FOR IMMEDIATE RELEASE
Contact:
Michael Quint
MicroStrategy Incorporated
(703) 848-8600
pr_info@microstrategy.com
MicroStrategy Reaches Agreements to Settle Class Action Lawsuit
and Shareholder Derivative Lawsuit
VIENNA, VA, October 24, 2000 - MicroStrategy(R) Incorporated (NASDAQ: MSTR)
announced today that it has reached agreements to settle two lawsuits filed
against the Company and certain of its officers and directors relating to the
Company's restatement of financial results for 1997, 1998, and 1999. The first
settlement agreement relates to the consolidated securities class action lawsuit
filed in the United States District Court for the Eastern District of Virginia.
The second settlement agreement relates to the shareholder derivative lawsuit
filed in the Delaware Court of Chancery. Both settlements are subject to
confirmatory discovery, final documentation, and court approval.
Under the class action settlement agreement, class members will receive:
(1) five-year unsecured promissory notes issued by MicroStrategy having an
aggregate principal amount of $80.5 million, bearing interest at 7.5% per year;
(2) 550,000 shares of MicroStrategy Class A Common Stock, with the number of
shares to be increased if the market value of the shares at the time of the
district court settlement hearing is less than $30 per share, so that the
guaranteed value of the shares is $16.5 million; and (3) warrants issued by
MicroStrategy to purchase 1.9 million shares of MicroStrategy Class A Common
Stock at an exercise price of $50 per share, with the warrants expiring five
years from the date they are issued.
MicroStrategy has the right, at any time, to prepay the promissory notes,
or to mandatorily convert the promissory notes into shares of MicroStrategy
Class A Common Stock at a conversion price equal to 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 trading days ending two days prior to the
date that written notice of conversion has been given. The warrants may be
exercised for cash or by tendering promissory notes valued for the purpose of
warrant exercise at 133% of their principal amount plus accrued interest.
Under the derivative settlement agreement, MicroStrategy will add a new,
independent director with finance experience to the audit committee of its board
of directors and will ensure continued adherence with applicable legal and
regulatory requirements regarding the independence of audit committee members
and trading
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by insiders. In addition, certain officers of MicroStrategy will contribute a
portion of the 550,000 shares of MicroStrategy Class A Common Stock that is to
be issued to class members in settlement of the class action lawsuit.
Specifically, Michael J. Saylor, Sanju K. Bansal and Mark S. Lynch will
contribute to the class action settlement Class A Common Stock with a total
value of $10 million.
"We are pleased to put these lawsuits behind us," said Jonathan F. Klein,
Vice President, Law and General Counsel of MicroStrategy Incorporated. "We
believe that the settlements announced today will allow us to focus on executing
our strategic plans and building value for our shareholders, customers, and
employees. In addition, the financial structure of the class action settlement
gives class members a strong interest in the future success of MicroStrategy."
In connection with the settlements, the Company expects to receive a cash
payment of slightly more than $13 million from its insurance carriers.
About MicroStrategy Incorporated
MicroStrategy is a leading worldwide provider of Intelligent E-Business(TM)
software and related services. MicroStrategy's technology platform is creating a
new generation of one-to-one e-business solutions that enable global 2000
organizations to build personal relationships with their partners,
supply-chains, and customers. MicroStrategy delivers these solutions via web,
wireless, and voice. In addition to its industry leading technology,
MicroStrategy also offers a comprehensive set of consulting, training and
support services for its customers and partners.
MicroStrategy has approximately 1,000 customers across such diverse
industries as retail, finance, telecommunications, dot-com, insurance,
healthcare, pharmaceuticals and consumer packaged goods. MicroStrategy also has
entered into relationships with more than 270 systems integrators, application
development and platform partners.
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This press release may include statements that may constitute "forward- looking
statements," including its estimates of future business prospects or financial
results and statements containing the words "believe," "estimate," "project,"
"expect" or similar expressions. Forward-looking statements inherently involve
risks and uncertainties that could cause actual results of MicroStrategy
Incorporated (the "Company") to differ materially from the forward-looking
statements. Factors that could contribute to such differences include: the
possibility that the settlement agreements will not obtain court approval or
that the other conditions to the settlement will not be satisfied; the Company's
ability to secure financing for its current operations and long-term plans on
acceptable terms; the ability of the Company to implement and achieve widespread
customer acceptance of its MicroStrategy 7 software and Strategy.com network on
a timely basis; adverse reaction by the Company's employees, investors,
customers, vendors and lenders to the restatement of the Company's financial
results or its future prospects; the Company's ability to recognize deferred
revenue through delivery of products or satisfactory performance of services;
continued acceptance of the Company's products in the marketplace; the timing of
significant orders; delays in the Company's ability to develop or ship new
products; market acceptance of new products; competitive factors; general
economic conditions; currency fluctuations and other risks detailed in the
Company's registration statements and periodic reports filed with the Securities
and Exchange Commission. By making these forward-looking statements, the Company
undertakes no obligation to update these statements for revisions or changes
after the date of this release.
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