<PAGE>
Exhibit 10.3
eCollege.com
STOCK OPTION AGREEMENT
----------------------
RECITALS
--------
A. This Agreement is executed in connection with the Corporation's grant
of a stock option to Optionee.
B. In connection with the Corporation's grant of a stock option to
Optionee, Blumenstein/Thorne Information Partners I, L.P. (the "Executive") is
to render valuable services to the Corporation or one or more parent or
subsidiary corporations.
C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. The Corporation hereby grants to Optionee, as of
---------------
the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.
2. Option Term. This option shall have a maximum term of ten (10)
-----------
years measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5.
3. Transferability. This option shall be neither transferable nor
---------------
assignable by Optionee.
4. Dates of Exercise. This option shall become exercisable for the
-----------------
Option Shares in one or more installments as specified in the Grant Notice. As
the option becomes exercisable for such installments, those installments shall
accumulate, and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5.
5. Special Acceleration of Option.
------------------------------
(a) This option, to the extent outstanding at the time of a
Change in Control but not otherwise fully exercisable, shall automatically
accelerate so that this option shall, immediately prior to the effective date of
such Change in Control, become exercisable for all of the Option Shares at the
time subject to this option and may be exercised for any or all of those Option
Shares as fully vested shares of Common Stock. The Exercise Price of the option
<PAGE>
shares shall be adjusted immediately prior to the effective date of such Change
in Control and shall be equal to $3.875.
(b) Immediately following the Change in Control, this option
shall terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof) in connection with the Change in
Control.
(c) If this option is assumed in connection with a Change in
Control, then this option shall be appropriately adjusted, immediately after
such Change in Control, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Change in Control
had the option been exercised immediately prior to such Change in Control, and
appropriate adjustments shall also be made to the Exercise Price (as adjusted in
accordance with Paragraph 5(a)), provided the aggregate Exercise Price (as
--------
adjusted in accordance with Paragraph 5(a)) shall remain the same. To the extent
the actual holders of the Corporation's outstanding Common Stock receive cash
consideration for their Common Stock in consummation of the Change in Control,
the successor corporation may, in connection with the assumption of this option,
substitute one or more shares of its own common stock with a fair market value
equivalent to the cash consideration paid per share of Common Stock in such
Change in Control.
(d) This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
6. Adjustment in Option Shares. Should any change be made to the
---------------------------
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
7. Stockholder Rights. The holder of this option shall not have any
------------------
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
8. Manner of Exercising Option.
---------------------------
(a) In order to exercise this option with respect to all or any
part of the Option Shares for which this option is at the time exercisable,
Optionee (or any other person or persons exercising the option) must take the
following actions:
(i) Execute and deliver to the Corporation a Notice of
Exercise for the Option Shares for which the option is exercised.
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(ii) Pay the aggregate Exercise Price for the purchased
shares in one or more of the following forms:
(A) cash or check made payable to the Corporation;
(B) through a special sale and remittance procedure
pursuant to which Optionee (or any other person or persons exercising
the option) shall concurrently provide irrevocable instructions (i) to
a Corporation-designated brokerage firm to effect the immediate sale
of the purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover
the aggregate Exercise Price payable for the purchased shares plus all
applicable Federal, state and local income and employment taxes
required to be withheld by the Corporation by reason of such exercise
and (ii) to the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete
the sale.
Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the
Exercise Price must accompany the Notice of Exercise delivered to the
Corporation in connection with the option exercise.
(iii) Furnish to the Corporation appropriate documentation
that the person or persons exercising the option (if other than Optionee)
have the right to exercise this option.
(iv) Make appropriate arrangements with the Corporation (or
Parent or Subsidiary employing or retaining Optionee) for the satisfaction
of all Federal, state and local income and employment tax withholding
requirements applicable to the option exercise, including withholding
requirements applicable to Executive.
(b) As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate for the purchased Option Shares,
with the appropriate legends affixed thereto.
(c) In no event may this option be exercised for any fractional
shares.
9. Restricted Securities. The shares subject to this Option have not
---------------------
been registered under the 1933 Act. Optionee hereby confirms that Optionee has
been informed that the shares subject to this Option are restricted securities
under the 1933 Act and may not be resold or transferred unless the Option Shares
are first registered under the Federal securities laws or unless an exemption
from such registration is available. Accordingly, Optionee hereby acknowledges
that if Optionee chooses to exercise the option Optionee is prepared to hold the
purchased shares for an indefinite period.
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<PAGE>
10. Restrictive Legends. If the Option is exercised, the stock
-------------------
certificates for the purchased shares shall be endorsed with one or more of the
following restrictive legend: "The shares represented by this certificate have
not been registered under the Securities Act of 1933. The shares may not be sold
or offered for sale in the absence of (a) an effective registration statement
for the shares under such Act, (b) a "no action" letter of the Securities and
Exchange Commission with respect to such sale or offer or (c) satisfactory
assurances to the Corporation that registration under such Act is not required
with respect to such sale or offer."
11. Compliance with Laws and Regulations.
------------------------------------
(a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance.
(b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals.
12. Successors and Assigns. Except to the extent otherwise provided
----------------------
in Paragraphs 3 and 5, the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Corporation and its successors and assigns
and Optionee.
13. Notices. Any notice required to be given or delivered to the
-------
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.
14. Construction. All decisions of the Board with respect to any
------------
question or issue arising under this Agreement shall be conclusive and binding
on all persons having an interest in this option.
15. Governing Law. The interpretation, performance and enforcement of
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this Agreement shall be governed by the laws of the State of Colorado without
resort to that State's conflict-of-laws rules.
16. Successor CEO. In the event that Blumenstein/Thorne Information
--------------
Partners I, L.P. is unable to make available Oakleigh Thorne to serve as CEO
through December 31, 2000, it will use its best efforts to assist eCollege.com
in identifying and hiring a successor CEO. If so requested by eCollege.com,
Blumenstein/Thorne Information Partners I, L.P. will
4
<PAGE>
take the lead in such recruiting effort, working with the executive search firm
selected by the Board of Directors, and will devote such time and attention as
may be necessary to achieve a successful recruiting effort. Any such successor
CEO will become an employee of, and all compensation agreed to, will be provided
by eCollege.com.
Dated as of July 18, 2000
eCollege.com
By: /s/ Douglas H. Kelsall
---------------------------------------
Douglas H. Kelsall, CFO
BLUMENSTEIN/THORNE INFORMATION PARTNERS I, L.P.
By: Blumenstein/Thorne Information Partners, L.L.C., as General Partner
/s/ Jack W. Blumenstein
---------------------------------------
Jack W. Blumenstein, Co-President
5
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify eCollege.com (the "Corporation") that I elect to
purchase ______________ shares of the Corporation's Common Stock (the "Purchased
Shares") at the option exercise price of $ ___________ per share (the "Exercise
Price") pursuant to that certain option (the "Option") granted to me on
__________________, _______.
Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the Exercise
Price.
____________________, _______
Date
________________________________
Optionee
Address:______________________
_______________________________
_______________________________
Print name in exact manner it is
to appear on the stock
certificate:
______________________________
Address to which certificate is to
be sent, if different from
address above:
______________________________
______________________________
Social Security Number: ______________________________
<PAGE>
APPENDIX
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The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Option Agreement.
---------
B. Board shall mean the Corporation's Board of Directors.
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C. Common Stock shall mean shares of the Corporation's common stock.
------------
D. Code shall mean the Internal Revenue Code of 1986, as amended.
----
E. Change in Control shall mean a change in ownership or control of the
-----------------
Corporation effected through any of the following transactions:
(i) a merger, consolidation or reorganization approved by the
Corporation's stockholders, unless securities representing more than fifty
------
percent (50%) of the total combined voting power of the voting securities
of the successor corporation are immediately thereafter beneficially owned,
directly or indirectly and in substantially the same proportion, by the
persons who beneficially owned the Corporation's outstanding voting
securities immediately prior to such transaction,
(ii) any stockholder-approved transfer or other disposition of
all or substantially all of the Corporation's assets, or
(iii) the acquisition, directly or indirectly by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation), of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly
to the Corporation's stockholders which the Board recommends such
stockholders accept.
F. Corporation shall mean eCollege.com, a Delaware corporation, and any
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successor corporation to all or substantially all of the assets or voting stock
of eCollege.com.
G. Exercise Date shall mean the date on which the option shall have been
-------------
exercised in accordance with Paragraph 9 of the Agreement.
H. Exercise Price shall mean the exercise price per Option Share as
--------------
specified in the Grant Notice.
A-1
<PAGE>
I. Expiration Date shall mean the date on which the option expires as
---------------
specified in the Grant Notice.
J. Fair Market Value per share of Common Stock on any relevant date shall
-----------------
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be deemed equal to the
closing selling price per share of Common Stock on the date in question, as
the price is reported by the National Association of Securities Dealers on
the Nasdaq National Market and published in The Wall Street Journal. If
-----------------------
there is no closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling price on
the last preceding date for which such quotation exists, or
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be deemed equal to the closing
selling price per share of Common Stock on the date in question on the
Stock Exchange determined by the Board to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange and published in The Wall Street Journal. If
-----------------------
there is no closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling price on
the last preceding date for which such quotation exists.
K. Grant Date shall mean the date of grant of the option as specified in
----------
the Grant Notice.
L. Grant Notice shall mean the Notice of Grant of Stock Option
------------
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
M. Non-Statutory Option shall mean an option not intended to satisfy the
--------------------
requirements of Code Section 422.
N. Notice of Exercise shall mean the notice of exercise in the form
------------------
attached hereto as Exhibit I.
O. Option Shares shall mean the number of shares of Common Stock subject
-------------
to the option as specified in the Grant Notice.
P. Optionee shall mean the person to whom the option is granted as
--------
specified in the Grant Notice.
Q. Parent shall mean any corporation (other than the Corporation) in an
------
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty
A-2
<PAGE>
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
R. Permanent Disability shall mean the inability of Optionee to engage in
--------------------
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or
more.
S. Stock Exchange shall mean the American Stock Exchange or the New York
--------------
Stock Exchange.
T. Subsidiary shall mean any corporation (other than the Corporation) in
----------
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
A-3
<PAGE>
eCollege.com
NOTICE OF GRANT OF STOCK OPTION
-------------------------------
Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of eCollege.com (the "Corporation"):
Optionee: Blumenstein/Thorne Information Partners I, L.P
--------- ----------------------------------------------
Grant Date: July 18, 2000
----------- --------------------------------------------
Vesting Commencement Date July 18, 2000
------------------------- ------------------------------
Exercise Price: $3.875 per share
--------------- ------
Number of Option Shares: 200,000 shares of Common Stock
----------------------- -------
Expiration Date: July 17, 2010
--------------- ---------------------------------------
Type of Option: Incentive Stock Option
-------------- ------
X Non-Statutory Stock Option
------
Date Exercisable: July 18, 2000
----------------
Vesting Schedule: 100% Immediate Vest
----------------
Optionee understands and agrees that the Option is
granted subject to and in accordance with the terms of the Option as set forth
in the Stock Option Agreement attached hereto as Exhibit A.
---------
<PAGE>
At Will Relationship. Nothing in this Notice or in the attached Stock
--------------------
Option Agreement shall confer upon Optionee any right to continue in Service for
any period of specific duration or interfere with or otherwise restrict in any
way the rights of the Corporation (or any Parent or Subsidiary employing or
retaining Optionee) or of Optionee, which rights are hereby expressly reserved
by each, to terminate Optionee's Service at any time for any reason, with or
without cause.
Definitions. All capitalized terms in this Notice shall have the
-----------
meaning assigned to them in this Notice or in the attached Stock Option
Agreement.
Dated as of July 18, 2000.
eCollege.com
By: /s/ Doug Kelsall
______________________________
Doug Kelsall, CFO
BLUMENSTEIN/THORNE INFORMATION PARTNERS I, L.P.
By: Blumenstein/Thorne Information Partners, L.L.C., as General Partner
/s/ Oakleigh Thorne
______________________________
Oakleigh Thorne, Co-President
Attachments:
-----------
Exhibit A - Stock Option Agreement
2
<PAGE>
eCollege.com
NOTICE OF GRANT OF STOCK OPTION
-------------------------------
Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of eCollege.com (the "Corporation"):
Optionee: Blumenstein/Thorne Information Partners I, L.P.
-------- ------------------------------------------------------
Grant Date: July 18, 2000
---------- --------------------
Vesting Commencement Date: July 18, 2000
------------------------- --------------------
Exercise Price: $ 15.00 per share unless the Company's stock price
-------------- -------
closes at or above $6.00 for at least thirty (30), or more,
consecutive days during any thirty (30) day period prior to June 1,
2005. At such time, the exercise price of this stock option will be
reduced to $3.875 per share.
Number of Option Shares: 200,000 shares of Common Stock
----------------------- -------
Expiration Date: July 17, 2010
--------------- --------------------------------------------------
Type of Option: Incentive Stock Option
-------------- -----
X Non-Statutory Stock Option
-----
Date Exercisable: July 18, 2000
----------------
Vesting Schedule: 100% Immediate Vest
----------------
Optionee understands and agrees that the Option is granted subject to
and in accordance with the terms of the Option as set forth in the Stock Option
Agreement attached hereto as Exhibit A.
---------
<PAGE>
At Will Relationship. Nothing in this Notice or in the attached Stock
--------------------
Option Agreement shall confer upon Optionee any right to continue in Service for
any period of specific duration or interfere with or otherwise restrict in any
way the rights of the Corporation (or any Parent or Subsidiary employing or
retaining Optionee) or of Optionee, which rights are hereby expressly reserved
by each, to terminate Optionee's Service at any time for any reason, with or
without cause.
Definitions. All capitalized terms in this Notice shall have the
-----------
meaning assigned to them in this Notice or in the attached Stock Option
Agreement.
Dated as of July 18, 2000.
eCollege.com
By: /s/ Doug Kelsall
______________________________
Doug Kelsall, CFO
BLUMENSTEIN/THORNE INFORMATION PARTNERS I, L.P.
By: Blumenstein/Thorne Information Partners, L.L.C., as General Partner
/s/ Oakleigh Thorne
______________________________
Oakleigh Thorne, Co-President
Attachments:
-----------
Exhibit A - Stock Option Agreement
2
<PAGE>
eCollege.com
NOTICE OF GRANT OF STOCK OPTION
-------------------------------
Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of eCollege.com (the "Corporation"):
Optionee: Blumenstein/Thorne Information Partners I, L.P.
-------- ------------------------------------------------------
Grant Date: July 18, 2000
---------- ----------------------------------------------------
Vesting Commencement Date: July 18, 2000
------------------------- -------------------------------------
Exercise Price: $ 15.00 per share unless the Company's stock price
-------------- -----
closes at or above $9.00 for at least thirty (30), or more,
consecutive days during any thirty (30) day period prior to June 1,
2005. At such time, the exercise price of this stock option will be
reduced to $3.875 per share.
Number of Option Shares: 300,000 shares of Common Stock
----------------------- -------
Expiration Date: July 17, 2010
--------------- ----------------------------------------
Type of Option: Incentive Stock Option
-------------- -----
X Non-Statutory Stock Option
-----
Date Exercisable: July 18, 2000
----------------
Vesting Schedule: 100% Immediate Vest
----------------
Optionee understands and agrees that the Option is granted subject to
and in accordance with the terms of the Option as set forth in the Stock Option
Agreement attached hereto as Exhibit A.
---------
<PAGE>
At Will Relationship. Nothing in this Notice or in the attached Stock
--------------------
Option Agreement shall confer upon Optionee any right to continue in Service for
any period of specific duration or interfere with or otherwise restrict in any
way the rights of the Corporation (or any Parent or Subsidiary employing or
retaining Optionee) or of Optionee, which rights are hereby expressly reserved
by each, to terminate Optionee's Service at any time for any reason, with or
without cause.
Definitions. All capitalized terms in this Notice shall have the
-----------
meaning assigned to them in this Notice or in the attached Stock Option
Agreement.
Dated as of July 18, 2000.
eCollege.com
By: /s/ Doug Kelsall
______________________________
Doug Kelsall, CFO
BLUMENSTEIN/THORNE INFORMATION PARTNERS I, L.P.
By: Blumenstein/Thorne Information Partners, L.L.C., as General Partner
/s/ Oakleigh Thorne
______________________________
Oakleigh Thorne, Co-President
Attachments:
-----------
Exhibit A - Stock Option Agreement
2
<PAGE>
eCollege.com
NOTICE OF GRANT OF STOCK OPTION
-------------------------------
Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of eCollege.com (the "Corporation"):
Optionee: Blumenstein/Thorne Information Partners I, L.P.
-------- ------------------------------------------------------
Grant Date: July 18, 2000
---------- ----------------------------------------------------
Vesting Commencement Date: July 18, 2000
------------------------- -------------------------------------
Exercise Price: $ 15.00 per share unless the Company's stock price
-------------- -------
closes at or above $14.00 for at least thirty (30), or more,
consecutive days during any thirty (30) day period prior to June 1,
2005. At such time, the exercise price of this stock option will be
reduced to $3.875 per share.
Number of Option Shares: 300,000 shares of Common Stock
----------------------- -------
Expiration Date: July 17, 2010
--------------- ----------------------------------------------
Type of Option: Incentive Stock Option
-------------- -----
X Non-Statutory Stock Option
-----
Date Exercisable: July 18, 2000
----------------
Vesting Schedule: 100% Immediate Vest
----------------
Optionee understands and agrees that the Option is granted subject to
and in accordance with the terms of the Option as set forth in the Stock Option
Agreement attached hereto as Exhibit A.
---------
<PAGE>
At Will Relationship. Nothing in this Notice or in the attached Stock
--------------------
Option Agreement shall confer upon Optionee any right to continue in Service for
any period of specific duration or interfere with or otherwise restrict in any
way the rights of the Corporation (or any Parent or Subsidiary employing or
retaining Optionee) or of Optionee, which rights are hereby expressly reserved
by each, to terminate Optionee's Service at any time for any reason, with or
without cause.
Definitions. All capitalized terms in this Notice shall have the
-----------
meaning assigned to them in this Notice or in the attached Stock Option
Agreement.
Dated as of July 18, 2000.
eCollege.com
By: /s/ Doug Kelsall
______________________________
Doug Kelsall, CFO
BLUMENSTEIN/THORNE INFORMATION PARTNERS I, L.P.
By: Blumenstein/Thorne Information Partners, L.L.C., as General Partner
/s/ Oakleigh Thorne
______________________________
Oakleigh Thorne, Co-President
Attachments:
-----------
Exhibit A - Stock Option Agreement
2
