<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
MITEK SYSTEMS, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(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)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
MITEK SYSTEMS, INC.
10070 CARROLL CANYON ROAD
SAN DIEGO, CALIFORNIA 92131
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 7, 2001
TO ALL STOCKHOLDERS OF
MITEK SYSTEMS, INC.
The Annual Meeting of Stockholders of Mitek Systems, Inc. (the
"Company") will be held at 1:00 p.m., local time, Wednesday, February 7,
2001, at the San Diego Marriott La Jolla, 4240 La Jolla Village Dr., La
Jolla, CA 92037, for the following purposes:
1. To elect a board of five directors to hold the office during the
ensuing year and until their respective successors are elected and
qualified. The Board of Directors intends to nominate as directors the
five persons identified in the accompanying proxy statement.
2. To ratify the adoption of our 2000 Stock Option Plan
3. To ratify the appointment of Deloitte & Touche LLP as our 2001 Auditors.
4. To transact such business as may properly come before the meeting and
any adjournments thereof.
The Board of Directors has fixed the close of business on January 2,
2001 as the record date for determination of stockholders entitled to notice
of and to vote at the Annual Meeting and all adjournments thereof. A list of
these stockholders will be open to examination by any stockholder at the
meeting and for ten days prior thereto during normal business hours at our
executive offices, 10070 Carroll Canyon Road, San Diego, California 92131.
Enclosed for your convenience is a form of proxy which may be used
at the Annual Meeting and which, unless otherwise marked, authorizes the
holders of the proxy to vote for the proposed slate of directors and as the
proxy holder deems appropriate on any other matter brought before the Annual
Meeting.
YOU ARE INVITED TO ATTEND THE MEETING IN PERSON. EVEN IF YOU EXPECT
TO ATTEND, IT IS IMPORTANT THAT YOU SIGN, DATE AND RETURN THE ATTACHED PROXY
PROMPTLY IN THE BUSINESS REPLY ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE
MEETING TO ASSURE THE PRESENCE OF A QUORUM. IF YOU SIGN AND SEND IN A PROXY,
YOU MAY REVOKE IT BY EXECUTING A NEW PROXY WITH A LATER DATE, BY WRITTEN
NOTICE OF REVOCATION TO THE SECRETARY OF THE COMPANY AT ANY TIME BEFORE IT IS
VOTED, OR BY ATTENDANCE AT THE MEETING AND VOTING IN PERSON.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ John M. Thornton
------------------------
John M. Thornton
Chairman of the Board
Date: January 17, 2001
<PAGE>
MITEK SYSTEMS, INC.
10070 CARROLL CANYON ROAD
SAN DIEGO, CALIFORNIA 92131
------------------------------------------------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 7, 2001
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Mitek Systems, Inc. (the
"Company") for use at its Annual Meeting of Stockholders (the "Annual
Meeting") to be held at 1:00 p.m., local time, Wednesday, February 7, 2001,
at the San Diego Marriott La Jolla, 4240 La Jolla Village Dr., La Jolla, CA
92037, and at any adjournments thereof.
As of the close of business on January 2, 2001, the record date for
determining stockholders entitled to notice of and to vote at the Annual
Meeting, we had a total of 11,119,843 shares of Common Stock issued and
outstanding.
We will pay the expenses of soliciting proxies for the Annual
Meeting including the cost of preparing, assembling and mailing the proxy
materials. Proxies may be solicited personally, by mail, by telephone, by
facsimile, or by telegram, by our regularly employed officers and employees
of the Company. Our officers and employees will not receive additional
compensation for soliciting proxies. We may request persons holding stock in
their names for others, such as brokers and nominees, to forward proxy
materials to their principals and request authority to execute the proxy. We
will reimburse any such brokers and nominees for their expenses in connection
therewith.
Our 2000 Annual Report to Stockholders is included in this Proxy
Statement, but is not incorporated in, and is not part of, this Proxy
Statement and is not proxy-soliciting material. We intend to mail this Proxy
Statement and the accompanying material to stockholders of record on or about
January 17, 2001. The Company's Annual Report will be provided free of charge
to any shareholder upon written request to the Company at 10070 Carroll
Canyon Road, San Diego, CA 92131.
VOTING
Each shareholder of record on January 2, 2001 is entitled to one
vote for each share held on all matters to come before the meeting. All
proxies which are returned will be counted by the Inspector of Elections in
determining the presence of a quorum and on each issue to be voted on. An
abstention from voting or a broker non-vote will be used for the purpose of
establishing a quorum, but will not be counted in the voting process. The
shares represented by proxies that are returned properly signed will be voted
in accordance with the shareholder's directions. If the proxy card is signed
and returned without direction as to how the shares are to be voted, the
shares will be voted as recommended by the Board of Directors. A stockholder
giving a proxy may revoke it at any time before it is exercised by filing
with the Secretary of the Company an instrument revoking it or a duly
executed proxy bearing a later date, or by written notice to the Company of
the death or incapacity of the stockholder who executed the proxy. The proxy
will also be revoked if the person executing the proxy is present at the
Annual Meeting and elects to vote in person. Unless revoked, the proxy will
be voted as specified. The persons named as proxies were selected by the
Board of Directors.
<PAGE>
PROPOSALS OF SHAREHOLDERS
For proposals of shareholders to be included at the 2002 annual
meeting of shareholders, anticipated to be held in February 2002. We must
receive such proposals no later than September 14, 2001. The acceptance of
such proposals is subject to Securities and Exchange Commission guidelines.
PROPOSAL NO. 1
TO ELECT FIVE DIRECTORS
ELECTION OF DIRECTORS
Pursuant to our Bylaws, the Board of Directors has fixed the number
of authorized directors at five. All five directors are to be elected at the
Annual Meeting, to hold office until the next annual meeting or until their
successors are duly elected. The five nominees receiving the highest number
of votes will be elected.
Unless authorization to do so is withheld, it is intended that the
persons named in the enclosed proxy will vote for the election of the
nominees proposed by the Board of Directors, all of whom are presently
directors of the Company. If any of the nominees should become unavailable
for election before the Annual Meeting, the proxy will be voted for a
substitute nominee or nominees, if any, designated by the Board of Directors.
The following table includes the names and certain information about
the directors and executive officer of the Company. Each of the directors is
also a nominee for election to the Board of Directors. All of the nominees
named below have consented to being named herein and to serve, if elected.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
John M. Thornton........................... 68 Chairman of the Board, President, Chief Executive Officer,
and Chief Financial Officer
Gerald I. Farmer, Ph. D (2)................ 66 Director
James B. DeBello (1)(2).................... 42 Director
Daniel E. Steimle (1) (2).................. 52 Director
Sally B. Thornton (1)...................... 66 Director
</TABLE>
(1) Compensation Committee
(2) Audit Committee
DIRECTORS
JOHN M. THORNTON-Mr. Thornton, 68, has been a director of the
Company since March 1986. He was appointed Chairman of the Board as of
October 1, 1987 and has served as President, Chief Executive Officer and
Chief Financial Officer since September 1998. Previously, he served as
President of the Company from May 1991 through July 1991 and Chief Executive
Officer from May 1991 through February 1992. From 1976 through 1988, Mr.
Thornton served as Chairman and Vice Chairman of the Board at Micom Systems,
Inc. Mr. Thornton was Chairman and President of Wavetek Corporation for 18
years. Mr. Thornton is also Chairman of the Board of Thornton Winery
Corporation. Mr. Thornton is the spouse of Sally B. Thornton, a director.
GERALD I. FARMER, PH.D.-Dr. Farmer, 66, has been a director of the
Company since May 1994. He was Executive Vice President of the Company from
November 1992 until June, 1997. Before joining the Company, Dr. Farmer was
Executive Vice President of HNC Software, Inc. from January 1987 to November
1992. He has held senior management positions with IBM Corporation, Xerox,
SAIC and Gould Imaging and Graphics.
2
<PAGE>
JAMES B. DEBELLO-Mr. DeBello, 42, has been a director of the Company
since November 1994. He has been Venture Chief Executive Officer for IdeaEdge
Ventures, Inc., a venture capital company, since June 2000. From May 1999 to
May 2000 he was President, Chief Operating Officer and a member of the Board
of Directors of CollegeClub.com, an internet company. From November 1998 to
April 1999 he was Chief Operating Officer of WirelessKnowledge, Inc.; a joint
venture company between Microsoft and Qualcomm, Inc. Before that, from
November 1996 to November 1998, Mr. DeBello held positions as Assistant
General Manager and Vice President and General Manager of Qualcomm Eudora
Internet E-Mail Software Division of Qualcomm, Inc. From 1990 to 1996, he was
President and Chief Executive Officer of Solectek Corporation, a manufacturer
and developer of wireless area networks.
DANIEL E. STEIMLE-Mr. Steimle, 52, has been a director of the
Company since February 1987. He has been Vice President and Chief Financial
Officer of LGC Wireless, a wireless technology company, since July 2000. From
November 1998 to March 2000 he was Chief Financial Officer of Transmeta
Corporation, a startup technology company. From July 1997 to February 1998 he
was Vice President, Finance and Administration and Chief Financial Officer of
Hybrid Networks, Inc., a broadband access network company. From December 1993
to July 1997, Mr. Steimle was Vice President and Chief Financial Officer of
Advanced Fibre Communications.
SALLY B. THORNTON-Ms. Thornton, 66, has been a director of the
Company since April 1988. She has been a private investor for more than forty
years. She served as a director of Micom Systems, Inc. from 1976 to 1988.
From 1987 until 1996 she served as Chairman of Medical Materials, Inc, a
composite plastics manufacturer. Ms. Thornton is on the Board of Directors of
Thornton Winery Corporation in Temecula, CA. She has been a Trustee of the
Sjorgren's Syndrome Foundation in New York and Stephens College in Missouri.
Ms. Thornton is also a Life Trustee of the San Diego Museum of Art. Ms.
Thornton is the spouse of John M. Thornton, Chairman of the Board.
MEETINGS
The Board of Directors has one regularly scheduled meeting each
year, immediately after and at the same place as the Annual Meeting of
Stockholders. Additional meetings may be called as the need arises. During
the 2000 fiscal year, there were six meetings of the Board of Directors.
COMMITTEES
The Board of Directors has appointed from among its members two
committees to advise it on matters of special importance to the Company.
The Compensation Committee, which acts as the Administrative
Committee for the 1986, 1988, 1996 and 1999 Stock Option Plans, during fiscal
2000 was composed of Sally B. Thornton, Daniel E. Steimle and James B.
DeBello. The Compensation Committee reviews, analyzes and recommends
compensation programs to the Board of Directors. It also decides to which key
employees of the Company either incentive stock options or non-qualified
stock options should be granted. During fiscal 2000, the Compensation
Committee held six meetings, concurrently with Board of Directors meetings.
The Audit Committee, during fiscal 2000, was composed of Daniel E.
Steimle, James B. DeBello and Gerald I. Farmer. The Audit Committee meets
with the independent auditors and officers or other personnel of the Company
responsible for the Company's financial reports. The Audit Committee is
responsible for reviewing the scope of the auditors' examination of the
Company and the audited results of the examination pursuant to a written
charter. The Audit Committee is also responsible for discussing with the
auditors the scope, reasonableness and adequacy of internal accounting
controls. Among other matters, the Audit Committee considers and recommends
to the Board a certified public accounting firm for selection by the Board as
the Company's independent auditor. The Audit Committee held one meeting
during fiscal 2000. During the meeting the Audit Committee reviewed the
Company's audited financial statements for fiscal 2000 and recommended they
be included in the Annual Report.
3
<PAGE>
DIRECTOR COMPENSATION
The Company does not pay compensation for service as a director to
persons employed by the Company (John M. Thornton). Outside directors are
paid $1,000 for each meeting they attend.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION
OF EACH NOMINEE AS A DIRECTOR OF THE COMPANY.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows the compensation we paid to our Chief
Executive Officer and other executive officers who served as such at the end
of fiscal 2000 and received annual compensation over $100,000.
<TABLE>
<CAPTION>
Common Stock All
Principal Annual Underlying Other
Position Year Salary($) Bonus($) Options Comp.($)
--------- ---- --------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
John M. Thornton 2000 225,000
Chairman,
Chief Executive Officer,
Chief Financial Officer 1999 200,000 85,000
1998 100,000
David Pintsov, Ph.D. 2000 150,000 50,000 23,452(1)
Sr. Vice President 1999 125,000 37,500 63,254(1)
William Boersing 2000 150,000 50.000
V.P., N. American Sales 1999 125,000 100,000
Noel Flynn 2000 130,000 50,000
V.P, Operations 1999 110,000 33,000
Dennis Brittain, Ph.D. 2000 125,000 50,000
Chief Technical Officer 1999 120,000 36,000
</TABLE>
(1) Consists solely of sales commissions.
4
<PAGE>
STOCK OPTIONS
The following table shows, as to the individuals named in the
Summary Compensation Table, information concerning stock options granted
during the fiscal year ended September 30, 2000.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER ANNUAL RATES OF
OF SECURITIES STOCK PRICE
UNDERLYING APPRECIATION FOR
OPTIONS TOTAL OPTIONS EXERCISE OR OPTION TERM (2)
GRANTED GRANTED TO EMPLOYEES BASE PRICE EXPIRATION --------------------
(#)(1) IN FY 2000 (%) ($/SHARE) DATE 5%($) 10%($)
------- -------------------- --------- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C>
John M. Thornton -0- N/A N/A N/A N/A N/A
David Pintsov 50,000 12.83%$ 7.01 5/3/10 220,500 558,837
William Boersing 50.000 12.83%$ 7.01 5/3/10 220,500 558,837
Noel Flynn 50,000 12.83%$ 7.01 5/3/10 220,500 558,837
Dennis Brittain 50,000 12.83%$ 7.01 5/3/10 220,500 558,837
</TABLE>
(1) Options vest monthly over a three-year period and have terms of either six
or ten years, subject to earlier termination on the occurrence of certain
events related to termination of employment. In addition, the full vesting
of the option is accelerated if there is a change in control of the
Company.
(2) The potential realizable value at assumed annual rates of stock price
appreciation for the option term represents hypothetical gains that could
be achieved for the respective options if exercised at the end of the
option term. The 5% and 10% assumed annual rates of compounded stock price
appreciation are mandated by the rules of the Securities and Exchange
Commission and do not represent our estimate or projection of our future
common stock prices. These amounts represent assumed rates of appreciation
in the value of our common stock from the fair market value on the date of
the grant. The amounts reflected in the table may not necessarily be
achieved.
The following table shows, as to the individuals named in the Summary
Compensation Table, information concerning stock option values at the fiscal
year end September 30, 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE MONEY OPTIONS
AT FY END AT FY-END ($)(1)
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John M. Thornton 0 0 0 0
David Pintsov 61,098 132,034 117,116 188,992
William Boersing 48,157 158,332 74,432 168,019
Noel Flynn 57,678 113,820 94,095 121,933
Dennis Brittain 5,556 44,444 0 0
</TABLE>
(1) Based on a closing bid price of $4.19 as of September 29, 2000 as reported
on the Nasdaq National Market.
5
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
As members of the Compensation Committee it is our duty to monitor
the performance and compensation of executive officers and other key
employees, to review compensation plans and to administer the Company's Stock
Option Plans. The Company's executive and key employee compensation programs
are designed to attract, motivate and retain the executive talent needed to
enhance shareholder value in a competitive environment. Our fundamental
philosophy is to relate the amount of compensation "at risk" for an executive
directly to his or her contribution to the Company's success in achieving
superior performance goals and to the overall success of the Company. The
Company's executive and key employee compensation program consists of a base
salary component, a component providing the potential for an annual bonus
based on overall Company performance as well as individual performance, and a
component providing the opportunity to earn stock options that focus the
executives and key employees on building shareholder value through meeting
longer-term financial and strategic goals.
In designing and administering its executive compensation program,
the Company tries to strike an appropriate balance among these various
elements, each of which is discussed in greater detail below.
In applying these elements to arrive at specific amounts or awards,
the members of the Compensation Committee apply their subjective evaluation
of these various factors and arrive at consensus through discussion. While
specific numerical criteria may be used in evaluating achievement of
individual or Company goals, the extent of achieving such goals is then
factored in with other more subjective criteria to arrive at the final
compensation or award decision.
BASE SALARY
Base salary is targeted at the fiftieth percentile, consistent with
comparable high technology companies in the same general stage of development
and in the same general industry and geographic area. For this purpose, this
Committee uses the wage and salary surveys of the American Electronics
Association and industry and area trade groups of which the Company is a
member. This group of companies is not the same as the peer group chosen for
the Stock Performance Graph.
The Company's salary increase program is designed to reflect
individual performance related to the Company's overall financial performance
as well as competitive practice. Salary reviews are typically performed
annually in conjunction with a performance review. Salary increases are
dependent on the achievement of individual and corporate performance goals.
THE EXECUTIVE AND KEY EMPLOYEE BONUS PLAN
The Executive and Key Employee Bonus Plan is designed to reward
Company executives and other key employees for their contributions to
corporate goals. Corporate goals are established as part of the annual
operating plan process. Overall corporate goals include target levels of
pre-tax, pre-bonus profit and net revenue.
Each eligible employee's award is expressed as a percentage of the
participant's October 1, 1999 base salary. Bonus achievement is dependent
upon meeting or exceeding the company's minimum goals for pre-tax, pre-bonus
and net revenue. For fiscal 2000, no bonus award for any participant was
payable as the Company did not achieve its goals.
6
<PAGE>
STOCK OPTION PLANS
The Company's 1986 Stock Option Plan (the "1986 Plan") authorized
the issuance of options to buy up to a total of 630,000 shares of the
Company's Common Stock. At September 30, 2000, 7,500 shares of Common Stock
were subject to outstanding options issued under the 1986 Plan. The 1986 Plan
ended on September 30, 1996 and no additional options may be granted under
the plan. The Company's 1988 Stock Option Plan (the "1988 Plan") authorized
the issuance of options to buy up to 650,000 shares of the Company's Common
Stock. At September 30, 2000, 5,000 shares were subject to outstanding
options issued under the 1988 Plan. The 1988 Plan ended on September 13, 1998
and no additional options may be granted under that plan. The Company's 1996
Stock Option Plan (the "1996 Plan") authorizes the Company to grant its
directors, officers and key employees options to buy up to 1,000,000 shares
of the Company's Common Stock. At September 30, 2000, 327,689 shares were
subject to outstanding options and none remained available for future grants
under the 1996 Plan. The Company's 1999 Stock Option Plan (the "1999 Plan")
authorizes the Company to grant its directors, officers, employees and
consultants options to purchase up to 1,000,000 shares of the Company's
Common Stock. At September 30, 2000, 775,653 shares were subject to
outstanding options and 178,916 were available for future grants under the
1999 Plan.
The Company's stock option plans are designed to:
1. Encourage and create ownership and retention of the Company's
stock;
2. Balance long-term with short-term decision making;
3. Link the officers' or key employees' financial success to that
of the stockholders;
4. Focus attention on building stockholder value through meeting
longer-term financial and strategic goals; and
5. Ensure broad-based participation of key employees (all
employees currently participate in the Stock Option Plans).
401(k) SAVINGS PLAN
In 1990 the Company established an Employee Savings Plan (the
"Savings Plan") intended to qualify under Section 401(k) of the Internal
Revenue Code of 1986 as amended (the "Code"), which is available to all
employees who satisfy the Plan's age and service requirement. The Savings
Plan allows an employee to defer up to 15% of the employee's compensation for
the pay period elected in his or her salary deferral agreement on a pre-tax
basis pursuant to a cash or deferred arrangement under Section 401(k) of the
Code (subject to maximums permitted under federal law). This contribution
will generally not be subject to federal tax until it is distributed from the
Savings Plan. In addition these contributions are fully vested and
non-forfeitable. Contributions to the Savings Plan are deposited in a trust
fund established in connection with the Savings Plan. The Company may make
discretionary contributions to the Savings Plan at the end of each fiscal
year as deemed appropriate by the Board of Directors. Vested amounts
allocated to each participating employee are distributed in the event of
retirement, death, disability or other termination of employment. For fiscal
2000 the Committee determined that participants would not receive a matching
contribution.
OTHER COMPENSATION PLANS
7
<PAGE>
The Company has adopted certain broad-based employee benefit plans
in which executive officers have been permitted to participate. The
incremental cost to the Company of benefits provided to executive officers
under these life and health insurance plans is less than 10% of the base
salaries for executive officers for fiscal 2000. Benefits under these
broad-based plans are not directly or indirectly tied to Company performance.
COMPENSATION COMMITTEE
SALLY B. THORNTON
DANIEL E. STEIMLE
JAMES B. DEBELLO
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below shows, as of January 2, 2001, the amount and class
of the Company's voting stock owned beneficially (within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934, as amended) by (i) each
director of the Company, (ii) the executive officers named in the Summary
Compensation Table, (iii) all directors and executive officers as a group and
(iv) each person known by us to own beneficially 5% or more of any class of
the Company's voting stock (except as noted below). The business address for
each of these shareholders is c/o Mitek Systems, Inc., 10070 Carroll Canyon
Road, San Diego, California 92131.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT
NAME OF BENEFICIAL OWNER OR IDENTITY OF GROUP BENEFICIALLY OWNED OF CLASS
--------------------------------------------- ------------------ --------
<S> <C> <C>
John M. and Sally B. Thornton................. 2,699,959(1) 24.28%
Gerald I. Farmer.............................. 43,052(2) .39%
James B. DeBello.............................. 20,000(3) .18%
Daniel E. Steimle............................. 35,634(4) .32%
David Pintsov................................. 280,055(5) 2.48%
William Boersing.............................. 206,489(6) 1.82%
Noel Flynn.................................... 184,898(7) 1.64%
Dennis Brittain............................... 120,700(8) 1.09%
Directors and Officers as a Group............. 3,590,787(9) 30.42%
</TABLE>
(1) John M. Thornton and Sally B. Thornton, husband and wife, are trustees
of a family trust, and are each directors of the Company.
(2) Represents 10,000 shares of Common Stock held by Dr. Farmer and
includes 33,052 shares of Common Stock subject to options exercisable
within 60 days of January 2, 2001.
(3) Represents 20,000 shares of Common Stock subject to options exercisable
within 60 days of January 2, 2001.
(4) Represents 25,634 shares of Common Stock held by Mr. Steimle and
includes 10,000 shares of Common Stock subject to options exercisable
within 60 days of January 2, 2001.
(5) Represents 86,924 shares of Common Stock held by Dr. Pintsov and
includes an additional 193,131 shares of common stock subject to
options exercisable within 60 days of January 2, 2001.
(6) Represents 206,489 shares of Common Stock subject to options
exercisable within 60 days of January 2, 2001.
(7) Represents 13,400 shares of Common Stock held by Mr. Flynn and includes
171,498 shares of Common Stock subject to options exercisable within 60
days of January 2, 2001.
(8) Represents 70,700 shares of Common Stock held by Dr. Brittain and
includes 50,000 shares of Common Stock subject to options exercisable
within 60 days of January 2, 2001.
8
<PAGE>
(9) Includes 684,1711 shares of Common Stock subject to options exercisable
within 60 days of January 2, 2001.
Information with respect to beneficial ownership is based on
information furnished to the Company by each person identified above.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
officers and directors and persons who own more than 10% of a registered
class of our equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors
and greater than 10% stockholders are required by Securities and Exchange
Commission regulations to furnish the Company with copies of all Section
16(a) forms they file. Based solely on a review of Forms 3, 4, and 5 and
amendments thereto furnished to us, we are not aware of any director, officer
or beneficial owner of 10% of our common stock that failed to file on a
timely basis as disclosed on the above forms, reports required by Section
16(a) of the Securities Exchange Act of 1934 during the most recent fiscal
year.
STOCK PERFORMANCE GRAPH
9/30/1995 9/30/1996 9/30/1997 9/30/1998 9/30/1999 9/30/2000
100.00 291.30 60.90 32.60 304.30 291.30
100.00 118.70 162.90 165.50 270.40 358.90
100.00 135.00 192.10 276.40 535.90 885.90
The above graph compares our performance with that of the Nasdaq
Market Index and Peer Group based on SIC Code 3570 - Computer and Office
Equipment. The graph assumes an investment of $100 on October 1, 1995 and the
reinvestment of dividends.
PROPOSAL NO. 2
PROPOSAL TO ADOPT THE 2000 STOCK OPTION PLAN
The Board of Directors believes that attracting and retaining highly
qualified key employees and directors is essential to the Company's growth
and success. In this regard, stock options have been and will continue to be
an important element of the Company's compensation program because options
enable directors, employees and providers of services to the Company to
acquire or increase their proprietary interest in the Company, thereby
promoting a close identity of interests between such individuals and the
Company's shareholders. Options also
9
<PAGE>
provide an increased incentive to option holders to expend their maximum
efforts for the success of the Company's business.
The Board of Directors believes it is in the interests of the
Company and its shareholders that the ability of the Company to grant stock
option awards be continued. Accordingly, on December 13, 2000, the Board of
Directors adopted, subject to shareholder approval, the 2000 Stock Option
Plan (the "2000 Plan"). The following discussion of the material features of
the 2000 Plan is qualified by reference to the text of the 2000 Plan set
forth in Exhibit A hereto.
STOCK OPTIONS. The Compensation Committee of the Board of Directors
(the "Committee") is authorized to grant stock options, including both
incentive stock options ("ISOs"), which can result in potentially favorable
tax treatment to the participant, and nonqualified stock options. Except as
provided in the 2000 Plan, generally the exercise price per share of common
stock subject to an option is determined by the Committee, provided that the
exercise price of an ISO may not be less than the fair market value of the
common stock on the date of grant. The term of each such option and the times
at which each such option shall be exercisable generally will be fixed by the
Committee, except no option will have a term exceeding ten years. Upon the
termination of an optionholder's employment with the Company other than for
cause, all his unvested options will immediately expire and his vested
options will expire three months after the occurrence giving rise to
termination. Upon the termination of an optionholder's employment for cause,
all of his options will expire on the date of the occurrence giving rise to
the termination. Options may be exercised by payment of the exercise price in
cash, stock or promissory note, or as the Committee may determine from time
to time in accordance with applicable law.
SHARES SUBJECT TO THE PLAN. Under the 2000 Plan, 1,000,000 shares of
common stock will be available for issuance of options. The maximum number of
shares of common stock which may be granted to any individual under the 2000
Plan in any one-year period shall not exceed 500,000 shares, subject to the
adjustments described in the next paragraph.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The 2000 Plan provides
that, in the event of any change in the capital structure of the Company that
effects an increase or decrease in the number of outstanding shares of the
Company without receipt of consideration, the number of shares of common
stock covered by each outstanding option, and the exercise price thereof,
shall be proportionately adjusted by the Committee. The 2000 Plan provides
that, in the event of certain capital transactions, all outstanding options
will terminate upon such capital transaction unless they are assumed by a
successor corporation, provided that all vested options may be exercised
during the 15 days prior to the capital transaction. The Committee may choose
to accelerate the vesting of any option.
ELIGIBILITY. Any officer, director or employee of, and certain
persons rendering services to, the Company and its subsidiaries is eligible
to receive awards under the 2000 Plan. Only employees may receive ISO's under
the 2000 Plan.
ADMINISTRATION. The Committee will administer the 2000 Plan. Subject
to the terms and conditions of the 2000 Plan, the Committee is authorized to
designate participants who are employees, directors or consultants of the
Company and its subsidiaries, determine the number of options to be granted,
set terms and conditions of such options, interpret the 2000 Plan, specify
rules and regulations relating to the 2000 Plan, and make all other
determinations which may be necessary or advisable for the administration of
the 2000 Plan.
OTHER TERMS OF OPTIONS. The flexible terms of the 2000 Plan will
permit the Committee to impose performance conditions with respect to any
option. Performance conditions may require that an option be forfeited, in
whole or in part, if performance objectives are not met, or require that the
time of exercisability of an option be linked to achievement of performance
conditions.
No options may be granted under the 2000 Plan after December 13,
2010.
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The exercise of an option is conditioned on the withholding of
taxes. Options granted under the 2000 Plan may not be pledged or otherwise
encumbered and are not transferable except by will or by the laws of
intestate succession.
The Board of Directors may, subject to any shareholder approval
required by applicable law, amend the 2000 Plan with respect to any shares of
common stock at that time not subject to options.
FEDERAL TAX CONSEQUENCES OF THE 2000 PLAN. The federal income tax
consequences of the grant, exercise and disposition of stock options are
complex. A summary of the more significant federal income tax consequences of
options granted pursuant to the 2000 Plan is set forth below; however, each
optionee is advised to consult his or her individual tax advisor concerning
their personal tax consequences. In addition, optionees may be subject to
state taxation, which may vary from the federal income tax treatment
described below.
INCENTIVE STOCK OPTIONS
No gain or loss is realized upon the grant or exercise of an ISO.
However, the excess of the fair market value of the stock received upon the
exercise of an ISO over the exercise price is an "item of tax preference" for
purposes of the alternative minimum tax described under Code Section 55.
Gain or loss realized on the disposition of stock acquired pursuant
to the exercise of an ISO is long-term capital gain or loss if the stock is
held for at least 2 years from the date of the grant and 1 year from the date
of exercise. There are no tax consequences to the Company upon the grant or
exercise of an ISO if these holding requirements are met. If stock acquired
pursuant to the exercise of an ISO is disposed of without satisfying the
holding requirements at a price in excess of the exercise price, the optionee
will recognize, at the time of sale, ordinary income equal to the lesser of
(1) the gain on the sale, or (2) the excess of the fair market value over the
option exercise price on the date of exercise. Any additional gain in such
event will be capital gain. Further, the Company would be allowed a deduction
for federal income tax purposes equal to the ordinary income recognized by
the optionee.
NONQUALIFIED OPTION
A participant who is granted a Nonqualified Option under the 2000
Plan will not recognize taxable income upon the grant of the option. An
optionee will recognize ordinary income upon the exercise of an option in an
amount equal to the excess of the fair market value of the stock at the time
of exercise over the exercise price. However, if the underlying stock is
restricted, the recognition of the ordinary income will be deferred until the
lapse of the restriction. A deduction for federal income tax purposes will be
allowed to the Company in an amount equal to the ordinary income taxable to
an optionee upon exercise, provided that such amount constitutes an ordinary
and necessary business expense to the Company and the Company satisfies
certain withholding and reporting requirements.
An optionee's tax basis in the shares received on exercise of a
Nonqualified Option will be equal to the amount of any cash paid by the
optionee on exercise, plus the amount of ordinary income recognized as a
result of the receipt of such shares. Any gain or loss recognized upon the
disposition of a Nonqualified Option will be capital gain.
The ordinary income recognized by an employee with respect to the
exercise of an option, will be subject to both wage withholding and
employment taxes. The holding period for such shares will begin on the date
of exercise.
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The foregoing statement is based on present federal tax laws and
regulations, and is not a complete description of the federal income tax
aspects of the 2000 Plan. In addition, participants may be subject to certain
state taxes, which are not described herein. Accordingly, each participant
should consult his or her tax advisor with regard to the tax aspects of his
or her participation in the 2000 Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
PROPOSAL NO. 3
RATIFICATION OF SELECTION OF AUDITORS
Based upon the recommendation of the Audit Committee, the Board of
Directors has authorized the firm of Deloitte & Touche, LLP, independent
certified public accountants, to serve as auditors for the fiscal year ending
September 30, 2001. A representative of Deloitte & Touche, LLP will be
present at the Annual Meeting and will have the opportunity to make a
statement and respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
OTHER BUSINESS
The Annual Meeting is called for the purposes set forth in the
attached Notice of Annual Meeting of Stockholders. We are notaware of any
matters for action by shareholders at this meeting other than those described
in the Notice. The enclosed proxy, however, will confer discretionary
authority with respect to matters that are not known at the date of printing
hereof and which may properly come before the Annual Meeting or any
adjournment thereof. The proxy holders intend to vote in accordance with
their best judgment on any such matters.
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD
IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
/s/ John M. Thornton
------------------------
John M. Thornton
Chairman of the Board
San Diego, California
January 17, 2001
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EXHIBIT A
MITEK SYSTEMS, INC.
2000 STOCK OPTION PLAN
1. PURPOSE. This Stock Option Plan (the "Plan") is intended to
serve as an incentive to, and to encourage stock ownership by certain
eligible participants rendering services to Mitek Systems, Inc., a Delaware
corporation, and certain affiliates as set forth below (the "Corporation"),
so that they may acquire or increase their proprietary interest in the
Corporation and to encourage them to remain in the service of the Corporation.
2. ADMINISTRATION.
2.1 COMMITTEE. The Plan shall be administered by the Board of
Directors of the Corporation (the "Board of Directors"), or a committee of
two or more members appointed by the Board of Directors (the "Committee") who
are Non-Employee Directors as defined in Rule 16b-3 promulgated under Section
16 of the Securities Exchange Act of 1934 and an outside director as defined
in Treasury Regulation ss. 1.162-27(e)(3). The Committee shall select one of
its members as Chairman and shall appoint a Secretary, who need not be a
member of the Committee. The Committee shall hold meetings at such times and
places as it may determine and minutes of such meetings shall be recorded.
Acts by a majority of the Committee in a meeting at which a quorum is present
and acts approved in writing by a majority of the members of the Committee
shall be valid acts of the Committee.
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2.2 TERM. If the Board of Directors selects a Committee, the
members of the Committee shall serve on the Committee for the period of time
determined by the Board of Directors and shall be subject to removal by the
Board of Directors at any time. The Board of Directors may terminate the
function of the Committee at any time and resume all powers and authority
previously delegated to the Committee.
2.3 AUTHORITY. The Committee shall have sole discretion and
authority to grant options under the Plan to eligible participants rendering
services to the Corporation or any "parent" or "subsidiary" of the
Corporation, as defined in Section 424 of the Internal Revenue Code of 1986,
as amended (the "Code") ("Parent or Subsidiary"), at such times, under such
terms and in such amounts as it may decide. For purposes of this Plan and any
Stock Option Agreement (as defined below), the term "Corporation" shall
include any Parent or Subsidiary, if applicable. Subject to the express
provisions of the Plan, the Committee shall have complete authority to
interpret the Plan, to prescribe, amend and rescind the rules and regulations
relating to the Plan, to determine the details and provisions of any Stock
Option Agreement, to accelerate any options granted under the Plan and to
make all other determinations necessary or advisable for the administration
of the Plan.
2.4 TYPE OF OPTION. The Committee shall have full authority and
discretion to determine, and shall specify, whether the eligible individual
will be granted options intended to qualify as incentive options under
Section 422 of the Code ("Incentive Options") or options which are not
intended to qualify under Section 422 of the Code ("Non-Qualified Options");
provided, however, that Incentive Options shall only be granted to employees
of the Corporation, or a Parent or Subsidiary thereof, and shall be subject
to the special limitations set forth herein attributable to Incentive Options.
2.5 INTERPRETATION. The interpretation and construction by the
Committee of any provisions of the Plan or of any option granted under the
Plan shall be final and binding on all parties having an interest in this
Plan or any option granted hereunder. No member of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any option granted under the Plan.
3. ELIGIBILITY.
3.1 GENERAL. All directors, officers, employees of and certain
persons rendering services to the Corporation, or any Parent or Subsidiary
relative to the Corporation's, or any Parent's or Subsidiary's management,
operation or development shall be eligible to receive options under the Plan.
The selection of recipients of options shall be within the sole and absolute
discretion of the Committee. No person shall be granted an Incentive Option
under this Plan unless such person is an employee of the Corporation, or a
Parent or Subsidiary on the date of grant. No person shall be granted an
option under this Plan unless such person has executed, if requested by the
Committee, the grant representation letter set forth on Exhibit "A," as such
Exhibit may be amended by the Committee from time to time. No person shall be
granted more than 500,000 options in any one year period.
3.2 Termination of Eligibility.
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3.2.1 If an optionee ceases to be employed by the
Corporation, or its Parent or Subsidiary, is no longer an officer or member
of the Board of Directors of the Corporation, or no longer performs services
for the Corporation, or its Parent or Subsidiary, for any reason (other than
for "cause," as hereinafter defined, or such optionee's death), any option
granted hereunder to such optionee shall expire three months after the
occurrence giving rise to such termination of eligibility (or 1 year in the
event an optionee is "disabled," as defined in Section 22(e)(3) of the Code)
or upon the date it expires by its terms, whichever is earlier. Any option
that has not vested in the optionee as of the date of such termination shall
immediately expire and shall be null and void. The Committee shall, in its
sole and absolute discretion, decide, utilizing the provisions set forth in
Treasury Regulations ss. 1.421-7(h), whether an authorized leave of absence
or absence for military or governmental service, or absence for any other
reason, shall constitute termination of eligibility for purposes of this
Section.
3.2.2 If an optionee ceases to be employed by the
Corporation, or its Parent or Subsidiary, is no longer an officer or member
of the Board of Directors of the Corporation, or no longer performs services
for the Corporation, or its Parent or Subsidiary, and such termination is as
a result of "cause," as hereinafter defined, then all options granted
hereunder to such optionee shall expire on the date of the occurrence giving
rise to such termination of eligibility or upon the date it expires by its
terms, whichever is earlier, and such optionee shall have no rights with
respect to any unexercised options. For purposes of this Plan, "cause" shall
mean an optionee's personal dishonesty, misconduct, breach of fiduciary duty,
incompetence, intentional failure to perform stated obligations, willful
violation of any law, rule, regulation or final cease and desist order, or
any material breach of any provision of this Plan, any Stock Option Agreement
or any employment agreement.
3.3 DEATH OF OPTIONEE AND TRANSFER OF OPTION. In the event an
optionee shall die, an option may be exercised (subject to the condition that
no option shall be exercisable after its expiration and only to the extent
that the optionee's right to exercise such option had accrued at the time of
the optionee's death) at any time within six months after the optionee's
death by the executors or administrators of the optionee or by any person or
persons who shall have acquired the option directly from the optionee by
bequest or inheritance. Any option that has not vested in the optionee as of
the date of death or termination of employment, whichever is earlier, shall
immediately expire and shall be null and void. No option shall be
transferable by the optionee other than by will or the laws of intestate
succession.
3.4 LIMITATION ON INCENTIVE OPTIONS. No person shall be granted
any Incentive Option to the extent that the aggregate fair market value of
the Stock (as defined below) to which such options are exercisable for the
first time by the optionee during any calendar year (under all plans of the
Corporation as determined under Section 422(d) of the Code) exceeds $100,000.
4. IDENTIFICATION OF STOCK. The Stock, as defined herein, subject
to the options shall be shares of the Corporation's authorized but unissued
or acquired or reacquired common stock (the "Stock"). The aggregate number of
shares subject to outstanding options shall not exceed 1,000,000 shares of
Stock (subject to adjustment as provided in Section 6). If any option granted
hereunder shall expire or terminate for any reason without having been
exercised in full, the unpurchased shares subject thereto shall again be
available for purposes of this Plan. Notwithstanding the above, at no time
shall the total number of shares of Stock
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issuable upon exercise of all outstanding options and the total number of
shares of Stock provided for under any stock bonus or similar plan of the
Corporation exceed 30% as calculated in accordance with the conditions and
exclusions of ss.260.140.45 of Title 10, California Code of Regulations,
based on the shares of the issuer which are outstanding at the time the
calculation is made.
5. TERMS AND CONDITIONS OF OPTIONS. Any option granted pursuant to
the Plan shall be evidenced by an agreement ("Stock Option Agreement") in
such form as the Committee shall from time to time determine, which agreement
shall comply with and be subject to the following terms and conditions:
5.1 NUMBER OF SHARES. Each option shall state the number of
shares of Stock to which it pertains.
5.2 OPTION EXERCISE PRICE. Each option shall state the option
exercise price, which shall be determined by the Committee; provided,
however, that (i) the exercise price of any Incentive Option shall not be
less than the fair market value of the Stock, as determined by the Committee,
on the date of grant of such option, (ii) the exercise price of any option
granted to any person who owns more than 10% of the total combined voting
power of all classes of the Corporation's stock, as determined for purposes
of Section 422 of the Code, shall not be less than 110% of the fair market
value of the Stock, as determined by the Committee, on the date of grant of
such option, and (iii) the exercise price of any Non-Qualified Option shall
not be less than 85% of the fair market value of the Stock, as determined by
the Committee, on the date of grant of such option. In the event that the
fair market value of the price of the common stock declines below the price
at which the option is granted, the Committee shall have the discretion and
authority to cancel, reduce, or otherwise modify the price of any unexercised
option, including, but not limited to, a regrant of the option at a new price
more commensurate with the fair market value of the stock. The Committee must
receive the approval of the Board of Directors before any action is taken in
accordance with this provision.
5.3 TERM OF OPTION. The term of an option granted hereunder
shall be determined by the Committee at the time of grant, but shall not
exceed ten years from the date of the grant. The term of any Incentive Option
granted to an employee who owns more than 10% of the total combined voting
power of all classes of the Corporation's stock, as determined for purposes
of Section 422 of the Code, shall in no event exceed five years from the date
of grant. All options shall be subject to early termination as set forth in
this Plan. In no event shall any option be exercisable after the expiration
of its term.
5.4 METHOD OF EXERCISE. An option shall be exercised by written
notice to the Corporation by the optionee (or successor in the event of
death) and execution by the optionee of an exercise representation letter in
the form set forth on Exhibit "B," as such Exhibit may be amended by the
Committee from time to time. Such written notice shall state the number of
shares with respect to which the option is being exercised and designate a
time, during normal business hours of the Corporation, for the delivery
thereof ("Exercise Date"), which time shall be at least 30 days after the
giving of such notice unless an earlier date shall have been mutually agreed
upon. At the time specified in the written notice, the Corporation shall
deliver to the optionee at the principal office of the Corporation, or such
other appropriate place as may be
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determined by the Committee, a certificate or certificates for such shares.
Notwithstanding the foregoing, the Corporation may postpone delivery of any
certificate or certificates after notice of exercise for such reasonable
period as may be required to comply with any applicable listing requirements
of any securities exchange. In the event an option shall be exercisable by
any person other than the optionee, the required notice under this Section
shall be accompanied by appropriate proof of the right of such person to
exercise the option.
5.5 MEDIUM AND TIME OF PAYMENT. The option exercise price shall
be payable in full on or before the option Exercise Date in any one of the
following alternative forms:
5.5.1 Full payment in cash or certified bank or cashier's
check;
5.5.2 A Promissory Note (as defined below);
5.5.3 Full payment in shares of Stock having a fair market
value on the Exercise Date in the amount equal to the option exercise price;
5.5.4 Through a special sale and remittance procedure
pursuant to which the optionee shall concurrently provide irrevocable written
instruction to (a) 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 (b) the
Corporation to deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale.
5.5.5 A combination of the consideration set forth in
Sections 5.5.1, through 5.5.4 equal to the option exercise price; or
5.5.6 Any other method of payment complying with the
provisions of Section 422 of the Code with respect to Incentive Options,
provided the terms of payment are established by the Committee at the time of
grant and any other method of payment established by the Committee with
respect to Non-Qualified Options.
5.6 FAIR MARKET VALUE. The fair market value of a share of Stock
on any relevant date shall be determined in accordance with the following
provisions:
5.6.1 If the Stock at the time is neither listed nor
admitted to trading on any stock exchange nor traded in the over-the-counter
market, then the fair market value shall be determined by the Committee after
taking into account such factors as the Committee shall deem appropriate.
5.6.2 If the Stock is not at the time listed or admitted to
trading on any stock exchange but is traded in the over-the-counter market,
the fair market value shall be the mean between the highest bid and lowest
asked prices (or, if such information is available, the closing selling
price) of one share of Stock on the date in question in the over-the-counter
market, as such prices are reported by the National Association of Securities
Dealers through its NASDAQ system or any successor system. If there are no
reported bid and asked prices (or
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closing selling price) for the Stock on the date in question, then the mean
between the highest bid and lowest asked prices (or the closing selling
price) on the last preceding date for which such quotations exist shall be
determinative of fair market value.
5.6.3 If the Stock is at the time listed or admitted to
trading on any stock exchange, then the fair market value shall be the
closing selling price of one share of Stock on the date in question on the
stock exchange determined by the Committee to be the primary market for the
Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no sale of Stock on such exchange
on the date in question, then the fair market value shall be the closing
selling price on the exchange on the last preceding date for which such
quotation exists.
5.7 PROMISSORY NOTE. Subject to the requirements of applicable
state or Federal law or margin requirements, payment of all or part of the
purchase price of the Stock may be made by delivery of a full recourse
promissory note ("Promissory Note"). The Promissory Note shall be executed by
the optionee, made payable to the Corporation and bear interest at such rate
as the Committee shall determine, but in no case less than the minimum rate
which will not cause under the Code (i) interest to be imputed, (ii) original
issue discount to exist, or (iii) any other similar results to occur. Unless
otherwise determined by the Committee, interest on the Note shall be payable
in quarterly installments on March 31, June 30, September 30 and December 31
of each year. A Promissory Note shall contain such other terms and conditions
as may be determined by the Committee; provided, however, that the full
principal amount of the Promissory Note and all unpaid interest accrued
thereon shall be due not later than five years from the date of exercise. The
Corporation may obtain from the optionee a security interest in all shares of
Stock issued to the optionee under the Plan for the purpose of securing
payment under the Promissory Note and may retain possession of the stock
certificates representing such shares in order to perfect its security
interest.
5.8 RIGHTS AS A SHAREHOLDER. An optionee or successor shall have
no rights as a shareholder with respect to any Stock underlying any option
until the date of the issuance to such optionee of a certificate for such
Stock. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions or other
rights for which the record date is prior to the date such Stock certificate
is issued, except as provided in Section 6.
5.9 MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to
the terms and conditions of the Plan, the Committee may modify, extend or
renew outstanding options granted under the Plan, or accept the surrender of
outstanding options (to the extent not exercised) and authorize the granting
of new options in substitution therefor.
5.10 VESTING AND RESTRICTIONS. The Committee shall have complete
authority and discretion to set the terms, conditions, restrictions, vesting
schedules and other provisions of any option in the applicable Stock Option
Agreement and shall have complete authority to require conditions and
restrictions on any Stock issued pursuant to this Plan; provided, however,
that. except with respect to options granted to officers or directors of the
Corporation, options granted pursuant to this Plan shall be exercisable or
"vest" at the rate of at least 20% per year over the 5-year period beginning
on the date the option is granted. Options granted to officers
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and directors shall become exercisable or "vest," subject to reasonable
conditions, at any time during any period established by the Corporation.
5.11 OTHER PROVISIONS. The Stock Option Agreements shall contain
such other provisions, including without limitation, restrictions or
conditions upon the exercise of options, as the Committee shall deem
advisable.
6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
6.1 SUBDIVISION OR CONSOLIDATION. Subject to any required action
by shareholders of the Corporation, the number of shares of Stock covered by
each outstanding option, and the exercise price thereof, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Stock of the Corporation resulting from a subdivision or
consolidation of shares, including, but not limited to, a stock split,
reverse stock split, recapitalization, continuation or reclassification, or
the payment of a stock dividend (but only on the Stock) or any other increase
or decrease in the number of such shares effected without receipt of
consideration by the Corporation. Any fraction of a share subject to option
that would otherwise result from an adjustment pursuant to this Section shall
be rounded downward to the next full number of shares without other
compensation or consideration to the holder of such option.
6.2 CAPITAL TRANSACTIONS. Upon a sale or exchange of all or
substantially all of the assets of the Corporation, a merger or consolidation
in which the Corporation is not the surviving corporation, a merger,
reorganization or consolidation in which the Corporation is the surviving
corporation and shareholders of the Corporation exchange their stock for
securities or property, a liquidation of the Corporation, or similar
transaction as determined by the Committee ("Capital Transaction"), this Plan
and each option issued under this Plan, whether vested or unvested, shall
terminate, unless such options are assumed by a successor corporation in a
merger or consolidation, immediately prior to such Capital Transaction;
provided, however, that unless the outstanding options are assumed by a
successor corporation in a merger or consolidation, subject to terms approved
by the Committee, all optionees will have the right, during the 15 days prior
to such Capital Transaction, to exercise all vested options. The Corporation
shall, subject to any nondisclosure provisions, attempt to provide optionees
at least 15 days notice of the option termination date. The Committee may
(but shall not be obligated to) (i) accelerate the vesting of any option or
(ii) apply the foregoing provisions, including but not limited to termination
of this Plan and options granted pursuant to the Plan, in the event there is
a sale of 51% or more of the stock of the Corporation in any two year period
or a transaction similar to a Capital Transaction.
6.3 ADJUSTMENTS. To the extent that the foregoing adjustments
relate to stock or securities of the Corporation, such adjustments shall be
made by the Committee, whose determination in that respect shall be final,
binding and conclusive.
6.4 ABILITY TO ADJUST. The grant of an option pursuant to the
Plan shall not affect in any way the right or power of the Corporation to
make adjustments, reclassifications, reorganizations or changes of its
capital or business structure or to merge, consolidate, dissolve, liquidate,
sell or transfer all or any part of its business or assets.
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6.5 NOTICE OF ADJUSTMENT. Whenever the Corporation shall take
any action resulting in any adjustment provided for in this Section, the
Corporation shall forthwith deliver notice of such action to each optionee,
which notice shall set forth the number of shares subject to the option and
the exercise price thereof resulting from such adjustment.
6.6 LIMITATION ON ADJUSTMENTS. Any adjustment, assumption or
substitution of an Incentive Option shall comply with Section 425 of the
Code, if applicable.
7. NONASSIGNABILITY. Options granted under this Plan may not be
sold, pledged, assigned or transferred in any manner other than by will or by
the laws of intestate succession, and may be exercised during the lifetime of
an optionee only by such optionee. Any transfer in violation of this Section
shall void such option, and any Stock Option Agreement entered into by the
optionee and the Corporation regarding such transferred option shall be void
and have no further force or effect. No option shall be pledged or
hypothecated in any way, nor shall any option be subject to execution,
attachment or similar process.
8. NO RIGHT OF EMPLOYMENT. Neither the grant nor exercise of any
option nor anything in this Plan shall impose upon the Corporation or any
other corporation any obligation to employ or continue to employ any
optionee. The right of the Corporation and any other corporation to terminate
any employee shall not be diminished or affected because an option has been
granted to such employee.
9. TERM OF PLAN. This Plan is effective on the date the Plan is
adopted by the Board of Directors and options may be granted pursuant to the
Plan from time to time within a period of ten (10) years from such date, or
the date of any required shareholder approval required under the Plan, if
earlier. Termination of the Plan shall not affect any option theretofore
granted.
10. AMENDMENT OF THE PLAN. The Board of Directors of the Corporation
may, subject to any required shareholder approval, suspend, discontinue or
terminate the Plan, or revise or amend it in any respect whatsoever with
respect to any shares of Stock at that time not subject to options.
11. APPLICATION OF FUNDS. The proceeds received by the Corporation
from the sale of Stock pursuant to options may be used for general corporate
purposes.
12. RESERVATION OF SHARES. The Corporation, during the term of this
Plan, shall at all times reserve and keep available such number of shares of
Stock as shall be sufficient to satisfy the requirements of the Plan.
13. NO OBLIGATION TO EXERCISE OPTION. The granting of an option
shall not impose any obligation upon the optionee to exercise such option.
14. APPROVAL OF BOARD OF DIRECTORS AND SHAREHOLDERS. The Plan shall
not take effect until approved by the Board of Directors of the Corporation.
This Plan shall be approved by a vote of the shareholders within 12 months
from the date of approval by the Board of Directors. In the event such
shareholder vote is not obtained, all options granted hereunder, whether
vested or unvested, shall be null and void. Further, any stock acquired
20
<PAGE>
pursuant to the exercise of any options under this Agreement may not count
for purposes of determining whether shareholder approval has been obtained.
15. WITHHOLDING TAXES. Notwithstanding anything else to the contrary
in this Plan or any Stock Option Agreement, the exercise of any option shall
be conditioned upon payment by such optionee in cash, or other provisions
satisfactory to the Committee, of all local, state, federal or other
withholding taxes applicable, in the Committee's judgment, to the exercise or
to later disposition of shares acquired upon exercise of an option.
16. PARACHUTE PAYMENTS. Any outstanding option under the Plan may
not be accelerated to the extent any such acceleration of such option would,
when added to the present value of other payments in the nature of
compensation which becomes due and payable to the optionee would result in
the payment to such optionee of an excess parachute payment under Section
280G of the Code. The existence of any such excess parachute payment shall be
determined in the sole and absolute discretion of the Committee.
17. SECURITIES LAWS COMPLIANCE. Notwithstanding anything contained
herein, the Corporation shall not be obligated to grant any option under this
Plan or to sell, issue or effect any transfer of any Stock unless such grant,
sale, issuance or transfer is at such time effectively (i) registered or
exempt from registration under the Securities Act of 1933, as amended (the
"Act"), and (ii) qualified or exempt from qualification under the California
Corporate Securities Law of 1968 and any other applicable state securities
laws. As a condition to exercise of any option, each optionee shall make such
representations as may be deemed appropriate by counsel to the Corporation
for the Corporation to use any available exemption from registration under
the Act or qualification under any applicable state securities law.
18. RESTRICTIVE LEGENDS. The certificates representing the Stock
issued upon exercise of options granted pursuant to this Plan will bear any
legends required by applicable securities laws as determined by the Committee.
19. NOTICES. Any notice to be given under the terms of the Plan
shall be addressed to the Corporation in care of its Secretary at its
principal office, and any notice to be given to an optionee shall be
addressed to such optionee at the address maintained by the Corporation for
such person or at such other address as the optionee may specify in writing
to the Corporation.
20. INFORMATION TO PARTICIPANTS. The Corporation shall make
available to all holders of options the information required pursuant
toss.260.140.46 of the California Code of Regulations.
As adopted by the Board of Directors on December 13, 2000.
MITEK SYSTEMS, INC., a Delaware corporation
By:
----------------------------------------
John M. Thornton, Chairman
21
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EXHIBIT A
____________, 2000
Mitek Systems, Inc.
10070 Carroll Canyon Road
San Diego, California 92131
Re: 2000 Stock Option Plan
To Whom It May Concern:
This letter is delivered to Mitek Systems, Inc., a Delaware corporation (the
"Corporation"), in connection with the grant to (the "Optionee") of an option
(the "Option") to purchase _____ shares of common stock of the Corporation
(the "Stock") pursuant to the Mitek Systems, Inc. 2000 Stock Option Plan
dated December 13, 2000 (the "Plan"). The Optionee understands that the
Corporation's receipt of this letter executed by the Optionee is a condition
to the Corporation's willingness to grant the Option to the Optionee.
The Optionee acknowledges that the grant of the Option by the Corporation is
in lieu of any and all other promises of the Corporation to the Optionee,
whether written or oral, express or implied, regarding the grant of options
or other rights to acquire Stock. Accordingly, in anticipation of the grant
of the Option, the Optionee hereby relinquishes all rights to such other
rights, if any, to acquire stock of the Corporation.
In addition, the Optionee makes the following representations and warranties
with the understanding that the Corporation will rely upon them.
1. The Optionee acknowledges receipt of a copy of the Plan and
Agreement. The Optionee has carefully reviewed the Plan and Agreement.
2. The Optionee acknowledges receipt of a prospectus regarding the
Plan which includes the information required by Section (a)(1) of Rule 428
under the Securities Act of 1933.
3. The Optionee understands and acknowledges that the Option and the
Stock are subject to the terms and conditions of the Plan.
4. The Optionee understands and agrees that, at the time of exercise
of any part of the Option for Stock, the Optionee may be required to provide
the Corporation with additional representations, warranties and/or covenants
similar to those contained in this letter.
5. The Optionee is a resident of the State of __________.
6. The Optionee will notify the Corporation immediately of any
change in the above information which occurs before the Option is exercised
in full by the Optionee.
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<PAGE>
The foregoing representations and warranties are given on __________,
2000 at _____________.
OPTIONEE:
-------------------------------
EXHIBIT B
____________, 2000
Mitek Systems, Inc.
10070 Carroll Canyon Road
San Diego, California 92131
Re: 2000 STOCK OPTION PLAN
To Whom It May Concern:
I (the "Optionee") hereby exercise my right to purchase shares of common
stock (the "Stock") of Mitek Systems, Inc., a Delaware corporation (the
"Corporation"), pursuant to, and in accordance with, the Mitek Systems, Inc.
2000 Stock Option Plan dated December 13, 2000 (the "Plan") and Stock Option
Agreement (the "Agreement") dated , 2000. As provided in such Plan, I deliver
herewith payment as set forth in the Plan in the amount of the aggregate
option exercise price. Please deliver to me at my address as set forth above
stock certificates representing the subject shares registered in my name (and
(spouse), as (style of vesting)).
The Optionee hereby represents and agrees as follows:
1. The Optionee acknowledges receipt of a copy of the Plan and
Agreement. The Optionee has carefully reviewed the Plan and Agreement.
2. The Optionee is a resident of the State of __________.
3. The Optionee represents and agrees that if the Optionee is an
"affiliate" (as defined in Rule 144 under the Securities Act of 1933) of the
Corporation at the time the Optionee desires to sell any of the Stock, the
Optionee will be subject to certain restrictions under, and will comply with
all of the requirements of, applicable federal and state securities laws.
The foregoing representations and warranties are given on ___________________
at ______________________.
OPTIONEE:
-------------------------------
23
<PAGE>
--------------------------------------------------------------------------------
PROXY
MITEK SYSTEMS, INC.
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 7, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John M. Thornton and Noel Flynn as proxies, each
with power to act without the other and with power of substitution, and
hereby authorizes them to represent and vote, as designated on the other side,
all the shares of stock of Mitek Systems, Inc. standing in the name of the
undersigned with all power which the undersigned would possess if present at the
Annual Meeting of Stockholders of the Company to be held February 7, 2001 or any
adjournment thereof.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
--------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
ANNUAL
MEETING OF
STOCKHOLDERS
FEBRUARY 7, 2001
San Diego Marriott La Jolla
4240 La Jolla Village Dr.
La Jolla, CA 92037
--------------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL 1, 2 AND 3.
Please mark
your votes as /X/
indicated in
this example
1. ELECTION OF DIRECTORS
FOR all nominees listed to the right except as marked (to the
contrary) / /
WITHHOLD AUTHORITY To vote for all nominees listed to the right / /
NOMINEES: John M. Thornton, Sally B. Thornton, Daniel E. Steimle,
James B. DeBello, Gerald I. Farmer
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
---------------------------------------------------------------------
2. To Ratify the Adoption of the Company's 2000 Stock Option Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. Ratify the appointment of Deloitte & Touche LLP as the Company's 2001
Auditors.
FOR AGAINST ABSTAIN
/ / / / / /
FOR AGAINST ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please sign exactly as name appears below. When
shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by
President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Date:__________________________________, 2001
-------------------------------------------
(Signature)
-------------------------------------------
(Signature if held jointly)
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
--------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
Admission Ticket
ANNUAL MEETING
OF
MITEK SYSTEMS, INC.
STOCKHOLDERS
WEDNESDAY, FEBRUARY 7, 2001
1:00 P.M.
SAN DIEGO MARRIOTT LA JOLLA
4240 LA JOLLA VILLAGE DR.
LA JOLLA, CA 92037
===================================================================
AGENDA
* Election of Directors
* Ratify the adoption of the Company's 2000 Stock Option Plan
* Ratify the appointment of Deloitte & Touche LLP as auditors
* Report on the progress of the corporation
* Informal discussion among stockholders in attendance
===================================================================
--------------------------------------------------------------------------------
