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Materials
posted by Dolphin on www.iusaccountability.com.
Contact:
Art Crozier, Innisfree (212) 750-5833
DOLPHIN
ISSUES THIRD REPORT TO infoUSA
SHAREHOLDERS
DOLPHIN
RELEASES MR. VINOD GUPTA’S SEPTEMBER 7, 2005 LETTER TO THE
BOARD
“To put me back
in the poison
pill would be a wrong move.
My
family holdings of 40% keep the other short sellers honest. ”
“When
our stock got crushed, I had no choice but to support the
stock.
That
was the primary reason for offering $11.75 for the
shares.”
STAMFORD,
Conn., May, 2, 2006—Dolphin Limited Partnership I, L.P. and Dolphin Financial
Partners, L.L.C., which together hold 2.0 million shares (3.6%) of infoUSA
Inc.
(NASDAQ: IUSA), today issued a third report to all infoUSA
shareholders based upon Company documents obtained through Dolphin’s books and
records request under Delaware law.
This
latest report relates to a letter dated September 7, 2005 that Mr. Vinod
Gupta,
Chairman, CEO and 40% shareholder of infoUSA,
wrote to the full Board. Dolphin believes that the letter again demonstrates
why
Mr.
Vinod Gupta should not be serving as a director of the
Company,
and why
he and the other Company nominees who have been unable or unwilling to rein
him
in should also not be re-elected to the Board. Mr. Vinod Gupta’s letter was in
response to an August 31, 2005 letter Dolphin had sent to the full Board
on a
broad range of issues, including Mr. Vinod Gupta’s exemption from infoUSA’s
poison pill and his June 13, 2005 offer to acquire infoUSA
for
$11.75 per share.
Dolphin
believes that it is important for all shareholders to see Mr. Vinod Gupta’s
letter first hand, the full text of which is now available on Dolphin’s Web
site: www.iusaccountability.com.
Dolphin’s August 31, 2005 letter appears in its proxy materials.
While
shareholders should read Mr. Vinod Gupta’s letter in full, together with
Dolphin’s commentary appearing on the Web site, we now draw your attention to
two statements in particular:
Mr.
Vinod Gupta’s Exemption from the Shareholder Rights
Plan
Dolphin’s
August 31st
letter
(as well as subsequent letters) challenged the exemption from the Company’s
shareholder rights plan for Mr. Vinod Gupta and his affiliates, particularly
in
light of Mr. Vinod Gupta’s statement that he would be unwilling to sell his
shares in a competing transaction even if it offered more value to shareholders.
This is how Mr. Vinod Gupta responded:
To
put me back in the poison pill would be a wrong move. My family holdings
of 40%
keep the other short sellers honest. That means that they cannot play games
with
the stock because they know that I am willing to buy back the
shares.
According
to Mr. Vinod Gupta, he and his affiliates, as the only shareholders exempt
from
the shareholder rights plan, should be allowed to accumulate unlimited amounts
of Company stock in the open market and through option exercises thereby
positioning him to obstruct transactions with other parties that may be in
the
best interests of all shareholders, in order to keep “short sellers” in check.
We think—and we believe that other shareholders will agree—that this
explanation is simply gibberish.
Not
surprisingly, there is no trace of his argument in the minutes of the Board
adopting the shareholder rights plan in July 1997. In
fact, there is no discussion whatsoever in those Board minutes that we received
regarding Mr. Vinod Gupta’s exemption from the shareholder rights
plan.
(These
minutes are now available at www.iusaccountability.com.)
As
a
result of this lack of oversight by the full Board, Mr. Vinod Gupta has been
free to accumulate shares and receive and exercise options that are dilutive
to
other shareholders. Dolphin finds the actions of both Mr. Vinod Gupta and
the
full Board in this regard very disturbing and detrimental to the interests
of
unaffiliated shareholders.
Mr.
Vinod Gupta’s Failed $11.75 Offer Proposal
In
Dolphin’s August 31st
letter,
Dolphin questioned the fairness and opportunism of Mr. Vinod Gupta’s $11.75 bid
for the Company in June 2005. This is his response:
After
we lowered our revenue guidance due to the Donnelley Marketing revenue
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.
This
confession shocks us.
In
addition to the possible implications of this statement under federal securities
law, it implies that Mr. Vinod Gupta did not make his bid in good faith,
but
rather in order to prop up the Company’s stock price. The full Board established
a Special Committee, which expended considerable time, effort and shareholder
funds to evaluate an offer that appears to have been illusory. How
can the full Board allow Mr. Vinod Gupta to continue to chair the
infoUSA
Board?
This
is
yet another demonstration of why infoUSA
shareholders need to elect the three new highly qualified and independent
directors nominated by Dolphin. These nominees have no ties to Dolphin or
to
infoUSA
or
its management.
Dolphin
will continue to report to all infoUSA
shareholders its findings under its books and records requests and to make
these
reports available at the www.iusaccountability.com
Web
site.
Dolphin
is making available below the letter that Mr. Vinod Gupta, Chairman and CEO
of
infoUSA,
sent
to the full Board on September 7, 2006. Mr. Vinod Gupta’s letter was apparently
delivered in response to Dolphin’s letter of August 31, 2005 to the Company’s
non-management directors. Dolphin’s letter appears on pages 16-19 of Dolphin’s
proxy statement, which you may also access on this site.
As
you
read Mr. Vinod Gupta’s letter, you should keep the following points in mind. We
have keyed the points to the numbered paragraphs in his letter:
| 1. |
Who
is Dolphin? Who is Mr. Vinod Gupta?
|
Dolphin
is now in its twelfth year of operations and consists of a number of sizeable
investment entities. Dolphin regularly files reports on Form 13F with the
SEC.
From time to time, Dolphin gets involved with companies in which it invests
and
has successfully worked to increase value for all shareholders. In fact,
Dolphin
has always sought to promote the interests of and value for ALL
shareholders.
Mr.
Vinod
Gupta’s suggestion that Dolphin was trying to “make a quick buck and get out,”
is simply not credible. It is a fact that Mr. Vinod Gupta offered to buy
the
Company at $11.75 per share on June 13, 2005 after lowering guidance on June
8,
2005, knocking 20% off of IUSA’s share price.
Dolphin
owns 2.0 million shares of IUSA and has invested considerable resources to
present the facts to all shareholders. This has included an extensive books
and
records search under Delaware law, and a court action to have confidentiality
lifted in order to present these documents to you. Dolphin executed a
confidentiality agreement enabling it to provide the information to any 2%
shareholder that executed the confidentiality agreement. One shareholder
did so
and received the information.
As
noted
in its first report to all shareholders on April 21, 2006, Dolphin will have
more to say in a subsequent report to all shareholders, about the usage of
and
the Company’s payments for private jets. At this point, we remind shareholders
that the Company’s significant locations are listed in its 2005 Form 10-K annual
report. Out of the seven identified “primary” locations, six are in close
driving proximity of the Company’s main Omaha, NE headquarters. Only one—in
Marshfield, WI—is out of the way. Unusually, this is where the Company has
chosen to hold this year’s annual meeting.
| 3. |
The
University of Nebraska - Lincoln
Skybox
|
Mr.
Vinod
Gupta refers to people running much
larger
companies, such as Bill Gates, Warren Buffet and Larry Ellison. Mr. Gates
runs a
company with a market capitalization of $248 billion, Mr. Buffet $138 billion
and Mr. Ellison $78 billion. IUSA has a $600 million market capitalization,
a
distant sixth to its publicly traded peers. As previously stated we reviewed
the
related party transactions of these significantly larger publicly traded
peers.
None of them have as a high a number or dollar amount of related party
transactions as IUSA.
How
the
skybox came to be an asset of the Company is in our view exemplary of the
full
Board’s dysfunction. As outlined in our first report to all shareholders on
April, 21 2006, the agreement of the Company to purchase the skybox from
Annapurna, Mr. Vinod Gupta’s corporation, was signed and the check was cut
months
before
the
Audit Committee requested a review to
approve
the
transaction, appearing to us to be a “rubber stamp” after the fact.
Dolphin
will have a full report on IUSA’s 80-foot yacht, the American Princess.
Currently, we refer you to Dolphin’s first report on related-party transactions
issued on April 21, 2006,
in
which
Dr. Vasant Raval, chairman of the Company’s Audit Committee, recommended that
Mr. Vinod Gupta bear $278,000 of Company expense for personal use of the
boat in
2004 alone, something to our knowledge he has failed to do. You may find
Dr.
Raval’s memo of February 8, 2005 elsewhere on this site.
Mr.
Vinod
Gupta touts the Company’s financial accomplishments, but neglects to mention
that the Company’s EBITDA is only now recovering to its level in 2001, despite
an intervening revenue increase of approximately $100 million. This has led
Dolphin and others to question whether the Company is experiencing organic
growth, or whether acquisitions have covered up for a failure to execute
internally in recent years.
Dolphin
has addressed in its press release of May 2, 2006, what seems to us to be
an
incomprehensible statement of Mr. Vinod Gupta on why he should be the only
shareholder exempt from the poison pill.
As
Dolphin has indicated on pages19 and 29 of its proxy materials, infoUSA
continues to trade at a material discount from its peers, based upon customary
benchmarks.
Dolphin
notes that through May 1, 2006, the Company’s stock price is down over 13% since
it announced its earnings miss for the first quarter of 2006 on April
21st.
As
such, IUSA’s stock is presently trading at a 2.4 multiple discount of Total
Enterprise Value to 2006 analyst consensus estimated EBITDA, and a 5.4 multiple
discount of price to 2006 estimated EPS to its publicly traded
peers.
| 8. |
The
Reasons for Mr. Vinod Gupta’s Offer
|
Mr.
Vinod
Gupta’s confession shocks us. As stated in our press release of May 2, 2006, it
appears that Mr. Vinod Gupta did not make his offer in good faith but rather
to
prop up the stock price.
| 9. |
(and
10.) State of the Business; The
Future
|
These
appear to be rare moments of candor on the part of Mr. Vinod Gupta, in which
he
admits that under his leadership not all has been well with the Company.
Curiously, this candor came within two weeks of a time when his undervalued
bid
to acquire the Company was still pending.
11. What
Can the Board Do?
We
ask
the question differently— who is the Board and what has it done? The answer,
Dolphin believes, is that this is a Board that has seen 15 directors come
and go
in the past decade and that has allowed Mr. Vinod Gupta a free pass, as
described in Dolphin’s proxy materials. Mr. Vinod Gupta says the Board should
stay united. How can it stay united if it is constantly changing?
The
closing words of the letter are the most chilling:
“In
the long run, we will increase shareholder value, otherwise I will come to
you
and say, “Let’s sell the company to the highest offer which is fair to all of
the shareholders.’”
Is
that
why Mr. Vinod Gupta offered to buy the Company for himself at $11.75 and
terminated the Special Committee after it publicly announced its desire to
continue to explore value enhancing alternatives for all shareholders? See
Dolphin’s outline of the going private transaction, as well as the related Board
and Special Committee minutes on this site.
September
7, 2005
PERSONAL
& CONFIDENTIAL
Board
of
Directors
infoUSA
Inc.
Gentlemen:
I
am
writing this letter in response to a letter that you may have received from
a
certain shareholder, Dolphin Limited Partnership (“Dolphin”).
I
believe
that it is proper for me to give my response to the points raised in their
letter.
| 1. |
Dolphin
is a small hedge fund in Stamford, CT. Obviously they bought our
stock
when it was announced that management planned to take the company
private
at $11.75 per share. They were probably hoping for a quick profit.
When we
withdrew our offer, that meant that they had to take a loss. Now
they are
acting like a bully and pressuring the Board of Directors into
selling the
company.
|
These
hedge funds don’t care anything about management, employees, customers or
enterprise value. They would rather make a quick profit and get
out.
Just
about any public company can be sold at a 20% premium. But, is this what
we
want? We could have sold the company at any time, at a premium to our stock
price, but we are not here to sell businesses. We are here to expand the
business and increase shareholder value. We are here to create a brand. We
are
here to create a bigger and better enterprise. We are here to employ more
people.
We
are
not here to sell the company and take the money and run. I could have done
that
many times during my 33 years with infoUSA.
| 2.
|
Let
me answer the questions about the transfer of NetJets ownership
to
infoUSA.
In the past, these aircraft were owned by Annapurna Corporation,
which I
owned. It allowed Annapurna Corporation to have the debt and the
long-term
contracts with NetJets. That means infoUSA
did not have to carry an asset or the debt for these
aircraft.
|
Today,
we
own 1/8 ownership in four planes, i.e. we own half of a plane. Every flight
and
its business reason are documented. These planes are used by many of our
managers and save time and increase productivity. A company the size of
infoUSA,
with
our many operations
within the U.S. and overseas, can easily justify more than one full plane.
But,
we only operate with half a plane.
When
Annapurna Corporation owned the planes; it was charging infoUSA
a
price that was 10% below the price charged by Marquis Business Jet. That
is a
company owned by NetJets. infoUSA
was
paying less than the market price without carrying any debt or long-term
obligation. Once we decided that infoUSA
will
no longer have related party transactions, I sold these planes to NetJets
and
then NetJets sold these to infoUSA
at
the market price. Now infoUSA
is
paying more for its usage, but it is a better way to show the asset and we
don’t
have to report this as a related party transaction.
In
today’s business world, the use of a business jet has pretty much become a
necessity. We don’t get many non-stop commercial flights from Omaha. Time
becomes a very important factor in travel. The business jet saves us a lot
of
time and it also allows our executives to work during the flight. If you
recall,
at one time Warren Buffett used to say that business jets were dispensable.
Today, Warren Buffett says that they are indispensable. We should point out
to
the shareholders that we only own half a jet, i.e. four interests in 1/8
plane.
This
hedge fund thinks that all of our employees are in Omaha. He does not realize
that we have operations in 15 different states and many foreign
countries.
| 3. |
Regarding
use of the Skybox.
If you read Dolphin’s letter, they are again denigrating the Nebraska
board members. Do they mean that New York companies do not buy
Skyboxes in
Madison Square Garden, Yankees Stadium, Giants Stadium and many
other
sports stadiums? In fact, all of the sports teams have skyboxes
owned by
businesses. But somehow, people from the East Coast have a tendency
to
make fun of people in the Midwest. I think that it is a cheap shot,
at our
Nebraska people.
|
I
paid $2
million for the Skybox. The box has always been used by infoUSA
people and infoUSA
customers. When I transferred the use of the Skybox to infoUSA,
it
was only transferred at $500,000. That means that I paid $1.5 million out
of my
own pocket. This is something that the Board of Directors and the shareholders
do not realize. I think that we should have mentioned that Mr. Gupta paid
$2
million for the Skybox and it was transferred for a half million. We use
the
Skybox for client entertainment and for rewarding the top performing
employees.
| 4. |
Questions
Regarding the Boat.
infoUSA
has always had a boat for the past ten years, which has been used
for
client entertainment. I owned the 80 ft. boat through Annapurna
Corporation and infoUSA
paid for its use. Since we are eliminating related party transactions,
the
boat was sold to the bank and the bank is leasing it to infoUSA.
|
| |
infoUSA
is a business-to-business brand company. We have over four million
customers. We entertain our large customers. Entertaining large
customers
is done by every single business in America. Our customers have
a choice
of buying a database from six different companies, and entertaining
them
is part of the selling process. A lot of these hedge funds and
investment
managers have never run a business. The only thing they know is
how to
break up a company, sell it, layoff the employees, take their money
and go
home.
|
| 5. |
Let
me talk about the entrepreneurial management of infoUSA
and how it has grown the company and made money for the company
many times
through smart investments.
|
| a. |
infoUSA
invested a million dollars in InfoSpace and realized a quick profit
of $15
million within a year.
|
| b. |
infoUSA
invested in Metromail and we realized a profit of $10
million.
|
| c. |
infoUSA
took an option in Hogan Real Estate Data from First Data Corporation
and
within a month, we sold that option for a $15 million
profit.
|
| d. |
infoUSA
invested in Digital Impact and we realized a profit in that investment
of
$1.5 million.
|
| e. |
Since
1993, infoUSA
has grown from $42 million in sales to $380 million in 2005. Our
EBITDA
has grown from $12 million in 1993 to $100 million in
2005.
|
| f. |
Our
shareholder value has grown from $100 million m 1993 to over $600
million
now.
|
Some
of
you may not know that we have been very opportunistic in making profits for
our
shareholders. We have made many intelligent investments, which have made
a lot
of money for the company. It does not happen by itself. We make a lot of
connections, we meet people, we go to a lot of meetings, we keep our eyes
and
ears open so that we can make money for the shareholders. We have made over
20
acquisitions and every acquisition requires a lot of selling and persuasion
before they are willing to sell their business.
| 6. |
Regarding
the poison pill and why I have been excluded from the poison pill.
After
we went public, my ownership in the company was roughly 75%. The
question
was raised that there was not enough liquidity in the marketplace
and it
was hurting the stock price. When I was asked to sell more shares,
I
agreed to do that in return for having a poison pill, and my holdings
being excluded from the poison
pill.
|
To
put me
back in the poison pill would be a wrong move. My family holdings of 40%
keep
the other short sellers honest. That means that they cannot play games with
the
stock because they know that I am willing to buy back the shares.
|
|
7. |
In
Dolphin’s letter, they talk about how infoUSA
has a lot of value, but they fail to mention who created the value.
Our
management team and I have created the value in this company. It
just did
not happen by itself.
|
When
Dolphin talks about the Gupta discount, it is quite normal for these guys
to be
jealous. People are jealous of Bill Gates, Warren Buffett, Larry Ellison
and
other successful entrepreneurs. There are plenty of people who are jealous
of
successful people and this hedge fund manager is one of them.
At
one
point in the letter, they talk about value, which I have created, and on
the
other side they talk about the discount. What do you believe?
| 8. |
History
of my Offer and the Reason.
After we lowered our revenue guidance due to the Donnelley Marketing
revenue 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 that
I am
there to support it.
The
role
of the Special Committee was formed to review my offer. Once the offer is
withdrawn, their job is done. I don’t think that they have to put the company up
for sale or be influenced by the lawyers and the bankers, who only make money
when there is a deal. The lawyers and bankers don’t care about the company, the
employees or the customers. They just want to make a deal and make
money.
| 9. |
The
State of Business at infoUSA.
We have had some challenges in our Donnelley Group. Our revenue
will be
down by $10 million since last year. We had to make senior management
changes.
|
In
our
Small Business Group, our revenue has been flat, as we migrate from a one-time
customer to a subscription customer. Due to the internet, the customer who
used
to buy 5,000 names is now only buying 500 names. We have had to invest a
lot of
money in our database content, in technology development, a subscription
model
and then we had to spend a lot of money in advertising and brand building
for
our subscription model. We do see the results, but it is going to take time
before we get on an internal growth path.
| 10. |
Future
Forecast.
I
believe that in three years, as we migrate from one-time sales
to
subscription selling, we will see internal growth. It is hard to
see now,
but as we progress and we invest in database, technology and marketing,
we
will see internal growth.
|
| 11. |
What
can the Board do at this time?
I
suggest that the Board stay united and work with management. We
believe
that we can grow the business internally. We can also use our excess
cash
for strategic acquisitions and make better use of our capital.
In the last
five years we have acquired many companies with our cash flow.
These
companies have been able to fill the gaps, which we had in our
company,
such as e-mail marketing, global business database company and
other
products.
|
If
at any
time I feel that we cannot grow and we are going sideways, I will be the
first
one to come to the Board and suggest that we sell the company, because that
may
be the best option for the shareholders.
Please
do
not forget that my family and me own 20 million shares. It represents more
than
90% of our net worth. It is in my best interest to increase shareholder value
for everybody including my family and me.
At
this
time, let us stay united. Let’s not listen to the hedge fund managers and some
of the quick money artists.
In
the
long run, we will increase shareholder value, otherwise I will come to you
and
say “Let’s sell the company to the highest offer which is fair to all of the
shareholders”.
Best
regards,
/s/
Vinod
Gupta
Vinod
Gupta
VG:mld
AMERICAN
BUSINESS INFORMATION, INC.
MINUTES
OF A MEETING
OF
THE BOARD OF DIRECTORS
July
21,
1997
Time
of Meeting
A
meeting
of the Board of Directors of American Business Information, Inc., a Delaware
corporation (the “Company”),was held at 1:15 p.m. (Omaha time)on Monday, July
21,1997.
Quorum
Participating
in the meeting were the following directors :Vinod Gupta, Jon Wellman, Jon
D.
Hoffmaster, Harold Andersen, Gautam Gupta, George Haddix, Elliot Kaplan, George
Kubat and Paul Goldner. Also participating at the invitation of the Board were
Steven Purcell of the Company, Frank Currie of Wilson Sonsini Goodrich &
Rosati, counsel to the Company, and Daniel Case and Robert Hobart of Hambrecht
& Quist (“H&Q”) financial adviser to the Company.
Chairman
and Secretary
Mr.
Vinod
Gupta chaired the meeting and Mr. Curie was asked to record the minutes. Noting
that a quorum was present, Mr. Gupta called the meeting to order.
Discussion
Mr.
Gupta
opened the discussion by reviewing with the Board the recent performance of
the
Company and the Company’s Common Stock price. The Board discussed prevailing
market conditions, including conditions in the acquisition market and the fact
that the Company’s industry is undergoing rapid consolidation. Mr. Currie
discussed with the Board various measures that the Board could take to ensure
that, in the event that another corporation were interested in acquiring the
Company, the Board of Directors would have tools available to ensure that it
would be able to maximize stockholder value. In particular, Mr. Curie reviewed
certain potential changes to the Company’s Bylaws, employment agreements,
stockholders rights plans and changes in the Company’s capital structure, among
other measures. Mr. Currie also reminded the Board of its fiduciary obligations
in considering such measures.
With
respect to stockholders rights plans, the Board recalled its formal discussion
in November 1995 of the advisability of adopting such a plain, as well as
subsequent discussions of such a plan by members of the Board. Mr. Currie
reviewed for the Board the mechanics and optional features of stockholders
rights plan generally. Mr. Case and Mr. Hobart then reviewed for the Board
H&Q’s analysis of the Company’s historical stock price and the long-term
future prospects for the Company’s stock price. The Board discussed the
presentations by Messrs. Currie, Case and Hobart, and concluded that a
stockholders rights plan would be in the best
interest
of the Company’s stockholders. The Board also determined that the $120 was a
fair price at which to set the exercise price for the Preferred Shares purchase
rights, representing a fair estimate of the long-term value of the Company’s
stock.
Mr.
Gupta
then introduced a proposal for the Company to adopt a two-class structure for
its Common Stock, whereby the Company’s Common Stock would be reclassified as
Class B Common Stock with ten votes per share and the Company would create
a new
class of Common Stock, designated “Class A Common Stock,” with one vote per
share (together, the “Reclassification’). If adopted, the Company would plan to
issue predominantly Class A Common Stock in the future in acquisitions,
financings or pursuant to stock option plans. Mr. Gupta explained that the
new
structure would give the Company greater flexibility to achieve strategic
objectives without risking an unintended change in voting control of the
Company. Mr. Currie then explained to the Board the steps that would be required
to implement the change in capital structure, including the requirement to
obtain Nasdaq approval and stockholder approval. Mr. Currie explained that
to
get the number of stockholders necessary for Nasdaq listing, it would be
advisable to declare a dividend of one share of Class A Common Stock for every
share of Class B Common Stock outstanding (the “Stock Dividend”). Mr. Currie
further explained the effects that the Reclassification and Stock Dividend
would
have on the Company’s stock option plan and a possible stockholders rights plan.
Mr. Case then discussed the expected effects of the Reclassification and Stock
Dividend on the liquidity and price of the Company’s stock. Finally, Mr. Currie
discussed with the Board the potential anti-takeover effects of the
Reclassification and the Stock Dividend, and reminded the Board of its fiduciary
responsibilities in considering such measures .
The
Board
then discussed the proposed Reclassification and Stock Dividend, and-questioned
the Company’s Chief Executive Officer and Messrs. Currie, Case and Hobart on
various aspects of the proposal. Noting the complexity of the issues involved
in
the proposal, the Board asked for further legal and financial analysis of the
Reclassification and Stock Dividend from Messrs. Currie and Case. Upon
conclusion off the discussion, the Board decided to defer action on the proposal
until it received such further legal and financial advice, and until the Board
members could have additional time to consider and discuss the
proposal.
At
the
conclusion of the meeting, upon motion duly made and seconded, the Board adopted
the following resolutions:
NOW,
THEREFORE, BE IT RESOLVED:
That,
effective July 21, 1997, the Board of Directors hereby declares that a dividend
of one right (a “Right”) for each share of the Corporation’s Common Stock,
$0.0025 par value (“Common Stock”) be paid on August 14, 1997
to
shareholders of record of the Common Stock issued and outstanding at the close
of a business on such date, each Right representing the right to Purchase
one-thousandth of a share of Series A Participating Preferred Stock (the
“Preferred Shares” upon the terms and subject to the conditions set forth in the
form of the Rights Agreement presented to this meeting (the “Rights Agreement”),
which agreement is hereby approved in all respects.
RESOLVED:
That the
exercise price of the Rights shall be $120.00 per Right, and that the redemption
price therefor shall be $0.001 per Right.
RESOLVED
FURTHER:
That
an
amount equal to $0.0001 per Right be charged to the surplus of the Company
for
each Right issued pursuant to the foregoing dividend.
RESOLVED
FURTHER:
That
the
proper officers of the Corporation are hereby authorized in the name and on
behalf of the Corporation to execute the Rights Agreement, with such
modifications as the officers executing the same shall approve, and to deliver
the same to the Rights Agent thereunder, such execution and delivery
conclusively to evidence the due authorization and approval thereof by the
Corporation.
Rights
Certificates
RESOLVED
FURTHER:
That
certificates evidencing the Rights (the “Rights Certificates”) shall be
substantially in the form set forth in the Rights Agreement and shall be issued
and delivered as provided therein.
RESOLVED
FURTHER:
That the
Rights Certificates shall be signed by the Chairman of the Board, the Chief
Executive Officer, the President or any Vice President and by the Secretary
or
an Assistant Secretary of the Corporation under its corporate seal (which may
be
in the form of a facsimile of the seal of the Corporation), provided that the
signature of any of said officers of the Corporation may, but need not be,
a
facsimile signature imprinted or otherwise reproduced on the Rights
Certificates, and that the Corporation hereby adopts for such purpose the
facsimile signature of the present or any future Chairman of the Board, Chief
Executive Officer, President, Vice President and Secretary, of the Corporation,
notwithstanding the fact that at the time the Rights Certificates shall be
authenticated and delivered or disposed of he or she shall have ceased to be
such officer.
RESOLVED
FURTHER:
That
the
proper officers of the corporation are hereby authorized to execute on behalf
of
the Corporation and under its corporate seal (which may be in the form of a
facsimile of the seal of the Corporation) Rights Certificates issued to replace
lost, stolen, mutilated or destroyed Rights Certificates, and such Rights
Certificates as may be required for exchange, substitution or transfer as
provided in the Rights Agreement in the manner
and form to be required in, or contemplated by, the Rights
Agreement.
RESOLVED
FURTHER:
That
the
Rights Certificates shall be manually countersigned by the Rights Agent and
books for the registration and transfer of the Rights Certificates shall be
maintained by the Rights Agent at its principal offices.
Authorization
and Reservation of Preferred Shares
RESOLVED
FURTHER:
That the
Certificate of Determination of Rights, Preferences and Privileges of Series
A
Participating Preferred Stock designating 35,000 shares of this Corporation’s
authorized but unissued Preferred Stock as “Series A Participating Preferred
Stock” and
setting forth the rights, preferences and privileges thereof in the form
attached hereto as Exhibit A (the “Certificate of Determination”) is hereby
approved and the resolutions set forth therein are hereby adopted.
RESOLVED
FURTHER:
That the
proper officers of the Corporation are hereby authorized on behalf of the
Corporation to execute the Certificate of Determination and to cause it to
be
filed with the Office of the Secretary of State of Delaware and to take such
other actions as may be necessary or appropriate for the authorization of such
series of Preferred Shares.
RESOLVED
FURTHER:
That
the
minimum number of Preferred Shares sufficient to permit the exercise in full
of
all outstanding Rights at any time is hereby reserved for issuance upon exercise
of the Rights, such number to be subject to adjustment from time to time in
accordance with the Rights Agreement, and subject to the limitation that in
no
event shall the number of Preferred Shares reserved hereunder, when, added
to
the number of Preferred Shares then otherwise reserved for issuance by the
Company, exceed the total number of authorized but unissued Preferred Shares
of
the Company at any time.
Appointment
of Rights Agent
RESOLVED
FURTHER:
That
NorWest Shareowner Services (the “Bank”) is hereby appointed Rights Agent under
the Rights Agreement, and that upon presentation to it of Rights Certificates
for exercise in accordance with the Rights Agreement, the Bank is authorized,
as
Transfer Agent and Registrar for the Common Stock, to issue originally,
countersign, register and deliver the Preferred Shares and/or Common Shares
issuable upon such exercise of the Rights.
Registration
and Listing
RESOLVED
FURTHER:
That the
proper officers of the Corporation are authorized for and on behalf of the
Corporation to execute personally or by attorney-in-fact and to cause to be
filed with the Securities and Exchange Commission, as and when advised by legal
counsel, a registration statement under the Securities Act of 1933, as amended
(the “Securities Act”), for the
registration
of the Preferred Shares and/or Common Shares issuable upon exercise of the
Rights, and thereafter to execute and cause to be filed any amended registration
statement or registration statements and amended prospectus or prospectuses,
or
amendments or supplements to any of the foregoing, and to cause such
registration statement and any amendments thereto to become effective in
accordance with the Securities Act and the General Rules and Regulations of
the
Securities and Exchange Commission thereunder.
RESOLVED
FURTHER:
That
the
Chief Executive Officer is hereby appointed as agent for service of the
Corporation with respect to said registration statement with all the powers
and
functions specified in the General Rules and Regulations of the Securities
and
Exchange Commission under the Securities Act.
RESOLVED
FURTHER:
That
the
proper officers of the Corporation are hereby authorized, jointly and severally,
in the name and on behalf of the Corporation, to take all such actions and
to
execute all such documents as they may deem necessary or appropriate in
connection with the issuance of the Rights and the Preferred Shares and/or
Common Shares issuable upon exercise of the Rights in order to comply with
the
Securities Act and the Securities Exchange Act of 1934, as amended.
RESOLVED
FURTHER:
That the
proper officers of the Corporation are hereby authorized, jointly and severally,
in the name and on behalf of the Corporation, to execute and file such
application or applications, and amendments and supplements thereto, and take
such other action as may be necessary to list the Rights (and, if in the
judgment of such officers it is appropriate to do so, the Preferred Shares
and/or Common Shares issuable upon exercise thereof) on the National Association
of Securities Dealers Automated Quotation System, and that the proper officers
of the Corporation are hereby authorized to appear before the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc.
(the “NASD”), and to execute such papers and agreements as may be necessary to
conform with the requirements of the Securities and Exchange Commission, and
the
NASD, and to effectuate such listing and registration.
Subsequent
Issuance of Rights
RESOLVED
FURTHER:
That so
long as the Rights are attached to the Common Stock as provided in the Rights
Agreement and subject to the other provisions of the Rights Agreement, one
additional Right shall be delivered with each share of Common
Stock
issued after August 14,1997, including but not limited to the shares of Common
Stock issued upon conversion of any convertible securities of the Corporation
and the exercise of options or warrants to purchase shares of Common Stock
granted by the Corporation, but excluding any now Class or Series of capital
stock of the Company with voting power inferior to the voting power of the
Company’s Common Stock on the date hereof.
“Blue
Sky”
Qualifications
RESOLVED
FURTHER:
That the
Board of Directors deems it desirable and in the best interests of the
Corporation that the Preferred Shares and/or Common Shares issuable upon
exercise of the Rights be qualified or registered for sale in various
jurisdictions; that the Chairman of the Board, the Chief Executive Officer,
the
President or any Vice President and the Secretary are hereby authorized to
determine the jurisdictions in which appropriate action shall be taken to
qualify or register for sale all or such part of the Preferred Shares and/or
Common Shares issuable upon exercise of the Rights as said officers may deem
advisable; that
said
officers are hereby authorized to perform on behalf of the Corporation any
and
all such acts as they may deem necessary or advisable in order to comply with
the applicable laws of any such jurisdictions, and in connection therewith
to
execute and file all requisite papers and documents, including, but not limited
to, applications, reports, surety bonds, irrevocable consents and appointments
of attorneys for service of process; and the execution by such officers of
any
such papers or documents or the doing by them of any act in connection with
the
foregoing matters shall conclusively establish their authority therefor and
the
approval and ratification by the Corporation of the papers and documents so
executed and the action so taken.
General
Resolutions
RESOLVED
FURTHER:
That the
Board of Directors hereby adopts, as if expressly set forth herein, the form
of
any resolution required by the Rights Agent or by any authority in connection
with any applications, consents to service, issuer’s covenants or other
documents if (i) in the opinion of the officers of the Corporation executing
the
same, the adoption of such resolutions is necessary or desirable and (ii)the
Secretary of the Corporation evidences such
adoption by inserting in the minutes of this meeting copies of such resolutions,
which will thereupon be deemed to be adopted by the Board of Directors with
the
same force and effect as if presented at this meeting.
RESOLVED
FURTHER:
That the
proper officers of the Corporation be, and each of them hereby is, authorized
and directed, jointly and severally, for and on behalf of the Corporation,
to
execute and deliver all certificates, agreements and other documents, take
all
steps and do all things which they may deem necessary or advisable in order
to
effectuate the purposes of the foregoing resolutions.
RESOLVED
FURTHER:
That any
actions taken by such officers prior to the date of this meeting that are within
the authority conferred are hereby ratified, confirmed and approved all respects
as the act and deed of the Corporation.
Adjournment
There
being no further business, the meeting was adjourned.
RESPECTFULLYSUBMITTED:
/s/
Frank
Currie
Frank
Currie
Secretary
of the
Meeting
ACCEPTED
AND APPROVED:
/s/ Vinod
Gupta
Vinod
Gupta
Chairman
of the Board