<PAGE>
================================================================================
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 Section 240.14a-11(c) or Section 240.14a-12
ELECTRONIC CLEARING HOUSE
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(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):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] 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:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
THE ELECTRONIC CLEARING HOUSE, INC.
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
February 6, 1997
----------------
To the Shareholders of The Electronic Clearing House, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders (the "Meeting")
of The Electronic Clearing House, Inc. (the "Company") will be held at the
Radisson Hotel, Agoura Hills, California on Wednesday, February 6, 1997 at 10:30
a.m. for the following purposes:
. To elect one Director to serve for the respective term specified
herein;
. To consider and act upon a proposal to increase the authorized Common
Stock of the Company from 20,000,000 shares to 26,000,000 shares.
. To amend the Incentive Stock Option Plan;
. To ratify or reject the selection of Price Waterhouse as independent
public accountants of the Company;
. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on December 16, 1996 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Meeting or any adjournment thereof.
You are cordially invited to attend the Meeting. Shareholders who do not expect
to attend the Meeting in person are requested to complete, date and sign the
enclosed Proxy and return it promptly in the envelope provided for that purpose.
The enclosed Proxy is being solicited on behalf of the Board of Directors of the
Company.
By Order of the Board of Directors,
/s/ DONNA L. CAMRAS
DONNA L. CAMRAS
Corporate Secretary
Agoura Hills, California
Dated: January 2, 1997
<PAGE>
PROXY STATEMENT
THE ELECTRONIC CLEARING HOUSE, INC.
P.O. BOX 3040
AGOURA HILLS, CA 91301
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 6, 1997
This Proxy Statement is furnished in connection with the solicitation of proxies
on behalf of the Board of Directors of Electronic Clearing House, Inc., a Nevada
corporation (the "Company"), for use at the Annual Meeting of Shareholders (the
"Meeting") which will be held on February 6, 1997 at 10:30 a.m., Pacific
Standard Time, at the Radisson Hotel, Agoura Hills, California. The approximate
mailing date of this Proxy Statement is January 2, 1997.
PROXIES
The shares represented by proxy in the form solicited by the Board of Directors
of the Company will be voted at the Meeting if the proxy is returned to the
Company properly executed. Where a choice is specified with respect to the
matter being voted upon, the shares represented by the proxy will be voted in
accordance with such specification. The proxy may specify approval or
disapproval of all nominees for directors of the Company as a group, or may
withhold authority to vote for any one or more of the nominees for directors,
and for the approval of the other proposals described herein.
It is intended that shares represented by proxies in the accompanying form will
be voted for the election of the person listed below under "Election of
Directors". Although the Board of Directors does not know whether any
nominations will be made at the Meeting other than those set forth below, if any
such nomination is made, or if votes are cast for any candidates other than
those nominated by the Board of Directors, the persons authorized to vote shares
represented by executed proxies in the enclosed form (if authority to vote for
the election of directors or for any particular nominee is not withheld) will
have full discretion and authority to vote for all of the nominees for the Board
of Directors, as provided in the Proxy. The Company is not aware of any matters
to be voted upon at the Meeting other than as stated herein and in the
accompanying Notice of Annual Meeting of Shareholders; if any other matters are
properly brought before the Meeting, the enclosed proxy gives authority to the
persons named in such proxy to vote the shares in their best judgment.
The cost of soliciting proxies will be borne by the Company. In addition, the
Company may reimburse brokerage firms and other firms representing beneficial
owners of shares for their expenses in forwarding solicitation materials to the
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone or telegram.
PLEASE MARK, SIGN and DATE the enclosed proxy card and RETURN it promptly in the
enclosed envelope provided for this purpose.
1.
<PAGE>
On December 16, 1996, the record date for determining shareholders entitled to
vote at the Annual Meeting, the Company had outstanding and entitled to vote at
the Meeting 11,998,079 shares of Common Stock, par value $.01 per share (the
"Common Stock"). Each share of Common Stock is entitled to one vote on any
matter brought before the Meeting, including election of the directors. The
Articles and By-Laws of the Company do not contain any provision for cumulative
voting.
The presence of a majority of the total number of outstanding shares of Common
Stock entitled to vote at the Meeting, in person or by proxy, is required to
constitute a quorum at the Annual Meeting.
Total Return to Shareholders
Dividends Reinvested Monthly
Base = $100 invested September 30, 1991
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) ECHO NASDAQ NASDAQ MANUF
- --------------------- ---- ------ ------------
<S> <C> <C> <C>
FYE September 1991 100 100 100
FYE September 1992 35 111 105
FYE September 1993 82 145 132
FYE September 1994 47 145 132
FYE September 1995 38 198 166
FYE September 1996 74 233 188
</TABLE>
PRINCIPAL OWNERS OF COMMON STOCK
The following table sets forth the beneficial owners of more than 5% of the
Company's voting securities.
<TABLE>
<CAPTION>
Amount of
Title Name and Address Beneficial Percent
of Class of Beneficial Owner Ownership of Class
- ----------- -------------------------- ------------- ---------
<S> <C> <C> <C>
Common Herbert Smilowitz 800,000 [1] 6.47%
P.O. Box 511
East Rutherford, NJ 07073
Common Leo and Maurine Weiner 775,000 [2] 6.28%
160 Broadway
New York, NY 10038
</TABLE>
2.
<PAGE>
<TABLE>
<S> <C> <C> <C>
Common Arthur Geiger 950,000 [3] 7.59%
P.O. Box 309
Morristown, NJ 07963
Common Moses Marx 787,500 [4] 6.37%
160 Broadway
New York, NY 10038
Common Prudential Insurance Co. 702,450 6.07%
Prudential Plaza
Newark, NJ 07102
Common Michael Rich 720,000 6.22%
245 E. 87th St.
New York, NY 10128
Common Dr. Kenneth Van Zyl 889,313 [5] 7.69%
1859 St. Andrews Drive
McMinnville, OR 97128
</TABLE>
- ---------------
[1] 300,000 shares are warrants issued in connection with various loans and
500,000 shares are loan conversion rights.
[2] 275,000 shares are warrants issued in connection with various loans and
500,000 shares are loan conversion rights.
[3] 375,000 shares are warrants issued in connection with various loans and
575,000 shares are loan conversion rights.
[4] 287,500 shares are warrants issued in connection with various loans and
500,000 shares are loan conversion rights.
[5] 447,900 shares of Dr. Van Zyl's common stock is 22,395 of unconverted
Preferred Series H Stock.
To the Company's knowledge, no other 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 September 30, 1996:
<TABLE>
<CAPTION>
Number of Shares Percentage of
Name & Address Beneficially Owned Common Stock[1]
- ------------------------- ------------------ ---------------
<S> <C> <C>
Donald R. Anderson 588,659 [2,3,7,10] 4.86%
28001 Dorothy Drive
Agoura Hills, CA 91301
Joel M. Barry 729,250 [7] 5.97%
28001 Dorothy Drive
Agoura Hills, CA 91301
Donna Camras 50,000 [7] .43%
28001 Dorothy Drive
Agoura Hills, CA 91301
</TABLE>
3.
<PAGE>
<TABLE>
<S> <C> <C>
Alice L. Cheung 100,000 [7] .86%
28001 Dorothy Drive
Agoura Hills, CA 91301
Jesse Fong 150,110 [4,7] 1.28%
28001 Dorothy Drive
Agoura Hills, CA 91301
R. Marshall Frost 60,000 [7] .52%
28001 Dorothy Drive
Agoura Hills, CA 91301
David Griffin 253,312 [7,9] 2.14%
28001 Dorothy Drive
Agoura Hills, CA 91301
Fariborz Hamzei 250,000 [5] 2.11%
28001 Dorothy Drive
Agoura Hills, CA 91301
Herbert L. Lucas, Jr. 391,889 [5,8] 3.31%
12011 San Vicente Blvd.
Los Angeles, CA 90049
Carl W. Schafer 300,000 [5] 2.53%
16 Farber Road
Princeton, NJ 08540
Larry Thomas 550,000 [6,7] 4.63%
28001 Dorothy Drive
Agoura Hills, CA 91301
Jack Wilson 160,000 [7] 1.36%
28001 Dorothy Drive
Agoura Hills, CA 91301
</TABLE>
- ---------------------
[1] Outstanding common shares with effect given to individual shareholder's
conversion of preferred stock and options described in footnotes 2
through 10.
[2] Includes 45,473 shares owned by the Anderson Family Trust of which Mr.
Anderson is a co-trustee and 1,775 shares owned by Mr. Anderson's wife.
[3] Reflects conversion of Series H Convertible Preferred Stock into Common
Stock.
[4] Includes non-plan options awarded by the Board of Directors of the Company.
[5] Includes options granted to outside directors.
[6] Includes Common Shares as payment for acquisition.
[7] Includes options according to the terms of the Incentive Stock Option Plan.
[8] Includes 141,889 shares indirectly owned by Mr. Lucas through a trust for
his wife.
[9] Includes 675 shares owned by Mr. Griffin's wife.
[10] Includes 310,000 options granted to Mr. Anderson pursuant to his employment
agreement of September 15, 1994.
4.
<PAGE>
ELECTION OF DIRECTORS
One director is proposed to be elected at the Annual Meeting. The director will
be elected to hold office until the conclusion of his respective three-year term
and thereafter until the election and qualification of his successor.
Nominees
- --------
The nominee for re-election to the Board of Directors is Herbert L. Lucas, Jr.
Directors
- ---------
The current members of the Board of Directors are:
<TABLE>
<CAPTION>
Director Position with Term Ending
Name Age Since the Company February:
- ---- --- -------- ------------- -----------
<S> <C> <C> <C> <C>
Donald R. Anderson 61 1986 President, COO 1998
and Director
Joel M. Barry 46 1986 Chairman and CEO 1999
Fariborz Hamzei 38 1988 Director 1999
Herbert L. Lucas, Jr. 70 1991 Director 1997
Carl W. Schafer 60 1986 Director 1998
</TABLE>
DONALD R. ANDERSON, age 61, has been President and a Director of the Company
since December 4, 1986. Mr. Anderson was Chief Executive Officer from December
4, 1986 to June 29, 1990, at which time he became Chief Operating Officer of the
Company. Mr. Anderson is also President and a Director of the Electronic
Payment Services (EPS), XpressCheX and National Credit Card Reserve (National)
subsidiaries and a Director of the Computer Based Controls, Inc. (CBC)
subsidiary. Mr. Anderson received his B.S. degree in mathematics and his M.S.
degree in engineering from California State University. He participated in the
founding of Science Dynamics Corporation, a medical information systems company,
in August, 1969, and served as its Vice President until October, 1984, when
Science Dynamics was purchased by McDonnell Douglas Corporation. From October,
1984, until December, 1986, Mr. Anderson was employed by McDonnell Douglas
Corporation as Vice President, Market Research and Product Planning. In August
1992, he was appointed to the Board of Directors of Pacific Christian College
and has served as a Director on the Board of Cornerstone Christian School since
September, 1994.
JOEL M. BARRY, age 46, has been a Director of the Company since July 8, 1986,
Chairman of the Board since December 26, 1986, Chief Financial Officer from May
1, 1987 to July 9, 1990, and Executive Vice President from October 12, 1987 to
June 29, 1990, when he was designated Chief Executive Officer of the Company.
Mr. Barry is also a Director and Chief Executive Officer of the National and CBC
subsidiaries. Since approximately August 1981, through various entities, Mr.
Barry has been a lecturer and investment counselor regarding investment
partnerships. Mr. Barry was the founder and President of Basics Financial
Planning & Investments, Inc. ("Basics"), a financial management firm, formed in
August 1983 and dissolved in June 1991. Basics is the successor to Dynamic
Seminars, a firm founded by Mr. Barry in August 1981.
5.
<PAGE>
FARIBORZ HAMZEI, age 38, is currently an independent financial consultant,
specializing in real estate investments and Vice President of Market Analysts of
Southern California, a non-profit organization conducting technical analyses of
financial markets. Mr. Hamzei was President of Caspian Capital Corporation, Los
Angeles, California, from July 1990 to December 1991, and Executive Vice
President of Caspian Capital Corporation from August 1988 to July 1990.
Previously, he was President and Chief Executive Officer of International
Message Switching Corporation, a publicly held company, from August 1987 to
October 1987. Mr. Hamzei has also held various positions in two high tech
start-up companies, and from 1978 through 1982 held various management positions
at Northrop's Aircraft Division. Mr. Hamzei holds a BSE degree from Princeton
University.
HERBERT L. LUCAS, JR., age 70, received a BA degree in History in 1950 from
Princeton University and an MBA degree in 1952 from Harvard University Graduate
School of Business Administration. He served as President from 1972 to 1981 of
Carnation International in Los Angeles and a member of the Board of Directors of
the Carnation Company. Since 1982, Mr. Lucas has managed his family investment
business. He has served on the Board of Directors of various financial and
business institutions including Wellington Management Company, Arctic Alaska
Fisheries, Inc., Nutraceutix, and Sunworld International Airways, Inc. Mr.
Lucas also serves as a Trustee of The J. Paul Getty Trust, the Los Angeles
County Museum of Art, and Winrock International Institute for Agricultural
Research and Development. He also was formerly a member of the Board of Trustees
of Princeton University.
CARL W. SCHAFER, age 60, has been a Director since July 1986. Mr. Schafer was
Financial Vice President and Treasurer (Chief Financial Officer) of Princeton
University from July 1976 to October 1987. From October 1987 to April 1990, Mr.
Schafer was a Principal of Rockefeller & Co., Inc. of New York, an investment
management firm. He is a Trustee of The Atlantic Foundation and Harbor Branch
Institution and became President of the Atlantic Foundation in April 1990. Mr.
Schafer also holds the following positions: Director/Trustee of the Paine Webber
and Guardian Families of Mutual Funds; Director of Roadway Express, Inc., a
trucking company; Director of Wainoco Oil Corporation, an oil and gas producer
and refinery; Director of Evans Systems, Inc., a petroleum product marketer,
convenience store, and diversified company; Director of Nutraceutix, Inc., a bio
technology company; and Director of The Johnson Atelier and School of Sculpture.
He graduated from the University of Rochester in 1958, and served with the U.S.
Bureau of the Budget, successively, as Budget Examiner, Legislative Analyst,
Deputy Director and Director of Budget Preparation. He resides in Princeton,
New Jersey.
Board of Directors' Meetings
- ----------------------------
During fiscal year 1996, there were four regular meetings of the Board of
Directors. Mr. Anderson attended three meetings and the remaining directors
attended all four meetings.
Officers
- --------
Officers of the Company are appointed by the Board of Directors and serve at the
discretion of the Board of Directors.
EXECUTIVE COMPENSATION
Cash Compensation of Officers
- -----------------------------
The following table sets forth the total compensation paid and stock options and
warrants offered by the Company to its Chief Executive Officer and to each of
its most highly compensated executive officers, other than the Chief Executive
Officer, whose compensation exceeded $100,000 during the fiscal years ended
September 30, 1996, 1995 and 1994.
6.
<PAGE>
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
------------ ------------
Capacities in Securities
Name Which Served Year Salary[1] Underlying Options[2]
- --------------- ------------- ---- --------- ---------------------
<S> <C> <C> <C> <C>
Joel M. Barry Chairman/Chief 1996 $120,000
Executive Officer 1995 115,000 650,000
1994 115,000
D.R. Anderson President/Chief 1996 $160,000[3]
Operating Officer 1995 160,000[3] 310,000
1994 121,000 50,000
</TABLE>
[1] The Company provides both Mr. Barry and Mr. Anderson with an automobile. Mr.
Barry and Mr. Anderson are both participants of a Company sponsored 401(K)
plan. There has been no compensation paid other than that indicated in the
above table. No bonuses pursuant to employment agreements were granted in
the three fiscal years presented.
[2] None of these options have been exercised. See "Stock Option Plan".
[3] According to the terms of Mr. Anderson's employment agreement, $125,000 of
Mr. Anderson's salary was annual income and $35,000 was repayment of
deferred income.
FISCAL 1996 OPTION GRANTS TABLE
-------------------------------
The following table sets forth the stock options granted to the Company's Chief
Executive Officer and each of its executive officers, other than the Chief
Executive Officer, whose compensation exceeded $100,000 during fiscal 1996.
Under applicable Securities and Exchange Commission regulations, companies are
required to project an estimate of appreciation of the underlying shares of
stock during the option term. The Company has chosen to project this estimate
using the potential realizable value at assumed annual rates of stock price
appreciation for the option term at assumed rates of appreciation of 5% and 10%.
However, the ultimate value will depend upon the market value of the Company's
stock at a future date, which may or may not correspond to the following
projections.
7.
<PAGE>
<TABLE>
<CAPTION>
Potential Realization
Value at Assumed
Annual Rates of
Stock Price
Percent of Appreciation for
Total Granted Exercise Option Term
Option to Employees in Price Expiration ------------------
Name Granted Fiscal Year ($/sh) Date 5% ($) 10% ($)
- ---- ------- ----------- ------ ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Joel M. Barry none n/a - - n/a n/a
D.R. Anderson none n/a - - n/a n/a
</TABLE>
The following table sets forth the number of unexercised options and warrants
held by the Company's Chief Executive Officer and each of its executive officers
other than the Chief Executive Officer whose compensation exceeded $100,000
during fiscal 1996. No options/warrants have been exercised.
AGGREGATED OPTION/SAR EXERCISES AND
FISCAL-YEAR OPTION/SAR VALUE TABLE
----------------------------------
<TABLE>
<CAPTION>
Value of
Number of unexercised
Shares unexercised in-the-money
acquired on Value options/SARS Options/SARS
Name exercise # realized $ FY-end # at FY-end $[1]
- ---- ---------- ---------- -------- --------------
<S> <C> <C> <C> <C>
Joel M. Barry -0- -0- 650,000 $247,000
D.R. Anderson -0- -0- 510,000 $ 98,000
</TABLE>
[1] Based on the closing sales price of the Common Stock on September 30, 1996
of $0.78 per share, less the option exercise price.
Compensation of Directors
- -------------------------
Outside directors are entitled to receive $1,500 per quarterly meeting they
attend plus reasonable expenses incurred in connection therewith. Directors are
not compensated for special meetings other than regular quarterly meetings.
Stock Option Plan
- -----------------
On May 13, 1992, the Company's Board of Directors authorized adoption of an
Incentive Stock Option Plan ("Plan"), ratified by the shareholders at the Annual
Meeting held July 10, 1992. The Plan provided for the issuance of up to 325,000
stock options, each to purchase one share of the Common Stock for $0.85 per
share, subject to adjustment in the event of stock splits, combinations of
shares, stock dividends or the like.
During fiscal 1994, Donald R. Anderson converted 150,000 warrants to Common
Stock options exercisable at $0.85.
On April 5, 1994, Donald R. Anderson was granted 50,000 five-year options each
to purchase one share of Common Stock at $0.56 per share.
8.
<PAGE>
On September 13, 1994, the Company's Board of Directors authorized an increase
in the Plan to 2,375,000 options. The Plan was ratified by shareholders at the
Annual Meeting held on February 15, 1995.
On September 30, 1995, Joel M. Barry was granted 650,000 five-year options each
to purchase one share of Common Stock at $0.40 per share.
Employee Benefit Plans
- ----------------------
The Company does not presently have a formal stock option plan for employees.
Employment Agreements
- ---------------------
Mr. Anderson entered into a three-year employment agreement, effective October
1, 1994, which provides for a salary of $120,000 during fiscal 1995, $125,000
during fiscal 1996 and $130,000 during fiscal 1997, plus a retirement plan
contribution of $60,000 per year for the term of the agreement or 3% of the pre-
tax earnings of the Company, whichever is greater, up to a maximum allocation in
any year of $120,000. In connection with this agreement, the Company also
issued Mr. Anderson 310,000 options, each to purchase one share of Common Stock
at $0.50 per share, vested over the three years of this agreement.
Bonus, Profit Sharing and Other Remuneration Plans and Pension and Retirement
- -----------------------------------------------------------------------------
Plans
- -----
Mr. Anderson is entitled to an annual bonus of 3% of the Company's pre-tax net
profits. This bonus will be offset against the current year retirement plan
contribution of $60,000. Additionally, the Board of Directors has granted Mr.
Anderson the authority and discretion to distribute up to 2 1/2% of the annual
pre-tax net profits to other "Senior Officers".
In fiscal 1996, the Company adopted a bonus plan which covers certain key
employees. Each participant could earn up to 30% of their annual salary as a
bonus based on each individual's performance and the overall performance of the
Company.
The Company has a contributory 401(K) Retirement Pension Plan which covers all
employees who are qualified under the plan provisions.
--------------------------------------------------------------------
9.
<PAGE>
DESCRIPTION OF PROPOSAL
PROPOSAL 1
PROPOSAL TO AMEND ARTICLE FOURTH OF THE ARTICLES OF INCORPORATION
- -----------------------------------------------------------------
Article Fourth of the Articles of Incorporation provides that the Company
presently has an authorized capital consisting of 5,000,000 shares of Preferred
Stock, par value $.01 per share, and 20,000,000 shares of Common Stock par value
$.01 per share. If the proposed amendment is passed, the Company will have an
authorized capital consisting of 5,000,000 shares of Preferred stock, par value
$.01 per share, and 26,000,000 shares of Common Stock, par value $.01 per share.
PRESENT:
"FOURTH: The amount of the total authorized capital stock of the corporation is
Two Hundred Fifty Thousand Dollars ($250,000), which shall consist of twenty
million (20,000,000) shares of Common Stock at the par value of One Cent ($.01)
each and five million (5,000,000) shares of Preferred Stock having par value of
One Cent ($.01) each."
PROPOSED:
"FOURTH: The amount of the total authorized capital stock of the corporation is
Three Hundred Ten Thousand Dollars ($310,000), which shall consist of twenty-six
- --------------------------------------------- ----------
million (26,000,000) shares of Common Stock at the par value of One Cent ($.01)
- --------------------
each and five million (5,000,000) shares of Preferred Stock having par value of
One Cent ($.01) each."
The purpose of this proposed amendment is to enable the Company to have
sufficient shares, as required, to consider portfolio acquisitions, to
potentially obtain capital, and to provide underlying shares for warrants and
options and for other corporate purposes.
PROPOSAL 2
PROPOSAL TO AMEND INCENTIVE STOCK OPTION PLAN
- ---------------------------------------------
On November 18, 1996, the Company's Board of Directors authorized the amending
of the Incentive Stock Option Plan ("Plan"), subject to ratification by the
shareholders at the Annual Meeting. A copy of the proposed amendments is
attached to this Proxy Statement, marked Exhibit A and incorporated herein by
reference.
The purpose of this amendment is to ensure an efficient Plan and dedicate
adequate shares into the Incentive Stock Option Plan in order to attract and
maintain the highest quality officers for service with the Company.
PROPOSAL 3
PROPOSAL TO RATIFY AND APPROVE THE SELECTION OF AUDITORS
- --------------------------------------------------------
The Board of Directors has appointed Price Waterhouse, independent certified
public accountants, as auditors of the Company for the current fiscal year.
Price Waterhouse has audited the financial statements of the Company since 1982,
and has no other relationship with or interest in the Company.
10.
<PAGE>
----------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE ABOVE PROPOSALS.
UNLESS A CONTRARY CHOICE IS SPECIFIED, PROXIES SOLICITED BY THE BOARD OF
DIRECTORS WILL BE VOTED FOR RATIFICATION AND APPROVAL OF THE ABOVE PROPOSALS.
---
SHAREHOLDER PROPOSALS AND OTHER MATTERS
- ---------------------------------------
Any shareholder desiring to have an appropriate proposal for action presented at
next year's Annual Meeting of Shareholders, now scheduled for February, 1998,
and who wishes to have it set forth in the Proxy Statement and form of Proxy for
the Meeting, 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, 1997.
If any other matters arise at the Meeting, it is intended that the shares
represented by Proxies in the accompanying form will be voted in accordance with
the judgment of the persons named in the Proxies.
A copy of the Company's Annual Report to the Securities and Exchange Commission
of Form 10-K may be obtained without charge by any beneficial owner of the
Company's Common Stock upon written request addressed to Donna Camras, Corporate
Secretary, 28001 Dorothy Drive, Agoura Hills, CA 91301 or Email: dcamras@echo-
inc.com.
By order of the Board of Directors,
/s/ DONNA L. CAMRAS
DONNA L. CAMRAS
Corporate Secretary
Dated: January 2, 1997
11.
<PAGE>
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder(s). If no choice is specified, this proxy will be
voted for the election of the nominated director and for proposals 1 through 4.
The shares represented by this proxy will be voted as directed, or if directions
are not indicated, will be voted for the election of the person listed in the
proxy statement as director of this corporation for the ensuing term, in the
manner described in the proxy statement.
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 shareholder(s) hereby appoint(s) Donald R. Anderson 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 on December 16, 1996, at the
Annual Meeting of Shareholders of Electronic Clearing House, Inc. to be held on
February 6, 1997, 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 authorize(s) the proxies to vote on the matters set forth in the
Proxy Statement of the Company dated January 2, 1997, as follows:
ELECTION OF DIRECTORS
The Nominees are: HERBERT L. LUCAS, JR.
[ ] For the Nominee Listed or, if needed nominee
is unable to serve, for a substitute nominee.
[ ] Withhold Authority to Vote for
Nominee Listed in the Proxy Statement.
PROPOSALS
<TABLE>
<C> <C> <C> <S>
For Against Abstain
[ ] [ ] [ ] 1. PROPOSAL TO AMEND ARTICLE FOURTH OF THE ARTICLES OF INCORPORATION.
[ ] [ ] [ ] 2. PROPOSAL TO AMEND THE INCENTIVE STOCK OPTION PLAN.
[ ] [ ] [ ] 3. PROPOSAL TO RATIFY THE SELECTION OF PRICE WATERHOUSE AS INDEPENDENT
PUBLIC ACCOUNTANTS.
[ ] [ ] [ ] 4. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
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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 Name/Signature if Held Jointly Date
Stock is Held
Please mark, sign, date and return this Proxy promptly. With your cooperation,
we can be ensured of a quorum. PLEASE INDICATE ANY CHANGES IN ADDRESS ON REVERSE
OF THIS PROXY FORM. THANK YOU.
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EXHIBIT A
Amendments to the Incentive Stock Option Plan
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AMENDMENT 1
Amendment to Section 3
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PRESENT:
3. Shares Subject to the Plan
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Subject to adjustment as provided in Section 15 hereof, the aggregate
maximum number of Shares which are available for the grant of Options under this
Plan is Two Million Three Hundred Seventy-five Thousand (2,375,000) Shares.
The Shares may be, in whole or in part as the Board of Directors shall from time
to time determine, issued Shares that shall have been reacquired by the Company
or authorized but unissued Shares, whether now or hereafter authorized. If any
Option granted under the Plan shall expire or terminate for any reason without
having been exercised in full, the unused Shares subject thereto shall again be
available for other Options to be granted under the Plan.
AMENDED:
3. Shares Subject to the Plan
--------------------------
Subject to adjustment as provided in Section 15 hereof, the aggregate
maximum number of Shares which are available for the grant of Options under this
Plan is Three Million Three Hundred Seventy-five Thousand (3,375,000) Shares.
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The Shares may be, in whole or in part as the Board of Directors shall from time
to time determine, issued Shares that shall have been reacquired by the Company
or authorized but unissued Shares, whether now or hereafter authorized. If any
Option granted under the Plan shall expire or terminate for any reason without
having been exercised in full, the unused Shares subject thereto shall again be
available for other Options to be granted under the Plan.
AMENDMENT 2
Amendment to Section 4
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PRESENT:
4. Effective Date
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The Plan shall become effective on May 13, 1992, provided that the
Committee has been advised by counsel that the Company has complied with all
other applicable legal requirements, including relevant securities laws;
provided further, that if the Plan is not approved by shareholders of the
Company within twelve (12) months from the date of adoption by the Board of
Directors, this Plan shall terminate and all Options granted hereunder shall be
canceled. All Options must be granted and exercised within ten (10) years from
the date of adoption or approval of this Plan, whichever is earlier.
AMENDED:
4. Effective Date
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The Plan shall become effective on May 13, 1992, provided that the
Committee has been advised by counsel that the Company has complied with all
other applicable legal requirements, including relevant securities laws;
provided further, that if the Plan is not approved by shareholders of
12.
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the Company within twelve (12) months from the date of adoption by the Board of
Directors, this Plan shall terminate and all Options granted hereunder shall be
canceled. All Options must be granted within ten (10) years from the date of
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adoption or approval of this Plan, whichever is earlier. All Options must be
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exercised within ten (10) years from the date they are granted.
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A copy of the Company's Incentive Stock Option Plan may be obtained without
charge by any beneficial owner of the Company's Common Stock upon written
request addressed to Donna Camras, Corporate Secretary, 28001 Dorothy Drive,
Agoura Hills, CA 91301.
13.
