<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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 (S) 240.14a-11(c) or (S) 240.14a-12
eCollege.com
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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 the 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transaction applies:
N/A
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(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):
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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(5) Total fee paid:
N/A
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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:
N/A
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(2) Form, Schedule or Registration Statement No.:
N/A
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(3) Filing Party:
N/A
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(4) Date Filed:
N/A
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Notes:
<PAGE>
eCollege.com
10200 A East Girard Avenue
Denver, Colorado 80231
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of eCollege.com (the "Company") which will be held on
September 27, 2000, at 10:00 a.m., local time, at the Inverness Hotel, 200
Inverness Drive West, Englewood, Colorado 80112.
At the Annual Meeting, you will be asked to consider and vote upon the
following proposals: (i) to elect six (6) directors of the Company, (ii) to
ratify the appointment of Arthur Andersen LLP as independent accountants of the
Company for the fiscal year ending December 31, 2000 and (iii) to transact such
other business as may properly come before the meeting or any adjournment or
postponement thereof.
The enclosed Proxy Statement more fully describes the details of the
business to be conducted at the Annual Meeting. After careful consideration,
the Company's Board of Directors has unanimously approved the proposals and
recommends that you vote FOR each such proposal.
After reading the Proxy Statement, please mark, date, sign and return the
enclosed proxy card in the accompanying reply envelope as promptly as possible
but no later than September 15, 2000. If you decide to attend the Annual
Meeting and would prefer to vote in person, please notify the Secretary of the
Company that you wish to vote in person and your proxy will not be voted. YOUR
SHARES CANNOT BE VOTED UNLESS YOU SIGN, DATE AND RETURN THE ENCLOSED PROXY OR
ATTEND THE ANNUAL MEETING IN PERSON.
A copy of the Company's 1999 Annual Report has been mailed concurrently
herewith to all stockholders entitled to notice of and to vote at the Annual
Meeting.
We look forward to seeing you at the Annual Meeting.
Sincerely yours,
[signature appears here]
Oakleigh Thorne
Chief Executive Officer and Chairman
of the Board
Denver, Colorado
August 15, 2000
IMPORTANT
PLEASE MARK, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT AT YOUR
EARLIEST CONVENIENCE, BUT NO LATER THAN SEPTEMBER 15, 2000, IN THE
ENCLOSED POSTAGE-PREPAID RETURN ENVELOPE SO THAT IF YOU ARE UNABLE TO
ATTEND THE ANNUAL MEETING, YOUR SHARES MAY BE VOTED.
<PAGE>
[LOGO APPEARS HERE]
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 27, 2000
----------------
TO THE STOCKHOLDERS OF eCollege.com:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
eCollege.com, a Delaware corporation (the "Company"), will be held on September
27, 2000, at 10:00 a.m., local time, at the Inverness Hotel, 200 Inverness
Drive West, Englewood, Colorado 80112, for the following purposes, as more
fully described in the Proxy Statement accompanying this Notice:
1. To elect six (6) directors to serve for one-year terms ending in the
year 2001 or until successors are duly elected and qualified;
2. To ratify the appointment of Arthur Andersen LLP as independent
auditors of the Company for the fiscal year ending December 31, 2000; and
3. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof, including the election
of any director if any of the above nominees is unable to serve or for good
cause will not serve.
Only stockholders of record at the close of business on July 31, 2000 are
entitled to notice of and to vote at the Annual Meeting. The stock transfer
books will not be closed between the record date and the date of the meeting. A
list of stockholders entitled to vote at the Annual Meeting will be available
for inspection at the executive offices of the Company.
All stockholders are cordially invited to attend the meeting in person.
Whether or not you plan to attend, please sign and return the enclosed proxy as
promptly as possible in the envelope enclosed for your convenience. Should you
receive more than one proxy because your shares are registered in different
names and addresses, each proxy should be signed and returned to assure that
all your shares will be voted. You may revoke your proxy at any time prior to
the Annual Meeting. If you attend the Annual Meeting and vote by ballot, your
proxy will be revoked automatically and only your vote at the Annual Meeting
will be counted. The prompt return of your proxy card will assist us in
preparing for the Annual Meeting.
We look forward to seeing you at the Annual Meeting.
Sincerely,
[signature appears here]
Oakleigh Thorne
Chief Executive Officer and Chairman
of the Board
Denver, Colorado
August 15, 2000
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. IN ANY EVENT, TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING,
YOU ARE URGED TO VOTE, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS
POSSIBLE IN THE POSTAGE-PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE.
<PAGE>
eCollege.com
10200 A East Girard Avenue
Denver, Colorado 80231
----------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 27, 2000
----------------
General
The enclosed proxy ("Proxy") is solicited on behalf of the Board of
Directors of eCollege.com, a Delaware corporation (the "Company"), for use at
the Annual Meeting of Stockholders to be held on September 27, 2000 (the
"Annual Meeting"). The Annual Meeting will be held at 10:00 a.m., local time,
at the Inverness Hotel, 200 Inverness Drive West, Englewood, Colorado 80112.
These proxy solicitation materials were mailed on or about August 15, 2000 to
all stockholders entitled to vote at the Annual Meeting.
Voting
The specific proposals to be considered and acted upon at the Annual Meeting
are summarized in the accompanying Notice and are described in more detail in
this Proxy Statement. On July 31, 2000, the record date for determination of
stockholders entitled to notice of and to vote at the Annual Meeting,
16,034,559 shares of the Company's Common Stock, $.01 par value ("Common
Stock"), were issued and outstanding. No shares of the Company's preferred
stock were outstanding. Each stockholder is entitled to one vote for each share
of Common Stock held by such stockholder on July 31, 2000. Stockholders may not
cumulate votes in the election of directors.
All votes will be tabulated by the inspector of elections appointed for the
meeting who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Directors are elected by a plurality vote.
Proposal 2, the ratification of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending December 31, 2000, will be
decided by the affirmative vote of the holders of a majority of shares present
in person or represented by proxy and entitled to vote on such matter. With
regard to the election of directors, votes may be cast in favor of or withheld
from each nominee; votes that are withheld will be excluded entirely from the
vote and will have no effect. Abstentions and broker non-votes are counted as
present for purposes of determining the presence or absence of a quorum for the
transaction of business. Abstentions with respect to any matter other than the
election of directors will be treated as shares present or represented and
entitled to vote on that matter and will thus have the same effect as negative
votes. If shares are not voted by the broker who is the record holder of the
shares, or if shares are not voted in other circumstances in which proxy
authority is defective or has been withheld with respect to any matter, these
non-voted shares are deemed not to be entitled to vote on the matter and
accordingly are not counted for purposes of determining whether stockholder
approval of that matter has been obtained.
Revocability of Proxies
If the enclosed form of proxy is properly signed and returned, the shares
represented thereby will be voted at the Annual Meeting in accordance with the
instructions specified thereon. If the proxy does not specify how the shares
represented thereby are to be voted, the proxy will be voted FOR the election
of each director proposed by the Board unless the authority to vote for the
election of any such director is withheld and, if no contrary instructions are
given, the proxy will be voted FOR the approval of Proposal 2 described in the
accompanying Notice and Proxy Statement and, with respect to any other
proposals properly brought before the Annual Meeting, as the Board of Directors
recommends. You may revoke or change your Proxy at any time
1
<PAGE>
before the Annual Meeting by filing with the Secretary of the Company at the
Company's principal executive offices, a notice of revocation or another signed
proxy with a later date. You may also revoke your proxy by attending the Annual
Meeting and voting in person.
Solicitation
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the proxy
and any additional solicitation materials furnished to stockholders. Copies of
solicitation materials will be furnished to brokerage houses, fiduciaries, and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
The original solicitation of proxies by mail may be supplemented by a
solicitation by telephone, telegram, or other means by directors, officers or
employees. Such individuals, however, will not be compensated by the Company
for those services. Except as described above, the Company does not presently
intend to solicit proxies other than by mail.
2
<PAGE>
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
At the Annual Meeting, six directors are to be elected to serve until the
next Annual Meeting of Stockholders or until a successor for such director is
elected and qualified, or until the death, resignation, or removal of such
director. The Board consists of seven director seats. Currently, there are six
directors and one vacancy. It is intended that the proxies will be voted for
the six nominees named below for election to the Company's Board of Directors
unless authority to vote for any such nominee is withheld. There are six
nominees, each of whom is currently a director of the Company. There is no
nominee designated to fill the vacancy. All of the current directors except for
Oakleigh Thorne were elected to the Board by the stockholders at the last
annual meeting. Oakleigh Thorne was appointed by the Board to fill a vacancy on
April 13, 1999. Each person nominated for election has agreed to serve if
elected, and the Board of Directors has no reason to believe that any nominee
will be unavailable or will decline to serve. In the event, however, that any
nominee is unable or declines to serve as a director at the time of the Annual
Meeting, the proxies will be voted for any nominee who is designated by the
current Board of Directors to fill the vacancy. Unless otherwise instructed,
the proxy holders will vote the proxies received by them FOR the nominees named
below. The six candidates receiving the highest number of the affirmative votes
of the shares entitled to vote at the Annual Meeting will be elected directors
of the Company.
NOMINEES
Set forth below is information regarding the nominees to the Board of
Directors.
<TABLE>
<CAPTION>
First Elected
Name Position(s) with the Company Age Director
---- ---------------------------- --- -------------
<S> <C> <C> <C>
Oakleigh Thorne......... Chairman and Chief Executive Officer 42 1998
Robert N. Helmick....... Co-Chairman of the Board 42 1996
Jonathan M. Dobrin...... Vice President, Chief Technology Officer
and Director 28 1997
Jack W.
Blumenstein(1)(2)...... Director 57 1998
Christopher E.
Girgenti(1)(2)......... Director 36 1997
Jeri L. Korshak(1)(2)... Director 46 1999
</TABLE>
--------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
Business Experience of Nominees for Election as Directors
Oakleigh Thorne has served as CEO and Chairman of the Board since June 2000.
Mr. Thorne has served as a member of our Board of Directors from February 1998
until January 1999 and from April 1999 to the present. Mr. Thorne has been
Chairman and Chief Executive Officer of TBG Information Investors, LLC and the
Co-President of Blumenstein/Thorne Information Partners I, L.P. since October
1996, and is a co-founder of these private equity investment firms. TBG, a
partnership with GS Capital Partners II, is a private equity fund that focuses
on capital transactions in the information industry. From September 1986 to
August 1996, Mr. Thorne served in various management positions, including most
recently President and Chief Executive Officer, of CCH Incorporated, a leading
provider of tax and business law information, software, and services.
Robert N. Helmick founded eCollege.com in July 1996 and serves as Co-
Chairman of the Board. From our inception through May 2000, Mr. Helmick served
as Chairman of the Board, President and Chief Executive Officer. Mr. Helmick
founded and served as Chief Executive Officer of Helmick and Associates,
International, a consulting firm for higher education from 1990 through 1996.
During that time, he served on the Board of Trustees of several universities.
He practiced law with Bradshaw, Fowler, Proctor and Fairgrave, a law firm in
Des Moines, Iowa, from 1982 through 1990. Mr. Helmick received a JD from the
University of Southern California Law School and a BA from Drake University.
Mr. Helmick is the brother of John V. Helmick, our Vice President, Corporate
Services.
3
<PAGE>
Jonathan M. Dobrin has served as our Vice President and Chief Technology
Officer since August 1998. Mr. Dobrin also served as our Vice President and
Chief Operating Officer from July 1996 through July 1998. Mr. Dobrin has served
as a director since 1997. He founded and served as Vice President of Real
Information Systems LLC, a company that specialized in the development and
deployment of premium Web sites, from October 1994 through July 1996. Mr.
Dobrin received a BA from the University of Vermont.
Jack W. Blumenstein has served as a member of our Board of Directors since
February 1998. Mr. Blumenstein has been the President of TBG Information
Investors, LLC, and the Co-President of Blumenstein/Thorne Information Partners
I, L.P. since October 1996, and is a co-founder of these private equity
investment firms. TBG, a partnership with GS Capital Partners II, is a private
equity fund that focuses on capital transactions in the information industry.
From October 1992 to September 1996, Mr. Blumenstein held various positions
with The Chicago Corporation (now ABN AMRO, Inc.), serving most recently as
Executive Vice President, Debt Capital Markets Group and as a member of the
Board of Directors. Mr. Blumenstein was President and CEO of Ardis, a joint
venture of Motorola and IBM, and has held various senior management positions
in product development and sales and marketing for Rolm Corporation and IBM.
Christopher E. Girgenti has served as a member of our Board of Directors
since June 1997. Mr. Girgenti has been Senior Managing Director of New World
Equities, Inc. since November 1996 and Managing Director of New World Venture
Advisors, LLC since January 1998. He serves on the boards of several technology
and telecommunications companies. From April 1994 through October 1996, Mr.
Girgenti served as Vice President and was co-head of the technology investment
banking group of The Chicago Corporation (now ABN AMRO, Inc.). He has held
various corporate finance positions with Kemper Securities, Inc. and KPMG Peat
Marwick. Mr. Girgenti is a Chartered Financial Analyst.
Jeri L. Korshak has served as a member of our Board of Directors since
February 1999. Ms. Korshak has been Senior Vice President of Marketing and
Business Development for AuraServ Communications since June 2000. Ms. Korshak
has over twenty years of experience in marketing and business development. Ms.
Korshak was the Vice President of Strategy for MediaOne Group from June 1998 to
June 2000. Ms. Korshak was Vice President and General Manager of US WEST Dex--
Mountain Region from September 1995 to May 1998, and Vice President and General
Manager of Interactive Television of US WEST Multimedia from November 1994 to
September 1995. In these and other positions, Ms. Korshak has been involved in
developing and introducing interactive services.
Board Meetings and Committees
The Board of Directors held five meetings during fiscal year 1999. Each
member of the Board of Directors during fiscal year 1999 attended or
participated in seventy five percent (75%) or more of the aggregate of (i) the
total number of meetings of the Board of Directors held during the fiscal year
and (ii) the total number of meetings held by all committees on which such
director served during the past fiscal year, except Oakleigh Thorne (who
attended thirty three and one-third percent (33 1/3 %) of such meetings). Mr.
Robert Helmick, Co-Chairman of the Board (previously Chairman of the Board,
President and Chief Executive Officer) is the brother of Mr. John V. Helmick,
Vice President of Corporate Services. The Board of Directors has an Audit
Committee and a Compensation Committee.
The Audit Committee of the Board of Directors held one meeting during fiscal
year 1999. The Audit Committee, which is currently comprised of Directors
Blumenstein, Girgenti and Korshak, reviews with our independent auditor the
scope and timing of its audit services, the auditor's report on our financial
statements following completion of its audit and our policies and procedures
with respect to internal accounting and financial controls. In addition, the
Audit Committee will make annual recommendations to the Board of Directors for
the appointment of independent auditors for the ensuing year.
The Compensation Committee of the Board of Directors held one meeting during
fiscal year 1999 and approved grants of options and other actions by written
consent from time to time as needed. The Compensation Committee is comprised of
Directors Blumenstein, Girgenti and Korshak and there is currently
4
<PAGE>
one vacancy. The Compensation Committee reviews and evaluates the salaries,
supplemental compensation and benefits of our officers, reviews general policy
matters relating to compensation and benefits of our employees and makes
recommendations concerning these matters to the Board of Directors. The
Compensation Committee also administers our stock option and stock purchase
plans.
Director Compensation
Board members do not receive cash compensation for their services as a
director. Ms. Korshak has been granted a total of 5,806 options to purchase the
Company's Common Stock as compensation for her service as a director in the
year 2000. These options were granted at an exercise price equal to thirty-
three and one-third percent (33-1/3%) of the fair market value of the Company's
Common Stock at the date of grant. Beginning January 1, 2001, non-employee
Board members will be compensated with an annual payment of $10,000 for their
service and an additional $2,500 for service on each committee. Pursuant to the
Company's Stock Option Plan, each non-employee Board member may elect to apply
all or any portion of the annual retainer fee otherwise payable in cash for his
or her service on the Board to the acquisition of a special option grant under
the Director Fee Option Grant Program. Such election must be filed with the
Corporation's Chief Financial Officer prior to the first day of the calendar
year for which the election is to be in effect. Each non-employee Board member
who files such a timely election with respect to the annual retainer fee shall
automatically be granted an option under the Director Fee Option Grant Program
on the first trading day in January in the calendar year for which that fee
would otherwise be payable. Board members are reimbursed for their reasonable
travel expenses incurred in connection with attending the Company's meetings.
The Board of Directors recommends that the stockholders vote FOR the
election of all of the nominees listed above.
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Company is asking the stockholders to ratify the selection of Arthur
Andersen LLP as the Company's independent public accountants for the fiscal
year ending December 31, 2000. The affirmative vote of the holders of a
majority of the shares represented and voting at the Annual Meeting will be
required to ratify the selection of Arthur Andersen LLP.
In the event the stockholders fail to ratify the appointment, the Audit
Committee of the Board of Directors will consider it as a direction to select
other auditors for the subsequent year. Even if the selection is ratified, the
Board of Directors in its discretion may direct the appointment of a different
independent accounting firm at any time during the year if the Board of
Directors determines that such a change would be in the best interest of the
Company and its stockholders.
Arthur Andersen LLP has audited the Company's financial statements annually
since 1996. Its representatives are expected to be present at the Annual
Meeting, will have the opportunity to make a statement if they desire to do so,
and will be available to respond to appropriate questions.
The Board of Directors recommends that the stockholders vote FOR the
proposal to ratify the selection of Arthur Andersen LLP to serve as the
Company's independent public accountants for the fiscal year ending December
31, 2000.
5
<PAGE>
OWNERSHIP OF SECURITIES
The following table sets forth certain information known to the Company with
respect to the beneficial ownership of the Company's Common Stock as of July
31, 2000 (unless otherwise stated in the footnotes) by (i) each stockholder
that the Company knows is the beneficial owner of more than 5% of the Common
Stock, (ii) each director and nominee for director, (iii) each of the executive
officers named in the Summary Compensation Table and (iv) all executive
officers and directors as a group. Unless otherwise indicated, each of the
security holders has sole voting and investment power with respect to the
shares beneficially owned, subject to community property laws, where
applicable.
<TABLE>
<CAPTION>
Shares of Percentage
Common Stock of Shares
Beneficially Beneficially
Name of Beneficial Owner Owned Owned
------------------------ ------------- ------------
<S> <C> <C>
Oakleigh Thorne.................................... 3,088,919 (1) 18.13%
Robert N. Helmick.................................. 1,400,000 (2) 8.73%
Charles P. Schneider............................... 128,035 (3) *
Douglas H. Kelsall................................. 73,667 (4) *
Jonathan M. Dobrin................................. 255,369 (5) 1.59%
Mark J. Fine....................................... -0- *
Ray P. Henderson................................... 30,333 (6) *
Blumenstein/Thorne Information Partners I, L.P..... 2,622,975 (7) 15.40%
MediaOne Interactive Services, Inc................. 937,622 (8) 5.85%
New World Equities, Inc............................ 917,378 (9) 5.72%
R.A. Investment Group.............................. 1,072,223(10) 6.69%
Jack W. Blumenstein................................ 2,623,975(11) 15.40%
Christopher E. Girgenti............................ 917,378(12) 5.72%
Jeri L. Korshak.................................... 6,806(13) *
Oakleigh B. Thorne................................. 722,222(14) 4.50%
All current directors and executive officers as a
group (15 persons)................................ 5,458,776(15) 33.07%
</TABLE>
--------
* Less than one percent of the outstanding Common Stock.
(1) Includes options to purchase 1,000,000 shares of Common Stock exercisable
within 60 days of July 31, 2000 by Blumenstein/Thorne Information Partners
I, L.P. and includes 1,622,975 shares beneficially owned by
Blumenstein/Thorne Information Partners I, L.P. and 5,500 shares owned by
the Oakleigh Thorne Irrevocable GST Trust. Mr. Thorne is a Co-President of
Blumenstein/Thorne Information Partners L.L.C, the general partner of
Blumenstein/Thorne Information Partners I, L.P. Mr. Thorne disclaims
beneficial ownership of such shares, except to the extent of his pecuniary
interest, if any. The address for Mr. Thorne is P.O. Box 871, Lake Forest,
Illinois 60045.
(2) Consists of 975,000 shares held by Robert N. Helmick Limited, a Delaware
Limited Partnership, and 425,000 shares held by the Julia A. Helmick
Annuity Trust. The address for Mr. Helmick is 10200 A East Girard Avenue,
Denver, Colorado 80231.
(3) Includes options to purchase 127,035 shares of Common Stock exercisable
within 60 days of July 31, 2000. The address for Mr. Schneider is 10200 A
East Girard Avenue, Denver, Colorado 80231.
(4) Includes 4,500 shares held by Mr. Kelsall's spouse, 1,500 shares held by
Mr. Kelsall's children, and options to purchase 66,667 shares of Common
Stock exercisable within 60 days of July 31, 2000. The address for Mr.
Kelsall is 10200 A East Girard Avenue, Denver, Colorado 80231.
(5) Includes options to purchase 45,370 shares of Common Stock exercisable
within 60 days of July 31, 2000. The address for Mr. Dobrin is 10200 A
East Girard Avenue, Denver, Colorado 80231.
(6) The address for Mr. Henderson is 4827 Snowberry Bay Court, Carmel, IN
46033.
(7) Includes options to purchase 1,000,000 shares of Common Stock exercisable
within 60 days of July 31, 2000. The address for Blumenstein/Thorne
Information Partners I, L.P. is P.O. Box 871, Lake Forest, Illinois 60045.
(8) The address for MediaOne Interactive Services, Inc. is 5613 DTC Parkway,
Suite 700, Englewood, Colorado 80111.
6
<PAGE>
(9) The address for New World Equities, Inc. is 1603 Orrington Avenue, Suite
1070, Evanston, Illinois 60201.
(10) Includes 943,556 shares held by R.A. Investment Group, 42,889 shares held
by Nicholas J. Pritzker, as trustee of Donrose Trust, 42,889 shares held
by Marshall E. Eisenberg, as trustee of JBR Trust #4, and 42,889 shares
held by Simon Zunamon, as trustee of T&M Childrens Trust; excludes an
aggregate of 301,378 shares owned by such persons, as to which New World
Equities has the sole voting and dispositive power pursuant to certain
nominee agreements; and excludes any other shares beneficially owned by
New World Equities, Inc. or its owners. The address for such persons is
200 W. Madison St., Suite 2500, Chicago, Illinois 60606.
11) Consists of options to purchase 1,000,000 shares of Common Stock
exercisable within 60 days of July 31, 2000 by Blumenstein/Thorne
Information Partners I, L.P. and 1,622,975 shares beneficially owned by
Blumenstein/Thorne Information Partners I, L.P. and 1,000 shares owned by
Mr. Blumenstein's spouse. Mr. Blumenstein is a co-president of
Blumenstein/Thorne Information Partners L.L.C., the general partner of
Blumenstein/Thorne Information Partners I, L.P. Mr. Blumenstein disclaims
beneficial ownership of such shares, except to the extent of his pecuniary
interest, if any. The address for Mr. Blumenstein is P.O. Box 871, Lake
Forest, Illinois 60045.
(12) Consists of 917,378 beneficially owned by New World Equities, Inc., of
which Mr. Girgenti is a Senior Director. Mr. Girgenti disclaims beneficial
ownership of such shares, except to the extent of his pecuniary interest,
if any. The address for Mr. Girgenti is 1603 Orrington Avenue, Suite 1070,
Evanston, Illinois 60201.
(13) Includes options to purchase 5,806 shares of Common Stock exercisable
within 60 days of July 31, 2000. The address for Ms. Korshak is 7400 S.
Tucson Way, Englewood, CO 80112.
(14) Excludes shares beneficially owned by Blumenstein/Thorne Information
Partners I, L.P. Mr. Thorne is the beneficiary of a trust which is a
limited partner in Blumenstein/Thorne Information Partners I, L.P. Mr.
Thorne is the father of Oakleigh Thorne, our CEO. The address for Oakleigh
B. Thorne is P.O. Box 871, Lake Forest, Illinois 60045.
(15) Includes 1,272,100 shares issuable upon the exercise of options
exercisable within 60 days of July 31, 2000. [See notes 1, 2, 3, 4, 5.]
7
<PAGE>
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Summary Compensation
The following table provides certain summary information concerning the
compensation earned by the Company's Chief Executive Officer and each of the
other executive officers of the Company whose salary and bonus for the 1999
fiscal year was in excess of $100,000 (collectively, the "Named Executive
Officers"), for services rendered in all capacities to the Company for the last
three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
------------
Annual Compensation Number of
------------------------------------ Securities
Name and Principal Other Annual Underlying
Position(s) Year Salary Bonus Compensation Options
------------------ ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Robert N. Helmick....... 1999 $150,000 $ -- $ -- --
President, Chief
Executive 1998 120,000 -- -- --
Officer and Chairman(1) 1997 65,000 -- -- --
Charles P. Schneider.... 1999 102,750(2) 108,000(3) -- --
Chief Operating Officer 1998 -- -- -- --
and Executive Vice
President 1997 -- -- -- --
Douglas H. Kelsall...... 1999 40,815(2) -- -- --
Chief Financial Officer 1998 -- -- -- --
and Treasurer 1997 -- -- -- --
Mark J. Fine............ 1999 98,333 -- 107,960(4) --
Vice President, Sales 1998 57,500 -- 35,375(4) --
1997 9,477(5) -- -- --
Ray P. Henderson........ 1999 115,625 -- -- --
Senior Vice President, 1998 -- -- -- --
Engineering &
Technology 1997 -- -- -- --
</TABLE>
--------
(1) Mr. Helmick resigned as President and Chief Executive Officer in May 2000
and continues to serve as Co-Chairman.
(2) Charles P. Schneider has served as the Company's Chief Operating Officer
since June of 1999. On an annual basis, his salary would have been
approximately $195,000. Douglas H. Kelsall has served as eCollege.com's
Chief Financial Officer since September of 1999. On an annual basis, his
salary would have been approximately $168,000.
(3) Charles P. Schneider received a $108,000 signing and moving bonus upon
execution of his employment agreement.
(4) Mark J. Fine received $107,960 and $35,375 in compensation for commissions
relating to sales.
(5) Mark J. Fine began serving as our Vice President, Sales in October, 1997.
Mr. Oakleigh Thorne was appointed as Chief Executive Officer on May 30, 2000
and serves as Chairman of the Board. In lieu of salary, benefits and other
compensation, an investment fund affiliated with Mr. Thorne has been granted
options to purchase up to 1,000,000 shares of the Company's Common Stock which
vested on May 30, 2000. 200,000 options have an exercise price of $4.125, the
fair market value of the Company's Common Stock on the date of the grant.
800,000 options have an exercise price of $15.00 per share which can be
adjusted to the fair market value at the date of the grant based on stock price
performance criteria. In addition, to these stock options, Mr. Thorne also owns
shares of Company's Common Stock as set forth above in the Ownership of
Securities table of this Proxy Statement.
8
<PAGE>
Stock Options
The following table provides information on the option grants made to the
Named Executive Officers during the fiscal year ended December 31, 1999. No
stock appreciation rights were granted to the Named Executive Officers during
that fiscal year.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed Annual
Rates of Stock
Price Appreciation
Individual Grant for Option Term(4)
---------------- -------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees in Price Expiration
Name Granted(1) Fiscal Year ($/Sh)(3) Date 5% ($) 10% ($)
---- ---------- ---------------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert N. Helmick....... -- -- -- -- -- --
Charles P. Schneider.... 326,666 17.7% $6.00 6/10/09 1,232,631 3,123,729
108,889 5.9% $9.00 12/09/09 616,317 1,561,869
Douglas H. Kelsall(2) .. 133,333 7.2% $9.00 9/16/09 754,672 1,912,486
88,888 4.8% $9.00 12/09/09 503,111 1,274,981
Mark J. Fine............ 93,566 5.1% $9.00 12/09/09 529,588 1,342,081
Ray P. Henderson........ 65,332 3.5% $9.00 6/30/09 369,782 937,101
</TABLE>
--------
(1) Each option has a maximum term of ten (10) years measured from such grant
date, subject to earlier termination upon the optionee's cessation of
service with the Company. Unless otherwise noted, the shares subject to
each option will vest and become exercisable as follows: (i) one-third
(33.33%) of the option shares upon optionee's completion of twelve (12)
months service measured from the grant date, and (ii) the remaining shares
in a series of one-twenty-fourth (4.16%) successive equal monthly
installments upon the completion of each additional month of service
thereafter. The shares subject to each option will immediately vest in full
in the event the Company is acquired by a merger or asset sale, unless the
option is assumed by the acquiring entity.
(2) Mr. Kelsall's options include 33,333 options that vest 100% on September
17, 1999. All other options vest as described in footnote (1).
(3) The exercise price may be paid in cash, in shares of the Company's Common
Stock valued at fair market value on the exercise date or through a
cashless exercise procedure involving a same-day sale of the purchased
shares. The Company may also finance the option exercise by loaning the
optionee sufficient funds to pay the exercise price for the purchased
shares, together with any federal and state withholding taxes to which the
optionee may become subject to in connection with such exercise.
(4) There can be no assurance provided to the option holder or any other holder
of the Company's securities that the actual stock price appreciation over
the ten (10) year option term will be at the assumed 5% and 10% annual
rates of compounded stock price appreciation or at any other defined level.
9
<PAGE>
Option Exercises and Holdings
The following table sets forth certain information concerning option
exercises and holdings for the fiscal year ended December 31, 1999 with respect
to each of the Named Executive Officers. No stock appreciation rights were
exercised by the Named Executive Officers during such fiscal year, and no stock
appreciation rights were held by them at the end of such fiscal year.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-
Options at Fiscal the-Money Options at
Shares Year End(#) Fiscal Year-End ($)(2)
Acquired on Value ------------------------- -------------------------
Name Exercise (#) Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert N. Helmick....... 0 -- 23,333 0 241,473 0
Charles P. Schneider.... 0 -- 0 435,555 0 1,824,104
Douglas H. Kelsall...... 0 -- 33,333 188,888 64,599 366,064
Mark J. Fine............ 0 -- 42,000 93,566 376,796 181,331
Ray P. Henderson........ 23,333 160,064 0 93,333 0 428,956
</TABLE>
--------
(1) Equal to the fair market value of the securities underlying the option on
the exercise date, minus the exercise price paid for those securities.
(2) Equal to the fair market value of the securities underlying the option at
fiscal year-end ($10.938 per share), less the exercise price payable for
those securities.
Employment Contracts, Termination of Employment Agreements and Change of
Control Arrangements
We have entered into an employment agreement with Robert N. Helmick. As of
December 31, 1999, Mr. Helmick's annual base salary was $255,000, and he was
eligible for an annual bonus of up to $200,000 payable in cash, the Company's
Common Stock, or other consideration as determined by the Board of Directors,
although the Company is not required to pay any bonus. Mr. Helmick was also
entitled to standard benefits including vacation days, participation in a
flexible reimbursement plan, and medical/dental insurance.
The initial term of employment under Mr. Helmick's employment agreement
commenced on August 1, 1999. Mr. Helmick's employment may be terminated by the
Company or by him at any time and for any reason.
The Company has agreed to provide Mr. Helmick with severance pay equal to
twelve months of his base salary, unless his employment is terminated for
cause, as defined in the agreement.
The agreement contains non-competition provisions during the term of
employment and for the period six months after termination of employment. Under
these provisions, Mr. Helmick may not:
. own an interest in, participate in the management of, or perform services
for any competitive business or activity; or
. for a period of 12 months subsequent to termination, solicit any of the
Company's employees to terminate their employment.
The agreement also contains a confidentiality provision as well as a
provision recognizing that the Company owns all ideas and inventions conceived
by Mr. Helmick during the term of the employment agreement.
In May 2000, Mr. Helmick resigned as President and Chief Executive Officer
of the Company. The Company is complying with the terms of his employment
agreement as described above.
10
<PAGE>
The Company has entered into an employment agreement with Charles P.
Schneider. The agreement sets an annual base salary for Mr. Schneider of
$195,000, which may be adjusted by the Board of Directors. In addition to a
base salary, Mr. Schneider is eligible for an annual bonus of up to $100,000,
payable in cash. For the year ended December 31, 1999, Mr. Schneider was also
awarded a signing and moving bonus. The Company issued to Mr. Schneider options
to purchase up to 326,666 and 108,889 shares of the Company's Common Stock at
an exercise price of $6.00 and $9.00 per share, respectively. These options are
subject to vesting requirements. All unvested options will vest upon a change
of control of the Company. Mr. Schneider is also entitled to standard benefits
including vacation days, participation in a flexible reimbursement plan, and
medical/dental insurance.
Mr. Schneider's employment may be terminated by the Company or by him at any
time and for any reason. The agreement generally provides for termination:
. upon employee's willful and continuous failure or refusal to comply with
the Company's policies, standards and regulations;
. if employee engages in fraud, dishonesty or any other act of material
misconduct; or
. if employee receives notice of a breach of a material provision of the
agreement and fails to cure the breach.
The Company has agreed to provide Mr. Schneider with severance pay equal to
six months of his base salary, unless his employment is terminated for cause,
as defined in the agreement.
The agreement contains non-competition provisions during the term of
employment and for the period six months after termination of employment. Under
these provisions, Mr. Schneider may not:
. own an interest in, participate in the management of, or perform services
for any competitive business or activity; or
. for a period of 12 months subsequent to termination, solicit any of the
Company's employees to terminate their employment.
The agreement also contains a confidentiality provision as well as a
provision recognizing that the Company owns all ideas and inventions conceived
by Mr. Schneider during the term of the agreement.
The Company has entered into an employment agreement with Douglas H.
Kelsall. The agreement sets an annual base salary for Mr. Kelsall of $168,000,
which may be adjusted by the Board of Directors. In addition to a base salary,
Mr. Kelsall is eligible for an annual bonus of up to $85,000, payable in cash.
The Company also issued to Mr. Kelsall options to purchase up to 222,221 shares
of the Company's Common Stock at an exercise price of $9.00 per share. These
options are subject to vesting requirements. All unvested options will vest
upon a change of control of the Company. Mr. Kelsall is also entitled to
standard benefits including vacation days, participation in a flexible
reimbursement plan, and medical/dental insurance.
Mr. Kelsall's employment may be terminated by the Company or by him at any
time and for any reason. The agreement generally provides for termination:
. upon employee's willful and continuous failure or refusal to comply with
the Company's policies, standards and regulations;
. if employee engages in fraud, dishonesty or any other act of material
misconduct; or
. if employee receives notice of a breach of a material provision of the
agreement and fails to cure the breach.
11
<PAGE>
The Company has agreed to provide Mr. Kelsall with severance pay equal to
six months of his base salary, unless his employment is terminated for cause,
as defined in the agreement.
The agreement contains non-competition provisions during the term of
employment and for the period six months after termination of employment. Under
these provisions, Mr. Kelsall may not:
. own an interest in, participate in the management of, or perform services
for any competitive business or activity; or
. for a period of 12 months subsequent to termination, solicit any of the
Company's employees to terminate their employment.
The agreement also contains a confidentiality provision as well as a
provision recognizing that the Company owns all ideas and inventions conceived
by Mr. Kelsall during the term of the agreement.
Mark J. Fine and Ray P. Henderson signed the Company's standard employment
agreement. Under this employment agreement, employment may be terminated by the
Company or by the employee at any time and for any reason. The agreement
generally provides for termination:
. upon employee's willful and continuous failure or refusal to comply with
the Company's policies, standards and regulations;
. if employee engages in fraud, dishonesty or any other act of material
misconduct; or
. if employee receives notice of a breach of a material provision of the
agreement and fails to cure the breach.
The agreement contains non-competition provisions during the term of
employment and for the period six months after termination of employment. Under
these provisions, employees may not:
. own an interest in, participate in the management of, or perform services
for any competitive business or activity; or
. for a period of 12 months subsequent to termination, solicit any of the
Company's employees to terminate their employment.
The agreement also contains a confidentiality provision as well as a
provision recognizing that the Company owns all ideas and inventions conceived
by employees during the term of the agreement.
Mr. Fine resigned from his position at eCollege.com on March 10, 2000 and
Mr. Henderson resigned from his position at eCollege.com on April 30, 2000.
12
<PAGE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors is responsible for
establishing the base salary and incentive cash bonus programs to be in effect
for the Company's executive officers and for administering certain other
compensation programs for such individuals, subject to review by the full
Board. The Compensation Committee also has the exclusive responsibility for the
administration of the Company's 1999 Stock Incentive Plan (the "1999 Plan")
under which grants may be made to executive officers and other key employees.
Compensation Philosophy
The fundamental policy of the Compensation Committee is to provide the
Company's executive officers and other key employees with competitive
compensation opportunities based upon their contribution to the financial
success of the Company and their personal performance. It is the Compensation
Committee's objective to have a substantial portion of each officer's
compensation contingent upon the Company's performance as well as upon the
officer's own level of performance. Accordingly, the compensation package for
each executive officer and key employee is comprised of three elements: (i)
base salary which reflects individual performance and is designed primarily to
be competitive with salary levels in effect at a select group of companies with
which the Company competes for executive talent, (ii) annual variable
performance awards payable in cash and tied to the Company's achievement of
financial performance milestones, and (iii) long-term stock-based incentive
awards which strengthen the mutuality of interests between the executive
officers and the Company's stockholders. As an executive officer's level of
responsibility increases, it is the intent of the Compensation Committee to
have a greater portion of the executive officer's total compensation be
dependent upon Company performance and stock price appreciation rather than
base salary.
In carrying out these objectives, the Compensation Committee takes the
following factors into consideration:
. The estimated level of compensation paid to executive officers in similar
positions by other companies within and outside the Company's industry
which compete with the Company for executive personnel.
. The individual performance of each executive officer, together with his
or her job knowledge and skills, demonstrated teamwork and adherence to
the Company's core values.
. The individual's level of responsibility and authority relative to other
positions within the Company.
. Corporate performance relative to competitors and business conditions and
the progress of the Company in meeting financial goals and objectives.
Specific Factors
The primary factors which the Compensation Committee considered in
establishing the components of each executive officer's compensation package
for the 1999 fiscal year are summarized below. The Compensation Committee may,
however, in its discretion apply different factors, particularly different
measures of financial performance, in setting executive compensation for future
fiscal years.
* Base Salary. The base salary levels for the executive officers was
established for the 1999 fiscal year on the basis of the following factors:
personal performance, the estimated salary levels in effect for similar
positions at a select group of companies within and outside the Company's
industry with which the Company competes for executive talent, and internal
comparability considerations. The Compensation Committee also relied upon
specific compensation surveys for comparative compensation purposes. The
Compensation Committee made its decisions as to the appropriate market level of
base salary for each executive officer on the basis of its understanding of the
salary levels in effect for similar positions at those companies with which the
Company competes for executive talent. Base salaries will be reviewed on an
annual basis, and adjustments will be made in accordance with the factors
indicated above.
13
<PAGE>
* Annual Incentive Compensation. Each executive officer may also earn an
incentive bonus each fiscal year on the basis of the Company's achievement of
certain performance milestones established by the Compensation Committee at the
start of that year.
It is the Compensation Committee's estimate (on the basis of calendar year
2000 surveys of calendar year 1999 executive compensation) that the total cash
compensation earned by the Company's executive officers for the 1999 fiscal
year was at the 75th percentile of the total cash compensation earned by the
executive officers in comparable positions at the principal companies with
which the Company competes for executive talent.
* Equity Incentives. Equity incentives are provided primarily through stock
option grants under the 1999 Plan. The grants are designed to align the
interests of each executive officer with those of the stockholders and provide
each individual with a significant incentive to manage the Company from the
perspective of an owner with an equity stake in the business. Each grant allows
the individual to acquire shares of the Company's Common Stock at a fixed price
per share (the market price on the grant date) over a specified period of time
(up to 10 years). The shares subject to each option generally vest in
installments over a 36-month period, contingent upon the executive officer's
continued employment with the Company. Accordingly, the option will provide a
return to the executive officer only if the executive officer remains employed
by the Company during the applicable vesting period, and then only if the
market price of the underlying shares appreciates over the option term.
The number of shares subject to each option grant will be set at a level
intended to create a meaningful opportunity for stock ownership based on the
officer's current position with the Company, the base salary associated with
that position, the size of comparable awards made to individuals in similar
positions within the industry, the individual's potential for increased
responsibility and promotion over the option term, and the individual's
personal performance in recent periods. The Compensation Committee will also
take into account the executive officer's existing holdings of the Company's
Common Stock and the number of vested and unvested options held by that
individual in order to maintain an appropriate level of equity incentive.
However, the Compensation Committee does not intend to adhere to any specific
guidelines as to the relative option holdings of the Company's executive
officers.
CEO Compensation
In setting the compensation payable to the Company's Chief Executive
Officer, Mr. Robert N. Helmick, for the 1999 fiscal year, the Compensation
Committee sought to achieve two objectives: (i) establish a level of base
salary competitive with that paid to other chief executive officers of the peer
group companies and (ii) make a significant percentage of the total
compensation package contingent upon Company performance. The base salary
established for Mr. Helmick on the basis of the foregoing criteria was intended
to provide him with a level of stability and certainty each year. Accordingly,
this element of Mr. Helmick's compensation was not affected to any significant
degree by Company performance factors and was at the 75th percentile of the
base salary levels in effect for other chief executive officers at the same
peer group of companies surveyed for comparative compensation purposes. The
remaining components of the compensation earned by Mr. Helmick for the 1999
fiscal year were entirely dependent upon financial performance and provided no
dollar guarantees.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to publicly held companies for compensation exceeding
$1 million paid to certain of the corporation's executive officers. The
limitation applies only to compensation which is not considered to be
performance-based. The non-performance based compensation to be paid to the
Company's executive officers for the 1999 fiscal year did not exceed the $1
million limit per officer, nor is it expected that the non-performance based
compensation to be paid to the Company's executive officers for fiscal 2000
will exceed that limit. The Company's 1999 Plan is structured so that any
compensation deemed paid to an executive officer in connection with the
exercise of option grants made under that plan will qualify as performance-
based compensation and will therefore not be
14
<PAGE>
subject to the $1 million limitation. Because it is very unlikely that the cash
compensation payable to any of the Company's executive officers in the
foreseeable future will approach the $1 million limit, the Compensation
Committee has decided at this time not to take any other action to limit or
restructure the elements of cash compensation payable to the Company's
executive officers. The Compensation Committee will reconsider this decision
should the individual compensation of any executive officer ever approach the
$1 million level.
The Compensation Committee believes that the executive compensation policies
and programs in effect for the Company's executive officers provide an
appropriate level of total remuneration which properly aligns the Company's
performance and the interests of the Company's stockholders with competitive
and equitable executive compensation in a balanced and reasonable manner, for
both the short and long-term.
Submitted by:
Jack W. Blumenstein
Christopher E. Girgenti
Jeri L. Korshak
Members of the Compensation
Committee
15
<PAGE>
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is a former or current officer or
employee of the Company or any of its subsidiaries. No executive officer of the
Company serves as a member of the Board of Directors or compensation committee
of any entity which has one or more of its executive officers serving as a
member of the Company's Board of Directors or Compensation Committee.
AUDIT COMMITTEE REPORT
The Audit Committee, which currently consists of Directors Blumenstein,
Girgenti and Korshak, is responsible for, among other things:
. reviewing the Company's annual financial statements and other relevant
financial reports,
. reviewing the internal financial reports prepared by management,
. recommending engagement of the Company's independent accountants,
. approving the services performed by such accountants,
. consulting with such accountants and reviewing with them the results of
their examination, and
. reviewing and evaluating the Company's systems of internal controls and
the audit and financial reporting process.
The Audit Committee has adopted a written charter, which is attached to this
Proxy Statement as Appendix A. Each member of our Audit Committee is
"independent" as defined under Rule 4200(a)(15) of the National Association of
Securities Dealers' listing standards.
The Audit Committee has reviewed and discussed the Company's audited
consolidated financial statements with its management and has discussed with
the Company's independent public accountants the matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committees).
The Audit Committee has not received the written disclosures and the letter
from the Company's independent public accountants required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit
Committees). The Company's independent public accountants have informed the
Company that they intend to issue such written disclosures and letter required
by Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees) dated as of July 31, 2000, within the next week. The Company
and its independent public accountants do not anticipate any material issues
relating to the independence of the Company's public accountants.
Based on its review, the Audit Committee recommended to the Board that the
audited financial statements for the Company's fiscal year ended December 31,
1999, be included in the Company's Annual Report on Form 10-K for the Company's
fiscal year ended December 31, 1999.
Submitted by:
Jack W. Blumenstein
Christopher E. Girgenti
Jeri L. Korshak
Members of the Audit Committee
16
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph shows a six month comparison of cumulative total return
on our Common Stock, based on the market price of our stock assuming
reinvestment of dividends with a return of the Nasdaq Stock Market (U.S.) Index
and a Peer Group, for the period beginning December 15, 1999, the day our
Common Stock began trading, through December 31, 1999.
COMPARISON OF 1 MONTH CUMULATIVE TOTAL RETURN*
AMONG ECOLLEGE.COM, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND A PEER GROUP
Cumulative Total Return
-----------------------
12/15/99 12/31/99
ECOLLEGE.COM 100.00 99.44
PEER GROUP 100.00 96.80
NASDAQ STOCK MARKET (U.S.) 100.00 112.51
* $100 INVESTED ON 12/15/99 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS. FISCAL
YEAR ENDING DECEMBER 31.
(1) The graph assumes that on December 15, 1999, $100 was invested in our
Common Stock and in each index, and all dividends were reinvested. No cash
dividends have been declared on our Common Stock.
(2) Stockholder returns over the indicated period should not be considered
indicative of future stockholder results.
(3) The Company's Peer Group consists of ten public companies engaged in
various aspects of the eLearning industry, and includes: Caliber Learning
Network, Inc. (CLBR), click2learn.com, inc. (CLKS), Learn2.com, Inc.
(LTWO), Lightspan, Inc. (LSPN), Riverdeep Interactive Learning Limited
(RVDP), Scientific Learning Corporation (SCIL), SkillSoft Corporation
(SKIL), SmartForce Corporation (SMTF), VCampus Corporation (VCMP) and
Zapme! Corporation (IZAP).
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings made under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings made by the Company under those statutes, neither the preceding Stock
Performance Graph nor the Compensation Committee Report nor the Audit Committee
Report is to be incorporated by reference into any such prior filings, nor
shall such graph or report be incorporated by reference into any future filings
made by the Company under those statutes.
17
<PAGE>
CERTAIN OTHER TRANSACTIONS
The Company's Amended and Restated Certificate of Incorporation and Bylaws
provide for indemnification of all directors and officers. In addition, each
director of the Company has entered into a separate indemnification agreement
with the Company.
In November 1999, the Company received a commitment for a subordinated
bridge loan facility from some of its current institutional investors to
provide the Company up to $2,000,000 of borrowings to fund working capital
needs. In addition, warrants for up to 150,000 shares of Common Stock were
issuable upon drawings on the facility. No funds were drawn and no warrants
were issued under the facility. The facility was cancelled in December 1999
with the closing of the Company's initial public offering.
The Board of Directors has adopted a policy that all material transactions
with affiliates will be on terms no less favorable to the Company than those
available from unaffiliated third parties and will be approved by a majority of
the disinterested members of the Board of Directors.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and any persons who are the beneficial owners of
more than ten percent of the Company's Common Stock to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "Commission"). Such directors, officers and greater than ten percent
beneficial stockholders are required by Commission regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it and
written representations from reporting persons for the 1999 fiscal year, the
Company believes that all of the Company's executive officers, directors and
greater than ten percent beneficial stockholders complied with all applicable
Section 16(a) filing requirements for the 1999 fiscal year.
ANNUAL REPORT
A copy of the Annual Report of the Company for the fiscal year ended
December 31, 1999 (the "Annual Report") is being mailed concurrently with this
Proxy Statement to all stockholders entitled to notice of and to vote at the
Annual Meeting. The Annual Report is not incorporated into this Proxy
Statement, except for executive officer biographical information contained in
the Annual Report on Form 10-K under the heading entitled "Executive Officers
and Directors of eCollege.com," and is not considered proxy soliciting
material.
FORM 10-K
A copy of the Company's Form 10-K, as filed with the Securities and Exchange
Commission, is being mailed concurrently with this Proxy Statement to all
stockholders entitled to notice of and to vote at the Annual Meeting.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the Company's 2001 Annual Meeting must be received no
later than 45 days prior to the 2001 Annual Meeting in order that they may be
included in the proxy statement and form of proxy relating to that meeting. In
addition, the proxy solicited by the Board of Directors for the 2001 Annual
Meeting will confer discretionary authority to vote on any stockholder proposal
presented at that meeting, unless the Company receives notice of such
18
<PAGE>
proposal not later than 45 days prior to the 2001 Annual Meeting. Stockholders
are also advised to review the Company's Bylaws, which contain additional
requirements with respect to advance notice of stockholder proposals and
director nominations.
OTHER MATTERS
The Company knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters properly come before
the Annual Meeting, it is the intention of the persons named in the enclosed
form of Proxy to vote the shares they represent as the Board of Directors may
recommend. Discretionary authority with respect to such other matters is
granted by the execution of the enclosed Proxy.
The Board of Directors of
eCollege.com
Dated: August 15, 2000
19
<PAGE>
APPENDIX A
eCollege.com
AUDIT COMMITTEE CHARTER
I.PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors of eCollege.com, a Delaware corporation (the "Corporation"), in
fulfilling its oversight responsibilities by reviewing the financial
information which will be provided to the shareholders and others, the systems
of internal controls which management and the Board of Directors have
established, and the Corporation's audit and financial reporting process.
The independent accountants' ultimate responsibility is to the Board of
Directors and the Audit Committee, as representatives of the shareholders.
These representatives have the ultimate authority to select, evaluate, and,
where appropriate, replace the independent accountants.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II.COMPOSITION
The Audit Committee shall be comprised of three or more independent
directors.
All members of the Committee shall have a working familiarity with basic
finance and accounting practices, and at least one member of the Committee
shall have accounting or related financial management expertise.
III.MEETINGS
The Committee shall meet on a regular basis and shall hold special meetings
as circumstances require.
IV.RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
1. Review this Charter at least annually and recommend any changes to the
Board.
2. Review the organization's annual financial statements and any other
relevant reports or other financial information.
3. Review the regular internal financial reports prepared by management and
any internal auditing department.
4. Recommend to the Board of Directors the selection of the independent
accountants and approve the fees and other compensation to be paid to
the independent accountants. On an annual basis, the Committee shall
obtain a formal written statement from the independent accountants
delineating all relationships between the accountants and the
Corporation consistent with Independence Standards Board Standard 1, and
shall review and discuss with the accountants all significant
relationships the accountants have with the Corporation to determine the
accountants' independence.
5. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
6. Following completion of the annual audit, review separately with the
independent accountants, the internal auditing department, if any, and
management any significant difficulties encountered during the course of
the audit.
7. Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law, as the Committee or the Board
deems necessary or appropriate.
A-1
<PAGE>
eCollege.com
PROXY
Annual Meeting of Stockholders, September 27, 2000
This Proxy is Solicited on Behalf of the Board of Directors of
eCollege.com
The undersigned revokes a previous proxies, acknowledges receipt of the
Notice of the Annual Meeting of Stockholders to be held September 27, 2000, and
the Proxy Statement and appoints Oakleigh Thorne and Douglas Kelsall, and each
of them, the Proxy of the undersigned, with full power of substitution, to vote
all shares of Common Stock of eCollege.com (the "Company") that the undersigned
is entitled to vote, either on his or her own behalf or on behalf of any entity
or entities, at the Annual Meeting of Stockholders of the Company to be held at
the Inverness Hotel, 200 Inverness Drive West, Englewood, Colorado 80112, on
Wednesday, September 27, 2000, at 10:00 a.m., local time (the "Annual Meeting"),
and at any adjournment or postponement thereto, with the same force and effect
as the undersigned might or could do if personally present thereafter.
The Board of Directors recommends a vote IN FAVOR OF the directors listed
below and a vote IN FAVOR OF each of the listed proposals. This Proxy, when
properly executed, will be voted as specified below. If no specification is
made, this Proxy will be voted IN FAVOR OF the election of the directors listed
below and IN FAVOR OF the other proposals.
1. To elect directors to serve for a one-year term or until the successors
are duly elected and qualified:
WITHHOLD
AUTHORITY
FOR TO VOTE
Oakleigh Thorne ________________ _________________
Robert N. Helmick ________________ _________________
Jonathan M. Dobrin ________________ _________________
Jack W. Blumenstein ________________ _________________
Christopher E. Girgenti ________________ _________________
Jeri L. Korshak ________________ _________________
2. To ratify the appointment of Arthur Andersen LLP as independent
auditors of the Company for the fiscal year ending December 31, 2000.
FOR AGAINST ABSTAIN
3. In accordance with the discretion of the proxy holders, to act upon all
matters incident to the conduct of the meeting and upon other matters as may
properly come before the meeting.
FOR AGAINST ABSTAIN
Please print the names(s) appearing on each share certificate(s) over which you
have voting authority:
_______________________________________________________________________________
(Print name(s) on certificate(s))
Please sign you name: _________________________________________________________
(Authorized Signature(s))
Date: _________________________________________________________________________
