joined the Company in 1985 and served as Vice
President-Finance for Santa Fe Minerals, Inc., a former subsidiary of the
Company. He was named Vice President and Treasurer of the Company in 1993 and
assumed his current responsibilities as Vice President, Controller and Treasurer
in January 2000.
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<PAGE> 10
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
BOARD OF DIRECTOR MEETINGS
During the year ended December 31, 1999, the Board of Directors met six
times, including one telephonic meeting. The Board of Directors also acted seven
times by unanimous written consent during said period and conducted its
statutory meeting under Cayman Islands law by proxy. All Directors attended at
least 75% of the aggregate of the meetings of the Board of Directors of the
Company and of the committees of the Board of Directors on which they served.
AUDIT COMMITTEE
Pursuant to the Company's Articles of Association, the Audit Committee
reviews and reports to the Board of Directors on the scope and results of audits
by the Company's auditing firm and internal auditing staff. The Audit Committee
periodically recommends a firm of certified public accountants to serve as
auditors for the Company and reviews such information as is necessary to ensure
the independence and integrity of the auditors. The Audit Committee is also
responsible for overseeing the Company's Business Conduct Policy. During the
year ended December 31, 1999, there were three meetings of the Audit Committee.
The Audit Committee also acted one time by unanimous written consent during said
period. The members of the Audit Committee are Messrs. Berger, Al-Haroon, Solarz
and Mrs. Razzuqi. Mr. Berger serves as Chairman of the Audit Committee.
COMPENSATION COMMITTEE
Pursuant to the Company's Articles of Association, the Compensation
Committee reviews, approves and oversees the Company's compensation and benefit
policies and programs. For the year ended December 31, 1999, there were four
meetings of the Compensation Committee. The members of the Compensation
Committee are Messrs. Berger, Haass, Sultan and Wycoff. Mr. Wycoff serves as
Chairman of the Compensation Committee.
EXECUTIVE COMMITTEE
In September 1997, the Board of Directors established an Executive
Committee. The Executive Committee was granted all powers and authorities of the
Board of Directors in the management of the business and affairs of the Company,
except as may be limited by applicable law, the Intercompany Agreement (as
defined below) or the Company's Memorandum of Association and Articles of
Association. Further, the Executive Committee may not declare a dividend or
adopt an agreement of merger or consolidation and is not generally authorized to
approve transactions in excess of $10 million per transaction. The Executive
Committee did not meet during the year ended December 31, 1999. The members of
the Executive Committee are Messrs. Garber, Al-Haroon, Sultan and Wycoff. Mr.
Garber serves as Chairman of the Executive Committee.
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<PAGE> 11
NOMINATING AND GOVERNANCE COMMITTEE
In September 1997, the Board of Directors established a Nominating
Committee. During March 1999, the Board changed the name of the Committee to the
Nominating and Governance Committee. The Committee has been designated to make
recommendations to the Board of Directors concerning the composition of the
Board of Directors, the nominees to fill vacancies or new positions and nominees
of the Board of Directors for election by the Company's shareholders at the
Annual General Meeting. In September 1999, the Committee's charter was revised
to include new responsibilities in the area of corporate governance, which
include ensuring that the Board and Board committees are empowered to
effectively carry out their responsibilities to oversee and monitor the
Company's performance and to participate in development and implementation of
corporate governance policies. The Nominating and Governance Committee met two
times during the year ended December 31, 1999. The Nominating and Governance
Committee also acted one time by unanimous written consent during said period.
The members of the Nominating and Governance Committee are Messrs. Anderson,
Haass, Solarz and Mrs. Razzuqi. Mr. Anderson serves as Chairman of the
Nominating and Governance Committee.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS AND OFFICERS
For the calendar year ended December 31, 1999, the aggregate
remuneration paid by the Company (which includes salary and other cash payments
under the Company's benefit plans and policies) to all Directors and executive
officers of the Company as a group (19 persons, including one former Director,
one deceased executive officer and two executive officers who retired effective
December 31, 1999) for services in all capacities was $7,837,053.
The Company and Gordon M. Anderson, a Director of the Company, entered
into a Consulting Agreement dated December 10, 1997 pursuant to which Mr.
Anderson received certain compensation. See "Certain Relationships and Related
Transactions - Consulting Agreement."
DIRECTOR FEES AND STOCK OPTIONS
Effective July 1, 1997, the Board adopted a policy whereby each
non-employee Director is paid an annual retainer fee of $20,000 plus meeting
fees of $2,000 for each Board and committee meeting (other than telephonic
meetings) attended by that Director. Each non-employee Director also is paid a
meeting fee of $500 for any Board or committee telephonic meeting of one hour or
longer and an additional $1,000 for each Board meeting such Director attends
outside his or her country of residence. Each non-employee Director who serves
as a committee chairman receives an additional meeting fee of $1,000. The
Company also reimburses its Directors for travel, lodging and related expenses
they may incur attending Board and committee meetings. The Company has also
adopted a stock option plan for non-employee Directors. See "-- Long Term
Incentive Plans -- 1997 Non-Employee Director Stock Option Plan." Effective
January 1, 1999, non-employee Directors are permitted to defer receipt of cash
compensation for Director service pursuant to a Deferred Compensation Plan
adopted by the Company in December 1998.
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INVESTMENT SAVINGS AND PROFIT SHARING (401(k)) PLAN
The Company maintains an Investment Savings and Profit Sharing Plan, a
defined contribution 401(k) plan that allows dollar payroll employees to make
both pre-tax and after-tax employee contributions. The Company matches these
employee contributions up to a maximum of 5% of a participant's base salary
subject to the limitations of eligible salary. Employees are vested in all
contributions made. Additionally, although it has not done so since 1984 and
does not currently expect to do so in the future, the Company has the option to
make additional employer contributions any year out of profits.
ANNUAL INCENTIVE COMPENSATION PLAN
The Company also maintains an Annual Incentive Compensation Plan
("AIP"). The AIP provides for payment of additional compensation to
participating employees, including executive officers, based on individual
contributions and overall performance of the Company and its key operating
business units during the fiscal year. The AIP is administered by the
Compensation Committee. Employees of the Company and its subsidiaries eligible
for awards under the AIP are executive officers, officers and other key
management personnel of the Company and its subsidiaries, whose performance, in
the judgment of the Compensation Committee, can have a significant effect on the
success of the Company. During the term of the AIP, an aggregate of 286,250
Ordinary Shares will be available for awards granted wholly or partly in
Ordinary Shares under the AIP.
In general, the Compensation Committee will establish a target
incentive award for each participant based on performance measures (and
performance scales for the measures) and individual objectives. The maximum
target incentive award shall not exceed 100% of the participant's base salary in
effect at the beginning of the plan year. The current performance measures are
(i) cash flow from operations and (ii) return on average capital employed as
compared to certain peer group companies set forth in the AIP. In general,
except for "covered employees," as defined in Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code") (relating to deduction limits for
compensation over $1 million), the Compensation Committee has discretion to vary
these measures and the relative weight to assign to the various objectives. With
respect to covered employees, the individual objectives must be capable of
determination by a third party and all of the objectives must be established
during the first 90 days of the plan year.
In the event of a Change in Control (as defined below), (i) if the
various objectives have not yet been determined during the plan year, then the
objectives and participants shall generally be based on the same rules as set
forth in the preceding plan year and (ii) in general, participants are eligible
for full unprorated target incentives for that year.
PENSION PLANS
The Company maintains a tax-qualified pension plan for employees of the
Company and participating subsidiaries who are residing in or are citizens of
the U.S. and who have completed one year of service, and a "mirror"
non-qualified pension plan for selected non-U.S. management and other employees
of the Company and participating subsidiaries which provides substantially
similar benefits (hereafter referred to collectively as the "Pension Plans"). In
addition, the Company maintains two non-qualified pension plans that provide
certain additional pension benefits.
The Pension Plans provide for monthly retirement benefits upon normal
retirement at age 62 based on the number of credited years of service and the
average of the highest 60 months of salary covered by the
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<PAGE> 13
Pension Plans. The Pension Plans permit retirement as early as age 55 with
reduced benefits. The Equity Restoration Plan restores to Pension Plan
participants any benefits otherwise lost as a result of the benefit limitations
contained in Section 415 of the Code and limitations contained in Section
401(a)(17) of the Code on the amount of compensation includable in determining
benefits provided by tax-qualified trusts. The Company's Supplemental Executive
Retirement Plan ("SERP") provides additional benefits for a select group of
management employees as a means to attract and retain employees of exceptional
ability who are critical to the Company's success.
For employees who participate only in the Pension Plans and the
Company's Equity Restoration Plan, the annual retirement income benefit is equal
to 1.525% of the participant's average annual base salary in the highest 60
consecutive months during the final 10 years of service multiplied by years of
credited service, plus 0.475% of this same base salary amount less the
participant's Social Security Covered Compensation (as defined), multiplied by
years of credited service not exceeding 35 years. For employees who also
participate in the SERP, the benefit so calculated will be 60% of the
participant's average annual salary and bonus in the highest consecutive 36
months during the final five years of service, reduced ratably for service under
15 years.
LONG TERM INCENTIVE PLANS
Performance Unit Plan
On June 28, 1995, the Company adopted the Santa Fe International
Corporation Performance Unit Plan ("Performance Unit Plan") to provide incentive
via performance share units to foster and promote the long- term financial
success of the Company and materially increase the value of the equity interests
of the shareholder.
Each unit awarded under the Performance Unit Plan represents the right
to receive an amount in cash on the date of payout, the amount of which depends
upon the Company's targeted three-year total cash flow from operations and a
return on fixed assets (three-year average of the annual cash flow from
operations divided by fixed assets) compared to a comparative group of peer
companies. The minimum (threshold) is $20 per unit, which is payable if the
Company's cash flow from operations equals 80% of targeted cash flow from
operations and the Company's return on fixed assets equals the 40th percentile
of its peer companies. If the results are less than threshold for any of the two
performance criteria, no awards are earned. The target amount of $100 per unit
is payable if the Company meets targeted total cash flow from operations and
return on fixed assets equals the 60th percentile of its peer companies. The
maximum amount of $300 per unit is payable if the Company's cash flow from
operations equals or exceeds 150% of targeted cash flow from operations and
return on fixed assets equals or exceeds the 90th percentile of peer companies.
As of December 31, 1998, there were 14 participants in the Performance Unit
Plan.
The last awards under the Performance Unit Plan were granted in
December 1996. No further awards will be made under the Performance Unit Plan.
The Performance Unit Plan remained in existence until the last performance cycle
has elapsed and payouts were made to participants. The Performance Unit Plan was
terminated in September 1999, shortly after the results had been finalized for
the third plan year ending June 30, 1999.
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<PAGE> 14
1997 Long Term Incentive Plan
The Company has adopted the 1997 Long Term Incentive Plan (the "LTIP"),
which is designed to retain key executives and other selected employees by
rewarding them for making major contributions to the success of the Company and
to provide participants with a proprietary interest in the growth and
performance of the Company.
Employees of the Company eligible for awards under the LTIP are
executive officers, other officers and key management personnel selected by the
Compensation Committee (including employees who are Directors), and whose
performance, in the judgment of the Compensation Committee, can have a
significant effect on the success of the Company. As of December 31, 1999, there
were 409 persons who participated in the LTIP. Awards under the LTIP may consist
of the grant of stock options, share appreciation rights, restricted and/or
performance-based share awards and/or restricted and/or performance-based cash
awards, granted singly, in combination or in tandem. The exercise price for
stock options shall not be less than 85% of the fair market value of the stock
on the date of the option grant (100% in the case of incentive stock options).
The Compensation Committee can also award supplemental payments up to the amount
necessary to pay the federal income tax payable with respect to exercise of
non-qualified stock options, share appreciation rights, restricted shares and
performance units. If approved by the Compensation Committee, the Company may
also make loans to participants to purchase shares pursuant to the exercise of
an award. During the term of the LTIP, an aggregate of 5,725,000 Ordinary Shares
will be available for awards granted wholly or partly in Ordinary Shares under
the LTIP. No participant may receive during a fiscal year incentive awards
covering an aggregate of more than 150,000 Ordinary Shares.
The Compensation Committee is responsible for administration and
interpretation of the LTIP. When a participant's employment with the Company is
terminated, any unexercised, deferred or unpaid awards will be treated as
provided in the specific agreement evidencing the award. If a participant
terminates for "good reason" (as defined in the LTIP) within two years after a
Change in Control (as defined below), all outstanding stock options shall become
vested and immediately exercisable and will remain exercisable until the earlier
of the expiration of their term or the first anniversary of the termination of
employment, all shares of restricted stock will immediately cease to be
forfeitable and all conditions relating to realization of any other stock-based
or non-stock award will immediately terminate. In addition, upon a Change in
Control (as defined below), the Company will have the right to cash out all
incentive awards (and all non-vested awards will vest) based on their fair
market value; for this purpose, their market value will be the average fair
market value per share on each of the five trading days immediately following a
Change in Control or the highest price per share, if any, offered in connection
with a Change in Control, whichever is higher. This cash out is automatic if the
stock of the surviving entity in a Change in Control is not publicly traded.
As of February 29, 2000, an aggregate of 1,072,375 options to purchase
the Company's Ordinary Shares (net of canceled or expired options) had been
granted under the LTIP to all Directors and executive officers as a group (18
persons). Such options were granted at exercise prices ranging from $12.25 to
$45.00 per Ordinary Share and expire ten years from date of grant or earlier. In
addition, the Company has granted restricted share awards for an aggregate of
48,600 Ordinary Shares (net of canceled, expired or issued shares) to all
Directors and executive officers as a group (18 persons).
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<PAGE> 15
1997 Non-Employee Director Stock Option Plan
The 1997 Non-Employee Director Stock Option Plan (the "Director Plan")
has been adopted by the Company. The Director Plan is designed to attract and
retain the services of experienced and knowledgeable non-employee Directors and
to provide non-employee Directors with a proprietary interest in the growth and
performance of the Company. Awards under the Director Plan consist of a grant of
stock options. The purchase price for the shares as to which the option is
exercised will be payable in full upon exercise, in cash or, if permitted by the
Compensation Committee, by tender of Ordinary Shares, valued at "fair market
value." During the term of the Director Plan, an aggregate of 286,250 Ordinary
Shares will be available for awards granted wholly or partly in Ordinary Shares.
No option will be granted under the Director Plan after 10 years following
consummation of the Company's initial public offering of Ordinary Shares in June
1997. The Compensation Committee is responsible for administration and
interpretation of the Director Plan.
As of February 29, 2000, an aggregate of 97,000 options to purchase the
Company's Ordinary Shares (net of canceled or expired options) had been granted
under the Director Plan to eight non-employee Directors who participated in the
Director Plan. Such options were granted at exercise prices ranging from $12.25
to $45.50 per Ordinary Share. Any new non-employee Director will be granted a
one-time award of a right to purchase 10,000 Ordinary Shares (increased from
4,000 by amendment of the Director Plan in March 1999) upon their election to
the Board at the fair market stock price/value on the date of their election.
Each non- employee Director who continues in office immediately following the
Annual General Meeting of Shareholders in any year (commencing in 1998) will
automatically be granted an option to acquire 5,000 shares of Ordinary Shares
(increased from 2,000 by amendment of the Director Plan in March 1999). The
Board may increase the number of options granted, provided that a non-employee
Director cannot receive more than 22,000 options (increased from 10,000 by
amendment of the Director Plan in December 1998) in any year. The price of
shares that may be purchased upon exercise of an option is the fair market value
of the Ordinary Shares on the date of the grant. Options granted pursuant to the
Director Plan are exercisable in installments of 33 1/3% upon each anniversary
of the date of grant. The term of each option is for a period not exceeding 10
years from the date of grant.
In the event of a Change in Control of the Company (as defined below),
all outstanding stock options will become vested and immediately exercisable and
will remain exercisable until the earlier of the expiration of their term or the
first anniversary of the Change in Control. In addition, the Company may cash
out options upon a Change in Control; these provisions are substantially the
same as set forth in the LTIP.
1997 Employee Share Purchase Plan
The Company has adopted the 1997 Employee Share Purchase Plan (the
"Share Purchase Plan"), which is designed to furnish eligible employees of the
Company and designated subsidiaries of the Company an incentive to advance the
best interests of the Company by providing a formal program whereby they may
voluntarily purchase Ordinary Shares of the Company at a favorable price and
upon favorable terms. Generally speaking, all covered employees of a
participating company who are scheduled to work an average of at least 20 hours
per week are eligible to participate in the Plan.
Once a year, participants in the Share Purchase Plan are granted
options to purchase Ordinary Shares with a fair market value equal to the lesser
of 10% of the participant's eligible compensation (as defined in the Share
Purchase Plan) and the amount specified in Section 423(b) of the Code (currently
$25,000). The exercise price of the options is 85% of the fair market value of
the Ordinary Shares on the date of grant or the date of exercise, whichever is
less. Options granted under the Share Purchase Plan are exercisable on the date
one year
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<PAGE> 16
after the date of grant. Generally, participants pay option exercise prices
through payroll deductions made ratably throughout the year. An aggregate of
572,500 Ordinary Shares are available for grants of options under the Share
Purchase Plan. The Share Purchase Plan, which became effective January 1, 1998,
is administered by the Administrative Committee for the Employee Benefit Plans
of the Santa Fe International Corporation. An aggregate of 159,411 and 192,938
Ordinary Shares were issued in January of the following year to participating
employees for the years ended December 31, 1999 and 1998, respectively, at
exercise prices of $12.325 and $10.997 per Ordinary Share.
1997 Employee Severance Protection Plan
The Company maintains the 1997 Employee Severance Protection Plan (the
"Severance Protection Plan") to retain the services of its employees in the
event of an unsolicited takeover of the Company or in the event of a threat of a
Change in Control of the Company. The Severance Protection Plan is intended to
ensure the continued dedication and efforts of the Company's employees in such
events without undue concern for their personal financial and employment
security. The Severance Protection Plan covers all full-time U.S.-based payroll
employees as defined therein. Severance is only payable in the event of a
termination of employment by the Company other than for "cause" or voluntary
termination by the Employee for "good reason," each as defined in the Severance
Protection Plan, within a specified period following a Change in Control. A
participant will also receive severance if the employee is terminated by the
Company without "cause" or for "good reason" at the request or direction of the
third party involved in the Change in Control or otherwise in connection with or
in anticipation of a Change in Control.
Executive Severance Protection Agreements
Commencing in 1999, the Company entered into Executive Severance
Protection Agreements (the "Executive Agreements") with certain of its officers
supplementing the provisions of the Severance Protection Plan for purposes of
insuring the continued dedication and efforts of the Company's executives. The
Executive Agreements provide certain benefits supplemental to and in lieu of the
Severance Protection plan in the event of termination of employment (other than
for "cause") or voluntary termination for "good reason" following a Change in
Control of the Company, each as defined in the Severance Protection Plan, within
two years following a Change in Control. The benefits applicable upon a Change
in Control and termination of the executive's employment include severance
compensation based upon three times annual salary and AIP bonus, a gross-up for
any applicable excise tax, extension of welfare benefits for three years or
until employment affording such benefits is secured, and an addition of three
years service time and three years age for purposes of calculating the
executive's pension plan benefits. In consideration for such supplemental
severance protection, the Executive Agreements contain a one year worldwide
non-compete provision, confidentiality undertakings and provisions limiting the
application of "good reason" in respect of a relocation to another office of the
Company or its successor. As of February 29, 2000, Executive Agreements had been
entered into with fourteen of the Company's officers.
DEFINITION OF CHANGE IN CONTROL
A "Change in Control" for all of the Company's benefit plans described
above is generally deemed to occur (a) if any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) is or becomes the beneficial owner (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of the Company's
then outstanding securities; (b) if, during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the
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<PAGE> 17
Company cease for any reason to constitute at least a majority thereof, unless
the election or nomination for the election by the Company's shareholders of
each new Director was approved by a vote of at least two-thirds of the Directors
then still in office who were Directors at the beginning of the period; (c) upon
consummation of a merger, consolidation or similar event, if the equity holders
of the Company prior to the transaction have beneficial ownership of less than
50% of the combined voting power of the surviving entity; (d) upon any sale,
disposition or similar transaction of 50% or more of the assets or earning power
of the Company or business operations which generate a majority of the
consolidated revenues; (e) upon a liquidation of the Company; or (f) (as amended
in November 1999) upon consummation of a merger of equals or similar event, if
the equity holders of the Company prior to the transaction have beneficial
ownership of less than 55% of the combined voting power of the surviving entity
or such greater percentage as may be approved by the Board.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of February 29, 2000, SFIC Holdings (Cayman), Inc. ("Holdings"), a
wholly-owned subsidiary of KPC, beneficially owns approximately 64.8% of the
outstanding Ordinary Shares. KPC is wholly owned by the Government of Kuwait.
Accordingly, KPC through Holdings is able to elect the Board of Directors of the
Company and effectively control the outcome of the vote on certain matters
submitted to a vote of the Company's shareholders. The Company, Holdings and KPC
have entered into agreements with respect to the approval by Holdings of certain
future corporate actions by the Company, the management and allocation of
certain liabilities relating to former non-drilling activities of the Company,
registration rights for the Ordinary Shares owned by Holdings, and various other
matters. This section describes certain transactions among KPC, Holdings and the
Company that occurred prior to the Company's initial public offering of Ordinary
Shares in June 1997 (the "Offering") and certain arrangements that are now in
effect. Because the Company is controlled by KPC, these transactions and
arrangements were not the result of arms-length negotiations. See also
"Directors and Executive Officers."
CONTRACT DRILLING SERVICES
The Company provides contract drilling and associated services in
Kuwait to the Kuwait Oil Company K.S.C. ("KOC"), a subsidiary of KPC, and also
provides contract drilling services to a partially owned affiliate of the Kuwait
Oil Company in the Kuwait-Saudi Arabia Partitioned Neutral Zone. Such services
are performed pursuant to drilling contracts which contain terms and conditions
and rates of compensation which materially approximate those which are
customarily included in the Company's arms-length contracts of a similar nature.
In connection therewith, KOC provides the Company rent-free use of certain land
and maintenance facilities and has committed to continue providing same, subject
to availability of the maintenance facilities, through the current February 2001
term of the drilling contracts. In relation to its drilling business in Kuwait,
the Company has an agency agreement with a subsidiary of KPC which obligates the
Company to pay an agency fee based upon a percentage of revenues. The Company
believes the terms of this agreement are more favorable than those which could
be obtained with an unrelated third party in an arms-length negotiation and
recently received a request to increase the agency fee. The value of such
favorable terms and the proposed fee increase are currently immaterial to the
Company's results of operations.
The Company earned revenues from KPC affiliated companies in the
ordinary course of business of $56.1 million for the year ended December 31,
1999. The Company paid agency fees to a subsidiary of KPC of $0.6 million during
the year ended December 31, 1999. The Company had accounts receivable from KPC
affiliated companies of $5.9 million at December 31, 1999.
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<PAGE> 18
RELATED PARTY AGREEMENTS
The following summary description of the agreements among the Company,
Holdings and KPC and of the Articles is qualified in its entirety by reference
to the forms of Intercompany Agreement and Management Services Agreement and the
Articles filed as exhibits to the Company's Annual Report on Form 20-F.
Intercompany Agreement
In connection with the Offering, the Company, Holdings and KPC entered
into an Intercompany Agreement (the "Intercompany Agreement"), certain
provisions of which are summarized below. As used herein, "KPC Affiliated Group"
means KPC and its affiliates, including Holdings, other than the Company and its
subsidiaries.
Indemnification. As of December 31, 1999, the consolidated financial
statements of Holdings contained liabilities to third parties, including tax
liabilities, aggregating approximately $51 million incurred by certain
subsidiaries which conducted the Company's former non-drilling operations and
services (the "Non- Drilling Subsidiaries") on or before March 31, 1997.
Holdings maintains cash and cash equivalents (the "Liability Payment Fund")
which the Company believes will be sufficient to satisfy those liabilities
remaining after such date. The Company, Holdings and KPC have agreed in the
Intercompany Agreement that all amounts paid to claimants to satisfy those
liabilities, whether by settlement, judgment or award (including claimants'
attorneys' fees), will be paid by Holdings from the Liability Payment Fund. The
Company will pay all internal and external costs and fees (including the
Company's and Holdings' attorneys' fees) associated with management and
resolution of those liabilities, and believes such costs and fees will not be
material. If any amount remains in the Liability Payment Fund at March 31, 2002,
Holdings will pay the Company the first $10 million of such amount and 50% of
any amount in excess of $10 million. Thereafter, or if the resolution of those
liabilities earlier exhausts the Liability Payment Fund, Holdings will have no
further responsibility for those liabilities, and the Company will be
responsible for all costs, fees and amounts paid to resolve those liabilities
and will indemnify the KPC Affiliated Group in respect of such costs and fees
and those liabilities. The Company believes that the Liability Payment Fund is
adequate to provide for such costs and fees and those liabilities. Accordingly,
the Company believes that the indemnification costs, if any, will not be
material and no additional reserves have been established by the Company in
respect of such costs and fees and those liabilities or the Company's obligation
under the Intercompany Agreement relating to such costs and fees and those
liabilities. See "- Management Services Agreement."
The Intercompany Agreement also provides that, except as may be
provided in a separate agreement, the Company will indemnify the KPC Affiliated
Group against claims by third parties based on, or taxes arising from, the
following: (i) the ownership of the assets or the operation of the business of
the Company or its subsidiaries, (ii) any other activities of the Company or its
subsidiaries, (iii) any guaranty or similar agreement by the KPC Affiliated
Group provided to any person with respect to any obligation of the Company or
its subsidiaries, and (iv) certain other matters. In addition, the Company has
agreed to indemnify the KPC Affiliated Group against certain civil liabilities,
including liabilities under the Securities Act of 1933, as amended (the
"Securities Act"), relating to misstatements in or omissions from the
Registration Statement filed in respect of the Offering and any other
registration statement or report that the Company files under the Securities
Act. Holdings has also agreed to indemnify the Company and its subsidiaries
against losses based on the ownership or operation of the assets or properties
or the operation or conduct of the business of Holdings and its subsidiaries on
or after March 31, 1997.
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<PAGE> 19
Consent of Holdings to Certain Events. The Intercompany Agreement
provides that until members of the KPC Affiliated Group cease to own the lesser
of at least 25% of the outstanding Ordinary Shares or 25% of the Company's
outstanding voting shares, the prior consent of Holdings generally will be
required for: (i) any disposition by the Company of assets involving
consideration in excess of $50 million; (ii) any issuance by the Company or any
subsidiary of the Company of any equity securities; (iii) the incurrence of any
indebtedness or guaranty in a consolidated amount in excess of $250 million at
any time outstanding; and (iv) a change in corporate domicile of the Company or
any of its subsidiaries. Analogous provisions are contained in the Articles.
Under this arrangement, consents may be requested from time to time. In the
event Holdings does not respond within 30 days after receipt of written notice
from the Company requesting consent to a proposed action, then the consent will
be deemed to have been given by Holdings to the Company.
Registration Rights. The Company has granted to the KPC Affiliated
Group certain demand and "piggyback" registration rights with respect to equity
securities owned by it. Pursuant to the demand registration rights, the KPC
Affiliated Group may, at any time, request the Company to register under the
Securities Act any or all Ordinary Shares held by the KPC Affiliated Group
whenever it wishes to sell Ordinary Shares in a transaction it reasonably
expects will yield gross proceeds of at least $250 million. The Company has
agreed to use its best efforts to effect any demand registrations requested by
the KPC Affiliated Group and has also agreed to register under the Securities
Act a certain amount of Ordinary Shares held by the KPC Affiliated Group when
the Company initiates certain other registrations of equity securities of the
Company on its own behalf or on behalf of any shareholder of the Company. Such
registration rights are transferable by the KPC Affiliated Group. The Company
has agreed to pay all costs and expenses in connection with each such
registration, except underwriting discounts and commissions applicable to the
equity securities sold by the KPC Affiliated Group and its transferees. The
Intercompany Agreement also contains specified restrictions on the ability of
the KPC Affiliated Group to exercise its demand and piggyback registration
rights and also contains customary terms and provisions with respect to, among
other things, registration procedures and certain rights to indemnification
granted by parties thereunder in connection with the registration of Ordinary
Shares on behalf of the KPC Affiliated Group under the Securities Act and
otherwise.
Other Provisions. Until the end of the first fiscal year of KPC in
which the KPC Affiliated Group owns the lesser of at least 25% of the
outstanding Ordinary Shares or 25% of the Company's outstanding voting shares,
the Company has agreed to furnish extensive financial information to Holdings,
including certain information before it becomes publicly available. So long as
the KPC Affiliated Group owns at least 10% of the outstanding Ordinary Shares or
10% of the Company's outstanding voting shares, the Company has agreed to
discuss its affairs, finances and accounts with Holdings and to permit Holdings
to inspect its properties, corporate books, and financial and other records.
Management Services Agreement
The Company has also entered into a Management Services Agreement with
Holdings (the "Management Services Agreement") for the purpose of providing
asset (primarily real estate) management services, general and administrative
services and liability management and resolution services to Holdings, the Non-
Drilling Subsidiaries and inactive subsidiaries of Holdings. The Management
Services Agreement authorizes the Company to resolve the liabilities of the
Non-Drilling Subsidiaries described under "Intercompany Agreement" using the
Liability Payment Fund. Although Holdings retains the right to reduce or expand
the scope of services to be performed by the Company pursuant to the Management
Services Agreement, the Company's liability management and resolution services
may not be reduced or terminated. The Management Services Agreement also
provides for payment of an initial asset management fee to the Company of
$173,000 per year as well as reimbursement of out-of-pocket costs in respect of
asset management services,
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and stipulates that the fees are subject to negotiation on an annual basis and
upon any reduction in or expansion of the scope of services provided by the
Company. By mutual agreement, the asset management fee was discontinued
effective January 1, 2000. The Company will pay all internal and external costs
and fees (including the Company's and Holdings' attorneys' fees) associated with
the Company's liability management and resolution services and all internal and
external costs and fees associated with the provision of general and
administrative services pursuant to the Management Services Agreement. The
Company believes such costs and fees have not been and will not be material.
Charter Provisions Relating to Corporate Opportunities and Interested Directors
The Company's Board of Directors currently includes persons who are
also Directors or officers of Holdings or KPC. As a consequence, Directors of
the Company who are also Directors or officers of KPC or Holdings charged with
granting or withholding consent for certain of the Company's actions may be
faced with conflicts of interest. In addition, potential conflicts of interest
exist or could arise in the future for such Directors with respect to a number
of areas, including the Company's contract drilling activities in Kuwait and its
other business relationships with KPC subsidiaries.
In order to address certain potential conflicts of interest between the
Company and the KPC Affiliated Group, the Articles contain provisions regulating
and defining the conduct of certain affairs of the Company as they may involve
the KPC Affiliated Group and their Directors and officers, and the powers,
rights, duties and liabilities of the Company and its officers, Directors and
shareholders in connection therewith. In general, these provisions recognize
that the Company and the KPC Affiliated Group may engage in the same line of
business and have an interest in the same areas of corporate opportunities and
that the Company and the KPC Affiliated Group will continue to have certain
contractual and business relations with each other (including service of
Directors and officers of the KPC Affiliated Group as Directors of the Company).
The Articles provide that the KPC Affiliated Group shall have no duty
to refrain from (i) engaging in the same line of business as the Company, (ii)
doing business with any customer of the Company or (iii) employing any employee
of the Company. The Articles also provide that the KPC Affiliated Group is not
under any duty to present any corporate opportunity to the Company which may be
a corporate opportunity for both the KPC Affiliated Group and the Company.
When corporate opportunities are offered to persons who are Directors
or officers of the Company and the KPC Affiliated Group, the Articles provide
that such Directors or officers of the Company shall not be liable to the
Company or its shareholders by reason of the fact that such members of the KPC
Affiliated Group pursue such corporate opportunities for themselves or do not
present such corporate opportunities to the Company, except in the case of
willful default or fraud of such Directors or officers, if such Directors or
officers act in a manner consistent with a policy that provides for allocation
based principally on the capacities in which the individual Director or officer
is offered the opportunity.
The Articles also provide that no arrangement between the Company and
the KPC Affiliated Group or another related party shall be voidable, and no
liability shall be imposed, solely because a member of the KPC Affiliated Group
is a party thereto, or solely because any Directors or officers who are related
parties are present at, participate in or vote with respect to, the
authorization of the arrangement, except in the case of willful default or fraud
on the part of the Directors or officers, if the material facts as to the
arrangement are disclosed to the Company's Board of Directors or the holders of
the Ordinary Shares who approve the arrangement.
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<PAGE> 21
The affirmative vote of a two-thirds majority of the shares entitled to
vote thereon and voting at a meeting of shareholders is required to amend the
Articles, including the provisions concerning corporate opportunity and
interested Directors described above and the provisions requiring the consent of
Holdings to certain actions described in "- Intercompany Agreement - Consent of
Holdings to Certain Events." Accordingly, so long as the KPC Affiliated Group
controls more than one third of such voting power, it can prevent any such
amendment.
CONSULTING AGREEMENT
On December 10, 1997, Gordon M. Anderson, a Director of the Company,
and the Company entered into a Consulting Agreement pursuant to which Mr.
Anderson shall serve as an independent consultant to the Company with respect to
matters relating to or affecting the operations of the Company. The term of the
Consulting Agreement was one year, terminating on January 1, 1999. Pursuant to
the Consulting Agreement, the Company has compensated Mr. Anderson by issuing to
Mr. Anderson 4,000 restricted Ordinary Shares under the Company's LTIP. In
addition, on the 25th month anniversary from the date of the grant of restricted
Ordinary Shares, the Company will further compensate Mr. Anderson under the
Consulting Agreement by paying Mr. Anderson cash in an amount equal to the
federal income tax payable with respect to the vesting of the 4,000 Ordinary
Shares and the federal income tax payable with respect to the cash payment to
Mr. Anderson. The Consulting Agreement also provides that Mr. Anderson will be
entitled to the standard Directors' cash and noncash compensation that all other
non-employee Directors are entitled to receive. Mr. Anderson has fulfilled his
obligations under the Consulting Agreement, which was not renewed following its
termination on December 31, 1998.
GENERAL
The Annual Report to Shareholders for the year ended December 31, 1999
is enclosed herewith. The Annual Report does not form any part of the material
for the solicitation of proxies.
A proposal or Director nomination to be presented by a shareholder at
the Company's 2001 Annual General Meeting of Shareholders must be received by
the Company at its principal executive offices no later than December 29, 2000
to be considered for inclusion in the Company's proxy statement for that
meeting. Pursuant to the Company's Articles of Association, if a shareholder
desires to submit a proposal or nominate persons for election as Directors at
the Company's 2001 Annual General Meeting of Shareholders, the Secretary of the
Company must receive written notice of such intent (which notice must set forth
the information required by the Articles of Association) not later than April
17, 2001.
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<PAGE> 22
OTHER BUSINESS
Management knows of no other matter that will come before the Annual
Meeting. However, if other matters do come before the Meeting, the proxy holders
will vote in accordance with their best judgment.
April 21, 2000 By Order of the Board of Directors,
/s/ GORDON M. ANDERSON
Gordon M. Anderson
Chairman of the Board
/s/ C. STEDMAN GARBER, JR.
C. Stedman Garber, Jr.
President and Chief Executive Officer
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<PAGE> 23
APPENDIX A
PROXY
SANTA FE INTERNATIONAL CORPORATION
Two Lincoln Centre
5420 LBJ Freeway, Suite 1100
Dallas, Texas 75240-2648 U.S.A.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints C. Stedman Garber, Jr., Seals M. McCarty and
Cary A. Moomjian, Jr. as proxies, each with the power to appoint his substitute,
and hereby authorizes them to represent and to vote, as designated below, all
the Ordinary Shares held of record by the undersigned as of the close of
business on April 14, 2000 at the Annual General Meeting of Shareholders (the
"Meeting") to be held at Four Seasons Resort and Club, Dallas at Las Colinas,
4150 N. MacArthur Blvd., Irving, Texas 75038 U.S.A., on June 6, 2000, at 2:00
p.m., Central Daylight Time, or any adjournment or postponement thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR EACH OF THE
PROPOSALS. PLEASE REVIEW CAREFULLY THE PROXY STATEMENT DELIVERED WITH THIS
PROXY.
<TABLE>
<S> <C>
1. Proposal to elect C. Stedman Garber, Jr., Maha A.R. Razzuqi and Robert E. Wycoff as Class III Directors until the Annual
General Meeting of Shareholders to be held in 2003 or until their successors have been duly qualified and elected.
[ ] FOR all nominees listed above [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed above
----------------------------------------------------------------------------------------------------------------------------
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED ABOVE)
2. Proposal to ratify the appointment of Ernst & Young LLP as the
independent auditors of the Company to audit the accounts of the Company
for the fiscal year ending December 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
<PAGE> 24
The proxies are authorized to vote, in their discretion, upon such other
business as may properly come before the Meeting.
-----------------------------------------
Signature
Dated: , 2000 -----------------------------------------
-------------- Signature, if held jointly
Please sign exactly as name appears. When shares are held by joint tenants, both
should sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by the President or other authorized officer. If a partnership,
please sign in partnership name by an authorized person.
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