Document:

QuickLinks
 -- Click here to rapidly navigate through this document
  

 
 

EXHIBIT 10.3(a)    
  

AMENDMENT TO EMPLOYMENT AGREEMENT  

        This Amendment to Employment Agreement (the "Amendment") is effective as of June 28, 2002 (the "Effective Date"), and amends the Employment Agreement,
dated as of October 10, 2001 (the "Original Agreement"), by and between Southwestern Water Exploration, Co., a Colorado corporation (the "Company"), and Thomas Lenney, an individual residing at
2019 Royal Downs Drive, Katy, Texas 77450 (the "Executive," and in the context of the amendments, Executive is sometimes referred to as "you") (as so amended, the "Agreement"). Each of the Company and
Executive are referred to herein as a "Party," and the two of them, together, are referred to herein as the "Parties." 

        WHEREAS,
Executive was appointed President and Chief Operating Officer of the Company, effective as of October 10, 2001, and entered into the Original Agreement with the Company; 

        WHEREAS,
the Parties agree that it is in the best interests of the Company to amend the Original Agreement to provide certain benefits to the Executive in the event that the Company
becomes subject to a Change of Control (as that term is defined herein); and 

        WHEREAS
the Company wishes to retain the continued services of the Executive and the Executive wishes to remain employed by the Company on the terms as amended herein. 

        In
consideration of Executive's continued employment and other valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties, intending to be bound hereby,
agree as follows: 

        1.    Stock
Options. Section 3(b) is hereby deleted and replaced in its entirety with the following: 

        (b)  Equity
Compensation. In connection with the commencement of your employment, the Board of Directors shall grant to you an option to purchase 200,000 shares of the
Company's Common Stock ("Shares") with an exercise price equal to $0.001 per Share, and such option shall vest at the rate of 1/48th per month on the 10th of each month commencing with
November 10, 2001, until such option is fully vested, provided, however, that you continue to be employed by the Company on each vesting date, and pursuant to all other terms contained in a
stock option agreement to be executed by you and the Company in connection with this option grant (the "Initial Option"). The Initial Option is not intended to be an incentive stock option as that
term is defined in Section 422 of the Internal Revenue Code of 1986, as amended. On each anniversary of the Commencement Date, subject to approval by the Board, you will be granted options to
purchase 200,000 Shares at a purchase price equal to the fair market value of the Shares on the date of grant (each a "Subsequent Stock Option"). Each Subsequent Stock Option will vest in accordance
with the terms described above for the Initial Option grant and will be subject to the terms of any such Subsequent Stock Option agreement between you and the Company; provided, however, all Option
agreements shall permit you to exercise options by paying cash, check or surrendering sufficient outstanding shares or options to pay the exercise price. Notwithstanding the above vesting schedule,
the following additional provisions shall apply in the events specified: 

          (i)  In
the event of your Involuntary Termination, as defined herein, or upon a Change of Control, as defined herein, any portion of the Initial Option or any Subsequent
Stock Option that remains unvested as of the date of such Involuntary Termination shall vest immediately. 

        (ii)  For
purposes of this Agreement, "Involuntary Termination" shall mean (A) your voluntary resignation following a material reduction in your job duties,
responsibilities and requirements such that they are inconsistent with your prior duties, responsibilities and requirements or a reduction in your base salary in excess of 15% (other than such
reduction that occurs in a general reduction of compensation applicable to all executives of the 

1

 

Company) or (B) a reasonable determination by a majority of those persons comprising the Board of Directors of the Company prior to a Change of Control, as defined herein (even if such
determination is made after such Change of Control) that, as a result of a Change of Control and a change in circumstances thereafter significantly affecting your position, you are unable to exercise
the functions or duties attached to your position immediately prior to the date on which a Change of Control occurs. 

        (iii)  In
the event you terminate your employment under this Agreement, other than in circumstances that constitute an Involuntary Termination, no portion of the Initial
Option or any Subsequent Stock Option that remains unvested as of the date of termination shall vest. 

        (iv)  For
purposes of this Agreement, "Change of Control" shall mean the occurrence of any of the following events: (A) any "person," including a "group" as determined
in accordance with
Section 13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange Act"), is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 50% or
more of the combined voting power of the Company's then outstanding securities; (B) as a result of, or in connection with, any tender offer or exchange offer, merger or other business
combination, sale of assets or contested election, or any combination of the foregoing transactions (a "Transaction"), the persons who were directors of the Company before the Transaction shall cease
to constitute a majority of the Board of Directors of the Company or any successor to the Company; (C) the Company is merged or consolidated with another corporation or entity and, as a result
of the merger or consolidation, less than 80% of the outstanding voting securities of the surviving corporation or entity is then owned in the aggregate by the former stockholders of the Company;
(D) a tender offer or exchange offer is made and consummated for the ownership of securities of the Company representing 50% or more of the combined voting power of the Company's then
outstanding voting securities; or (E) the Company transfers all or substantially all of its assets to another corporation which is not a wholly-owned subsidiary of the Company. 

        2.    Severance
Compensation. Section 4(c) is hereby deleted and replaced in its entirety with the following: 

        (c)  In
the event that your employment hereunder is terminated by your death, disability, or the receipt of a Non-Renewal Notice by either you, other than in
circumstances that constitute an Involuntary Termination in connection with a Change of Control, or the Company for reasons that may even constitute "Cause," then the Company will pay to you the
Accrued Obligations. The Company shall have no obligation to pay you or your estate any compensation other than the Accrued Obligations following such termination. 

        3.    Severance
Compensation. Section 4 is hereby amended by adding the following subparagraphs: 

        (d)  In
the case of an Involuntary Termination following a Change of Control, the Company will pay to you all Accrued Obligations payable in one lump sum no later than thirty
(30) days following such termination. 

        (e)  Notwithstanding
any other provision of this Agreement, in the event that you are found to have violated the non-compete provisions of Section 5 of
this Agreement by a court of competent jurisdiction ("Breach"), all severance amounts due and owing under this Section 4 ("Severance Amount") shall be terminated upon the effective date of the
Breach and you shall be obligated to reimburse the Company for any portion of the Severance Amount previously paid to you. 

        (f)    In
the unlikely event that the Severance Amounts under this Section 4 are determined by an independent accounting firm retained by you (but paid by the Company)
to constitute "excess parachute payments" within the meaning of Section 280G of the Internal Revenue Code of 1986, 

2

 

as amended, and any regulations thereunder, such Severance Amounts shall be reduced by the amount necessary to avoid such classification. 

        4.    Effective
Date. This Amendment will be effective on the Effective Date. 

        5.    Remaining
Provisions. Except as specifically amended hereby, the Agreement shall continue in full force and effect in accordance with its terms. From and after the date
hereof, all references to the Agreement contained therein or in any other documents or instruments shall be to the Agreement as amended hereby. 

        [Signature
Page Follows] 

3

 

        The
parties have executed this Agreement the date first written above. 

	
SOUTHWESTERN WATER EXPLORATION, CO.	
 	

 
	

By:	
 	

/s/  STEVEN B. MISNER      
 Steven B. Misner
 Chairman of the Board	
 	

 

	Agreed and accepted:	 	 
	
THOMAS LENNEY	
 	

 
	Signature:	 	/s/  THOMAS LENNEY      
	 	 

4

QuickLinks

EXHIBIT 10.3(a)<PAGE>

                                                                     EXHIBIT 4.1

                    CERTIFICATE OF DESIGNATIONS, PREFERENCES
             AND RIGHTS OF THE SERIES F CONVERTIBLE PREFERRED STOCK
                                       OF
                           MICROSTRATEGY INCORPORATED

     MicroStrategy Incorporated (the "Company"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, does hereby
certify that, pursuant to authority conferred upon the Board of Directors of the
Company by the Certificate of Incorporation, as amended, of the Company, and
pursuant to Section 151 of the General Corporation Law of the State of Delaware,
the Board of Directors of the Company at a meeting duly held, adopted
resolutions (i) authorizing a series of the Company's previously authorized
preferred stock, par value $0.001 per share, and (ii) providing for the
designations, preferences and relative, participating, optional or other rights,
and the qualifications, limitations or restrictions thereof, of Two Thousand
Ninety-Six (2,096) shares of Series F Convertible Preferred Stock of the
Company, as follows:

     RESOLVED, that the Company is authorized to issue 2,096 shares of Series F
     Convertible Preferred Stock (the "Preferred Shares"), par value $0.001 per
     share, which shall have the following powers, designations, preferences and
     other special rights:

     (1)  Dividends. The Preferred Shares shall not bear any dividends.

     (2)  Conversion of Preferred Shares. Preferred Shares shall be convertible
into shares of the Company's Class A Common Stock, par value $0.001 per share
(the "Common Stock"), on the terms and conditions set forth in this Section 2.

          (a)  Certain Defined Terms. For purposes of this Certificate of
Designations, the following terms shall have the following meanings:

               (i)  "Amended and Restated Redemption and Exchange Agreement"
means that amended and restated certain redemption and exchange agreement, dated
as of June 14, 2001, between the Company and investors named therein.

<PAGE>

               (ii)   "Business Day" means any day other than Saturday, Sunday
or other day on which commercial banks in The City of New York are authorized or
required by law to remain closed.

               (iii)  "Closing Sale Price" means, for any security as of any
date, the last closing trade price for such security on the Principal Market as
reported by Bloomberg, or if the Principal Market begins to operate on an
extended hours basis, and does not designate the closing trade price, then the
last trade price at 4:00 p.m., Eastern Time, as reported by Bloomberg, or if the
foregoing do not apply, the last closing trade price of such security in the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg, or, if no last closing trade price is reported for such
security by Bloomberg, the last closing ask price of such security as reported
by Bloomberg, or, if no last closing ask price is reported for such security by
Bloomberg, the average of the highest bid price and the lowest ask price of any
market makers for such security as reported in the "pink sheets" by the National
Quotation Bureau, Inc. If the Closing Sale Price cannot be calculated for such
security on such date on any of the foregoing bases, the Closing Sale Price of
such security on such date shall be the fair market value as mutually determined
by the Company and the holders of Preferred Shares. If the Company and the
holders of Preferred Shares are unable to agree upon the fair market value of
the Common Stock, then such dispute shall be resolved pursuant to Section
2(d)(iii) below. All such determinations to be appropriately adjusted for any
stock dividend, stock split or other similar transaction during such period.

               (iv)   "Conversion Amount" means the Stated Value.

               (v)    "Conversion Price" means $15.00, subject to adjustment as
provided herein.

               (vi)   "Convertible Securities" means any stock or securities
(other than Options) directly or indirectly convertible into or exchangeable or
exercisable for Common Stock.

               (vii)  "Issuance Date" means, with respect to each Preferred
Share, the first date on which any Preferred Shares are issued by the Company.

               (viii) "Maturity Date" means, with respect to each Preferred
Share, the date which is two (2) years after the Closing Date (as defined in the
Second Redemption and Exchange Agreement), unless extended pursuant to Section
2(d)(vii).

               (ix)   "Options" means any rights, warrants or options to
subscribe for or purchase Common Stock or Convertible Securities.

               (x)    "Person" means an individual, a limited liability company,
a partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.

                                      -2-

<PAGE>

               (xi)   "Principal Market" means the Nasdaq National Market, or if
the Common Stock is not traded on the Nasdaq National Market, then the principal
securities exchange or trading market for the Common Stock.

               (xii)  "Second Redemption and Exchange Agreement" means, with
respect to any Preferred Share, that certain redemption and exchange agreement,
dated on or about July 30, 2002, between the Company and the initial holder of
such Preferred Share, as such agreement may be amended from time to time as
provided in such agreement.

               (xiii) "Series B Preferred Shares" means the shares of the
Company's Series B Convertible Preferred Stock issued pursuant to an Amended and
Restated Redemption and Exchange Agreement in accordance with the terms of the
Company's Certificate of Designations, Preferences and Rights of the Series B
Convertible Preferred Stock filed with the Secretary of State of the State of
Delaware on June 14, 2001.

               (xiv)  "Series C Preferred Shares" means the shares of the
Company's Series C Convertible Preferred Stock issued pursuant to an Amended and
Restated Redemption and Exchange Agreement in accordance with the terms of the
Company's Certificate of Designations, Preferences and Rights of the Series C
Convertible Preferred Stock filed with the Secretary of State of the State of
Delaware on June 14, 2001.

               (xv)   "Stated Value" means $10,000.

          (b)  Holder's Conversion Right; Mandatory Conversion. Subject to the
provisions of Section 4, at any time or times on or after the Issuance Date, any
holder of Preferred Shares shall be entitled to convert any whole or fractional
number of Preferred Shares into fully paid and nonassessable shares of Common
Stock in accordance with Section 2(d) at the Conversion Rate (as defined below).
If any Preferred Shares remain outstanding on the Maturity Date, then, pursuant
and subject to Section 2(d)(vii), all such Preferred Shares shall be converted
at the Conversion Rate as of such date in accordance with Section 2(d)(vii). The
Company shall not issue any fraction of a share of Common Stock upon any
conversion. All shares of Common Stock (including fractions thereof) issuable
upon conversion of more than one Preferred Share by a holder thereof shall be
aggregated for purposes of determining whether the conversion would result in
the issuance of a fraction of a share of Common Stock. If, after the
aforementioned aggregation, the issuance would result in the issuance of a
fraction of a share of Common Stock, the Company shall round such fraction of a
share of Common Stock up or down to the nearest whole share.

          (c)  Conversion. The number of shares of Common Stock issuable upon
conversion of each Preferred Share pursuant to Section 2(b) shall be determined
according to the following formula (the "Conversion Rate"):

                                      -3-

<PAGE>

                                Conversion Amount
                                -----------------
                                Conversion Price

          (d)  Mechanics of Conversion. The conversion of Preferred Shares shall
be conducted in the following manner:

               (i)    Holder's Delivery Requirements. To convert Preferred
Shares into shares of Common Stock on any date (the "Conversion Date"), the
holder thereof shall (A) transmit by facsimile (or otherwise deliver), for
receipt on or prior to 11:59 p.m., Eastern Time, on such date, a copy of an
executed notice of conversion in the form attached hereto as Exhibit I (the
"Conversion Notice") to the Company and the Company's designated transfer agent
(the "Transfer Agent") and (B) if required by Section 2(d)(viii), surrender to a
common carrier for delivery to the Company as soon as practicable following such
date the original certificates representing the Preferred Shares being converted
(or an indemnification undertaking with respect to such shares in the case of
their loss, theft or destruction) (the "Preferred Stock Certificates").

               (ii)   Company's Response. Upon receipt by the Company of a copy
of a Conversion Notice, the Company shall (I) as soon as practicable, but in no
event later than within one (1) Business Day, send, via facsimile, a
confirmation of receipt of such Conversion Notice to such holder and the
Transfer Agent, which confirmation shall constitute an instruction to the
Transfer Agent to process such Conversion Notice in accordance with the terms
herein and (II) on or before the second (2nd) Business Day following the date of
receipt by the Company of such Conversion Notice (the "Share Delivery Date"),
(A) issue and deliver to the address as specified in the Conversion Notice, a
certificate, registered in the name of the holder or its designee, for the
number of shares of Common Stock to which the holder shall be entitled, or (B)
provided the Transfer Agent is participating in The Depository Trust Company
("DTC") Fast Automated Securities Transfer Program, upon the request of the
holder, credit such aggregate number of shares of Common Stock to which the
holder shall be entitled to the holder's or its designee's balance account with
DTC through its Deposit Withdrawal Agent Commission system. If the number of
Preferred Shares represented by the Preferred Stock Certificate(s) submitted for
conversion, as may be required pursuant to Section 2(d)(viii), is greater than
the number of Preferred Shares being converted, then the Company shall, as soon
as practicable and in no event later than three Business Days after receipt of
the Preferred Stock Certificate(s) (the "Preferred Stock Delivery Date") and at
its own expense, issue and deliver to the holder a new Preferred Stock
Certificate representing the number of Preferred Shares not converted.

               (iii)  Dispute Resolution. In the case of a dispute as to the
determination of the Closing Sale Price or the arithmetic calculation of the
Conversion Rate, the Company shall instruct the Transfer Agent to issue to the
holder the number of shares of Common Stock that is not disputed and shall
transmit an explanation of the disputed determinations or arithmetic
calculations to the holder via facsimile within one (1) Business Day of receipt
of such holder's Conversion Notice or other date of determination. If such
holder and the Company are unable to agree upon the determination of the Closing
Sale Price or arithmetic

                                      -4-

<PAGE>

calculation of the Conversion Rate within two (2) Business Days of such disputed
determination or arithmetic calculation being transmitted to the holder, then
the Company shall within one (1) Business Day submit via facsimile (A) the
disputed determination of the Closing Sale Price to an independent, reputable
investment bank selected by the Company and approved by the holders of at least
two-thirds (2/3) of the Preferred Shares then outstanding or (B) the disputed
arithmetic calculation of the Conversion Rate to the Company's independent,
outside accountant. The Company shall cause the investment bank or the
accountant, as the case may be, to perform the determinations or calculations
and notify the Company and the holder of the results no later than two (2)
Business Days from the time it receives the disputed determinations or
calculations. Such investment bank's or accountant's determination or
calculation, as the case may be, shall be binding upon all parties absent error.

               (iv)   Record Holder. The person or persons entitled to receive
the shares of Common Stock issuable upon a conversion of Preferred Shares shall
be treated for all purposes as the record holder or holders of such shares of
Common Stock on the Conversion Date.

               (v)    Company's Failure to Timely Convert.

                      (A)  Cash Damages. If (I) within five (5) Business Days
after the Company's receipt of the facsimile copy of a Conversion Notice the
Company shall fail to issue and deliver a certificate to a holder or credit such
holder's balance account with DTC for the number of shares of Common Stock to
which such holder is entitled upon such holder's conversion of Preferred Shares
or (II) within five (5) Business Days of the Company's receipt of a Preferred
Stock Certificate the Company shall fail to issue and deliver a new Preferred
Stock Certificate representing the number of Preferred Shares to which such
holder is entitled pursuant to Section 2(d)(ii), then in addition to all other
available remedies which such holder may pursue hereunder and under the Second
Redemption and Exchange Agreement (including indemnification pursuant to Section
8 thereof), the Company shall pay additional damages to such holder for each day
after the Share Delivery Date such conversion is not timely effected and/or each
day after the Preferred Stock Delivery Date such Preferred Stock Certificate is
not delivered in an amount equal to 0.5% of the product of (I) the sum of the
number of shares of Common Stock not issued to the holder on or prior to the
Share Delivery Date and to which such holder is entitled as set forth in the
applicable Conversion Notice and, in the event the Company has failed to deliver
a Preferred Stock Certificate to the holder on or prior to the Preferred Stock
Delivery Date, the number of shares of Common Stock issuable upon conversion of
the Preferred Shares represented by such Preferred Stock Certificate as of the
Preferred Stock Delivery Date and (II) the Closing Sale Price of the Common
Stock on the Share Delivery Date, in the case of the failure to deliver Common
Stock, or the Preferred Stock Delivery Date, in the case of failure to deliver a
Preferred Stock Certificate.

                      (B)  Void Conversion Notice. If for any reason a holder
has not received all of the shares of Common Stock prior to the tenth (10th)
Business Day after the Share Delivery Date with respect to a conversion of
Preferred Shares, then the holder, upon written

                                     -5-

<PAGE>

notice to the Company, with a copy to the Transfer Agent, may void its
Conversion Notice with respect to, and retain or have returned, as the case may
be, any Preferred Shares that have not been converted pursuant to such holder's
Conversion Notice; provided that the voiding of a holder's Conversion Notice
shall not effect the Company's obligations to make any payments which have
accrued prior to the date of such notice pursuant to Section 2(d)(v)(A) or
otherwise.

               (vi)   Pro Rata Conversion. In the event the Company receives a
Conversion Notice from more than one holder of Preferred Shares for the same
Conversion Date and the Company can convert some, but not all, of such Preferred
Shares, the Company shall convert from each holder of Preferred Shares electing
to have Preferred Shares converted at such time a pro rata amount of such
holder's Preferred Shares submitted for conversion based on the number of
Preferred Shares submitted for conversion on such date by such holder relative
to the number of Preferred Shares submitted for conversion on such date.

               (vii)  Mandatory Conversion at Maturity. If any Preferred Share
remains outstanding on the Maturity Date the Company shall convert such
Preferred Share at the Conversion Rate as of the Maturity Date for such
Preferred Share without the holder of such Preferred Share being required to
give a Conversion Notice on such Maturity Date (a "Maturity Date Mandatory
Conversion"). All Preferred Shares which remain outstanding on the Maturity Date
shall be converted at the Conversion Rate on such Maturity Date as if such
holder of such Preferred Shares had delivered a Conversion Notice with respect
to such Preferred Shares on the Maturity Date. Promptly following the Maturity
Date, all holders of Preferred Shares shall surrender all Preferred Stock
Certificates representing such Preferred Shares, duly endorsed for cancellation,
to the Company or the Transfer Agent. The Maturity Date shall be extended for
any Preferred Shares for as long as the conversion of such Preferred Shares
would violate the provisions of Section 4.

               (viii) Book-Entry. Notwithstanding anything to the contrary set
forth herein, upon conversion of Preferred Shares in accordance with the terms
hereof, the holder thereof shall not be required to physically surrender the
certificate representing the Preferred Shares to the Company unless the full
number of Preferred Shares represented by the certificate are being converted.
The holder and the Company shall maintain records showing the number of
Preferred Shares so converted and the dates of such conversions or shall use
such other method, reasonably satisfactory to the holder and the Company, so as
not to require physical surrender of the certificate representing the Preferred
Shares upon each such conversion. In the event of any dispute or discrepancy,
such records of the Company establishing the number of Preferred Shares to which
the record holder is entitled shall be controlling and determinative in the
absence of manifest error. Notwithstanding the foregoing, if Preferred Shares
represented by a certificate are converted as aforesaid, the holder may not
transfer the certificate representing the Preferred Shares unless the holder
first physically surrenders the certificate representing the Preferred Shares to
the Company, whereupon the Company will forthwith issue and deliver upon the
order of the holder a new certificate of like tenor, registered as the holder
may request, representing in the aggregate the remaining number of Preferred
Shares represented by such certificate. The holder and any assignee, by
acceptance of a certificate, acknowledge and agree that, by reason of

                                      -6-

<PAGE>

the provisions of this paragraph, following conversion of any Preferred Shares,
the number of Preferred Shares represented by such certificate may be less than
the number of Preferred Shares stated on the face thereof. Each certificate for
Preferred Shares shall bear the following legend:

          ANY TRANSFEREE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW
          THE TERMS OF THE COMPANY'S CERTIFICATE OF DESIGNATIONS
          RELATING TO THE PREFERRED SHARES REPRESENTED BY THIS
          CERTIFICATE, INCLUDING SECTION 2(d)(viii) THEREOF. THE
          NUMBER OF PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE
          MAY BE LESS THAN THE NUMBER OF PREFERRED SHARES STATED ON
          THE FACE HEREOF PURSUANT TO SECTION 2(d)(viii) OF THE
          CERTIFICATE OF DESIGNATIONS RELATING TO THE PREFERRED SHARES
          REPRESENTED BY THIS CERTIFICATE.

          (e)  Taxes. The Company shall pay any and all documentary, stamp,
transfer and other similar taxes that may be payable with respect to the
issuance and delivery of Common Stock upon the conversion of Preferred Shares.

          (f)  Adjustment of Conversion Price upon Subdivision or Combination of
Common Stock. If the Company at time any after August 6, 2002 subdivides (by any
stock split, stock dividend, recapitalization or otherwise) one or more classes
of its outstanding shares of Common Stock into a greater number of shares, the
Conversion Price in effect immediately prior to such subdivision will be
proportionately reduced. If the Company at any time after August 6, 2002
combines (by combination, reverse stock split or otherwise) one or more classes
of its outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination will be
proportionately increased.

               (i)    Notices.

                      (A)  Immediately upon any adjustment of the Conversion
Price pursuant to this Section 2(f), the Company will give written notice
thereof to each holder of Preferred Shares, setting forth in reasonable detail,
and certifying, the calculation of such adjustment.

                      (B)  The Company will give written notice to each holder
of Preferred Shares at least ten (10) Business Days prior to the date on which
the Company closes its books or takes a record (I) with respect to any dividend
or distribution upon the Common Stock, (II) with respect to any pro rata
subscription offer to holders of Common Stock or (III) for determining rights to
vote with respect to any Sale Transaction (as defined in Section 3(a)), Organic
Change (as defined in Section 3(b)), dissolution or liquidation, provided that
such information shall be made known to the public prior to or in conjunction
with such notice being provided to such holder.

                                      -7-

<PAGE>

                      (C)  The Company will also give written notice to each
holder of Preferred Shares at least ten (10) Business Days prior to the date on
which any Sale Transaction, Organic Change, dissolution or liquidation will take
place, provided that such information shall be made known to the public prior to
or in conjunction with such notice being provided to such holder.

     (3)  Other Rights of Holders.

          (a)  Sale Transaction. Any consolidation, merger, sale of all or
substantially all of the Company's assets to another Person or other transaction
which is effected in such a way that holders of Common Stock are entitled to
receive (either directly or upon subsequent liquidation) stock, securities or
assets with respect to or in exchange for Common Stock (other than (x) any
transaction in which holders of the Company's voting power immediately prior to
the transaction continue after the transaction to hold, directly or indirectly,
the voting power of the surviving entity or entities necessary to elect a
majority of the members of the board of directors (or their equivalent if other
than a corporation) of such entity or entities or (y) any transaction in
connection with any bankruptcy or insolvency proceeding) is referred to herein
as "Sale Transaction." The Company may effect a Sale Transaction without the
vote or consent of the holders of the Preferred Shares, provided that concurrent
with the consummation of any Sale Transaction, at the election of the Company,
either (i) each Preferred Share shall be automatically converted into the kind
and amount of stock, securities or assets which a holder of the number of shares
of Common Stock of the Corporation issuable upon conversion of one Preferred
Share immediately prior to such Sale Transaction would have been entitled to
receive pursuant to such transaction (without taking into account any
limitations or restrictions on the convertibility of the Preferred Shares) or
(ii) the Company shall have made appropriate provision (in form and substance
reasonably satisfactory to the holders of at least two-thirds (2/3) of the
Preferred Shares then outstanding) to ensure that each of the holders of the
Preferred Shares will thereafter have the right to acquire and receive in lieu
of or in addition to (as the case may be) the shares of Common Stock immediately
theretofore acquirable and receivable upon the conversion of such holder's
Preferred Shares such shares of stock, securities or assets that would have been
issued or payable in such Sale Transaction with respect to or in exchange for
the number of shares of Common Stock which would have been acquirable and
receivable upon the conversion of such holder's Preferred Shares as of the date
of such Sale Transaction (without taking into account any limitations or
restrictions on the convertibility of the Preferred Shares). No later than 10
Business Days prior to the consummation of a Sale Transaction, but not prior to
the public announcement of such Sale Transaction, the Company shall deliver
written notice thereof via facsimile and overnight courier (a "Notice of Sale
Transaction") to each holder of Preferred Shares. The Notice of Sale Transaction
shall set forth the Company's election pursuant to this Section 3(a), which
election shall be irrevocable.

          (b)  Reorganization, Reclassification. Any recapitalization,
reorganization, reclassification or other transaction that does not constitute a
Sale Transaction which is effected in such a way that holders of Common Stock
are entitled to receive (either directly or upon

                                      -8-

<PAGE>

subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as "Organic Change." Prior to
the consummation of any Organic Change following which the Company is not a
surviving entity, the Company will secure from the successor resulting from such
Organic Change (in each case, the "Successor Entity") a written agreement (in
form and substance reasonably satisfactory to the holders of at least two-thirds
(2/3) of the Preferred Shares then outstanding) to deliver to each holder of
Preferred Shares in exchange for such shares, a security of the Successor Entity
evidenced by a written instrument substantially similar in form and substance to
the Preferred Shares, including, without limitation, having a stated value and
liquidation preference equal to the Stated Value and the Liquidation Preference
of the Preferred Shares held by such holder, and reasonably satisfactory to the
holders of at least two-thirds (2/3) of the Preferred Shares then outstanding.
Prior to the consummation of any other Organic Change, the Company shall make
appropriate provision (in form and substance reasonably satisfactory to the
holders of at least two-thirds (2/3) of the Preferred Shares then outstanding)
to insure that each of the holders of the Preferred Shares will thereafter have
the right to acquire and receive in lieu of or in addition to (as the case may
be) the shares of Common Stock immediately theretofore acquirable and receivable
upon the conversion of such holder's Preferred Shares such shares of stock,
securities or assets that would have been issued or payable in such Organic
Change with respect to or in exchange for the number of shares of Common Stock
which would have been acquirable and receivable upon the conversion of such
holder's Preferred Shares as of the date of such Organic Change (without taking
into account any limitations or restrictions on the convertibility of the
Preferred Shares).

          (c)  Purchase Rights. If at any time the Company grants, issues or
sells any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "Purchase Rights"), then the holders of Preferred Shares will
be entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which such holder could have acquired if such holder
had held the number of shares of Common Stock acquirable upon complete
conversion of the Preferred Shares (without taking into account any limitations
or restrictions on the convertibility of the Preferred Shares) immediately
before the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as of which the
record holders of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights.

     (4)  Limitation on Beneficial Ownership. The Company shall not effect and
shall have no obligation to effect any conversion of Preferred Shares, and no
holder of Preferred Shares shall have the right to convert any Preferred Shares,
in excess of a number of Preferred Shares which, after giving effect to such
conversion, would cause the aggregate number of shares of Common Stock
beneficially owned by such Person (together with such Person's affiliates) to
exceed 9.99% of the number of shares of Common Stock outstanding immediately
after giving effect to such conversion. For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by a Person and its
affiliates shall include the number of shares of Common Stock issuable upon
conversion of the Preferred Shares with respect to which the determination of
such sentence is being made, but shall exclude the number of shares of

                                      -9-

<PAGE>

Common Stock which would be issuable upon (A) conversion of the remaining,
nonconverted Preferred Shares beneficially owned by such Person or any of its
affiliates and (B) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company (including, without limitation,
any warrants) subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by such Person or any of its
affiliates. Except as set forth in the preceding sentence, for purposes of this
Section 4, beneficial ownership shall be calculated in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this
Section 4, in determining the number of outstanding shares of Common Stock a
holder may rely on the number of outstanding shares of Common Stock as reflected
in (1) the Company's most recent Form 10-Q, Form 10-K or other public filing
with the Securities and Exchange Commission, as the case may be, (2) a more
recent public announcement by the Company, or (3) any other notice by the
Company or its transfer agent setting forth the number of shares of Common Stock
outstanding. Upon the written request of any holder, the Company shall promptly,
but in no event later than one (1) Business Day following the receipt of such
notice, confirm in writing to any such holder the number of shares of Common
Stock then outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to conversions of Preferred Shares
by such holder and its affiliates since the date as of which such number of
outstanding shares of Common Stock was reported.

     (5)  Reservation of Shares. The Company shall, so long as any of the
Preferred Shares are outstanding, take all action necessary to reserve and keep
available out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversions of the Preferred Shares, such number of
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all of the Preferred Shares then outstanding; provided that the
number of shares of Common Stock so reserved shall at no time be less than the
number of shares of Common Stock for which the Preferred Shares are at any time
convertible (without regard to any limitations on conversions). The initial
number of shares of Common Stock reserved for conversions of the Preferred
Shares and each increase in the number of shares so reserved shall be allocated
pro rata among the holders of the Preferred Shares based on the number of
Preferred Shares held by each holder at the time of issuance of the Preferred
Shares or increase in the number of reserved shares, as the case may be. In the
event a holder shall sell or otherwise transfer any of such holder's Preferred
Shares, each transferee shall be allocated a pro rata portion of the number of
reserved shares of Common Stock reserved for such transferor. Any shares of
Common Stock reserved and allocated to any Person which ceases to hold any
Preferred Shares shall be allocated to the remaining holders of Preferred
Shares, pro rata based on the number of Preferred Shares then held by such
holders.

     (6)  Voting Rights. Holders of Preferred Shares shall have no voting
rights, except as required by law, including but not limited to the Delaware
General Corporation Law, and as expressly provided in this Certificate of
Designations.

     (7)  Liquidation, Dissolution, Winding-Up. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company, the holders
of the Preferred

                                      -10-

<PAGE>

Shares shall be entitled to receive in cash out of the assets of the Company,
whether from capital or from earnings available for distribution to its
stockholders (the "Liquidation Funds"), before any amount shall be paid to the
holders of any of the capital stock of the Company of any class junior in rank
to the Preferred Shares in respect of the preferences as to distributions and
payments on the liquidation, dissolution and winding up of the Company, an
amount per Preferred Share equal to the Stated Value; provided that, if the
Liquidation Funds are insufficient to pay the full amount due to the holders of
Preferred Shares and holders of shares of other classes or series of preferred
stock of the Company that are of equal rank with the Preferred Shares (including
the Series B Preferred Shares and Series C Preferred Shares outstanding on the
Issuance Date) as to payments of Liquidation Funds (the "Pari Passu Shares"),
then each holder of Preferred Shares and Pari Passu Shares shall receive a
percentage of the Liquidation Funds equal to the full amount of Liquidation
Funds payable to such holder as a liquidation preference, in accordance with
their respective Certificate of Designations, Preferences and Rights, as a
percentage of the full amount of Liquidation Funds payable to all holders of
Preferred Shares and Pari Passu Shares. The purchase or redemption by the
Company of stock of any class, in any manner permitted by law, shall not, for
the purposes hereof, be regarded as a liquidation, dissolution or winding up of
the Company. Neither the consolidation or merger of the Company with or into any
other Person, nor the sale or transfer by the Company of less than substantially
all of its assets, shall, for the purposes hereof, be deemed to be a
liquidation, dissolution or winding up of the Company.

     (8)  Preferred Rank. All shares of Common Stock shall be of junior rank to
all Preferred Shares with respect to the preferences as to distributions and
payments upon the liquidation, dissolution and winding up of the Company. The
rights of the shares of Common Stock shall be subject to the preferences and
relative rights of the Preferred Shares. The Preferred Shares shall rank pari
passu with the Series B Preferred Shares and Series C Preferred Shares
outstanding on the Issuance Date in respect the preferences as to distributions
and payments upon the liquidation, dissolution and winding up of the Company.
Without the prior express written consent of the holders of not less than
two-thirds (2/3) of the then outstanding Preferred Shares, the Company shall not
hereafter authorize or issue additional or other capital stock that is of senior
rank to the Preferred Shares in respect of the preferences as to distributions
and payments upon the liquidation, dissolution and winding up of the Company.
Without the prior express written consent of the holders of not less than
two-thirds (2/3) of the then outstanding Preferred Shares, the Company shall not
hereafter authorize or make any amendment to the Company's Certificate of
Incorporation or bylaws, or file any resolution of the board of directors of the
Company with the Secretary of State of the State of Delaware or enter into any
agreement containing any provisions, which would adversely affect or otherwise
impair the rights or relative priority of the holders of the Preferred Shares
relative to the holders of the Common Stock or the holders of any other class of
capital stock.

     (9)  Restriction on Redemption and Dividends. On any date after the
Issuance Date, unless all of the Preferred Shares have been converted as
provided herein, the Company shall not, directly or indirectly, redeem, or
declare or pay any dividend or distribution on, its Common Stock or its Class B
Common Stock, par value $0.001 per share (or any capital stock issued in

                                      -11-

<PAGE>

replacement thereof) (other than (a) the redemption or repurchase by the Company
of shares of Common Stock which is not made pursuant to an offer made to all of
the Company's stockholders or (b) pursuant to a stock split, stock dividend,
stock combination or other similar transaction described in Section 2(f)),
without the prior express written consent of the holders of not less than
two-thirds (2/3) of the then outstanding Preferred Shares.

     (10)  Vote to Change the Terms of or Issue Additional Preferred Shares;
Waiver. The affirmative vote at a meeting duly called for such purpose or the
written consent without a meeting, of the holders of not less than two-thirds
(2/3) of the then outstanding Preferred Shares, shall be required for (a) any
change to this Certificate of Designations or the Company's Certificate of
Incorporation which would amend, alter, change or repeal any of the powers,
designations, preferences and rights of the Preferred Shares or (b) the issuance
of Preferred Shares other than on the Issuance Date pursuant to a Second
Redemption and Exchange Agreement which has substantially the same terms as the
Second Redemption and Exchange Agreement pursuant to which the other Preferred
Shares were issued on the Issuance Date (as determined in the sole discretion of
the holders of the Preferred Shares representing at least two-thirds (2/3) of
the other Preferred Shares issued on the Issuance Date). Any of the terms,
conditions, requirements or obligations set forth in this Certificate of
Designations may be waived by the affirmative vote at a meeting duly called for
such purpose or the written consent without a meeting, of the holders of not
less than two-thirds (2/3) of the then outstanding Preferred Shares.

     (11)  Lost or Stolen Certificates. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Preferred Stock Certificates representing the Preferred
Shares, and, in the case of loss, theft or destruction, of an indemnification
undertaking by the holder to the Company in customary form and, in the case of
mutilation, upon surrender and cancellation of the Preferred Stock
Certificate(s), the Company shall execute and deliver new preferred stock
certificate(s) of like tenor and date; provided, however, the Company shall not
be obligated to re-issue preferred stock certificates if the holder
contemporaneously requests the Company to convert such Preferred Shares into
Common Stock.

     (12)  Remedies, Characterizations, Other Obligations, Breaches and
Injunctive Relief. The remedies provided in this Certificate of Designations
shall be cumulative and in addition to all other remedies available under this
Certificate of Designations, at law or in equity (including a decree of specific
performance and/or other injunctive relief). No remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy.
Nothing herein shall limit a holder's right to pursue actual damages for any
failure by the Company to comply with the terms of this Certificate of
Designations. The Company covenants to each holder of Preferred Shares that
there shall be no characterization concerning this instrument other than as
expressly provided herein. Amounts set forth or provided for herein with respect
to payments, conversion and the like (and the computation thereof) shall be the
amounts to be received by the holder thereof and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the
performance thereof). The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the holders of the

                                      -12-

<PAGE>

Preferred Shares and that the remedy at law for any such breach may be
inadequate. The Company therefore agrees that, in the event of any such breach
or threatened breach, the holders of the Preferred Shares shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach, without the necessity of showing economic loss and without any bond or
other security being required.

     (13)  Specific Shall Not Limit General; Construction. No specific provision
contained in this Certificate of Designations shall limit or modify any more
general provision contained herein. This Certificate of Designations shall be
deemed to be jointly drafted by the Company and all Buyers and shall not be
construed against any person as the drafter hereof.

     (14)  Failure or Indulgence Not Waiver. No failure or delay on the part of
a holder of Preferred Shares in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.

     (15)  Notice. Whenever notice is required to be given under this
Certificate of Designations, unless otherwise provided herein, such notice shall
be given in accordance with Section 9(f) of the applicable Second Redemption and
Exchange Agreement.

     (16)  Transfer of Preferred Shares. A holder of Preferred Shares may assign
some or all of its rights hereunder or the Preferred Shares held by such holder
without the consent of the Company.

                                    * * * * *

                                      -13-

<PAGE>

     IN WITNESS WHEREOF, the Company has caused this Certificate of Designations
to be signed by Eric F. Brown, its President and Chief Financial Officer, as of
the 6th day of August, 2002.

                                     MICROSTRATEGY INCORPORATED

                                     By:   /s/ Eric F. Brown
                                        ----------------------------------------
                                     Name: Eric F. Brown
                                     Its: President and Chief Financial Officer

                                      -14-

<PAGE>

                                    EXHIBIT I

                           MICROSTRATEGY INCORPORATED
                                CONVERSION NOTICE

Reference is made to the Certificate of Designations, Preferences and Rights of
the Series F Convertible Preferred Stock of MicroStrategy Incorporated (the
"Certificate of Designations"). In accordance with and pursuant to the
Certificate of Designations, the undersigned hereby elects to convert the number
of shares of Series F Convertible Preferred Stock, par value $0.001 per share
(the "Preferred Shares"), of MicroStrategy Incorporated, a Delaware corporation
(the "Company"), indicated below into shares of Class A Common Stock, par value
$0.001 per share (the "Common Stock"), of the Company, as of the date specified
below.

     Date of Conversion:________________________________________________________

     Number of Preferred Shares to be converted:________________________________

     Stock certificate no(s). of Preferred Shares to be converted:______________

Please confirm the following information:

     Conversion Price:__________________________________________________________

     Number of shares of Common Stock to be issued:_____________________________

Please issue the Common Stock into which the Preferred Shares are being
converted and, if applicable, any check drawn on an account of the Company in
the following name and to the following address:

     Issue to:__________________________________________________________________
              __________________________________________________________________

     Facsimile Number:__________________________________________________________

     Authorization:_____________________________________________________________
                    By:_________________________________________________________
                    Title:______________________________________________________

     Dated:_____________________________________________________________________

     Account Number (if electronic book entry transfer):________________________

     Transaction Code Number (if electronic book entry transfer):_______________

            [NOTE TO HOLDER -- THIS FORM MUST BE SENT CONCURRENTLY TO
                                TRANSFER AGENT]

                                      -15-

<PAGE>

                                 ACKNOWLEDGMENT

     The Company hereby acknowledges this Conversion Notice and hereby directs
[TRANSFER AGENT] to issue the above indicated number of shares of Common Stock
in accordance with the Transfer Agent Instructions dated _________ __, 2002 from
the Company and acknowledged and agreed to by [TRANSFER AGENT].

                                      MICROSTRATEGY INCORPORATED

                                      By:_______________________________________
                                      Name:_____________________________________
                                      Title:____________________________________

                                      -16-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00041-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00041-of-00352.parquet"}]]