Item 1.01. Entry into a Material Definitive Agreement.
Convertible Notes and the Indenture
On February 2, 2021, Mitek Systems, Inc. (the "Company") priced its private
offering of $135,000,000 million in aggregate principal amount of 0.750%
Convertible Senior Notes due February 1, 2026 (the "Notes"). The offering size
was increased from the previously announced offering size of $125,000,000
aggregate principal amount of Notes. The Notes are senior unsecured obligations
of the Company. The Notes were issued pursuant to an Indenture, dated February
5, 2021 (the "Indenture"), between the Company and UMB Bank, National
Association, as trustee. The Indenture includes customary covenants and sets
forth certain events of default after which the Notes may be declared
immediately due and payable and sets forth certain types of bankruptcy or
insolvency events of default involving the Company after which the Notes become
automatically due and payable. The Company also granted the Initial Purchasers
(as defined below) of the Notes a 13-day option to purchase up to an additional
$20.25 million aggregate principal amount of the Notes (the "Additional Notes"),
which was exercised in full. The Notes were purchased in a transaction that was
completed on February 5, 2020.
The Notes will mature on February 1, 2026, unless earlier redeemed, repurchased
or converted. The Notes will bear interest from August 1, 2021 at a rate of
0.750% per year payable semiannually in arrears on February 1 and August 1 of
each year, beginning on August 1, 2021. The Notes will be convertible at the
option of the holders at any time prior to the close of business on the business
day immediately preceding August 1, 2025, only under the following
circumstances: (1) during any calendar quarter commencing after the calendar
quarter ending on June 30, 2021, if the last reported sale price per share of
the Company's common stock, $0.001 par value (the "Common Stock") exceeds 130%
of the conversion price for each of at least 20 trading days during the 30
consecutive trading days ending on, and including, the last trading day of the
immediately preceding calendar quarter; (2) during the five consecutive business
days immediately after any five consecutive trading day period (such five
consecutive trading day period, the "measurement period") in which the trading
price per $1,000 principal amount of notes for each trading day of the
measurement period was less than 98% of the product of the last reported sale
price per share of the Common Stock on such trading day and the conversion rate
on such trading day; (3) upon the occurrence of certain corporate events or
distributions on the Common Stock. On or after August 1, 2025, until the close
of business on the second scheduled trading day immediately preceding the
maturity date, holders may convert all or any portion of their Notes, in
multiples of $1,000 principal amount, at the option of the holder regardless of
the foregoing circumstances. Upon conversion, the Company may satisfy its
conversion obligation by paying and/or delivering, as the case may be, cash and,
if applicable at the Company's election, shares of the Common Stock, based on
the applicable conversion rate(s); provided that the Company will be required to
settle conversions solely in cash unless and until the Company (i) receives
stockholder approval to increase the number of authorized shares of the Common
Stock and (ii) reserves such amount of shares of the Common Stock for future
issuance as required pursuant to the indenture that will govern the Notes. The
conversion rate for the Notes will initially be 47.9731 shares of the Common
Stock per $1,000 principal amount of Notes, which is equivalent to an initial
conversion price of approximately $20.85 per share of the Common Stock. The
initial conversion price of the Notes represents a premium of approximately
37.5% to the $15.16 per share last reported sale price of the Common Stock on
February 2, 2021. The conversion rate is subject to adjustment under certain
circumstances in accordance with the terms of the Indenture.
The Company may not redeem the Notes prior to maturity.
Upon the occurrence of a fundamental change (as defined in the Indenture) prior
to the maturity date, subject to certain conditions, holders may require the
Company to repurchase all or a portion of the Notes for cash at a price equal to
the principal amount of the Notes to be repurchased, plus any accrued and unpaid
interest to, but excluding, the fundamental change repurchase date.
The Notes are the Company's senior unsecured obligations and will rank equal in
right of payment with the Company's future senior, unsecured indebtedness,
senior in right of payment to the Company's future indebtedness that is
expressly subordinated to the notes and effectively subordinated to the
Company's future secured indebtedness, to the extent of the value of the
collateral securing that indebtedness.
The following events are considered "events of default" with respect to the
Notes, which may result in the acceleration of the maturity of the Notes:
(1) the Company defaults in any payment when due (whether at maturity or
repurchase upon fundamental change or otherwise) of the principal of or
fundamental change repurchase price for, any note;
(2) the Company defaults for 30 consecutive days in the payment when due of
interest on any note;
(3) failure by the Company to give a fundamental change notice or notice of a
specified corporate transaction in accordance with the provisions of the
Indenture when due with respect to the Notes, and such failure continues for
three business days;
(4) failure by the Company to comply with its obligation to convert the Notes in
accordance with the Indenture upon exercise of a holder's conversion right, and
such failure continues for three business days;
(5) failure by the Company to comply with any of its obligations under the
Indenture with respect to consolidation, merger, sale, conveyance, transfer, and
lease of assets of the Company;

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(6) failure by the Company for 60 days after written notice from the Trustee or
the holders of at least 25% in aggregate principal amount of the Notes then
outstanding has been received to comply with any of its other agreements
contained in the Notes or the Indenture;
(7) default by the Company or any significant subsidiary (as defined in the
Indenture) with respect to any mortgage, agreement, or other instrument under
which there may be outstanding, or by which there may be secured or evidenced,
any indebtedness for money borrowed in excess of $15.0 million (or its foreign
currency equivalent) in the aggregate of the Company and/or such significant
subsidiary, whether such indebtedness now exists or is hereafter created (i)
resulting in such indebtedness becoming or being declared due and payable prior
to its stated maturity or (ii) constituting a failure to pay the principal of
any such debt when due and payable at its stated maturity, upon required
repurchase, upon declaration of acceleration or otherwise, in each case, after
the expiration of any applicable grace period, and, in either case if such
acceleration shall not have been rescinded or annulled or such failure to pay or
default shall not have been cured or waived, or such indebtedness shall not have
been paid or discharged, as the case may be, within 30 days after written notice
to the Company by the Trustee or to the Company and the Trustee by holders of at
least 25% in aggregate principal amount of Notes then outstanding in accordance
with the Indenture;
(8) one or more final judgements being rendered against the Company or any
subsidiaries for the payment of at least $15.0 million (or its foreign currency
equivalent) in the aggregate (excluding any amounts covered by insurance), where
such judgment is not waived, paid, discharged or stayed within 60 days after (i)
the date on which the right to appeal the same has expired, if no such appeal
has commenced; or (ii) the date on which all rights to appeal have been
extinguished; and
(9) certain events of bankruptcy, insolvency, or reorganization of the Company
or any significant subsidiary.
If such an event of default, other than an event of default described in clause
(9) above with respect to the Company, occurs and is continuing, the Trustee by
notice to the Company, or the holders of at least 25% in aggregate principal
amount of the outstanding Notes by notice to the Company and the Trustee, may
declare 100% of the principal of and accrued and unpaid interest, if any, on all
the Notes then outstanding to be due and payable. If an event of default
described in clause (9) above with respect to the Company occurs, 100% of the
principal of and accrued and unpaid interest on the Notes then outstanding will
automatically become due and payable without any further action or notice by any
person.
A copy of the Indenture and the form of the Note are attached as Exhibits 4.1
and 4.2, respectively, to this Current Report on Form 8-K and are incorporated
herein by reference. The foregoing description of the Indenture and Notes does
not purport to be complete and is qualified in its entirety by reference to the
full text in such exhibits.
The net proceeds from this offering were approximately $149.9 million, after
deducting the Initial Purchasers' discounts and commissions and the Company's
estimated offering expenses related to the offering. The Company used
approximately $9.3 million of the net proceeds from the offering to pay the cost
of the Hedge Transactions (as defined below) (after such cost is partially
offset by the proceeds from the Warrant Transactions described below). The
Initial Purchasers exercised their option to purchase Additional Notes in full
and the Company used a portion of the net proceeds from the sale of such
Additional Notes to enter into additional Hedge Transactions (after such cost is
partially offset by the proceeds from the additional Warrant Transactions) with
the Option Counterparties (as defined below). The Company intends to use the
remainder of the net proceeds from the offering for general corporate purposes,
which may include working capital, capital expenditures, and potential
acquisitions and strategic transactions. From time to time, the Company
evaluates potential acquisitions and strategic transactions of businesses,
technologies or products. However, the Company has not designated any specific
uses and the Company currently has no binding agreements with respect to any
material acquisition or strategic transaction.
Convertible Note Hedge Transactions and Warrant Transactions
In connection with the pricing of the Notes, the Company has entered into
privately negotiated convertible note hedge transactions (the "Hedge
Transactions") with Bank of America, N.A., Jefferies International Limited and
Goldman Sachs & Co. LLC (the "Option Counterparties"). The Hedge Transactions
cover, subject to anti-dilution adjustments substantially similar to those
applicable to the Notes, the aggregate number of shares of Common Stock that
initially underlie the Notes. The Company also entered into separate, privately
negotiated warrant transactions (the "Warrant Transactions") with the Option
Counterparties relating to the same number of shares of the Common Stock,
subject to customary anti-dilution adjustments. The strike price of the Warrant
Transactions will initially be $26.53 per share, which represents a 75.0%
premium to the last reported sale price of the Common Stock on The NASDAQ
Capital Market on February 2, 2021, and is subject to certain adjustments under
the terms of the Warrant Transactions. In addition, the initial purchasers
exercised their option to purchase additional Notes in full, and the Company
entered into additional Warrant Transactions with the Option Counterparties and
used a portion of the net proceeds from the sale of the additional Notes and
from the sale of the additional warrants to enter into additional Hedge
Transactions with the Option Counterparties. The Hedge Transactions are expected
generally to reduce the potential dilution with respect to the Common Stock
and/or offset any cash payments the Company is required to make in excess of the
principal amount of converted Notes, as the case may be, upon the conversion of
the Notes in the event that the market price of the Common Stock is greater than
the strike price of the Hedge Transactions. However, the Warrant Transactions
could separately have a dilutive effect with respect to the Common Stock to the
extent that the market price per share of the Common Stock exceeds the
applicable strike price of the warrants on any expiration date of the warrants.

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In connection with establishing their initial hedges of the Hedge Transactions
and Warrant Transactions, concurrently with, or shortly after, the pricing of
the Notes, the Option Counterparties or their respective affiliates expect to
enter into various derivative transactions with respect to the Common Stock
and/or purchase shares of the Common Stock, and shortly after the pricing of the
Notes, may purchase the Common Stock in secondary market transactions. These
activities could have the effect of increasing, or reducing the size of any
decrease in, the market price of the Common Stock or the Notes at that time. In
addition, the Option Counterparties or their respective affiliates may modify
their hedge positions by entering into or unwinding various over-the-counter
derivative transactions with respect to the Common Stock and/or by purchasing or
selling the Common Stock or other securities of the Company, including the
Notes, in secondary market transactions following the pricing of the Notes and
from time to time prior to the maturity of the Notes (and are likely to do so
during any "observation period" (as that term will be defined in the indenture
that will govern the Notes) related to a conversion of Notes). Any of these
hedging activities could cause or avoid an increase or a decrease in the market
price of the Common Stock or the Notes, which could affect the ability of
holders of the Notes to convert the Notes and, to the extent the activity occurs
during any observation period related to a conversion of the Notes, it could
affect the number of shares, if any, of common stock and value of the
consideration that holders of the Notes will receive upon conversion of the
Notes.
The Option Counterparties may choose to engage in, or to discontinue engaging
in, any of these transactions with or without notice at any time, and their
. . .


Item 9.01 Financial Statements and Exhibits.
Exhibits. The exhibits shall be deemed to be filed or furnished, depending on
the relevant item requiring such exhibit, in accordance with the provisions of
Item 601 of Regulation S-K (17 CFR 229.601) and Instruction B.2 to this form.
Exhibit Number             Description
                 4.1       Indenture, dated as of February 5, 2021, between

Mitek Systems, Inc. and UMB

Bank, National Association
                 4.2       Form of 0.750% Convertible Senior Notes due 2026

(included in Exhibit 4.1)


                10.1       Form of Convertible Note Hedge Transaction Confirmation
                10.2       Form of Warrant Transaction Confirmation
                99.1       Mitek Systems, Inc. Press Release, dated February 1, 2021
                99.2       Mitek Systems, Inc. Press Release, dated February 2, 2021
                 104       Cover Page Interactive Data File, formatting

Inline Extensible Business


                           Reporting Language (iXBRL)

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