OMAHA, Neb. - Database provider InfoGroup Inc. said Thursday its founder Vinod Gupta has stepped down as chief executive.

Gupta's resignation Wednesday was part of a proposed settlement of a shareholder lawsuit, documents filed with the Securities and Exchange Commission said. The lawsuit alleged the company misspent millions - some of it on former President Bill Clinton and his wife, Sen. Hillary Rodham Clinton.

The news of the settlement sent InfoGroup's shares soaring Thursday. They closed up 19 percent, or 98 cents, at $6.15.

The Omaha-based company said Gupta would remain on the board of directors. InfoGroup also said Gupta will be paid $10 million as part of a severance agreement. He will receive half of that within 60 days of his resignation and half after the company's 2009 annual meeting.

Board chairman Bill Fairfield will replace Gupta as CEO, the company said, and a member of the board, Bernard Reznicek, has taken over as chairman, replacing Fairfield.

Fairfield had been InfoGroup's lead independent director and is chairman of DreamField Partners Inc., a private equity firm.

The company said it had entered a "settlement agreement" with Gupta and others named in a shareholder lawsuit.

Investment manager Cardinal Value Equity Partners and hedge fund Dolphin Limited Partnership filed the lawsuit in Delaware last year.

A spokeswoman for InfoGroup said there would be no further comment Thursday.

A spokeswoman for Dolphin Financial Partners, a private investment partnership in Stamford, Conn., declined to comment.

Rob Kirkpatrick, managing director at Cardinal Capital in Greenwich, Conn., said the proposed settlement would be presented to the judge in Delaware for approval.

Gupta said in a news release that his leaving was "in the best interest of the company" and that he looked forward to new business opportunities.

The SEC filing also said that as part of the settlement, InfoGroup directors George Haddix, Vasant Raval and Elliot Kaplan will be resigning from the board.

The SEC has been investigating spending by InfoGroup, which used to be known as InfoUSA, and certain trades of company stock.

InfoGroup said its internal investigation into the allegations cost the company $16.2 million through the end of July.

According to the shareholder lawsuit, InfoUSA had spent nearly $900,000 since 2001 flying the Clintons to domestic and international locations and political events.

Gupta has been a major donor to Democrats and gave at least $1 million to Bill Clinton's presidential library in Arkansas. Gupta also took part in a fundraiser for Hillary Clinton in Manhattan in June 2007.

In July, the company said it would sell the company yacht as its first step in reining in expenses. It also said Gupta, who owned 40 percent of InfoGroup stock, had agreed not to buy more company stock through July 21, 2009, and that he would pay the company $9 million over the next five years.

InfoGroup said the payment from Gupta was subject to court approval as part of a future settlement agreement with the shareholders.

In the past, InfoGroup had made sizable payments to a company Gupta owned called Annapurna Corp. for use of a jet plane, the 80-foot yacht American Princess, condos in Hawaii and California and a University of Nebraska stadium box.

InfoGroup eventually took over the lease of what it calls a boat and invested in fractional ownership in a jet from NetJets. Previously, Gupta had said the jet, condos, stadium box and American Princess were for entertaining clients.

The company's new policy will prohibit owning or leasing yachts.

Any related-party transactions between InfoGroup and any business affiliated with an executive or large shareholder will require pre-approval from the board if they cost more than $120,000.

Also Thursday, InfoGroup filed its long-overdue second-quarter earnings report with the SEC.

The company said its second-quarter net income fell nearly 32 percent to $4.3 million, or 8 cents per share. In the same period a year ago, the company earned $6.3 million, or 11 cents per share.

The company said revenue increased 17 percent to $187.2 million in the period that ended June 30.

But InfoGroup's expenses - some related to the investigations - soared nearly 23 percent to $176.5 million in the second quarter.

InfoGroup has said its first- and second-quarter numbers - and the 2007 annual report - were delayed by the SEC investigation and the shareholder lawsuit.

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AP Business Writer Josh Funk in Omaha, Neb., contributed to this report.

On the Net:

InfoUSA Inc.: http://www.infousa.com