STANDSTILL AGREEMENT
Exhibit
99.2
This STANDSTILL AGREEMENT, dated November 10, 2005 (this “Agreement”), is by and
among:
1. SIFY LIMITED, a company incorporated under the laws of India and having its principal
office at Tidel Park, 2nd Floor, Xx. 0 Xxxxx Xxxx Xxxx, Xxxxxxxx, Xxxxxxx — 600 113 (the
“Company”);
2. Infinity Capital Ventures, L.P., a limited partnership organized and existing under the
laws of the State of Delaware and having its office at 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000 (“Infinity Capital”); and
3. Xxxx Xxxxxxx, an individual resident in the United States (“Xxxxxxx”).
Recitals:
(A) The Company and Infinity Capital are parties to a Subscription Agreement, dated as of the
date hereof (the “Subscription Agreement”), pursuant to which the Company will issue and
sell to Infinity Capital, and Infinity Capital will acquire from the Company, 6,720,260 Equity
Shares or ADSs upon the terms and subject to the conditions set forth therein (the “New Issue
Equity Shares/ADSs”).
(B) Concurrently with the execution of this Agreement and the Subscription Agreement, Xxxxxx
Computer Services Limited, a company incorporated under the laws of India and having its principal
office at Xxxxxx Technology Center, Bahadurpally Village, Qutbullapur Mandal, X.X. Xxxxxxxx — 000
000, Xxxxxxxxx, Xxxxxx Xxxxxxx, Xxxxx (“Xxxxxx”), is selling to Infinity Capital, and
Infinity Capital is acquiring from Xxxxxx, an aggregate of 11,182,600 ADSs (the “Xxxxxx
ADSs” and, together with the New Issue ADSs, the “Infinity Capital ADSs”).
(C) Upon the terms and subject to the conditions set forth in this Agreement, Infinity Capital
and Xxxxxxx have agreed that neither Infinity Capital nor its Affiliates (including, without
limitation, Xxxxxxx) shall acquire, directly or indirectly, any additional Equity Shares, ADSs or
other equity securities of the Company, whether or not the transactions contemplated by the
Subscription Agreement are completed.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and
for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
DEFINITIONS
1.1 As used in this Agreement, and unless the context requires a different meaning, the
following terms have the meanings indicated:
“ADSs” means mean the American Depositary Shares, issued under the Deposit Agreement,
dated October 18, 1999, as amended, by and among the Company, Citibank, N.A., as depositary, and
the holders and beneficial owners of ADSs.
“Affiliate” shall mean, with respect to a specified Person, any person that, directly
or indirectly through one or more intermediaries, controls, or is controlled by, or is under common
control with, the Person specified; provided, however, that for purposes of the beneficial
ownership calculations herein (but not the test for affiliated directors), a natural person shall
not be deemed an Affiliate of Vagesna solely due to his or her employment with ServerEngines, LLC.
“Commission” means the United States Securities and Exchange Commission.
“Equity Shares” means the ordinary equity shares, par value Rs.10 per share, of the
Company as subdivided, consolidated or converted from time to time.
“Exchange Act” means the United States Securities and Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
“Person” means any individual, corporation, company, partnership, limited liability
company, joint venture, association or trust of any other entity or organization.
ARTICLE II
FEDERAL SECURITIES LAWS
FEDERAL SECURITIES LAWS
2.1 For so long as Xxxxxxx is a director or officer of the Company, he agrees to comply with
all policies of the Company applicable to all other directors and/or officers (as the case may be)
involving the trading of securities of the Company, including standard trading window policies.
ARTICLE III
STANDSTILL
STANDSTILL
3.1 Each of Infinity Capital and Xxxxxxx agree that none of Infinity Capital, Xxxxxxx or any
of their respective Affiliates or representatives, acting alone or as part of any group, will,
directly or indirectly:
(a) acquire or agree, offer, seek or propose to acquire, or cause to be acquired,
ownership (including, but not limited to, beneficial ownership as defined in Rule 13d-3
under the Exchange Act) of Equity Shares, ADSs or any other equity securities or any assets
of the Company, or any rights or options to acquire any such ownership (“Company
Securities”);
(b) form, join, or in any way participate in a “group” (within the meaning of Section
13d(3) of the Exchange Act) with respect to any Company Securities if the aggregate
beneficial ownership of the members of the group exceeds 45% of the Company’s outstanding
Equity Shares (determined under Rule 13d-3 under the Exchange Act but assuming the
exercise, conversion or exchange of all outstanding options, warrants and other
securities exercisable for, convertible into or exchangeable for Equity Shares);
(c) arrange, or in any way participate in, any financing for the purchase of any
Company Securities or assets or securities convertible or exchangeable into or exercisable
for any Company Securities if the aggregate beneficial ownership of Infinity Capital,
Xxxxxxx and their respective Affiliates, together with the Company Securities directly or
indirectly purchased through any such financing arranged by any of them, or in which any of
them participate, exceeds 45% of the Company’s outstanding Equity Shares (determined under
Rule 13d-3 under the Exchange Act but assuming the exercise, conversion or exchange of
all outstanding options, warrants and other securities exercisable for, convertible
into or exchangeable for Equity Shares);
(d) fail promptly to refer to the full Board of Directors any Person who expresses
serious interest in engaging in any merger, acquisition, exchange offer or liquidation of
the
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Company or any other acquisition of the Company or any other similar transaction (it
being understood, however, that if discussions between Xxxxxxx and a third party involve
other topics but become a discussion involving a possible merger, acquisition, exchange
offer or liquidation of the Company or any other acquisition of the Company or any other
similar transaction, it shall not be a violation of this Agreement provided that Xxxxxxx
with reasonable promptness refers that inquiry to the full Board of Directors);
(e) announce an intention to, make any public filing or enter into any discussion,
negotiations, arrangements or understandings with any third party with respect to, any of
the foregoing;
(f) disclose any intention, plan or arrangement inconsistent with the foregoing; or
(g) advise, assist or encourage any other Person in connection with any of the
foregoing.
3.2 Notwithstanding the restrictions contained in Section 3.1 above:
(a) Infinity Capital may purchase the Xxxxxx ADSs and may purchase from the Company
the New Issue Equity Shares/ADSs in accordance with the provisions of the Subscription
Agreement; and
(b) From and after the closing of the transactions contemplated by the Subscription
Agreement or the termination of such agreement with its terms, Infinity Capital, Xxxxxxx
and their respective Affiliates may, collectively, acquire Company Securities (in addition
to the Infinity Capital Equity Shares/ADSs described in the immediately preceding clause
(a)), in the aggregate amount for all such Persons such that, at the time of acquisition,
the aggregate beneficial ownership of all such Persons equals not more than 45% of the
Company’s outstanding Equity Shares (determined under Rule 13d-3 under the Exchange Act but
assuming the exercise, conversion or exchange of all outstanding options, warrants
and other securities exercisable for, convertible into or exchangeable for Equity Shares).
3.3 A waiver of the restrictions contained in this Article III shall only be granted in
accordance with the following procedures:
(a) Should Xxxxxxx or any Affiliate desire to (i) take an action prohibited by Section
3.1 (taking into account the exceptions set forth in Section 3.2) or (ii) purchase Company
Securities in excess of that permitted by Section 3.2, a written submission shall be made
to the Board of Directors of the Company stating the precise nature of the waiver under
this Agreement that is sought, including the identity of the Persons involved. Such
request shall be made in private and neither Xxxxxxx nor any Affiliate shall directly or
indirectly announce an intention to, make any public filing or enter into any discussion,
negotiations, arrangements or understandings with respect to any such waiver. The
determination whether or not to grant a waiver shall be made by the Board of Directors of
the Company (with Xxxxxxx and any Affiliate of Xxxxxxx then a director abstaining from all
such action and the related deliberations) in its sole discretion within 30-days of the
receipt of the request for the waiver.
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(b) In the event a waiver is sought under Section 3.3(a)(ii) but not granted, Xxxxxxx
may, at any time within 60 days after the related waiver was denied by the
Company and upon 15 days advance written notice to the Company (which notice shall be
confidential in the same manner as provided for in Section 3.3(a)), commence an open offer
under Indian, United States and all other applicable securities, corporate and other laws
to purchase all Equity Shares and ADS of the Company not then beneficially owned by Xxxxxxx
and his Affiliates which offer shall be (i) solely for cash, (ii) conducted in accordance
with the tender offer provisions of the United States securities laws (including, without
limitation, Section 14(d) of the Exchange Act) with respect to holders of ADSs; provided,
however, that if an unrelated third party is then conducting a tender offer for all Equity
Shares and related ADSs and such third party is not required to comply with such United
States securities laws, then Xxxxxxx and his Affiliates shall not be required to comply
with such laws solely by operation of this Section 3.3(b)(ii), and (iii) conditioned upon
the tender and purchase of not less than a majority of all Equity Shares of the Company
(whether as such or represented by ADSs) held by all shareholders not affiliated with
Xxxxxxx as of the date the offer is commenced. All determinations regarding such offer
(including, without limitation, whether to recommend that shareholders accept or reject
such offer) shall be made by the Board of Directors of the Company (with Xxxxxxx and any
Affiliate of Xxxxxxx then a director abstaining from all such action and the related
deliberations) in its sole discretion.
3.4 Each of Infinity Capital and Xxxxxxx agree that none of Infinity Capital, Xxxxxxx or any
of their respective Affiliates or representatives, acting alone or as part of any group, will,
directly or indirectly, vote or fail to vote any Company Securities in their control in a manner
that causes the Company to violate Sections 4350(c) or 4350(d) of the NASD Marketplace Rules
(without regard to any “controlled company” exemption).
3.5 Upon request, the Company shall within two business days confirm to Xxxxxxx the number of
Equity Shares issued and outstanding for purposes of the calculating the amount of beneficial
ownership under this Agreement.
ARTICLE IV
MISCELLANEOUS
MISCELLANEOUS
4.1 Notices. All notices, demands and other communications provided for or permitted
hereunder shall be made in writing and shall be by registered or certified first-class mail, return
receipt requested, telecopier, courier service or personal delivery:
(a) if to the Company:
Sify Limited
Tidel Park, 2nd Xxxxx
Xx. 0 Xxxxx Xxxx Xxxx, Xxxxxxxx
Xxxxxxx — 000000
Xxxxx
Telecopy: 91 44 2254 0851
Attention: X Xxxxxxx
Tidel Park, 2nd Xxxxx
Xx. 0 Xxxxx Xxxx Xxxx, Xxxxxxxx
Xxxxxxx — 000000
Xxxxx
Telecopy: 91 44 2254 0851
Attention: X Xxxxxxx
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(b) if to Infinity Capital or Xxxxxxx:
c/o Infinity Capital
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
XXX
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
XXX
Attention: Xxxx Xxxxxxxx, Esq.
All such notices, demands and other communications shall be deemed to have been duly given when
delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial
courier service; and when receipt is mechanically acknowledged, if telecopied. Any party may by
notice given in accordance with this Section 4.1 designate another address or Person for receipt of
notices hereunder.
4.2 Successors and Assigns. Neither Infinity Capital nor Xxxxxxx may assign any of
its respective rights or obligations under this Agreement without the prior written consent of the
Company. Except as provided for in Section 2.2, nothing herein shall restrict Infinity Capital or
Xxxxxxx, or any of their respective Affiliates, from entering into a transaction involving any sale
by Infinity Capital or Xxxxxxx of Company Securities. The restrictions set forth herein shall
terminate with respect to any securities sold by Xxxxxxx, Infinity Capital or any of their
respective Affiliates to any third party that is not an Affiliate of Infinity Capital or Xxxxxxx in
a bona fide sale transaction in which no party restricted hereunder retains any direct or indirect
beneficial interest in such securities.
4.3 Amendment and Waiver.
(a) No failure or delay on the part of the Company, Infinity Capital or Xxxxxxx in
exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy. The
remedies provided for herein are cumulative and are not exclusive of any remedies that may
be available to the Company, Infinity Capital or Xxxxxxx at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any provision of this
Agreement, any waiver of any provision of this Agreement, and any consent to any departure
by the Company, Infinity Capital or Xxxxxxx from the terms of any provision of this
Agreement, shall be effective (i) only if it is made or given in writing and signed by the
Company (and approved by the Board of Directors of the Company, with Xxxxxxx and any
Affiliate of Xxxxxxx then a director abstaining from all such action and the related
deliberations), Infinity Capital and Xxxxxxx in accordance with the procedures provided for
in this Agreement and (ii) only in the specific instance and for the specific purpose for
which made or given.
4.4 Counterparts. This Agreement may be executed in any number of counterparts and by
the parties hereto in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same agreement.
4.5 Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
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4.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF INDIA, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS TO LAW OF ANY JURISDICTION.
4.7 Severability. If any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect
for any reason, the validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
4.8 Rules of Construction. Unless the context otherwise requires, references to
sections or subsections refer to sections or subsections of this Agreement.
4.9 Entire Agreement. This Agreement is intended by the parties hereto as a final
expression of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject matter contained herein
and therein. There are no restrictions, promises, representations, warranties or undertakings,
other than those set forth or referred to herein or therein. This Agreement supersedes all prior
agreements and understandings between the parties hereto with respect to such subject matter.
4.10. Enforcement; Remedies. The Company may, without limiting its remedies at law or
in equity, enforce the restrictions contained in this Agreement through legends on Equity
Shares/ADS certificates (solely to identify such as restricted securities), entries in its books
and records, stop transfer instructions and similar remedies for the purposes of preventing the
acquisition of Company Securities in contravention of this Agreement. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party hereunder will be deemed
cumulative with and not exclusive of any other remedy conferred hereby or by law on such party, and
the exercise of any one remedy will not preclude the exercise of any other. The parties hereto
agree that irreparable damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in
any court having jurisdiction.
4.11 Further Assurances. Each of the parties hereto shall execute such documents and
perform such further acts (including, without limitation, obtaining any consents, exemptions,
authorizations or other actions by, or giving any notices to, or making any filings with, any
governmental authority or any other Person) as may be reasonably required or desirable to carry out
or to perform the provisions of this Agreement.
4.12 Termination. The Agreement shall terminate at such time as Xxxxxxx, Infinity
Capital and their respective Affiliates no longer beneficially own 10% or more of the Company’s
outstanding Equity Securities (determined under Rule 13d-3 under the Exchange Act).
(Signature page follows)
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IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this
Standstill Agreement on the date first written above.
| SIFY LIMITED | ||||||
| By: | /s/ X. Xxxxxxx | |||||
| Title: CEO and Managing Director | ||||||
| INFINITY CAPITAL VENTURES, L.P. | ||||||
| By: Infinity Capital Management, LLC, | ||||||
| Its General Partner | ||||||
| By: | /s/ Xxxx Xxxxxxx | |||||
| Name: Xxxx Xxxxxxx | ||||||
| Title: Member | ||||||
| XXXXXXX | ||||||
| /x/ Xxxx Xxxxxxx | ||||||
| Xxxx Xxxxxxx | ||||||
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