kl06015.htm
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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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Contact: Arthur
B. Crozier
Innisfree
M&A Incorporated
(212)
750-5833
DOLPHIN
SEEKS ANSWERS REGARDING PUBLIC DISCLOSURE
AND
TRADING PRACTICES OF infoUSA
CHIEF
STAMFORD,
CONNECTICUT, June 4, 2007 - Dolphin Limited Partnership I, L.P. and Dolphin
Financial Partners, L.L.C., long-term holders with 2.0 million shares (3.6%)
of
infoUSA (NASDAQ Symbol: IUSA), today sent the following letter to Mr.
Vinod Gupta and the infoUSA Board of Directors.
Dear
Mr.
Vinod Gupta and other infoUSA Board members,
In
addition to Question #’s 1, 2, 3, 4 and 5, all of which remain unanswered, the
shareholders of infoUSA need meaningful answers to the following
additional serious questions regarding the Company’s and Mr. Vinod Gupta’s
public disclosures.
We
are
once again providing you with an opportunity to do so in advance of the Annual
Meeting this Thursday, June 7, 2007.
Question
#6: In June 2005, Mr. Vinod Gupta
publicly announced a proposal to acquire infoUSA at a price of $11.75
per share. The Company formed a special committee, which rejected Mr.
Vinod Gupta’s deal after expending considerable time and Company
resources. On September 7, 2005, Mr. Vinod Gupta wrote a letter to
the Board1 in which he
said,
“After
we
lowered our revenue guidance due to the Donnelly Market shortfall, our stock
got
crushed. At that time I had no choice but to support the
stock. That was the primary reason for offering $11.75 for the
shares. If you recall, the stock had dropped to $9.20 per
share. After my offer, even though it has been withdrawn, the stock
is hanging in around $10.80 per share. Under the circumstances,
nobody can sell their shares short because they know I am there to support
it.”
For
Mr. Vinod Gupta: Under these circumstances, can you explain why
your offer to acquire the Company did not violate the federal securities
laws?
For
the Board:Were you aware at the time Mr.
Vinod Gupta presented his buyout proposal to you that his primary purpose was
to
support the Company’s stock price? If you were aware of this at the
time, why did you not so inform the market? If you were not aware of
this until Mr. Vinod Gupta wrote to you his September 7, 2005 letter, what
action did you take against Mr. Vinod Gupta when you learned of the primary
purpose of his offer? We see no evidence that you took any
action. Under the circumstances, were you not complicit in apparent
violations of the federal securities laws by Mr. Vinod
Gupta?
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1
Available at
www.iusaccountability.com under “Important Documents from IUSA
Books and Records.”
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Question
#7: In the proxy statements for the Company’s annual
meetings of shareholders prior to 2006, the Company failed to disclose Mr.
Vinod
Gupta’s beneficial ownership of 2.1 million shares held in trust for his
children and 300,000 shares held in a charitable trust and a foundation that
Mr.
Vinod Gupta controls. In 2006, after Dolphin announced its intention
to conduct a proxy contest for the election of directors, these shares were
included in Mr. Vinod Gupta’s beneficial ownership, increasing his ownership by
2.4 million shares over prior years. About the same time, Mr. Vinod
Gupta made a filing with the SEC in which Mr. Vinod Gupta conceded that he
had
not previously disclosed beneficial ownership of these shares in his Schedule
13G filings.
For
Mr. Vinod Gupta:Can you explain why
both
you and the Company previously
failed to report your beneficial ownership of these shares and why these shares
were “found” only after Dolphin announced its proxy
contest?
For
the Board: A public company is required
to have a system of controls to assure the accuracy of its
disclosures. A board has a duty to oversee implementation of a system
of compliance with law. Can you explain how the Board
discharged this duty, when for years the Company failed to accurately disclose
in its public filings the number of shares beneficially owned by its chairman
and CEO?
Question
#8: Between 1992 and 2006, Mr. Vinod
Gupta failed to disclose over 150 transactions in Company shares as required
under Section 16 of the Securities Exchange Act of 1934. Disclosure
of these transactions was only made in July of 2006, after Dolphin’s proxy
contest in which it challenged the accuracy of reporting of Mr. Vinod Gupta’s
beneficial ownership of shares of the Company.
For
Mr. Vinod Gupta: Can you explain why over the course of 15 years
you repeatedly failed to comply with your reporting requirements under Section
16?
Also,
according to this year’s proxy statement, during 2006 the Company received a
payment from the Vinod Gupta Revocable Trust (the “Trust”) for $132,300 for
reimbursement for short-swing profits the Trust had previously received on
sale
of the Company common stock. Given the confusion in your
Section 16 reporting, can you identify the purchase and sales of Company shares
to which this payment relates?
For
the Board: Under the rules and
regulations of the SEC, the Company’s proxy statement is required to indicate
the number of transactions that were not reported on a timely basis under
Section 16. This disclosure is incorporated by reference into the
Company’s Form 10-K, which is signed by each of you. Can you
explain why the Company failed to make this disclosure in its 2007 proxy
statement regarding Mr. Vinod Gupta’s failure to comply with the requirements of
Section 16?2
Question
#9: Between June 2005 and August 4,
2006, infoUSA was engaged in private negotiations to acquire Opinion
Research Corporation (NASDAQ: ORCI).3 On August 4, 2006, the parties
announced that infoUSA would acquire ORCI for $12.00 per share, a
transaction that
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2
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Instead
of stating the exceedingly large number of transactions that were
not
disclosed by Mr. Vinod Gupta on a timely basis, the proxy statement
refers
to “two Forms 4 reporting multiple transactions for Vinod Gupta not
previously reported.” This would not seem to comply with the
requirements of law.
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3
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Proxy
Statement of Opinion Research Corporation, dated November 2,
2006 at pages
15-18.
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was
completed on December 4, 2006. Between April 2005 and August 2005,
infoUSA acquired 4.7% of the outstanding shares of ORCI.4 The Vinod Gupta Revocable
Trust (the” Trust”), which is 100% owned by Mr. Vinod Gupta, also acquired ORCI
shares. At least since June 15, 2006 and through August 4, 2006 — and
perhaps for a good deal of time before that —the Trust held
approximately 1% of the outstanding shares of ORCI.5 During this period, the total
number of shares held by the Trust and infoUSA exceeded 5% of the ORCI
shares.
For
Mr. Vinod Gupta: We would like to know, why, as chairman, CEO and
41% shareholder of infoUSA, you were not a Schedule 13D group together
with the Company in the ORCI shares, and why your activities did not violate
public disclosure rules?
We
would also like to know when the Trust first acquired its ORCI shares and
whether the Trust acquired its shares after
infoUSA became interested in
acquiring ORCI? In these circumstances, we would like to know why your
acquisition of the shares was not a breach of a duty of trust or confidence
to
infoUSA under Rule 10b5-2 of the
federal securities laws?And if there was no breach of duty, why
did you disgorge back to infoUSA the
profits you made on selling some of those ORCI shares in the public market,
and
why did you sell the remaining shares to
infoUSA at your apparent
cost?6 And
finally, why did the Company only disclose your disgorgement and sale in its
2006 10-K,7 after
Dolphin had filed suit in Delaware Chancery Court referencing these
transactions?
We
await
your meaningful response to Questions 1 through 9 – and on behalf of the
interests of all shareholders, will put forth additional questions to you in
the
days leading up to the June 7th Annual
Meeting.
Very
truly yours,
/s/ Donald
T.
Netter
Donald
T.
Netter
Senior
Managing Director
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4
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Item
3 of Schedule 13D filed by infoUSA with respect to ORCI, dated
August 14, 2006.
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5
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Item
5 of the infoUSA Schedule 13D states that the Vinod Gupta
Irrevocable Trust held 33,000 ORCI shares on August 14, 2007, had
sold
22,000 shares between August 7-9, 2006 and engaged in no other
transactions in the ORCI shares since June 15,
2006.
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6
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infoUSA
2007 Proxy Statement, “Certain Transactions”, page 23. The
Vinod Gupta Irrevocable Trust disgorged gains of $94,869 on the
sale of 22,000 shares following public announcement of the ORCI
merger—an
average gain of $4.31 per share—and the Company purchased 33,000 shares
for the Vinod Gupta Irrevocable Trust for a total of $236,231—an average
price of $7.16 per share.
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7
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Note
12 to the financial statements, 2006 infoUSA Form 10-K at page
68.
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