ELECTRONIC CLEARING HOUSE, INC. AND OTR, INC. AMENDMENT NUMBER THREE TO AMENDED AND RESTATED RIGHTS AGREEMENT APRIL 24, 2007
ELECTRONIC
CLEARING HOUSE, INC.
AND
OTR,
INC.
AMENDMENT
NUMBER THREE TO
AMENDED
AND RESTATED RIGHTS AGREEMENT
APRIL
24, 2007
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AMENDMENT
NUMBER THREE TO
AMENDED
AND RESTATED RIGHTS AGREEMENT
This
Amendment Number Three to Amended and Restated Rights Agreement (this
“Third Amendment”)
is
made and entered into as of the 24th day of April, 2007, by and between
Electronic Clearing House, Inc., a Nevada corporation (“Company”),
and
OTR, Inc., an Oregon corporation (“Rights
Agent”).
RECITALS
A. Pursuant
to that certain Rights Agreement dated September 30, 1996, by and between the
Company and the Rights Agent (the “Original
Agreement”),
the
Board of Directors of the Company authorized, declared and distributed a
dividend of one preferred share purchase right (“Right”)
for
each share of Common Stock of the Company outstanding on September 30, 1996
(“Record
Date”),
each
Right representing the right to purchase four one-hundredths of a Preferred
Stock share, and further authorized and directed the issuance of one Right
with
respect to each Common Stock share that has or will become outstanding between
the Record Date and the earliest of the Distribution Date, the Redemption Date
and the Final Expiration Date.
B.
On
January 29, 2003, the Company and the Rights Agent entered into an Amended
and
Restated Rights Agreement (the “Amended
Agreement”)
that
completely amended and restated the Original Agreement to, among other matters,
clarify the effects on each Right of (i) dividends payable in common stock
and
(ii) subdivisions, combinations or consolidations of Common Stock as the same
have been declared and implemented by the Company prior to January 29, 2003.
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to such terms in the Amended Agreement.
C.
Concurrent
with the execution of the Amended Agreement, the Board of Directors of the
Company authorized and declared, and distributed as of January 29, 2003, a
second dividend of one preferred share purchase right (the “Second
Right”)
for
each share of Common Stock of the Company outstanding on January 29, 2003,
each
Second Right representing the right to purchase four one-hundredths of a
Preferred Stock share, upon the terms and subject to the conditions set forth
in
the Amended Agreement, and further authorized and directed the issuance of
one
Second Right with respect to each Common Stock share that has or will become
outstanding between January 29, 2003 and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date.
D.
On
September 27, 2004, the Company and the Rights Agent entered into an Amendment
Number One to Amended and Restated Rights Agreement (the “Amendment”)
to,
among other matters, amend the purchase price of each individual Right and
Second Right such that each Right and Second Right would have a similar economic
effect as was intended for such Right and Second Right under the Amended
Agreement.
E.
On
December 14, 2006, the Company and the Rights Agent entered into an Amendment
Number Two to Amended and Restated Rights Agreement (the “Second
Amendment”)
to,
among other matters, revise the definition of “Acquiring Person” to exempt
Intuit Inc., a Delaware corporation (“Intuit”)
therefrom.
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F.
The
Board
of Directors of the Company has determined that it is in the best interests
of
the Company and its shareholders to amend the Amended Agreement (as amended),
including all applicable sections, to revise the definition of “Acquiring
Person” to remove the exemption of Intuit therefrom.
G.
Pursuant
to Section 27 of the Amended Agreement, the Board of Directors has the power
and
authority to direct the amendment of the Amended Agreement (as amended) by
the
Company and the Rights Agent, such amendment to be evidenced by a writing signed
by both parties.
Accordingly,
in consideration of the premises and the mutual agreements herein set forth,
the
parties hereby agree as follows:
1.
Amendment
to Section 1(a).
Section
1(a) of the Amended Agreement is hereby amended and restated to read in its
entirety as follows:
“(a)
"Acquiring Person" shall mean any Person (as such term is hereinafter defined)
who or which, together with all Affiliates and Associates (as such terms are
hereinafter defined) of such Person, shall be the Beneficial Owner (as such
term
is hereinafter defined) of twenty-percent (20%) or more of the Common Stock
of
the Company then outstanding, but shall not include the (i) Company, (ii) any
Subsidiary (as such term is hereinafter defined) of the Company, and (iii)
any
employee benefit plan of the Company or of any Subsidiary of the Company, or
of
any entity holding Common Stock for or pursuant to the terms of any such plan,
provided, however, that if a Person is the Beneficial Owner at the close of
business on the date of this Agreement of twenty-percent (20%) or more of the
Common Stock of the Company, such Person shall not be deemed an Acquiring Person
unless and until such Person acquires any additional Common Stock in any manner
other than pursuant to a stock dividend, stock split, recapitalization, or
similar transaction that does not affect the percentage of outstanding Common
Stock. Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of an acquisition of Common Stock by the Company which,
by
reducing the number of shares outstanding, increases the proportionate number
of
shares beneficially owned by such Person to twenty-percent (20%) or more of
the
Common Stock of the Company then outstanding; provided, however, that if a
Person shall become the Beneficial Owner of twenty-percent (20%) or more of
the
Common Stock of the Company then outstanding by reason of share purchases by
the
Company and shall, after such share purchases by the Company, become the
Beneficial Owner of any additional Common Stock of the Company, then such Person
shall be deemed to be an "Acquiring Person." Notwithstanding the foregoing,
if a
majority of the Board of Directors then in office determines in good faith
that
a Person who should be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), has become such inadvertently,
and
such Person divests as promptly as practicable a sufficient number of shares
of
Common Stock so that such Person would no longer be an Acquiring Person, as
defined pursuant to the foregoing provisions of this paragraph (a), then such
a
Person shall not be deemed to be an "Acquiring Person" for any purposes to
this
Agreement.”
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2.
Amendment
to Section 3(a). Section
3(a) of the Amended Agreement is hereby amended and restated to read in its
entirety as follows:
“(a)
Until the earlier of the close of business on (i) the tenth day after the Stock
Acquisition Date, or (ii) the tenth Business Day (or such later date as may
be
determined by action of the Board of Directors prior to such time as any Person
becomes an Acquiring Person) after the date of the commencement by any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company or any entity holding
Common Stock for or pursuant to the terms of any such plan) of, or of the first
public announcement of the intention of any Person (other than the Company,
any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Stock for or pursuant
to
the terms of any such plan) to commence, a tender or exchange offer the
consummation of which would result in any Person becoming the Beneficial Owner
of Common Stock aggregating twenty-percent (20%) or more of the then outstanding
Common Stock, irrespective of whether any shares of Common Stock are actually
purchased pursuant to such offer (including any such date which is after the
Record Date (with respect to Rights) and the Effective Date (with respect to
Second Rights) and prior to the issuance of the Rights or the Second Rights,
as
the case may be, the earliest of such dates being herein referred to as the
"Distribution Date"), (x) the Rights/Second Rights will be evidenced, subject
to
the provisions of Section 3(b) hereof, by the certificates for Common Stock
registered in the names of the holders thereof (which certificates shall also
be
deemed to be Rights Certificates) and not be separate Rights Certificates,
and
(y) the right to receive Rights Certificates will be transferable only in
connection with the transfer of Common Stock. As soon as practicable after
the
Distribution Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights
Agent
will, if requested, send) by first-class, insured, postage-prepaid mail, to
each
record holder of Common Stock as of the close of business on the Distribution
Date, at the address of such holder shown on the records of the Company, a
Rights Certificate, in substantially the form of Exhibit B attached hereto
("Rights Certificate"), evidencing one Right or Second Right, as the case may
be, for each Common Stock share so held. As of the Distribution Date, the Rights
and Second Rights will be evidenced solely by such Rights
Certificates.”
3.
Amendment
to Section 24(a).
Section
24(a) of the Amended Agreement is hereby amended and restated to read in its
entirety as follows:
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“(a)
The
Board of Directors of the Company may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of the then outstanding
and exercisable Rights and Second Rights, which shall not include Rights or
Second Rights that have become void pursuant to the provisions of Section
11(a)(ii) hereof, for Common Stock at an exchange ratio of one Common Stock
share per Right or per Second Right, as the case may be, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof, such exchange ratio being hereinafter referred to as
the
"Exchange Ratio." Notwithstanding the foregoing, the Board of Directors shall
not be empowered to effect such exchange at any time after any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan
of
the Company or of any such Subsidiary, or of any entity holding Common Stock
for
or pursuant to the terms of any such plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Stock then outstanding.”
4.
Ratification
of Amended Agreement.
Except
as expressly amended or modified herein, all terms and conditions of the Amended
Agreement and the Amendment are hereby ratified, confirmed and approved and
shall remain in full force and effect. In the event of any conflict or
inconsistency between this Third Amendment, on the one hand, and the Amended
Agreement, the Amendment and the Second Amendment, on the other hand, this
Third
Amendment shall govern.
[Signature
Page Follows]
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IN
WITNESS WHEREOF, the parties hereto have executed this Third Amendment as of
the
date first set forth above.
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ELECTRONIC
CLEARING HOUSE, INC.
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OTR,
INC.
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By:
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/s/
Xxxx X. Xxxxx
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By:
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/s/
Xxxxxx X. Xxxxx
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XXXX
X. XXXXX
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Name:
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Xxxxxx
X. Xxxxx
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Chairman
of the Board and
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Title:
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Vice
President
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Chief
Executive Officer
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