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U.S.
Securities and Exchange Commission
Washington,
DC 20549
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Notice
of Exempt
Solicitation
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1.
Name of the Registrant:
infoUSA
Inc.
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2.
Name of person relying on exemption:
Dolphin
Limited Partnership I, L.P.
Dolphin
Financial Partners, L.L.C.
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3.
Address of person relying on exemption:
Ninety-Six
Cummings Point Road
Stamford,
Ct 06902
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4.
Written materials. Attach written material required to be submitted
pursuant to Rule 14a-6(g)(1).
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“Clearly
it was a very strong message,” said an infoUSA board member who
asked not to be identified. “The vote was very, very
lopsided. This was a very sobering experience for all the board
members and one that will be responded to very
thoughtfully.”
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The
continuation of the Stockholder Rights Plan, scheduled to expire
on
July 21, 2007, and elimination of Mr. Vinod Gupta’s exclusive
exemption – another example of the Board’s favoritism towards Mr. Vinod
Gupta;
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The
elimination of the current classified Board structure so all directors
are
elected annually and the introduction of cumulative voting to advance
the
ability of unaffiliated shareholders, not just Mr. Vinod Gupta, to
gain
representation on the Board;
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In
the current robust information services acquisition market, the
implementation of a strategic review process to explore all opportunities
to enhance value for all shareholders;
and
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The
adoption of a Zero Tolerance Policy for related party transactions
and use
of Company-owned assets.
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Mr.
Vinod Gupta has received from the Board approximately 1/3 of all
option
grants in the past ten years, 1/2 of all option grants in the past
five
years, and 100% of all option grants in the past three
years!7
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In
the past ten years, Mr. Vinod Gupta has exercised 3.5 million of
these
options currently representing approximately 6% of your Company—further
diluting you!8
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In
2005, shareholders voted to increase the number of shares issuable
under
the 1997 Plan by 3.0 million. Even then, 69% of the
unaffiliated shareholders voting rejected this plan, which passed
only
because Mr. Vinod Gupta voted all of his disclosed and
undisclosed6 shares
in favor of the plan. This plan added another 3.0 million of
available options―further diluting
you!
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The
effects of option awards on the balance of corporate control is
real. Immediately prior to the record date of last year’s hotly
contested election, Mr. Vinod Gupta exercised 1.2 million options,
representing 2.4% of the Company’s then outstanding shares.8
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This
is what the Company’s 2007 proxy statement (page 11) says about its equity
incentive program:
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1.
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Fiduciary
Duties.You have the right to a Board
that will exercise its fiduciary duties to represent and serve the
interests of ALL shareholders without
priority or preference. Instead, the infoUSA Board, in
Dolphin’s view, has preferentially served the interests of Mr. Vinod
Gupta, Chairman, CEO and 41%
shareholder.
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2.
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Shareholder
Rights Plan. You have the right to the
protections of a shareholder rights plan that is equally applied
to
ALL shareholders and will deter
a
coercive or undervalued acquisition of the Company from whatever
source. Instead, the infoUSA Board has adopted
and continues to endorse a rights plan that exempts Mr. Vinod Gupta
and
his affiliates—even though he now beneficially holds 41% of the Company’s
outstanding shares, has been steadily increasing his position and
in June
2005 made an undervalued and opportunistic bid for the
Company. The current rights plan should be extended at its
expiration in July 2007 with NO
exemption for insiders and their
affiliates.
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3.
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Strategic
Review. You have the right to a Board that
means what it says when it commits to establish a special committee
that
will disinterestedly explore all opportunities for enhancing shareholder
value. Instead, the infoUSA Board voted to
disband a special committee that rejected Mr. Vinod Gupta’s undervalued
and opportunistic bid for the Company, only one day after the Company
publicly said the work of the committee would continue to seek to
maximize
shareholder value. Given infoUSA’s poor short and long term
share price performance and the robust information services acquisition
market, a strategic review process should be undertaken to maximize
value
for ALL
shareholders.
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4.
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Related
Party Transactions. You have the right to a
Board that is vigilant against related party transactions or the
use of
company-owned assets that give substantial benefits to insiders at
shareholders’ expense. Instead, the Board of
infoUSA has permitted sizeable related party transactions with
Mr. Vinod Gupta and his affiliates involving planes, a skybox, the
“American Princess” 80-foot yacht, luxury vehicles, personal residences
and a catamaran. The Company must have a zero tolerance
policy for related party transactions and uses of company-owned assets
that confer improper benefits on insiders and their
affiliates.
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5.
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Declassified
Board. You have the right to a Board that is
fully accountable to shareholders through an election process that
allows
you to vote for, and if you so determine replace, the entire Board
annually. Instead, the Board of infoUSA is
staggered, so that only a third of the Board is required to answer
to
shareholders annually. The Board should promptly approve
and submit to shareholders a charter amendment to declassify the
Board.
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6.
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Cumulative
Voting. You have the right to a realistic and
effective opportunity to elect directors who will represent your
interests
on the Board. Instead, Mr. Vinod Gupta has been permitted
to accumulate beneficial ownership of 41% of the Company, making
it more
difficult for other shareholders to gain representation on the
Board. The Board should promptly approve and submit
to shareholders a charter amendment to authorize cumulative voting
for
directors.
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7.
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Options. You
have the right to an equity compensation program that appropriately
incentivizes, but does not enable management to further entrench
itself. Instead, Mr. Vinod Gupta, over the past ten years,
has expanded his beneficial ownership of the Company by approximately
6%
through the receipt and exercise of stock options. Grants to
Mr. Vinod Gupta have only served to expand Mr. Vinod Gupta’s control and
dilute other shareholders interests. The Board and its
compensation committee must design compensation plans that won’t advance
top management/director beneficial ownership that now stands at
43%.
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8.
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Top
Management Accountability. You have a right to
top management that is committed to seeking competitive, risk adjusted
returns over an appropriate time period. Instead, the
infoUSA short and long term share price performance has been
poor. The Board should act promptly either to find top
management committed to producing competitive returns or to pursue
strategic alternatives to generate value for all
shareholders.
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