IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Alexandria Division
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: Civil Action No. 00-473-A
In re MICROSTRATEGY SECURITIES :
LITIGATION :
:
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MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding ("MOU") contains the material
terms of a proposed partial settlement (the "Settlement") of the
above-captioned consolidated action (the "Action") by Lead Plaintiffs
Akiko Minami, Atsukuni Minami and Local 144 Pension Fund, on behalf
of themselves and the Certified Class and Settlement Subclass (as
defined below) and defendants MicroStrategy Incorporated
("MicroStrategy"), Michael J. Saylor, Sanju K. Bansal, Mark S. Lynch,
Stephen S. Trundle, Ralph S. Terkowitz and Frank A. Ingari (the
"Individual Defendants") (collectively the "Settling Defendants") by
and through their respective counsel. Nothing in this MOU shall be
deemed to release defendant PricewaterhouseCoopers LLP, including its
successors in interest ("PWC" or the "Non-Settling Defendant") from
any claims or liability in the Action or to otherwise affect or
extinguish any claims against PWC. (The Settling Defendants and PWC
are collectively referred to as the "Defendants," and the Lead
Plaintiffs and members of the Certified Class and Settlement Subclass
are collectively referred to as the "Plaintiffs".)
1. This MOU is binding upon the parties hereto, subject to the
provisions of paragraph 10 hereof. The Settling Defendants and Lead
Plaintiffs (collectively, with all other Plaintiffs, the "Settling
Parties") will cooperate expeditiously and in good faith to prepare a
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Stipulation of Settlement and accompanying papers which shall embody
the terms set forth herein and such other and consistent terms as are
agreed upon by counsel for the Settling Parties.
2. Pursuant to this MOU, the Settling Parties have agreed to a
settlement of claims brought (as defined in more detail below) by
members of the Certified Class and Settlement Subclass as defined
below:
(a) The Certified Class shall consist of all persons and
entities who, during the period June 11, 1998 through
March 20, 2000, inclusive (the "Class Period"),
purchased MicroStrategy common stock or call options
or sold MicroStrategy put options, and who allegedly
were damaged thereby. The definition of the Certified
Class is consistent with the Class defined in the
Stipulation and Agreement Regarding Class
Certification, entered into by the Parties on or about
August 10, 2000, and subsequently approved by the
Court on August 10, 2000.
(b) The Settlement Subclass shall consist of all persons
and entities who, during the Class Period, purchased
MicroStrategy common stock contemporaneously (to be
defined in the Stipulation of Settlement) with sales
of MicroStrategy common stock by any of the Individual
Defendants. The definition of the Settlement Subclass
represents a modification of the Subclass defined in
the Stipulation and Agreement Regarding Class
Certification, entered into by the Parties on or about
August 10, 2000, and subsequently approved by the
Court on August 10, 2000. The Parties will request
the Court to certify the Settlement Subclass, as
modified from the
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Court's prior Order, solely for the
purposes of the Settlement contemplated herein.
Excluded from the Certified Class and Settlement Subclass are
Defendants, any person, firm, trust, corporation or other individual
or entity in which any Defendant has a controlling interest or which
is related to or affiliated with any of the Defendants, the partners,
principals, officers, directors, employees, affiliates, legal
representatives, heirs, predecessors, successors and assigns of
Defendants, and the immediate family members of any such individual.
3. In exchange for a release by Plaintiffs in the Action, as
described in paragraph 7 below, the Settling Defendants agree to
deliver, at the direction of Milberg Weiss Bershad Hynes & Lerach LLP
and Wolf Haldenstein Adler Freeman & Herz LLP ("Plaintiffs' Co-Lead
Counsel"), the consideration in the form described in Exhibit A
hereto, which is incorporated by reference in this MOU. The
consideration set forth in Exhibit A will have an estimated fair
market value, as of the date of the Settlement Hearing (as described
in paragraph 17), of one hundred thirty seven million five hundred
thousand dollars ($137,500,000) (the "Settlement Consideration").
4. As soon as practicable after the Effective Date (as defined
below), the Settling Defendants shall deliver the Settlement
Consideration as directed by Plaintiffs' Co-Lead Counsel. The
Effective Date shall be the date by which all of the following have
occurred: (1) the Settlement has been approved in all material
respects by the Court; (2) an Order and Final Judgment, reflecting
the terms of this MOU, has been entered by the Court and not vacated
or modified in any way that affects any party's rights or obligations
hereunder, upon appeal or otherwise; and (3) either (i) the time to
appeal or otherwise seek review of the Order and Final Judgment has
expired without any appeal having been taken or review sought, or
(ii) if an appeal
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is taken or review sought, the expiration of five days after an appeal or review
shall have been finally determined by the highest court before which appeal or
review is sought which upholds the terms of the Stipulation and/or an Order and
Final Judgment and is not subject to further judicial review.
5. MicroStrategy shall pay in cash the costs of notice and
administration of the Settlement up to a maximum of seven hundred and
fifty thousand dollars ($750,000) as and when incurred (not including
any attorneys' fees or expenses, which fees and expenses shall be
payable from the Notes, Class A Shares and Warrants, as may be
approved by the Court). If the costs of notice and administration of
the Settlement exceed seven hundred and fifty thousand dollars
($750,000) (such excess over seven hundred and fifty thousand dollars
($750,000) to be referred to as the "Excess Amount"), MicroStrategy
shall pay such costs as and when incurred and shall be entitled to a
credit equal to the Excess Amount against the installment of interest
on the Notes next due, to be applied against the Notes then
outstanding on a pro rata basis. If the Excess Amount exceeds the
amount of interest next due, MicroStrategy may at its option either
reduce the principal of the balance of the Notes then outstanding on
a pro rata basis by the balance of the Excess Amount not previously
applied or apply such amount against subsequent installments of
interest. MicroStrategy shall not be entitled to any refund or
reimbursement of the costs of notice and administration in the event
that the Settlement is not approved, terminated or does not become
final and effective for any reason. The notice and administration
shall be performed by a Claims Administrator. The Claims
Administrator shall be selected by Plaintiffs' Co-Lead Counsel. The
Claims Administrator's performance shall be under the sole
supervision of Plaintiffs' Co-Lead Counsel. MicroStrategy shall (i)
provide information from MicroStrategy's transfer records concerning
the identity of members of the Certified Class and Settlement
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Subclass and their transactions, and (ii) issue the Notes, Class A
common stock, and Warrants, as directed by Plaintiffs' Co-Lead
Counsel, and, if applicable, cash or other consideration as provided
in Exhibit A hereto.
6. As soon as practicable after the Effective Date, the
Settlement Consideration (after deduction of plaintiffs' attorneys'
fees and litigation expenses as approved by the Court and any taxes
and related expenses) will be distributed to the Certified Class and
Settlement Subclass pursuant to a plan of distribution and allocation
to be set forth in the Stipulation of Settlement, subject to Court
approval at the Settlement Hearing.
7. In exchange for settlement of this Action against the
Settling Defendants, and conditioned upon the Settlement becoming
effective, the settlement documents, including, without limitation,
the Order and Final Judgment, shall provide for a release by
Plaintiffs (excluding any persons or entities who timely and properly
exclude themselves from the Certified Class and Settlement Subclass)
in the form described in Exhibit B hereto, which is incorporated by
reference in this MOU. The Order and final Judgment shall also
provide a contribution bar order as provided in Exhibit B. In
exchange for settlement of this Action against the Settling
Defendants, and conditioned upon the Settlement becoming effective,
the settlement documents, including without limitation, the Order and
Final Judgment, shall provide for a release by the Settling
Defendants of Plaintiffs and Plaintiffs' Counsel in the form as also
described in Exhibit B hereto. If, prior to the execution of the
Stipulation of Settlement, any party to this MOU wishes to propose
any modification to the terms of, the parties to, or the form of the
releases attached as Exhibit B, the parties agree to negotiate in
good faith to attempt to resolve that issue. In the absence of a
mutually agreeable modification of the release, the Settling Parties
agree to the forms of releases in Exhibit B.
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8. As part of the Settlement, all claims against the Settling
Defendants by Plaintiffs (excluding any persons or entities who
timely and properly exclude themselves from the Certified Class and
Settlement Subclass) will be dismissed with prejudice in the Action
pursuant to an appropriate order under Fed. R. Civ. P. Rule 54(b) and
Plaintiffs (excluding any persons or entities who timely and properly
exclude themselves from the Certified Class and Settlement Subclass)
shall be deemed to have released such claims and will be enjoined
from any further prosecution thereof.
9. As part of the Settlement, the Settling Defendants shall
provide mutually agreeable confirmatory discovery as set forth, inter
alia, in a separate letter agreement. As part of the Settlement, the
Settling Parties shall also execute a separate letter agreement
providing that MicroStrategy may, at its sole option, terminate the
Settlement if securities (common stock, calls and puts) representing
losses of more than an agreed dollar amount opt out of the Certified
Class and/or Settlement Subclass.
10. The following are express conditions precedent to the
effectiveness of the Settlement: (i) completion of Plaintiffs'
confirmatory discovery; (ii) negotiation and execution of the
Stipulation of Settlement and accompanying documents; (iii)
certification of the Settlement Subclass as defined herein, to which
the parties hereby stipulate, subject to Court approval; (iv)
approval of the Settlement and entry of an Order and Final Judgment
substantially in the form as will be annexed to the Stipulation of
Settlement; (v) the Settlement becomes final because of the
exhaustion of any and all appeals or the time to appeal from final
District Court approval; and (vi) the securities constituting the
Settlement Consideration are validly issued pursuant to Section
3(a)(10) or, in lieu thereof, there shall be filed an effective
registration statement covering the
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securities (subject to the provisions of section 4 of Exhibit A), or a no-action
letter will be obtained from the Securities and Exchange Commission
covering such issuance.
11. Except as expressly provided in paragraph 5, above, with
respect to the payment of the costs of notice and administration and
the continuing obligations contained in this paragraph, if the
Settlement is terminated or is not approved by the Court, or for any
reason the Effective Date does not occur: (i) the Settlement shall be
without prejudice, and none of its terms (including the forms of
releases provided in paragraph 7) shall be effective or enforceable;
(ii) the Settling Parties shall revert to their litigation positions
immediately prior to the execution of this MOU; and (iii) the fact
and terms of this Settlement shall not be used for any purpose in
connection with the trial or prosecution of this Action or for any
purpose in any other action or proceeding not directly related to the
Settlement.
12. Plaintiffs' Co-Lead Counsel shall make an application for
an award of attorneys' fees and reimbursement of litigation expenses,
plus accruing interest thereon, to be paid solely from the Settlement
Consideration.
13. The Settling Defendants shall take no position on and shall
neither interfere with nor delay the efforts by Plaintiffs to pursue
any claims they may have against any actual or potential party to
this action or any other person or entity. Nor shall the Settling
Defendants materially aid or assist any actual or potential party to
this action or any other person or entity in their or its defense of
this Action. Notwithstanding anything to the contrary in this MOU or
accompanying exhibits, nothing herein shall prevent the Settling
Defendants from defending the rights or protecting the interests of
any Released Party (as defined in Exhibit B hereto). If the
Settlement is approved and becomes final, the Settling Defendants,
shall, at the request of Plaintiffs' Co-Lead Counsel, be subject to
formal discovery and trial testimony in connection
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with any remaining claims asserted in this Action as if they were parties to the
continuing action, such that non-party discovery procedures against them will
not be necessary. If requested by Plaintiffs' Co-Lead Counsel, the Settling
Defendants shall further direct their employees to provide discovery and trial
testimony in this Action as if the employees were parties to the continuing
action. Settling Defendants shall assist Plaintiffs' Co-Lead Counsel in locating
former employees and securing their testimony. Settling Defendants shall not
interpose the terms of any confidentiality agreements with such former employees
which might interfere with the former employees' candid discussions with
Plaintiffs' Co-Lead Counsel or their testimony. Settling Defendants shall
relieve former employees from the obligations of any confidentiality agreements
insofar as they would interfere with or obstruct those employees' discussions
with Plaintiffs' Co-Lead Counsel or their testimony. Any information provided
pursuant to this paragraph shall be subject to a mutually agreeable
confidentiality agreement or, in the absence of such an agreement, an order of
the Court.
14. Nothing contained in this MOU, the Stipulation of
Settlement, or other agreements executed in connection with the
Settlement shall be construed as an admission (i) by any Settling
Defendant of any alleged liability, fault or wrongdoing whatsoever of
the Settling Defendants or any of them, or (ii) by any member of the
Certified Class or Settlement Subclass that their claims are without
merit or lack validity.
15. Subject to MicroStrategy's obligations under the securities
laws, the Settling Parties agree to consult with each other prior to
issuing any public announcement or similar public statement
concerning the Settlement until the earlier of the filing of the Form
10-K or Form 10-Q following the Effective Date of the Settlement.
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16. This MOU may be executed in counterparts, including by
signature transmitted by facsimile. Each counterpart when so
executed shall be deemed to be an original, and all such counterparts
together shall constitute the same instrument. The terms of this MOU
and Settlement shall inure to and be binding upon the Settling
Parties, their insurer(s) and their successors in interest.
17. The Settlement shall be presented to the Court for a
settlement hearing (the "Settlement Hearing") as soon as practicable.
18. Each of the signatories hereto hereby represents and
confirms that he/she has the necessary authority to execute this MOU
on behalf of each and every one of his/her respective clients and
will use his, her or its best efforts to take such other steps as are
necessary to implement the proposed Settlement.
Dated: October 23, 2000
MILBERG WEISS BERSHAD HYNES &
LERACH LLP
By /s/ Melvyn I. Weiss
-----------------------
Melvyn I. Weiss
Steven G. Schulman
One Pennsylvania Plaza
New York, NY 10119
Tel: (212) 594-5300
WOLF HALDENSTEIN ADLER
FREEMAN & HERZ LLP
By /s/ Daniel Krasner
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Daniel Krasner
Fred Taylor Isquith
270 Madison Avenue
New York, NY 10016
Tel: (212) 545-4600
Co-Lead Counsel for Plaintiffs
WILLLAMS & CONNOLLY LLP
By /s/ John K. Villa
---------------------
Brendan V. Sullivan, Jr.
John K. Villa
Steven M. Farina
725 12th Street, N.W.
Washington, D.C. 20005
Tel: (202) 434-5000
Counsel for Defendants
MicroStrategy Incorporated,
Michael J. Saylor, Sanju K. Bansal, Mark
S. Lynch, Stephen S. Trundle, Ralph S.
Terkowitz and Frank A. Ingari
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Exhibit A
Settlement Amount
and Payment Method: 1. Notes: From the date of issuance (as
defined in section 5 below) five-year, unsecured
promissory Notes (face amounts in $100 multiples)
issued by MicroStrategy having an aggregate
principal amount of eighty million five hundred
thousand dollars ($80,500,000) bearing interest
from the date of commencement of the Settlement
Hearing at a rate of seven and one-half percent
(7.5%) per annum, payable solely in cash, with
interest originally accruing and compounding
annually until six (6) months after the date of
issuance of the first Notes to be issued
hereunder and to be paid on that date and,
thereafter, accruing semi-annually and payable
semi-annually in arrears. The Notes shall be
issued pursuant to Section 3(a)(10) of the
Securities Act and shall not constitute
"restricted securities." In the event that the
Notes cannot be issued pursuant to Section
3(a)(10), MicroStrategy shall take such steps as
are necessary to permit such issuance, or, in
lieu thereof, shall file a registration statement
covering the issuance of the Notes or seek a "no
action" letter from the Securities and Exchange
Commission covering such issuance. The Notes may
be prepaid at any time, upon thirty (30) days
prior written notice, in whole or in part on a
pro rata basis, without premium or penalty, and
may be mandatorily converted at the option of
MicroStrategy at any time, upon thirty (30) days
prior written notice, in whole or in part on a
pro rata basis, without premium or penalty except
as described herein, into MicroStrategy Class A
common stock. The combination of prepayments,
mandatory conversions and purchases in the open
market by MicroStrategy shall not reduce the
total original issue by more than forty percent
(40%) unless the entire issue shall be prepaid,
converted and/or purchased
by MicroStrategy. MicroStrategy shall not
mandatorily convert the Notes while a petition in
bankruptcy relating to MicroStrategy is pending
and not discharged or stayed. If notice of a
mandatory conversion is given during the thirty
(30) day period prior to the filing date of a
petition in bankruptcy relating to MicroStrategy,
then the conversion will take place five (5) days
after the petition is discharged or stayed or
thirty (30) days after the notice, whichever is
later.
If the Notes are converted into shares of Class
A common stock, they shall be converted into such
number of shares as would be determined by dividing
the principal and accrued but unpaid interest on
the Notes to be converted by an amount equal to
eighty percent (80%) of the dollar weighted
average trading price per share for all round lot
transactions in the stock on the Nasdaq National
Market for the ten (10) trading days ending two
(2) days prior to the date of the written
notice. MicroStrategy shall not mandatorily
convert the Notes if, during the ten (10) day
period used for calculating the conversion price,
MicroStrategy, any member of the MicroStrategy
Board of Directors or any MicroStrategy officer
subject to the requirements of Section 16 of the
Securities and Exchange Act of 1934 has
purchased shares of Class A common stock
(excluding any issuance of stock to any officer
or director of MicroStrategy pursuant to any
MicroStrategy stock option, employee stock
purchase or similar plan or rights plan in effect
on the date of the commencement of the Settlement
Hearing or subsequently approved by
MicroStrategy's Board of Directors, or any
exercises of options or rights issued under such
plans). The Notes will be subordinated to all
present and future (a) secured indebtedness and
(b) unsecured institutional indebtedness
evidenced by promissory notes. The Notes will
rank pari passu with all other indebtedness. The
Notes will contain only covenants for timely
payment of principal and interest and for
maintenance of
MicroStrategy's corporate existence. The Notes will
be tenderable in lieu of cash on the exercise of
the Warrants provided herein, at a value equal
to 133% of the sum of par value plus interest
accrued to the date of the tender but unpaid.
The Notes will be issued pursuant to an indenture
with the indenture trustee being a financial
institution mutually satisfactory to MicroStrategy
and Plaintiffs' Co-Lead Counsel. Events of default
under the indenture will be a failure to pay
principal or interest when due and filing of a
bankruptcy petition relating to MicroStrategy that
remains undischarged or unstayed for a period of
sixty (60) days. The Notes shall also contain
provisions concerning any change of control or
sale of all or substantially all MicroStrategy
assets such that any buyer must assume the Notes
and the stock provisions to be translated into
the acquirer's stock.
In the event any Plaintiff would be entitled
to a fractional share of a $100 Note (after adding
any increase to the principal amount in lieu of
any fractional Class A share and/or Warrant as
provided below) MicroStrategy shall be entitled,
in lieu thereof, at MicroStrategy's option,
either to pay cash or to issue additional shares
of Class A common stock valued at the dollar
weighted average trading price per share for all
round lot transactions in the stock on the Nasdaq
National Market for the twenty (20) trading days
ending two (2) days prior to the date on which
the shares are distributed to the Plaintiff.
2. Common Stock: Five hundred fifty thousand (550,000) shares
of MicroStrategy Class A common stock to be
contributed by MicroStrategy and, directly or
indirectly through MicroStrategy, Michael Saylor,
Sanju Bansal and Mark Lynch. The respective
contributions of Messrs. Saylor, Bansal and Lynch
shall be limited to those set out in a letter to
be delivered to Plaintiffs' Co-Lead Counsel
concurrently with the execution of the MOU. The
contribution obligations of Messrs. Saylor,
Bansal and Lynch set forth in the letter shall be
several, and
not joint and several, obligations and shall have
a total value of ten million dollars ($10,000,000)
with the total number of shares to be
contributed to be determined by dividing that ten
million dollars ($10,000,000) by the Trading
Price (defined below). All the shares shall be
issued pursuant to Section 3(a)(10) of the
Securities Act and shall not constitute
"restricted securities." In the event that the
shares cannot be issued pursuant to Section
3(a)(10), MicroStrategy shall take such steps as
are necessary to permit such issuance, or, in
lieu thereof, shall file a registration statement
covering the issuance of the shares or seek a "no
action" letter from the Securities and Exchange
Commission covering such issuance. The shares will
be valued at the dollar weighted average trading
price per share for all round lot transactions in
the stock on the Nasdaq National Market for the
twenty (20) trading days ending two (2) days
prior to the date that the Settlement Hearing
commences (the "Trading Price"). If the Trading
Price is less than thirty dollars ($30) per share,
then MicroStrategy will issue such number of
additional Class A common shares which, when
multiplied by the Trading Price, will yield a
product equal to the amount by which sixteen
million five hundred thousand dollars
($16,500,000) exceeds the product of five hundred
fifty thousand (550,000) multiplied by the
Trading Price. MicroStrategy shall issue and
deliver such shares as instructed by Plaintiffs'
Co-Lead Counsel, in whole or in part and from
time to time as instructed by Plaintiffs' Co-Lead
Counsel at MicroStrategy's sole expense. To
protect against dilution, the number of shares to
be issued will be increased based on a dollar
weighted average anti-dilution formula in the
event that MicroStrategy issues or sells any
equity securities or equity linked securities to
any person, for a price per Class A common share
less than the lesser of thirty dollars ($30) per
share or the Trading Price, provided, however,
that there shall be excluded from such
anti-
dilution protection (a) any issuance of options or
stock to any employee, officer, director or
consultant of MicroStrategy or any of its
subsidiaries pursuant to any MicroStrategy stock
option, employee stock purchase or similar plan or
rights plan in effect on the date of the
commencement of the Settlement Hearing or
subsequently approved by the MicroStrategy Board
of Directors, or any exercises of options or
rights issued under such plans, (b) shares of
stock issuable upon conversion of any shares of
Series A Preferred Stock outstanding on the date
of commencement of the Settlement Hearing or any
issuance of common stock in lieu of dividends
thereon, (c) shares of stock issuable upon the
conversion of shares of Class B common stock
outstanding as of the date of the commencement of
the Settlement Hearing, (d) shares of stock
issuable upon the exercise of any warrants which
are outstanding as of the date of the
commencement of the Settlement Hearing, (e) any
shares of equity securities issued as
consideration in a merger, combination or other
acquisition of any business or the assets of
such a business, (f) any shares of equity
securities issued in connection with any vendor,
lease or similar commercial arrangement, (g) any
shares of equity securities issued in connection
with any strategic alliance to the extent that
such shares constitute less than 5% (unless a
greater percentage is approved by Plaintiffs'
Co-Lead Counsel) of the common stock of
MicroStrategy (including both Class A and Class B
shares) issued and outstanding prior to such
issuance. The anti-dilution protection shall
apply only during the period beginning on the
date of the commencement of the Settlement
Hearing and ending sixty (60) days from the date
on which the District Court enters an order
approving the settlement described herein.
In the event any Plaintiff would be entitled to a
fractional share of Class A common stock,
MicroStrategy shall be entitled to pay cash
in lieu of the fractional share at the lesser of
thirty dollars ($30) per share or the Trading
Price or, in lieu thereof, at MicroStrategy's
option, to increase the principal amount of the
Notes distributable to the shareholder entitled
to the shares by the same amount.
3. Warrants: Warrants issued by MicroStrategy to purchase one
million nine hundred thousand (1,900,000) shares
of MicroStrategy Class A common stock at an
exercise price of fifty dollars ($50) per share.
The Warrants shall expire five years from the
date of issuance (as defined in section 5 below).
The Warrants shall be immediately exercisable,
immediately separable from the Notes, and
non-redeemable. The Warrants shall be issued
pursuant to Section 3(a)(10) of the Securities
Act and shall not constitute "restricted
securities." In the event that the Warrants
cannot be issued pursuant to Section 3(a)(10),
MicroStrategy shall take such steps as are
necessary to permit such issuance, or, in lieu
thereof, shall file a registration statement
covering the issuance of the Warrants or seek a
"no action" letter from the Securities and
Exchange Commission covering such issuance. The
Warrants shall be exercisable for cash, or in
lieu thereof, at the option of the holder, in
Notes provided herein valued at one hundred
thirty three percent (133%) of the sum of par
value plus interest accrued to the date of the
tender but unpaid.
The number and kind of securities purchasable upon
the exercise of each Warrant and the exercise
price will be subject to adjustment in the event
of a stock split or stock dividends on the Class
A common stock, reorganizations, recapitalizations
and reclassifications, and extraordinary
distributions of other property to holders of the
Class A common stock. Notwithstanding the
foregoing, there shall be no adjustment with
respect to any securities issued by MicroStrategy
upon conversion of any shares of Series A
Preferred Stock outstanding on the date of the
commencement of the Settlement
Hearing or any issuance of Class A common stock in
lieu of dividends on such Series A Preferred Stock.
In the event any Plaintiff would be entitled to a
fractional Warrant, MicroStrategy shall be
entitled to issue cash in lieu of fractional
Warrants with each Warrant valued at $21.0988 for
purposes of this calculation, or in lieu thereof,
at MicroStrategy's option, to increase the
principal amount of the Note distributable to the
Plaintiff entitled to the Warrants by the same
amount.
4. Registration and Listing Obligations: During the period
that any Warrants are outstanding, MicroStrategy
agrees that it will, at its sole cost, use its
best efforts to keep a registration statement
relating to the issuance of the Class A common
shares upon exercise of the Warrants effective
under the Securities Act; provided, however, that
MicroStrategy shall have the right in its sole
discretion to delay the effectiveness of any
registration statement or suspend offers and
sales under any effective registration statement,
at any time and for any period, if (a) such
action is required by applicable law, (b) the
effectiveness of a registration statement or the
continuation of offers and sales under a
registration would require MicroStrategy to
disclose a material financing, acquisition or
other corporate development and MicroStrategy's
Board of Directors (or where due to the nature of
the circumstances, timely consultation with the
Board of Directors is not, in the good faith
determination of the Chairman of the Board, the
Chief Executive Officer or the Chief Financial
Officer of MicroStrategy, possible, then such
person) shall have determined in good faith that
such disclosure is not in the best interests of
MicroStrategy and its shareholders, or (c) if the
Board of Directors shall have determined in good
faith that there is a valid business purpose or
reason for such delay or suspension. This right
to delay the effectiveness of any registration
statement or suspend offers and
sales under any effective registration statement
may only be invoked for ninety (90) trading days
out of any three hundred sixty five (365) calendar
day period.
MicroStrategy will comply with all Blue Sky laws
applicable to the Warrants, Notes and Class A
common stock. MicroStrategy will use its best
efforts to effect the listing of the Notes,
Warrants and the underlying shares on the Nasdaq
National Market, the American Stock Exchange or
the New York Stock Exchange (or other such
principal market as approved by Plaintiffs'
Co-Lead Counsel) commencing on the date of their
issuance and will use its best efforts to maintain
such listing during the period that any Notes or
Warrants are outstanding. MicroStrategy shall have
no obligation to make a market in the Notes or the
Warrants.
5. Definition of Issuance and Term of Notes and Warrants:
Notwithstanding anything in this Exhibit A to the
contrary, there shall be a single date on which
all Notes and Warrants issued as Settlement
Consideration shall mature or expire, as the case
may be. That date shall be the date that is five
(5) years from the date of issuance of the first
Note or Warrant issued as Settlement
Consideration. In addition, there shall be
common semi-annual dates on which interest is
payable on all Notes issued as Settlement
Consideration. Those semi-annual dates shall be
determined on the basis of the date of issuance
of the first Note to be issued hereunder.
MicroStrategy shall issue and deliver the Notes
and Warrants as instructed by Plaintiffs' Co-Lead
Counsel, in whole or in part and from time to
time as instructed by Plaintiffs' Co-Lead
Counsel, at MicroStrategy's sole expense.
6. Protection Against Contingencies: The Stipulation of
Settlement shall contain formulas for the number
of shares to be issued pursuant to the settlement
and/or exercise of the Warrants consistent, from
a financial standpoint, with the formulas
contained herein, in the event of any
one or more of the following contingencies: (a)
MicroStrategy ceases to be a public company; (b)
MicroStrategy Class A common shares cease to be
listed on the Nasdaq National Market, the
American Stock Exchange or the New York Stock
Exchange; (c) there is a MicroStrategy
recapitalization, corporate merger, acquisition,
combination or other type of reorganization
which results in eliminating the Class A common
stock; and/or (d) there is a halt in trading of
Class A common stock during all or part of
the valuation period(s). In addition, in the
event of any merger, reorganization, or other
change in control, the contractual rights and
obligations created in connection with this
Settlement shall not be diminished or impaired in
any way and shall be assumed by the acquirer or
successor as appropriate.