0001015402-01-501970.txt : 20011018
0001015402-01-501970.hdr.sgml : 20011018
ACCESSION NUMBER: 0001015402-01-501970
CONFORMED SUBMISSION TYPE: DEF 14A
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20010907
FILED AS OF DATE: 20010730
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ELECTRONIC CLEARING HOUSE INC
CENTRAL INDEX KEY: 0000721773
STANDARD INDUSTRIAL CLASSIFICATION: FUNCTIONS RELATED TO DEPOSITORY BANKING, NEC [6099]
IRS NUMBER: 930946274
STATE OF INCORPORATION: NV
FISCAL YEAR END: 0930
FILING VALUES:
FORM TYPE: DEF 14A
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-15245
FILM NUMBER: 1692517
BUSINESS ADDRESS:
STREET 1: 28001 DOROTHY DR
CITY: AGOURA HILLS
STATE: CA
ZIP: 91301-2697
BUSINESS PHONE: 8187068999
MAIL ADDRESS:
STREET 1: 28001 DOROTHY DRIVE
CITY: AGOURA HILLS
STATE: CA
ZIP: 91301
FORMER COMPANY:
FORMER CONFORMED NAME: BIO RECOVERY TECHNOLOGY INC
DATE OF NAME CHANGE: 19860122
DEF 14A
1
doc1.txt
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14 (a) of the Securities
Exchange Act of 1934 (Amendment No. ____)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only ( as permitted by Rule
14a-6 (e) (2) )
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11 (c) or Rule 14a-12
ELECTRONIC CLEARING HOUSE, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person (s) Filing Proxy Statement, if other than Registrant
Payment of Filing Fee (Check the appropriate box) :
/X/ No fee Required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(I) (1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(2) Aggregate number of securities to which transaction applies:
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a) (2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid
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(2) Form, schedule or registration statement number:
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(3) Filing party:
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(4) Date filed:
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ELECTRONIC CLEARING HOUSE, INC.
28001 DOROTHY DRIVE
AGOURA HILLS, CALIFORNIA 91301
(818) 706-8999
-------------------------
Dear Stockholders:
You are cordially invited to attend a special meeting of stockholders of
Electronic Clearing House, Inc. (the "Company") to be held on September 7, 2001
at 10:00 a.m., local time, at the Renaissance Hotel, 30100 Agoura Road, Agoura
Hills, California.
At the special meeting, you will be asked to consider and vote on the adoption
and approval of a proposal to amend our Amended and Restated Articles of
Incorporation. The amendment provides for a one-for-four (1-for-4) reverse
stock split of the issued and outstanding shares of our common stock. The
purpose of the reverse stock split is to attempt to comply with the Nasdaq
SmallCap Market's $1.00 minimum bid price requirement for continued listing on
the Nasdaq SmallCap Market. Complete details of the business to be conducted at
the special meeting are provided in the attached Notice of Special Meeting of
Stockholders and Proxy Statement.
Our board of directors has determined that the proposal to be considered at the
special meeting is in the best interest of our stockholders. For the reasons
discussed in this proxy statement, our board of directors recommends a vote
"FOR" the proposal.
Please review the enclosed materials carefully. Whether or not you plan to
attend the meeting, please promptly return your proxy card in the enclosed
postage prepaid envelope. If you attend the meeting, you may vote in person, if
you wish, even though you have previously returned your proxy.
Your vote is very important, and we appreciate your cooperation in considering
and acting on the matter presented. We look forward to seeing you at the
meeting.
Sincerely,
JOEL M. BARRY
Chairman of the Board
and Chief Executive Officer
August 13, 2001
ELECTRONIC CLEARING HOUSE, INC.
28001 DOROTHY DRIVE
AGOURA HILLS, CA 91301
(818) 706-8999
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 7, 2001
To the Stockholders:
A special meeting of the stockholders of Electronic Clearing House, Inc. will be
held on September 7, 2001, at the Renaissance Hotel, 30100 Agoura Road, Agoura,
California, at 10:00 a.m., local time, for the following purposes:
1. To consider and vote on the adoption and approval of an amendment to our
Amended and Restated Articles of Incorporation, which provides for a
one-for-four (1-for-4) reverse stock split of the issued and outstanding shares
of our common stock; and
2. To transact any other business properly coming before the special meeting or
any adjournment thereof.
We are not aware of any matters, other than those described above, that are to
come before the meeting. If any other matters arise, however, your signed proxy
card gives authority to Joel M. Barry and Carl W. Schafer to vote on those
matters at their discretion. If you decide to attend the special meeting, you
may revoke your proxy at any time before it is voted. Stockholders owning
shares of our common stock at the close of business on August 6, 2001 are
entitled to attend and vote at the special meeting.
By Order of the Board of Directors,
DONNA L. REHMAN
Corporate Secretary
Agoura Hills, California
August 13, 2001
IT IS IMPORTANT THAT YOUR SHARES BE VOTED AT THE MEETING. PLEASE COMPLETE,
SIGN, DATE AND RETURN TO US THE ENCLOSED PROXY CARD BY SEPTEMBER 3, 2001.
PROXY STATEMENT
FOR THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 7, 2001
Our board of directors is soliciting your proxy for the special meeting of
stockholders to be held at 10:00 a.m., local time, on September 7, 2001, at the
Renaissance Hotel, 30100 Agoura Road, Agoura Hills, California. Voting
materials, including this proxy statement and the proxy card, are first being
mailed to the stockholders on or about August 13, 2001.
VOTING AND RELATED MATTERS
Q: WHAT AM I VOTING ON?
A: You are being asked to vote on the approval of an amendment to our Amended
and Restated Articles of Incorporation to effect a one-for-four (1-for-4)
reverse stock split of our common stock and any other business properly coming
before the meeting. The amendment is further described below and the form of
the actual amendment is contained in Appendix A, subject to any further changes
that may be necessary or desirable to effect the amendment of our Amended and
Restated Articles of Incorporation.
Q: WHO IS ENTITLED TO VOTE?
A: Stockholders as of the close of business on August 6, 2001, the record date,
are entitled to vote.
Q: HOW MANY SHARES CAN BE VOTED?
A: As of the record date, approximately 21,791,000 shares of common stock were
issued and approximately 21,634,000 shares of common stock were outstanding and
entitled to vote at the special meeting. Each stockholder of common stock is
entitled to one (1) vote for each share held.
Q: HOW DO I VOTE?
A: Complete, sign and mail us your proxy card. If you return your signed proxy
card but do not indicate how you wish to vote, your shares will be voted FOR the
proposal. You may, of course, attend the meeting in person and vote. Even if
you plan to attend the meeting, we ask that you sign and return a proxy card.
Q: WHAT IF I CHANGE MY MIND AFTER I RETURN MY PROXY?
A: You may revoke your proxy and change your vote at any time before the
meeting. You may do this by signing and sending a written notice of revocation
or another proxy with a later date than the one you want to revoke, or by voting
in person at the meeting.
Q: WHO WILL COUNT THE VOTES?
A: The chairman of the board of directors will select the inspectors of the
election for our special meeting. The inspectors will ascertain the number of
shares outstanding and the voting power of the shares, determine the shares
represented at the meeting, determine the validity of proxies and ballots, count
all votes and determine the results of the voting. The inspectors will deliver
a written report after the meeting.
Q: WHAT CONSTITUTES A QUORUM?
A: There must be a quorum for the meeting to be held. A quorum is a majority
of the outstanding shares. To be counted towards the quorum, stockholders may
be present at the meeting or represented by proxy. If you submit a properly
executed proxy card, even if you abstain from voting, then you will be
considered part of the quorum. Broker non-votes, or proxies submitted by
brokers as holders of record on behalf of their customers that do not indicate
how to vote on the proposal, are also considered part of the quorum. However,
broker non-votes and abstentions are not counted in the tally of votes FOR or
AGAINST the proposal and will have the same effect as votes AGAINST the
proposal. A WITHHELD vote is the same as an abstention.
Q: WHAT HAPPENS IF THE SPECIAL MEETING IS POSTPONED OR
ADJOURNED?
A: If the special meeting is postponed or adjourned for any reason, including
to permit the further solicitation of proxies, at any subsequent reconvening of
the meeting all proxies will be voted in the same manner as they would have been
voted at the original special meeting. However, as described above, you may
revoke your proxy and change your vote at any time before the reconvened
meeting.
Q: HOW MANY VOTES ARE REQUIRED TO APPROVE THE PROPOSAL?
A: The proposal to amend our Amended and Restated Articles of Incorporation
will be deemed approved by the stockholders if a majority of the quorum, present
or represented by proxy, vote FOR the proposal.
Q: WHO IS PAYING FOR THIS PROXY SOLICITATION?
A: We are paying the cost of soliciting proxies. In addition to mailing these
materials, our officers, directors and employees will solicit proxies, either
personally or via telephone or facsimile. They will not be paid specifically
for this solicitation activity.
We will also reimburse brokerage houses and other custodians, nominees and
fiduciaries who are record holders for their reasonable expenses in forwarding
these materials to the beneficial owners of those shares. Furthermore, we may
engage a firm to help solicit proxies in which event related fees will
approximate $7,000 (plus expenses). The extent to which we and our proxy
solicitation firm must solicit proxies depends entirely upon how soon proxy
cards are returned. Please send in your proxy cards immediately.
PROPOSAL
AMENDMENT TO OUR AMENDED AND RESTATED
ARTICLES OF INCORPORATION TO EFFECT A ONE-FOR-FOUR
REVERSE STOCK SPLIT OF OUR ISSUED
AND OUTSTANDING COMMON STOCK
INTRODUCTION
Our board of directors has approved the proposal to amend our Amended and
Restated Articles of Incorporation to effect a one-for-four (1-for-4) reverse
stock split of our common stock. We are now submitting the proposal to you, the
stockholders, for approval. The proposed reverse stock split will take effect,
if at all, after it is approved by you and after we file a Certificate of
Amendment to the Amended and Restated Articles of Incorporation with the
Secretary of State of the State of Nevada.
We expect that, if the proposal is approved by you, the Certificate of Amendment
will be filed promptly. However, our board of directors may elect not to file,
or to delay the filing of, the Certificate of Amendment if they determine that
filing the Certificate of Amendment would not be in the best interest of our
stockholders. Factors leading to such a determination could include any
possible effect on our Nasdaq listing or future securities offerings.
PURPOSE OF REVERSE SPLIT
Our common stock has been listed, and has traded, on the Nasdaq SmallCap Market
since October 2, 1989. For continued listing on the Nasdaq SmallCap Market, it
is necessary that, among other things, our shares of common stock maintain a
minimum bid price of at least $1.00 per share. On January 5, 2001, we received
a letter from Nasdaq that our minimum bid price was not in compliance with the
minimum bid price requirement for stock listed on Nasdaq. We were notified that
if we do not comply with the $1.00 per share requirement on or before April 5,
2001, our stock will be delisted. The Company requested a written hearing which
was held on May 31, 2001. On July 16, 2001, the Company received Nasdaq
notification that the Panel determined to continue the listing of the Company's
securities on the Nasdaq SmallCap Market pursuant to the following exceptions:
1) on or before August 3, 2001, the Company is required to file a proxy
statement with the Securities and Exchange Commission and Nasdaq evidencing its
intent to seek stockholder approval for a reverse stock split, and 2) on or
before September 17, 2001, the Company is required to demonstrate a closing bid
price of at least $1.00 per share and, immediately thereafter, a closing bid
price of at least $1.00 per share for a minimum of ten consecutive trading days.
The board of directors has approved a one-for-four (1-for-4) reverse stock
split, subject to stockholder approval, that the Company believes will resolve
the bid price deficiency. The Company intends to seek stockholder approval at a
special meeting of stockholders to be held on September 7, 2001. Presently, the
Company has approximately 21.6 million total shares outstanding. Assuming the
successful completion of the reverse stock split, the Company would have
approximately 5.41 million total shares outstanding after the split. We believe,
but cannot assure, that the proposed reverse stock split will enable the common
stock to trade above the minimum bid price established by the Nasdaq Continued
Listing Requirements. We believe we will be in compliance with the Nasdaq
Continued Listing Requirements if our common stock trades at or above the
minimum bid price of $1.00 per share as a result of the reverse split.
If our stock is delisted from Nasdaq, trading of our stock, if any, would have
to be conducted in the OTC-Bulletin Board. In such an event, an investor could
find it more difficult to dispose of, or to obtain accurate quotations as to the
market value of, our stock. In addition, if our common stock were to become
delisted from trading on Nasdaq and the trading price were to remain below $5.00
per share, trading in our common stock may also be subject to the requirements
of certain rules promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), which require additional disclosure by
broker-dealers in connection with any trades involving a stock defined as a
"penny stock" (generally, any non-Nasdaq equity security that has a market price
of less than $5.00 per share, subject to certain exceptions). The additional
burdens imposed upon broker-dealers by these requirements could discourage
broker-dealers from facilitating trades in our common stock, which could
severely limit the market liquidity of the stock and the ability of investors to
trade our common stock. We believe that, if the reverse stock split is
approved, there is a greater likelihood that the minimum bid price of the common
stock will be maintained at a level over $1.00 per share.
Even though a reverse stock split, by itself, does not impact a company's assets
or prospects, because we cannot predict the market's reaction, a reverse stock
split could result in a decrease in our aggregate market capitalization. Our
board of directors, however, believes that this risk is offset by the prospect
that the reverse stock split will improve the likelihood that we will be able to
maintain Nasdaq SmallCap Market listing and may, by increasing the per share bid
price, make an investment in our common stock more attractive for certain
investors. There can be no assurance, however, that approval of the reverse
stock split will succeed in raising the bid price of our common stock above
$1.00 per share, or that a bid price of $1.00, if achieved, would be maintained,
or that even if the Nasdaq's minimum bid price requirements were satisfied, our
common stock would not be delisted by the Nasdaq for other reasons.
Our common stock is currently registered under Section 12 of the Exchange Act,
and as a result, we are subject to the periodic reporting and other requirements
of the Exchange Act. The reverse stock split will not affect the registration
of our common stock under the Exchange Act and we have no present intention of
terminating its registration under the Exchange Act in order to become a
"private" company.
The reverse stock split will not affect the number of authorized shares.
Accordingly, the reverse stock split will have the effect of creating additional
authorized and unreserved shares of our common stock. We have no current plans
to issue these shares, however, these shares may be used by us for general
corporate purposes.
The increase in authorized but unissued shares of common stock also may have the
effect of discouraging an attempt by another person or entity, through
acquisition of a substantial number of shares of common stock, to acquire
control of us with a view to effecting a merger, sale of assets or similar
transaction, since the issuance of new shares could be used to dilute the stock
ownership of such person or entity. The authorized but unissued common stock
could be issued to a holder who would then have sufficient voting power to
assure that any business combination or any amendment to our Amended and
Restated Articles of Incorporation would not receive the stockholder vote
required for approval. Our board of directors has no current plans to issue any
shares of common stock for any of these purposes and does not intend to issue
any stock except on terms or for reasons which they deem to be in our best
interests.
The reverse stock split may result in some stockholders owning "odd-lots" of
less than 100 shares of common stock. Brokerage commissions and other
transaction costs in odd-lots are generally somewhat higher than the costs of
transactions in "round-lots" of even multiples of 100 shares.
As a result of the reverse stock split, the approximately 21,634,000 shares of
common stock outstanding on August 6, 2001 will become approximately 5,408,500
shares of common stock, and any other shares issued prior to the effectiveness
of this proposal will be similarly adjusted. In addition, if the proposed
amendment becomes effective, each option to purchase common stock and any other
convertible security, outstanding on the effective date, will be adjusted so
that the number of shares of common stock issuable upon their exercise shall be
divided by four (4) (and corresponding adjustments will be made to the number of
shares vested under each outstanding option) and the exercise price of each
option shall be multiplied by four (4).
For the above reasons, we believe that the reverse stock split is in our best
interests and in the best interests of our stockholders. There can be no
guarantee, however, that the market price of our common stock after the reverse
stock split will be equal to the market price before the reverse stock split
multiplied by the split number, or that the market price following the reverse
stock split will either exceed or remain in excess of the current market price.
EXCHANGE OF STOCK CERTIFICATES
If you approve the proposed reverse stock split, we will instruct our corporate
secretary and transfer agent to begin implementing the exchange of certificates
representing outstanding common stock. As soon as practicable after the
effectiveness of the proposed amendment, holders of our common stock will be
notified and requested to surrender their certificates representing shares of
common stock to our corporate secretary and transfer agent in exchange for
certificates representing post-reverse split common stock. Beginning on the
date the proposed amendment becomes effective, each certificate representing
shares of our common stock will be deemed for all corporate purposes to evidence
ownership of as many shares of post-reverse split common stock after applying
the split factor and otherwise making adjustments for fractional shares
described below.
You will not be required to pay a transfer or other fee in connection with the
exchange of your certificates. You should not submit certificates until
requested to do so.
FRACTIONAL SHARES
No fractional shares of common stock will be issued as a result of the reverse
stock split. In lieu of receiving fractional shares, you will be entitled to
receive from us a cash payment in U.S. dollars equal to such fraction multiplied
by four (4) times the average of the closing bid and asked price per share of
the common stock as quoted on Nasdaq for the five (5) trading days immediately
preceding the date the amendment becomes effective.
FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE SPLIT
The following is a summary of the material federal income tax consequences of
the reverse stock split to you.
The reverse stock split will not be taxable to you, except for any cash received
in lieu of a fractional share of post-reverse split common stock. Consequently,
the holding period of shares of post-reverse split common stock (including any
fractional share interest) will include your holding period for the shares of
common stock exchanged, provided that the shares of common stock are held as a
capital asset at the effective time. In addition, your aggregate basis of the
shares of post-reverse split common stock (including any fractional share
interest) will be the same as your aggregate basis of the shares of common stock
exchanged.
Cash that you receive in lieu of a fractional share will be treated as if the
fractional share had been issued to you and then redeemed by us for the cash.
Accordingly, if you receive cash you will recognize taxable gain or loss equal
to any difference between the amount of cash received and your basis in the
fractional share. That basis will be an allocable portion of the aggregate
basis of the post-reverse split common stock described above.
YOU SHOULD CONSULT WITH YOUR OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES OF THE
REVERSE SPLIT IN LIGHT OF YOUR PARTICULAR CIRCUMSTANCES, INCLUDING THE
APPLICATION OF ANY STATE, LOCAL OR FOREIGN TAX LAW.
NO DISSENTER'S RIGHTS
Under Nevada law, you are not entitled to dissenter's rights of appraisal with
respect to the reverse stock split since our common stock is currently listed on
a national exchange.
BENEFICIAL OWNERSHIP OF COMMON STOCK
To the Company's knowledge, no individual has beneficial ownership or control
over 5% or more of the Company's outstanding common stock.
The following table sets forth the number of shares of common stock owned
beneficially by the Company's officers and directors as of the record date,
August 6, 2001:
Number of Shares Percentage of
Name & Address Beneficially Owned Common Stock[1]
------------------------- ------------------ ----------------
Joel M. Barry 1,073,250 [2] 4.76%
28001 Dorothy Drive
Agoura Hills, CA 91301
Lawrence Brown 130,000 [2] 0.60%
28001 Dorothy Drive
Agoura Hills, CA 91301
Alice L. Cheung 210,000 [2] 0.96%
28001 Dorothy Drive
Agoura Hills, CA 91301
Jesse Fong 65,110 [2] 0.30%
28001 Dorothy Drive
Agoura Hills, CA 91301
Aristides W. Georgantas 26,314 0.12%
28001 Dorothy Drive
Agoura Hills, CA 91301
David Griffin 137,747 [2] 0.63%
28001 Dorothy Drive
Agoura Hills, CA 91301
Herbert L. Lucas, Jr. 266,748 [3,4] 1.23%
12011 San Vicente Blvd.
Los Angeles, CA 90049
Donna Rehman 60,000 [2] 0.28%
28001 Dorothy Drive
Agoura Hills, CA 91301
Carl W. Schafer 146,914 [3] 0.68%
66 Witherspoon St., #1100
Princeton, NJ 08542
Rick Slater 234,000 [2] 1.06%
28001 Dorothy Drive
Agoura Hills, CA 91301
Patricia Williams 140,000 [2] 0.64%
28001 Dorothy Drive
Agoura Hills, CA 91301
Jack Wilson 174,300 [2][5] 0.80%
28001 Dorothy Drive
Agoura Hills, CA 91301
All officers and directors
as a group (12 persons) 2,702,283 [1] 11.33%
----------------------
[1] Outstanding common shares with effect given to individual stockholder's
exercise of stock options described in footnotes 2 through 5.
[2] Includes options according to the terms of the Incentive Stock Option Plan.
[3] Includes options granted to outside directors.
[4] Includes 71,889 shares indirectly owned by Mr. Lucas through a trust for
his wife.
[5] Includes 2,120 shares indirectly owned by Mr. Wilson through his wife.
SUBMISSION OF STOCKHOLDER PROPOSALS
If you want us to consider including a proposal for action presented at next
year's Annual Meeting of Stockholders, now scheduled for February, 2002, and you
wish to have it set forth in the proxy statement and form of proxy for the
meeting, you must notify the Company and submit the proposal in writing for
receipt at the Company's executive offices as noted above not later than October
31, 2001.
OTHER MATTERS
As of the date of this proxy statement, we do not know of any other matters that
will be presented for action at the special meeting. If, however, any other
matters not currently known are properly brought before the special meeting, the
persons named on the proxy card will vote the proxy on those matters in their
discretion as determined by a majority of the board of directors.
The Company's annual report on Form 10-K for the fiscal year ended September 30,
2000, and quarterly report(s) on Form 10-Q for the quarter(s) ended December 31,
2000, March 31, 2001 and June 30, 2001, filed with the Securities and Exchange
Commission are incorporated herein by reference. A copy of the Company's annual
report on Form 10-K and quarterly reports on Form 10-Q may be obtained without
charge by any beneficial owner of the Company's common stock upon written
request addressed to Donna Rehman, Corporate Secretary, 28001 Dorothy Drive,
Agoura Hills, CA 91301 or Email: drehman@echo-inc.com.
By Order of the Board of Directors,
DONNA L. REHMAN
Corporate Secretary
Dated: August 13, 2001
APPENDIX A
CERTIFICATE OF AMENDMENT TO
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF ELECTRONIC CLEARING HOUSE, INC.
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
1. Name of corporation: Electronic Clearing House, Inc.
2. The articles have been amended as follows (Article FOURTH):
Simultaneously with the effective date of this amendment (the "Effective Date"),
each four shares of the Corporation's common stock, issued and outstanding
immediately prior to the Effective Date (the "Old Common Stock") shall,
automatically and without any action on the part of the holder thereof, be
reclassified as and changed, pursuant to a reverse stock split (the "Reverse
Stock Split"), into one share of the Corporation's outstanding common stock (the
"New Common Stock"), subject to the treatment of fractional share interests as
described below. Each holder of a certificate or certificates which immediately
prior to the Effective Date represented outstanding shares of Old Common Stock
(the "Old Certificates," whether one or more) shall be entitled to receive upon
surrender of such Old Certificates to the Corporation's transfer agent for
cancellation, a certificate or certificates (the "New Certificates," whether one
or more) representing the number of whole shares of the New Common Stock into
and for which the shares of the Old Common Stock formerly represented by such
Old Certificates so surrendered, are reclassified under the terms hereof. From
and after the Effective Date, Old Certificates shall thereupon be deemed for all
corporate purposes to evidence ownership of New Common Stock in the
appropriately reduced whole number of shares. No certificates or scrip
representing fractional share interests in New Common Stock will be issued, and
no such fractional share interest will entitle the holder thereof to vote, or to
any rights of a stockholder of the Corporation. In lieu of any fraction of a
share of New Common Stock to which the holder would otherwise be entitled, the
holder will receive a cash payment in U.S. dollars equal to such fraction
multiplied by four times the average of the closing bid and asked price per
share of Common Stock as quoted on Nasdaq for the five trading days immediately
preceding the Effective Date. If more than one Old Certificate shall be
surrendered at one time for the account of the same stockholder, the number of
full shares of New Common Stock for which New Certificates shall be issued shall
be computed on the basis of the aggregate number of shares represented by the
Old Certificates so surrendered. In the event that the Corporation's transfer
agent determines that a holder of Old Certificates has not surrendered all his
certificates for exchange, the transfer agent shall carry forward any fractional
share until all certificates of that holder have been presented for exchange
such that payment for fractional shares to any one person shall not exceed the
value of one share. If any New Certificate is to be issued in a name other than
that in which it was issued, the Old Certificates so surrendered shall be
properly endorsed and otherwise in proper form for transfer, and the stock
transfer tax stamps to the Old Certificates so surrendered shall be properly
endorsed and otherwise in proper form for transfer, and the person or persons
requesting such exchange shall affix any requisite stock transfer tax stamps to
the Old Certificates surrendered, or provide funds for their purchase, or
establish to the satisfaction of the transfer agent that such taxes are not
payable. From and after the Effective Date, the amount of capital shall be
represented by the shares of the New Common Stock into which and for which the
shares of the Old Common Stock are reclassified, until thereafter reduced or
increased in accordance with applicable law. All references elsewhere in the
Amended and Restated Articles of Incorporation to the "Common Stock" shall,
after the Effective Date, refer to the "New Common Stock".
3. The vote by which the stockholders holding shares in the corporation
entitling them to exercise at least a majority of the voting power, or such
greater proportion of the voting power as may be required in the case of a vote
by classes or series, or as may be required by the provisions of the articles of
incorporation have voted in favor of this amendment is the majority of the stock
having voting power, present in person or represented by proxy.
4. Signatures
The shares representing this proxy, when properly executed, will be voted in the
manner directed herein by the undersigned stockholder(s). IF NO CHOICE IS
SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
ELECTRONIC CLEARING HOUSE, INC.
P.O. BOX 3040, 28001 DOROTHY DRIVE, AGOURA HILLS, CA 91301
P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned stockholder(s) hereby appoint(s) Joel M. Barry and Carl W.
Schafer, and either of them, proxies with full power of substitution and hereby
authorize(s) them to represent and vote, as designated below, all the shares of
Common Stock held of record by the undersigned as of the close of business on
August 6, 2001, at the Special Meeting of Stockholders of Electronic Clearing
House, Inc. to be held on September 7, 2001, or any adjournment thereof.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS [X]
KEEP THIS PORTION FOR YOUR RECORDS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(DETACH HERE AND RETURN THIS PORTION ONLY)
ELECTRONIC CLEARING HOUSE, INC. PROXY
The undersigned stockholder(s) hereby appoint(s) Joel M. Barry and Carl W.
Schafer, and either of them, proxies with full power of substitution and hereby
authorize(s) them to represent and vote, as designated below, all the shares of
Common Stock held of record by the undersigned as of the close of business on
August 6, 2001, at the Special Meeting of Stockholders of Electronic Clearing
House, Inc. to be held on September 7, 2001, or any adjournment thereof.
The undersigned authorize(s) the proxies to vote on the matters set forth in the
Proxy Statement of the Company dated August 13, 2001, as follows:
For Against Abstain
[_] [_] [_] 1. PROPOSAL TO AMEND ARTICLES OF INCORPORATION PROVIDING
FOR A ONE-FOR- FOUR (1-FOR-4) REVERSE STOCK SPLIT OF
THE ISSUED AND OUTSTANDING SHARES OF COMMON STOCK.
[_] [_] [_] 2. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT THEREOF.
Please sign exactly as name appears on stock. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
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NAME/SIGNATURE IN WHICH STOCK IS HELD
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NAME/SIGNATURE IF HELD JOINTLY DATE
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY BY SEPTEMBER 3, 2001. WITH YOUR
COOPERATION, WE CAN BE ENSURED OF A QUORUM.
PLEASE INDICATE ANY CHANGES IN ADDRESS ON REVERSE OF THIS PROXY FORM. THANK YOU.