Document:

<PAGE>

                                                                    Exhibit 10.3

                              SECURITY AGREEMENT

                                 (Guarantors)

          This SECURITY AGREEMENT (this "Agreement"), is entered into as of
                                         ---------
February 9, 2001, is executed and delivered by MICROSTRATEGY INCORPORATED, a
Delaware corporation ("Parent"), certain of Parent's Subsidiaries, (Parent and
                       ------
such Subsidiaries, are referred to hereinafter each individually as a "Debtor,"
                                                                       ------
and individually and collectively, jointly and severally, as the "Debtors"), in
                                                                  -------
favor of FOOTHILL CAPITAL CORPORATION, a California corporation (together with
its successors, if any, "Secured Party").
                         -------------

          WHEREAS, Parent, MicroStrategy Services Corporation, a Delaware
corporation ("Borrower") and Secured Party are, contemporaneously herewith,
              --------
entering into that certain Loan and Security Agreement of even date herewith (as
amended, restated, modified, renewed or extended from time to time, the "Loan
                                                                         ----
Agreement");
---------

          WHEREAS, each Debtor has executed that certain General Continuing
Guaranty, of even date herewith, in favor of Secured Party (the "Guaranty"),
                                                                 --------
respecting certain obligations of Borrower owing to Secured Party under the Loan
Agreement;

          WHEREAS, each Debtor desires to secure its obligations under the Loan
Documents to which it is party (including the Guaranty) by granting to Secured
Party security interests in the Collateral as set forth herein; and

          WHEREAS, each Debtor will benefit by virtue of the loans from the
Secured Party to Borrower.

          NOW THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and each intending
to be bound hereby, Secured Party and each Debtor agree as follows:

          1.   DEFINITIONS AND CONSTRUCTION.

               1.1.  Definitions.  All capitalized terms used herein and not
                     -----------
otherwise defined herein shall have the meanings ascribed to them in the Loan
Agreement. As used in this Agreement, the following terms shall have the
following definitions:

          "Accounts" means all of a Debtor's now owned or hereafter acquired
           --------
right, title, and interest with respect to "accounts" (as that term is defined
in the Code), and any and all supporting obligations in respect thereof.
<PAGE>

          "Agreement" means this Security Agreement and any extensions, riders,
           ---------
supplements, notes, amendments, or modifications to or in connection with this
Security Agreement.

          "Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.
           ---------------
(S) 101 et seq.), as amended, and any successor statute.
        ------

          "Borrower" has the meaning set forth in the recitals to this
           --------
Agreement.

          "Code" means the California Uniform Commercial Code as in effect from
           ----
time to time.

          "Collateral" means each of the following: the Accounts; Debtor's
           ----------
Books; the Equipment; the General Intangibles; the Inventory; the Investment
Property; the Negotiable Collateral; any money, or other assets of a Debtor
which now or hereafter come into the possession, custody, or control of Secured
Party; and the proceeds and products, whether tangible or intangible, of any of
the foregoing, including proceeds of insurance covering any or all of the
Collateral, and any and all Accounts, Debtor's Books, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, money,
deposit accounts, or other tangible or intangible property resulting from the
sale, exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.

          "Control Agreement" means a control agreement, in form and substance
           -----------------
satisfactory to Secured Party, executed and delivered by the applicable Debtor,
Secured Party, and the applicable securities intermediary with respect to a
Securities Account or bank with respect to a deposit account.

          "Debtor's Books" means a Debtor's now owned or hereafter acquired
           --------------
books and records (including all of its Records indicating, summarizing, or
evidencing its assets (including the Collateral) or liabilities, all of its
Records relating to its business operations or financial condition, and all of
its goods or General Intangibles related to such information).

          "Debtor" and "Debtors" has the meaning ascribed thereto in the
           ------       -------
preamble to this Agreement.

          "Equipment" means all of a Debtor's now owned or hereafter acquired
           ---------
right, title, and interest with respect to equipment, machinery, machine tools,
motors, furniture, furnishings, fixtures, vehicles (including motor vehicles),
tools, parts, goods (other than consumer goods, farm products, or Inventory),
wherever located, including all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any of the
foregoing.

          "Event of Default" has the meaning ascribed to it in Section 6.
           ----------------                                    ---------

                                      -2-
<PAGE>

          "General Intangibles" means all of a Debtor's now owned or hereafter
           -------------------
acquired right, title, and interest with respect to general intangibles
(including payment intangibles, contract rights, rights to payment, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and
tax refund claims), and any and all supporting obligations in respect thereof,
and any other personal property other than goods, Accounts, Investment Property,
and Negotiable Collateral.

          "Guaranty" has the meaning set forth in the recitals to this
           --------
Agreement.

          "Indebtedness" means (a) all obligations of a Debtor for borrowed
           ------------
money, (b) all obligations of a Debtor evidenced by bonds, debentures, notes, or
other similar instruments and all reimbursement or other obligations of a Debtor
in respect of letters of credit, bankers acceptances, interest rate swaps, or
other financial products, (c) all obligations of a Debtor under Capital Leases,
(d) all obligations or liabilities of others secured by a Lien on any asset of a
Debtor, irrespective of whether such obligation or liability is assumed, (e) all
obligations of a Debtor for the deferred purchase price of assets (other than
trade debt incurred in the ordinary course of a Debtor's business and repayable
in accordance with customary trade practices), and (f) any obligation of a
Debtor guaranteeing or intended to guarantee (whether directly or indirectly
guaranteed, endorsed, co-made, discounted, or sold with recourse to a Debtor)
any obligation of any other Person.

          "Inventory" means all of a Debtor's now owned or hereafter acquired
           ---------
right, title, and interest with respect to inventory, including goods held for
sale or lease or to be furnished under a contract of service, goods that are
leased by such a Debtor as lessor, goods that are furnished by such a Debtor
under a contract of service, and raw materials, work in process, or materials
used or consumed in such a Debtor's business.

          "Investment Property" means all of a Debtor's now owned or hereafter
           -------------------
acquired right, title, and interest with respect to "investment property" as
that term is defined in the Code, and any and all supporting obligations in
respect thereof.

          "Loan Agreement" has the meaning set forth in the recitals to this
           --------------
Agreement.

          "Material Adverse Change" means (a) a material adverse change in the
           -----------------------
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrower or its Subsidiaries taken as a
whole, (b) a material impairment of the Borrower's ability to perform its
obligations under the Loan Documents or of Secured Party's ability to enforce
the Obligations or realize upon the Collateral, or (c) a material impairment of
the enforceability or priority of the Secured Party's Liens with respect to the
Collateral as a result of an action or failure to act on the part of a Debtor.

                                      -3-
<PAGE>

          "Negotiable Collateral" means all of a Debtor's now owned and
           ---------------------
hereafter acquired right, title, and interest with respect to letters of credit,
letter of credit rights, instruments, promissory notes, drafts, documents, and
chattel paper (including electronic chattel paper and tangible chattel paper),
and any and all supporting obligations in respect thereof.

          "Parent" has the meaning set forth in the recitals to this Agreement.
           ------

          "Permitted Protest" means the right of a Debtor to protest any Lien
           -----------------
(other than any such Lien that secures the Secured Obligations), taxes (other
than payroll taxes or taxes that are the subject of a United States federal tax
lien), or rental payment, provided that (a) a reserve with respect to such
obligation is established on the applicable Debtor's Books in such amount as is
required under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by the applicable Debtor in good faith, and (c) Secured Party is
satisfied that, while any such protest is pending, there will be no impairment
of the enforceability, validity, or priority of any of the Secured Party's
Liens.

          "Secured Obligations" shall mean, with respect to each Debtor, all
           -------------------
liabilities, Obligations, or undertakings owing by such Debtor to Secured Party
of any kind or description arising out of or outstanding under, advanced or
issued pursuant to, or evidenced by the Guaranty, the other Loan Documents to
which such Debtor is a party, or this Agreement, irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, due or to
become due, voluntary or involuntary, whether now existing or hereafter arising,
and including all interest (including interest that accrues after the filing of
a case under the Bankruptcy Code) and any and all costs, fees (including
attorneys fees), and expenses which such Debtor is required to pay pursuant to
any of the foregoing, by law, or otherwise.

          "Secured Party" has the meaning set forth in the recitals to this
           -------------
Agreement.

          "Secured Party's Liens" means the Liens granted by each Debtor to
           ---------------------
Secured Party under this Agreement or the other Loan Documents to which such
Debtor is a party.

          "Voidable Transfer" has the meaning ascribed to it in Section 13.8.
           -----------------                                    ------------

               1.2.  Code.  Any terms used in this Agreement which are defined
                     ----
in the Code shall be construed and defined as set forth in the Code unless
otherwise defined herein.

               1.3.  Construction.  Unless the context of this Agreement clearly
                     ------------
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the term "including" is not limiting, and the
term "or" has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or." The words "hereof," "herein," "hereby,"
"hereunder," and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Section,
subsection, clause, schedule, and exhibit references are to this Agreement
unless otherwise

                                      -4-
<PAGE>

specified. Any reference in this Agreement or in any of the other Loan Documents
to this Agreement or any of the other Loan Documents shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, and supplements, thereto and thereof, as
applicable. In the event of a direct conflict between the terms and provisions
of this Agreement and the Loan Agreement, it is the intention of the parties
hereto that both such documents shall be read together and construed, to the
fullest extent possible, to be in concert with each other. In the event of any
actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms
and provisions of the Loan Agreement shall control and govern; provided,
                                                               --------
however, that the inclusion herein of additional obligations on the part of each
-------
Debtor and supplemental rights and remedies in favor of Secured Party, in each
case in respect of the Collateral, shall not be deemed a conflict with the Loan
Agreement.

               1.4.  Schedules and Exhibits.  All of the schedules and exhibits
                     ----------------------
attached to this Agreement shall be deemed incorporated herein by reference.

          2.   CREATION OF SECURITY INTEREST.

               2.1.  Grant of Security Interest.  Each Debtor hereby grants to
                     --------------------------
Secured Party a continuing security interest in all currently existing and
hereafter acquired or arising Collateral in order to secure the Secured
Obligations. Secured Party's security interests in the Collateral shall attach
to all Collateral without further act on the part of Secured Party or any
Debtor. Anything contained in this Agreement or any other Loan Document to the
contrary notwithstanding, except for Permitted Dispositions, no Debtor has
authority, express or implied, to dispose of any item or portion of the
Collateral.

               2.2.  Negotiable Collateral.  In the event that any Collateral,
                     ---------------------
including proceeds, is evidenced by or consists of Negotiable Collateral, and if
and to the extent that perfection or priority of Secured Party's security
interest is dependent on or enhanced by possession, the applicable Debtor,
immediately upon the request of Secured Party, shall endorse and deliver
physical possession of such Negotiable Collateral to Secured Party.

               2.3.  Collection of Accounts, General Intangibles, Negotiable
                     -------------------------------------------------------
Collateral.  At any time after the occurrence and during the continuation of an
----------
Event of Default, (x) Secured Party or Secured Party's designee may (a) notify
Account Debtors of any Debtor that the Accounts, chattel paper, or General
Intangibles have been assigned to Secured Party or that Secured Party has a
security interest therein, or (b) collect the Accounts, chattel paper, or
General Intangibles directly and charge the collection costs and expenses to the
Loan Account; and (y) each Debtor agrees that it will hold in trust for Secured
Party, as Secured Party's trustee, any Collections that it receives and
immediately will deliver said Collections to Secured Party or a Cash Management
Bank in their original form as received by the applicable Debtor.

               2.4.  Delivery of Additional Documentation Required.  At any
                     ---------------------------------------------
time upon the request of Secured Party, each Debtor shall execute and deliver to
Secured

                                      -5-
<PAGE>

Party, any and all financing statements, original financing statements in lieu
of continuation statements, fixture filings, security agreements, pledges,
assignments, endorsements of certificates of title, and all other documents (the
"Additional Documents") that Secured Party may request in its Permitted
 --------------------
Discretion, in form and substance satisfactory to Secured Party, to perfect and
continue perfected or better perfect the Secured Party's Liens in the Collateral
(whether now owned or hereafter arising or acquired), to create and perfect the
Liens in favor of Secured Party in any Real Property acquired after the date
hereof, and in order to fully consummate all of the transactions contemplated
hereby and under the other Loan Documents. To the maximum extent permitted by
applicable law, each Debtor authorizes Secured Party to execute any such
Additional Documents in such Debtor's name and authorizes Secured Party to file
such executed Additional Documents in any appropriate filing office. In
addition, on such periodic basis as Secured Party shall require, each Debtor
shall (a) provide Secured Party with a report of all new material patentable,
copyrightable, or trademarkable materials acquired or generated by such Debtor
during the prior period that are necessary to the conduct of the business of
Parent and its Subsidiaries as then conducted, (b) cause all such material
patents, copyrights, and trademarks acquired or generated by such Debtor that
are not already the subject of a registration with the appropriate filing office
(or an application therefor diligently prosecuted) to be registered with such
appropriate filing office in a manner sufficient to impart constructive notice
of such Debtor's ownership thereof, and (c) cause to be prepared, executed, and
delivered to Secured Party supplemental schedules to the applicable Loan
Documents to identify such patents, copyrights, and trademarks as being subject
to the security interests created thereunder.

               2.5.  Power of Attorney.  Each Debtor hereby irrevocably makes,
                     -----------------
constitutes, and appoints Secured Party (and any of Secured Party's officers,
employees, or agents designated by Secured Party) as such Debtor's true and
lawful attorney, with power to: (a) if such Debtor refuses to, or fails timely
to execute and deliver any of the documents described in Section 2.4, sign the
                                                         -----------
name of such Debtor on any of the documents described in Section 2.4; (b) at any
                                                         -----------
time that an Event of Default has occurred and is continuing, sign such Debtor's
name on any invoice or bill of lading relating to the Collateral, drafts against
Account Debtors, or notices to Account Debtors; (c) send requests for
verification of Accounts; (d) endorse such Debtor's name on any Collection item
that may come into Secured Party's possession; (e) at any time that an Event of
Default has occurred and is continuing, make, settle, and adjust all claims
under such Debtor's policies of insurance and make all determinations and
decisions with respect to such policies of insurance; and (f) at any time that
an Event of Default has occurred and is continuing, settle and adjust disputes
and claims respecting the Accounts, chattel paper, or General Intangibles
directly with Account Debtors, for amounts and upon terms which Secured Party
determines to be reasonable, and Secured Party may cause to be executed and
delivered any documents and releases which Secured Party determines to be
necessary. The appointment of Secured Party as each Debtor's attorney, and each
and every one of Secured Party's rights and powers, being coupled with an
interest, is irrevocable until all of the Secured Obligations have been fully
and finally repaid and performed and Secured Party's obligation to extend credit
under the Loan Agreement is terminated.

                                      -6-
<PAGE>

               2.6.   Right to Inspect.  Secured Party (through any of its
                      ----------------
officers, employees, or agents) shall have the right, from time to time
hereafter to inspect each Debtor's Books and to check, test, and appraise the
Collateral and the other assets pledged to Lender pursuant to the Loan Documents
in order to verify such Debtor's financial condition or the amount, quality,
value, condition of, or any other matter relating to, the Collateral or the
other assets pledged to Lender pursuant to the Loan Documents.

               2.7.   Control Agreement.  Each Debtor agrees that it will not
                      -----------------
transfer assets out of any deposit accounts or Securities Accounts other than as
permitted under Section 5.10 and, if to another depositary bank or securities
                ------------
intermediary, unless each of the applicable Debtor, Secured Party, and the
substitute depositary bank or securities intermediary have entered into a
Control Agreement. No arrangement contemplated hereby or by any Control
Agreement in respect of any deposit accounts or Securities Accounts or other
Investment Property shall be modified by any Debtor without the prior written
consent of Secured Party. Solely upon the occurrence and during the continuance
of a Default or Event of Default, Secured Party may notify any depositary bank
or securities intermediary to liquidate the applicable deposit account or
Securities Account or any related Investment Property maintained or held thereby
and remit the proceeds thereof to the Lender's Account.

          3.   REPRESENTATIONS AND WARRANTIES.

          Each Debtor represents and warrants as follows:

               3.1.   No Prior Encumbrances.  Each Debtor has good and
                      ---------------------
indefeasible title to the Collateral, free and clear of Liens except for
Permitted Liens.

               3.2.   Place of Business/Chief Executive Office; FEIN.  The chief
                      ----------------------------------------------
executive office of each Debtor and all other locations at which such Debtor has
a place of business are set forth on Schedule 3.2. Each Debtor's FEIN is set
                                     ------------
forth on Schedule 3.2.
         ------------

               3.3.   Equipment.  All of the Equipment is used or held for use
                      ---------
in each Debtor's business and is fit for such purposes.

               3.4.   Location of Inventory and Equipment.  The Inventory and
                      -----------------------------------
Equipment are not stored with a bailee, warehouseman, or similar party and,
other than the equipment of any Debtor that is in transit in the ordinary course
of business of such Debtor, are located only at the locations identified on
Schedule 3.4.
------------

               3.5.   Inventory Records.  Each Debtor keeps correct and accurate
                      -----------------
records itemizing and describing the type, quality, and quantity of its
Inventory, and the book value thereof.

               3.6.   Due Organization and Qualification; Subsidiaries.  Each
                      ------------------------------------------------
Debtor is duly organized and is existing and in good standing under the laws of
the jurisdiction of its organization and is qualified and licensed to do
business in, and is in good

                                      -7-
<PAGE>

standing in, any state where the failure to be so licensed or qualified could
reasonably be expected to have a Material Adverse Change.

                3.7.   Due Authorization; No Conflict.  The execution, delivery,
                       ------------------------------
and performance of this Agreement, the Guaranty, and any other Loan Document to
which a Debtor is a party are within such Debtor's powers, have been duly
authorized, and are not in conflict with nor, constitute a breach of any
provision contained in the applicable Debtor's Governing Documents, or any
partnership or trust agreement pertaining to such Debtor, nor will they
constitute an event of default under any material agreement to which such Debtor
is now or may hereafter become a party.

               3.8.   Litigation.  Other than those matters disclosed on
                      ----------
Schedule 5.10 to the Loan Agreement, there are no material actions, suits, or
proceedings pending or, to the best knowledge of each Debtor, threatened against
any Debtor, or any of its Subsidiaries, as applicable, except for: (a) matters
that are fully covered by insurance (subject to customary deductibles), and (b)
matters arising after the date hereof that, if decided adversely to Parent, or
any of its Subsidiaries, as applicable, reasonably could not be expected to
result in a Material Adverse Change.

               3.9.   Fraudulent Transfer.
                      -------------------

                      (a)  Each Debtor is Solvent.

                      (b)  No transfer of property is being made by a Debtor and
no obligation is being incurred by a Debtor in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of any Debtor.

               3.10.  Reliance by Secured Party; Cumulative.  The warranties,
                      -------------------------------------
representations, and agreements set forth herein shall be conclusively presumed
to have been relied upon by Secured Party and shall be cumulative and in
addition to any and all other warranties, representations, and agreements which
any Debtor shall now or hereinafter give, or cause to be given, to Secured
Party.

          4.   AFFIRMATIVE COVENANTS.

          Each Debtor covenants and agrees that, until payment full and final
payment of the Secured Obligations (other than any Secured Obligations in
respect of the Warrant and the Registration Rights Agreement), and unless
Secured Party shall otherwise consent in writing, such Debtor shall do all of
the following:

               4.1.   Schedules of Accounts.  With such regularity as Secured
                      ---------------------
Party shall reasonably request, provide Secured Party with schedules describing
all Accounts. Secured Party's failure to request such schedules or any Debtor's
failure to execute and deliver such schedules shall not affect or limit Secured
Party's security interests or other rights in and to the Accounts.

                                      -8-
<PAGE>

               4.2.   Inventory Reporting.  With such regularity as Secured
                      -------------------
Party shall reasonably request, execute and deliver to Secured Party a report
regarding such Debtor's Inventory specifying such Debtor's cost therefor and
further specifying such other information as Secured Party may reasonably
request.

               4.3.   Title to Equipment.  Upon Secured Party's request, deliver
                      ------------------
to Secured Party, properly endorsed, any and all evidences of ownership of,
certificates of title, or applications for title to any items of Equipment.

               4.4.   Maintenance of Properties.  Maintain and preserve all of
                      -------------------------
its properties which are necessary or useful in the proper conduct to its
business in good working order and condition, ordinary wear and tear excepted,
and comply at all times with the provisions of all leases to the extent
necessary to the proper conduct of its business to which it is a party as lessee
so as to prevent any loss or forfeiture thereof or thereunder.

               4.5.   Taxes.  Cause all assessments and taxes, whether real,
                      -----
personal, or otherwise, due or payable by, or imposed, levied, or assessed
against a Debtor or any of its assets to be paid in full, before delinquency or
before the expiration of any extension period, except to the extent that the
validity of such assessment or tax shall be the subject of a Permitted Protest.
Each Debtor will make timely payment or deposit of all tax payments and
withholding taxes required of it by applicable laws, including those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Secured Party with proof
satisfactory to Secured Party indicating that the applicable Debtor has made
such payments or deposits. Promptly upon request by Secured Party, each Debtor
shall deliver satisfactory evidence of payment of applicable excise taxes in
each jurisdictions in which such Debtor is required to pay any such excise tax.

               4.6.   Insurance.
                      ---------

                      (a)  At its expense, keep the Collateral insured against
loss or damage by fire, theft, explosion, and all other hazards and risks as
ordinarily are insured against by other Persons engaged in the same or similar
businesses. Each Debtor also shall maintain business interruption, public
liability, product liability insurance, as well as insurance against larceny,
embezzlement, and criminal misappropriation.

                      (b)  All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Secured Party. Each Debtor shall deliver copies of all such policies to Secured
Party with a satisfactory lender's loss payable endorsement naming the Secured
Party as sole loss payee or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Secured Party in the event of
cancellation of the policy for any reason whatsoever. All proceeds payable under
any such policy shall be payable to Secured Party to be applied on account of
the Secured Obligations.

               4.7.   Location of Inventory and Equipment.  Keep the Inventory
                      -----------------------------------
and Equipment, other than the Equipment that is in transit in the ordinary
course of business

                                      -9-
<PAGE>

of such Debtor, only at the locations identified on Schedule 3.4; provided,
                                                    ------------  --------
however, that any Debtor may amend Schedule 3.4 so long as such amendment occurs
-------                            ------------
by written notice to Secured Party not less than 30 days prior to the date on
which Inventory or Equipment is moved to such new location, so long as such new
location is within the continental United States, and so long as, not later than
the date on which such inventory or equipment is moved to such new location,
such Debtor provides any financing statements or fixture filings necessary to
perfect and continue perfected the Secured Party's Liens on such assets and also
uses reasonable efforts to provide to Secured Party a Collateral Access
Agreement.

               4.8.   Secured Party Expenses.  Each Debtor shall immediately and
                      ----------------------
without demand reimburse Secured Party for all sums expended by Secured Party
which constitute Lender Expenses and each Debtor hereby authorizes and approves
all advances and payments by Secured Party for items constituting Lender
Expenses.

          5.   NEGATIVE COVENANTS.

          Each Debtor covenants and agrees that until full and final payment of
the Secured Obligations (other than any Secured Obligations in respect of the
Warrant and the Registration Rights Agreement), it will not do any of the
following without Secured Party's prior written consent:

               5.1.   Liens.  Create, incur, assume, or permit to exist,
                      -----
directly or indirectly, any Lien on or with respect to any of its assets, of any
kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens (including Liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is refinanced,
renewed, or extended under Section 7.1(d) of the Loan Agreement and so long as
                           --------------
the replacement Liens only encumber those assets that secured the refinanced,
renewed, or extended Indebtedness).

               5.2.   Restrictions on Fundamental Changes.
                      -----------------------------------

                      (a)  Except for Permitted Transactions, enter into any
merger, consolidation, reorganization, or recapitalization, or reclassify its
capital Stock.

                      (b)  Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution).

                      (c)  Convey, sell, assign, lease, transfer, or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets.

               5.3.   Disposal of Assets.  Other than Permitted Dispositions and
                      ------------------
Permitted Transactions, convey, sell, lease, license, assign, transfer or
otherwise dispose of any of the assets of any Debtor.

               5.4.   Change Name.  Except as permitted in Section 5.2(a)
                      -----------                          --------------
hereof, change a Debtor's name, FEIN, business structure, or identity, or add
any new fictitious

                                      -10-
<PAGE>

name; provided, however, that a Debtor may change its name upon at least 30 days
      --------  -------
prior written notice to Secured Party of such change and so long as, not later
than the date on which such change of name is consummated, such Debtor provides
any financing statements, fixture filings necessary to perfect or continue
perfected the Secured Party's Liens.

               5.5.   Guarantee.  Except (i) for the guarantee of the payment
                      ---------
and performance of the Secured Obligations, (ii) guaranties executed by Parent
with respect to the obligations of its subsidiaries which are otherwise
permitted under the Loan Agreement, and (iii) by endorsement of instruments or
items of payment for deposit to the account of a Debtor or which are transmitted
or turned over to Secured Party, guarantee or otherwise become in any way liable
with respect to the obligations of any third Person.

               5.6.   Nature of Business.  Make any change in the principal
                      ------------------
nature of any Debtor's business.

               5.7.   Transactions with Affiliates.  Each Debtor will not
                      ----------------------------
directly or indirectly enter into or permit to exist any transaction with any
Affiliate of a Debtor except for transactions which are in the ordinary course
of a Debtor's business, upon fair and reasonable terms and which are fully
disclosed to Secured Party and, no less favorable to the applicable Debtor than
would be obtained in arm's length transaction with a non-Affiliate.

               5.8.   Suspension.  Suspend or go out of a substantial portion of
                      ----------
its business.

               5.9.   Change in Location of Chief Executive Office; Inventory
                      -------------------------------------------------------
and Equipment with Bailees.  Relocate its chief executive office to a new
--------------------------
location without providing 15 days prior written notification thereof to Secured
Party and so long as, at the time of such written notification, the applicable
Debtor provides any financing statements or fixture filings necessary to perfect
and continue perfected Secured Party's Liens and also uses reasonable efforts to
provide to Secured Party a Collateral Access Agreement with respect to such new
location. The Inventory and Equipment shall not at any time now or hereafter be
stored with a bailee, warehouseman, or similar party without Secured Party's
prior written consent.

               5.10.  Securities Accounts.  Establish or maintain any Securities
                      -------------------
Account unless Secured Party shall have received a Control Agreement in respect
of such Securities Account. No Debtor shall transfer assets out of any
Securities Account; provided, however, that, so long as no Event of Default has
                    --------  -------
occurred and is continuing or would result therefrom, each Debtor may use such
assets (and the proceeds thereof) to the extent not prohibited by this Agreement
or any other Loan Documents.

          6.   EVENTS OF DEFAULT.

          Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
                   ----------------

                                      -11-
<PAGE>

                      (a)  The occurrence of an Event of Default (as defined in
the Loan Agreement);

                      (b)  If a Debtor fails or neglects to (a) perform, keep,
or observe any covenant or other provision contained in Sections 4.1, 4.2, 4.5,
                                                        -----------------------
and 4.7 hereof and such failure or neglect continues for a period of 5 days
-------
after the date on which such failure or neglect first occurs, or (b) perform,
keep, or observe any covenant or other provision contained in any Section of
this Agreement, any other Loan Document, or in any other present or future
agreement between a Debtor and Secured Party (other than a Section that is
expressly dealt with elsewhere in this Section 6), and such failure or neglect
                                       ---------
is not cured within 15 days after the date on which such failure or neglect
first occurs, or (c) perform, keep, or observe any covenant or other provision
contained in Section 4 (other than a subsection of Section 6 that is dealt with
             ---------                             ---------
elsewhere in this Section 6), or Section 5 of this Agreement or any comparable
                  ---------      ---------
provision contained in any of the other Loan Documents, or in any other present
or future agreement between a Debtor and Secured Party;

                      (c)  If any portion of a Debtor's property or assets with
a value greater than $1,000,000 individually or in the aggregate, is attached,
seized, subjected to a writ or distress warrant, or is levied upon, or comes
into the possession of any third Person and the same is not discharged before
the earlier of 30 days after the date it first arises or 5 days prior to the
date on which such property or asset is subject to forfeiture by such Debtor;

                      (d)  If (a) a notice of Lien, levy, or assessment is filed
of record with respect to the properties or assets of a Debtor by the United
States Government, or any department, agency, or instrumentality thereof, or if
any taxes or debts owing at any time hereafter to any one or more of such
entities becomes a Lien, whether choate or otherwise, upon any properties or
assets of a Debtor and the same is not paid on the payment date thereof, or (b)
notices of Lien, levy, or assessment in an aggregate amount in excess of
$1,000,000 are filed of record with respect to the properties or assets of a
Debtor by any state, county, municipal, or governmental agency, or if any taxes
or debts owing at any time hereafter to any one or more of such entities becomes
a Lien exceeding the foregoing aggregate limitation, whether choate or
otherwise, upon the properties or assets of a Debtor and the same is not paid on
the payment date thereof;

                      (e)  If one or more judgments or other claims involving an
aggregate amount of $1,000,000, or more, in excess of the amount covered by
insurance, becomes a Lien or encumbrance upon any material portion of the
properties or assets of a Debtor and the same is not released, discharged,
bonded against, or stayed pending appeal before the earlier of 30 days after the
date it first arises or 5 days prior to the date on which such asset is subject
to being forfeited by a Debtor;

                      (f)  If (x) there is a default in any agreement to which a
Debtor is a party under which Indebtedness of a Debtor involving not less than
$1,000,000 is owing and such default (i) occurs at the final maturity of the
obligations thereunder, or (ii) results in a right of the holder of such
Indebtedness, irrespective of whether exercised, to accelerate the

                                      -12-
<PAGE>

maturity of the obligations of the applicable Debtor thereunder, and such
default is not cured or waived prior to the date that is the earlier of (A) the
date that is 15 days after the date on which such default first occurred, and
(B) the date on which the obligations of the applicable Debtor thereunder are
accelerated or (iii) results in the termination of such agreement; or (y) If
there is a default by a Debtor with respect to any other material agreement
which default reasonably likely could result (i) in a Material Adverse Change,
or (ii) in an award of damages in an amount of $1,000,000, or greater;

                      (g)  If a Debtor makes any payment on account of
Indebtedness that has been contractually subordinated in right of payment to the
payment of the Secured Obligations, except to the extent such payment is
permitted by the terms hereof and by the subordination provisions applicable to
such Indebtedness;

                      (h)  If the obligation of any Debtor under its guaranty is
limited or terminated by operation of law or by such Debtor thereunder;

                      (i)  If any material misstatement or misrepresentation
exists now or hereafter in any warranty, representation or Record made to
Secured Party by a Debtor or any officer, employee, agent, or director of a
Debtor, or if any such warranty or representation is withdrawn; or

                      (j)  If this Agreement or any other Loan Document that
purports to create a Lien, shall, for any reason, fail or cease to create a
valid and perfected and, except to the extent permitted by the terms hereof or
thereof, first priority Lien on or security interest in the Collateral covered
hereby or thereby.

          7.   SECURED PARTY'S RIGHTS AND REMEDIES.

               7.1.  Rights and Remedies.  Upon the occurrence of an Event of
                     -------------------
Default, the security hereby constituted shall become enforceable and, in
addition to all other rights and remedies available to Secured Party as provided
hereafter, Secured Party may, at its election, without notice of its election
and without demand, do any one or more of the following, all of which are
authorized by each Debtor:

                      (a)  Proceed directly and at once, without notice, against
any Debtor to collect and recover the full amount or any portion of the Secured
Obligations, without first proceeding against any Borrower, or against any
security or collateral for the Secured Obligations;

                      (b)  Without notice to any Debtor and regardless of the
acceptance of any security or collateral for the payment hereof, appropriate and
apply toward the payment of the Secured Obligations (i) any indebtedness due or
to become due from Secured Party to any Debtor and (ii) any moneys, credits or
other property belonging to a Debtor at any time held by or coming into the
possession of Secured Party;

                                      -13-
<PAGE>

                      (c)  May exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein and the Guaranty or
otherwise available to it, all the rights and remedies available to it at law
(including those of a secured party under the Code) or in equity;

                      (d)  Settle or adjust disputes and claims directly with
Account Debtors for amounts and upon terms which Secured Party considers
advisable, and in such cases, Secured Party will credit the Loan Account with
only the net amounts received by Secured Party in payment of such disputed
Accounts after deducting all Lender Expenses incurred or expended in connection
therewith;

                      (e)  Cause each Debtor to hold all returned Inventory in
trust for Secured Party, segregate all returned Inventory from all other
property of such Debtor or in such Debtor's possession and conspicuously label
said returned Inventory as the property of Secured Party for the benefit
thereof;

                      (f)  Without notice or demand upon any Debtor, make such
payments and do such acts as Secured Party considers necessary or reasonable to
protect its security interest in the Collateral. Each Debtor agrees to assemble
the Collateral if Secured Party so requires, and to make the Collateral
available to Secured Party as Secured Party may designate. Each Debtor
authorizes Secured Party to enter the premises where the Collateral is located,
to take and maintain possession of the Collateral, or any part of it, and to
pay, purchase, contest, or compromise any encumbrance, charge, or lien which in
Secured Party's determination appears to be prior or superior to its security
interest and to pay all expenses incurred in connection therewith. With respect
to any of the Debtors' owned premises, each Debtor hereby grants Secured Party a
license to enter into possession of such premises and to occupy the same,
without charge, for up to one hundred twenty (120) days in order to exercise any
of Secured Party's rights or remedies provided herein, at law, in equity, or
otherwise;

                      (g)  Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral. Each Debtor hereby grants to Secured Party a license
or other right to use, without charge, such Debtor's labels, patents,
copyrights, rights of use of any name, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any property of a similar nature, as
it pertains to the Collateral, in completing production of advertising for sale
and selling any Collateral, and each Debtor's rights under all licenses and all
franchise agreements shall inure to Secured Party's benefit;

                      (h)  Sell all or any part of the Collateral at either a
public or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places (including
a Debtor's premises) as Secured Party determines is commercially reasonable. It
is not necessary that the Collateral be present at any such sale;

                                      -14-
<PAGE>

                      (i)  Secured Party shall give notice of the disposition of
the Collateral as follows:

                      (i)  Secured Party shall give the applicable Debtor a
               notice in writing of the time and place of public sale, or, if
               the sale is a private sale or some other disposition other than a
               public sale is to be made of the Collateral, then the time on or
               after which the private sale or other disposition is to be made;
               and

                      (ii) The notice shall be personally delivered or mailed,
               postage prepaid, to the applicable Debtor as provided in Section
                                                                        -------
               10, at least 10 days before the earliest time of disposition set
               --
               forth in the notice; no notice needs to be given prior to the
               disposition of any portion of the Collateral that is perishable
               or threatens to decline speedily in value or that is of a type
               customarily sold on a recognized market;

                      (j)  Secured Party may credit bid and purchase at any
public sale;

                      (k)  Secured Party may seek the appointment of a receiver
or keeper to take possession of all or any portion of the Collateral or to
operate same and, to the maximum extent permitted by law, may seek the
appointment of such a receiver without the requirement of prior notice or a
hearing;

                      (l)  Secured Party shall have all other rights and
remedies available at law or in equity or pursuant to any other Loan Document;
and

                      (m)  Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by the Debtors. Any excess
will be returned, without interest and subject to the rights of third Persons,
by Secured Party to the applicable Debtor.

               7.2.   Remedies Cumulative.  Secured Party's rights and remedies
                      -------------------
under this Agreement, the Loan Documents, and all other agreements shall be
cumulative. Secured Party shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by Secured Party of one right or remedy shall be deemed an election,
and no waiver by Secured Party on behalf thereof, of any Event of Default on a
Debtor's part shall be deemed a continuing waiver. No delay by Secured Party on
behalf thereof shall constitute a waiver, election, or acquiescence by it.

          8.  TAXES AND EXPENSES REGARDING THE COLLATERAL.  If any Debtor fails
to pay any monies (whether taxes, rents, assessments, insurance premiums, or, in
the case of leased properties or assets, rents or other amounts payable under
such leases) due to third Persons, or fails to make any deposits or furnish any
required proof of payment or deposit, all as required under the terms of this
Agreement, then, Secured Party, in

                                      -15-
<PAGE>

its sole discretion and without prior notice to any Debtor, may do any or all of
the following: (a) make payment of the same or any part thereof; (b) set up such
reserves in the Loan Account as Secured Party deems necessary to protect Secured
Party from the exposure created by such failure; or (c) in the case of the
failure to comply with Section 4.6 obtain and maintain insurance policies
                       -----------
insuring each Debtor's ownership and use of the Collateral, and take any action
with respect to such policies as Secured Party deems prudent in its Permitted
Discretion. Any amounts paid or deposited by Secured Party shall constitute
Lender Expenses, shall immediately become additional Secured Obligations, shall
bear interest at the applicable rate described in the Loan Document, and shall
be secured by the Collateral. Any payments made by Secured Party shall not
constitute an agreement by Secured Party to make similar payments in the future
or a waiver by Secured Party of any Event of Default under this Agreement.
Secured Party need not inquire as to, or contest the validity of, any such
expense, tax, security interest, encumbrance, or lien and the receipt of the
usual official notice for the payment thereof shall be conclusive evidence that
the same was validly due and owing. Secured Party shall use its best efforts to
provide notice to the applicable Debtor of any action taken by it under this
Section 8.
---------

          9.   WAIVERS; INDEMNIFICATION.

               9.1.   Demand; Protest; etc.  To the extent permitted by law,
                      --------------------
each Debtor waives demand, protest, notice of protest, notice of default or
dishonor, notice of payment and nonpayment, notice of any default, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of accounts,
documents, instruments, chattel paper, and guarantees at any time held by
Secured Party on which such Debtor may in any way be liable.

               9.2.   Secured Party's Liability for Collateral.  So long as
                      ----------------------------------------
Secured Party complies with its obligations, if any, under Section 9207 of the
Code, Secured Party shall not in any way or manner be liable or responsible for:
(a) the safekeeping of the Collateral; (b) any loss or damage thereto occurring
or arising in any manner or fashion from any cause; (c) any diminution in the
value thereof; or (d) any act or default of any carrier, warehouseman, bailee,
forwarding agency, or other Person (other than its own agents). All risk of
loss, damage, or destruction of the Collateral shall be borne by the Debtors.

               9.3.   Indemnification.  Each Debtor agrees, jointly and
                      ---------------
severally, to defend, indemnify, save, and hold the Lender-Related Persons, the
Lender-Related Persons with respect to Lender harmless against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
Person, and (b) all losses (including attorneys fees and disbursements) in any
way suffered, incurred, or paid by Secured Party as a result of or in any way
arising out of, following, or consequential to transactions with the Borrower or
the Debtors, whether under this Agreement, the other Loan Documents or
otherwise. This provision shall survive the termination of this Agreement.

          10.  NOTICES.  All notices and other communications hereunder to
Secured Party shall be in writing and shall be mailed, sent or delivered in
accordance with

                                      -16-
<PAGE>

the Loan Agreement and all notices and other communications hereunder to a
Debtor shall be in writing and shall be mailed, sent or delivered in care of
Borrower in accordance with the Loan Agreement.

          11.  CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.  THE VALIDITY OF THIS
AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF
THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. THE PARTIES AGREE THAT ALL
ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED
AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
                             --------  -------
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT SECURED
PARTY'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE LENDER ELECTS TO BRING
SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH DEBTOR
AND SECURED PARTY WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 11.
----------

          EACH DEBTOR AND SECURED PARTY HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS.  EACH DEBTOR AND SECURED PARTY REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

          12.  DESTRUCTION OF DEBTORS' DOCUMENTS.  All documents, schedules,
agings, or other papers delivered to Secured Party may be destroyed or otherwise
disposed of by Secured Party four (4) months after they are delivered to or
received by Secured Party, unless the applicable Debtor requests, in writing,
the return of said documents, schedules or other papers and makes arrangements,
at such Debtor's expense, for their return.

                                      -17-
<PAGE>

          13.  GENERAL PROVISIONS.

               13.1.  Effectiveness.  This Agreement shall be binding and deemed
                      -------------
effective when executed by each Debtor and accepted and executed by Secured
Party.

               13.2.  Successors and Assigns.  This Agreement shall bind and
                      ----------------------
inure to the benefit of the respective successors and assigns of each of the
parties; provided, however, that no Debtor may assign this Agreement or any
         --------  -------
rights or duties hereunder without Secured Party's prior written consent and any
prohibited assignment shall be absolutely void. No consent to an assignment by
Secured Party shall release the applicable Debtor from its Secured Obligations.
Secured Party may assign this Agreement and its rights and duties hereunder and
no consent or approval by any Debtor is required in connection with any such
assignment. Secured Party reserves the right to sell, assign, transfer,
negotiate, or grant participations in all or any part of, or any interest in the
applicable member's rights and benefits hereunder. In connection therewith,
Secured Party may disclose all documents and information which Secured Party now
or hereafter may have relating to any Debtor or any Debtor's business. To the
extent that Secured Party assigns its rights and obligations to a third Person,
Secured Party thereafter shall be released from such assigned obligations to
each of the Debtors and such assignment shall effect a novation between each of
the Debtors and such third Person.

               13.3.  Section Headings.  Headings and numbers have been set
                      ----------------
forth herein for convenience only. Unless the contrary is compelled by the
context, everything contained in each section applies equally to this entire
Agreement.

               13.4.  Interpretation.  Neither this Agreement nor any
                      --------------
uncertainty or ambiguity herein shall be construed or resolved against Secured
Party or any Debtor, whether under any rule of construction or otherwise. On the
contrary, this Agreement has been reviewed by all parties and shall be construed
and interpreted according to the ordinary meaning of the words used so as to
fairly accomplish the purposes and intentions of all parties hereto.

               13.5.  Severability of Provisions.  Each provision of this
                      --------------------------
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.

               13.6.  Amendments in Writing.  This Agreement can only be amended
                      ---------------------
by a writing signed by Secured Party and each Debtor.

               13.7.  Counterparts; Telefacsimile Execution.  This Agreement may
                      -------------------------------------
be executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.

                                      -18-
<PAGE>

               13.8.  Revival and Reinstatement of Obligations.  If the
                      ----------------------------------------
incurrence or payment of the Secured Obligations by a Debtor or the transfer by
a Debtor to Secured Party of any property of a Debtor should for any reason
subsequently be declared to be void or voidable under any state or federal law
relating to creditors' rights, including provisions of the Bankruptcy Code
relating to fraudulent conveyances, preferences, and other voidable or
recoverable payments of money or transfers of property (collectively, a
"Voidable Transfer"), and if Secured Party is required to repay or restore, in
 -----------------
whole or in part, any such Voidable Transfer, or elects to do so upon the
reasonable advice of its counsel, then, as to any such Voidable Transfer, or the
amount thereof that Secured Party is required or elects to repay or restore, and
as to all reasonable costs, expenses, and attorneys fees of Secured Party
related thereto, the liability of each of the Debtors automatically shall be
revived, reinstated, and restored and shall exist as though such Voidable
Transfer had never been made.

                           [signature page follows]

                                      -19-
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.

                                   MICROSTRATEGY INCORPORATED,
                                   a Delaware corporation

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

                                   AVENTINE INCORPORATED,
                                   a Delaware corporation

                                   By:   /s/ William J. Chatterton Jr.
                                         --------------------------------------
                                   Name:  William J. Chatterton Jr.
                                         --------------------------------------
                                   Title: President
                                         --------------------------------------

                                   MICROSTRATEGY CAPITAL CORPORATION,
                                   a Delaware corporation

                                   By:   /s/ Eric F. Brown
                                         --------------------------------------
                                   Name:  Eric F. Brown
                                         --------------------------------------
                                   Title: Treasurer
                                         --------------------------------------

                                   MICROSTRATEGY MANAGEMENT CORPORATION,
                                   a Delaware corporation

                                   By:   /s/ Eric F. Brown
                                         --------------------------------------
                                   Name:  Eric F. Brown
                                         --------------------------------------
                                   Title: Treasurer
                                         --------------------------------------

                                   FOOTHILL CAPITAL CORPORATION,
                                   a California corporation

                                   By:   /s/ Brian Duffy
                                         --------------------------------------
                                   Name:  Brian Duffy
                                         --------------------------------------
                                   Title: Senior Vice President
                                         --------------------------------------

                                      S-1<PAGE>

                                                                    Exhibit 10.4

                               WARRANT AGREEMENT

          WARRANT AGREEMENT (this "Agreement"), dated as of February 9, 2001, by
                                   ---------
and between MICROSTRATEGY INCORPORATED, a Delaware corporation (the "Company"),
                                                                     -------
and FOOTHILL CAPITAL CORPORATION, a California corporation ("Lender").
                                                             ------

                              W I T N E S S E T H:
                              --------------------

          WHEREAS, the Company and Lender are parties to that certain Loan and
Security Agreement, dated as of February 9, 2001 (as the same may from time to
time be amended, restated, supplemented or otherwise modified, the "Loan
                                                                    ----
Agreement") pursuant to which Lender has agreed to make certain financial
---------
accommodations to the Company;

          WHEREAS, pursuant to the Loan Agreement and as a condition to the
effectiveness thereof, it is a requirement that the Company execute and deliver
this Agreement and issue to the Warrant Holder, in accordance with the terms and
conditions hereof, a warrant (the "Warrant") to purchase up to an aggregate of
                                   -------
50,000 shares of the Company's class A common stock, par value $0.001 per share
("Common Stock"), at the exercise price per share provided for herein, which
  ------------
warrant shall be evidenced in substantially the same form as the Form of Warrant
Certificate (the "Warrant Certificate") attached hereto as Exhibit A; and
                  -------------------                      ---------

          WHEREAS, Lender desires to acquire from the Company, and the Company
desires to issue to Lender, the Warrant.

          NOW, THEREFORE, in consideration of these premises, and the respective
promises and covenants contained herein, the parties hereto hereby agree as
follows:

          SECTION 1.  Definitions.  The following terms as used in this
                      -------------------------------------------------
Agreement shall have the meanings set forth below:
--------------------------------------------------

          "Business Day" means a day other than a Saturday, Sunday or other day
on which banks in the State of California are authorized by law to remain
closed;

          "Common Stock" shall mean the meaning set forth in the Recitals to
this Agreement;

          "Company" shall have the meaning set forth in the introductory
paragraph hereof, or any successor thereof;

          "Convertible Securities" shall have the meaning set forth in
Section 4(c);
------------

          "Exempt Securities" shall have the meaning set forth in Section 4(o);
                                                                  ------------

          "Exercise Date" shall mean any date on which the Company shall have
received both (i) a Warrant Certificate representing a Warrant, with the
exercise form thereon duly executed by the Warrant Holder, or his attorney-in-
fact duly authorized in writing, and (ii) payment of the
<PAGE>

Underlying Share Purchase Price pursuant to Section 2(b) or Section 2(c), as
determined by the Warrant Holder in its sole discretion;

          "Lender" shall have the meaning set forth in the preamble hereto;

          "Nasdaq" means the Nasdaq National Market;

          "Notice Event" shall mean (i) any authorization by the Company of the
issuance to all holders of shares of Common Stock of rights, options or warrants
to subscribe for or purchase shares of Common Stock or of any other subscription
rights or warrants, (ii) any authorization by the Company of the distribution to
all holders of shares of Common Stock of evidences of its indebtedness or assets
(other than cash dividends or distributions payable out of consolidated earnings
or earned surplus or dividends payable in shares of Common Stock), (iii) any
consolidation or merger to which the Company is a party and for which approval
of any stockholders of the Company is required, or of the conveyance or transfer
of the properties and assets of the Company substantially as an entirety, or of
any reclassification or change of Common Stock issuable upon exercise of the
Warrants (other than a change in par value, or from par value to no par value,
or from no par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of Common Stock,
(iv) any voluntary or involuntary dissolution, liquidation or winding up of the
Company, or (v) any proposal by the Company to take any other action that would
require an adjustment of the Underlying Share Purchase Price or the number of
Underlying Shares pursuant to Section 4;

          "Option Issuance" shall have the meaning set forth in Section 4 (c);
                                                                -------------

          "Options" shall have the meaning set forth in Section 4(c);
                                                        ------------

          "Registrable Securities" shall have the meaning set forth in the
Registration Rights Agreement;

          "Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of the date hereof, by and between the Company and Lender;

          "SEC" means the Securities and Exchange Commission;

          "SEC Reports" shall have the meaning set forth in Section 3(d);
                                                            ------------

          "Stock Option Plan" shall have the meaning set forth in Section 4(o);
                                                                  ------------

          "Transfer Agent" means American Stock Transfer & Trust Company, or
such other firm as may then be acting as the transfer agent of the Company;

          "Underlying Share Expiration Date" means the last date on which the
Warrants to purchase the Underlying Shares may be exercised, which shall be 5:00
p.m., California time, on the day before the date which is 5 years from the date
hereof (or as may be extended pursuant to Section 3(c)), or if such expiration
date is not a Business Day, at or before 5:00 p.m. California time on the next
following Business Day;

                                      -2-
<PAGE>

          "Underlying Share Purchase Price" shall mean the average of the high
and low sales prices of the Company's Common Stock as reported by Nasdaq for the
five consecutive business days prior to the closing date of the Loan Agreement
subject to adjustment from time to time pursuant to the provisions of Section 4;
                                                                      ---------

          "Underlying Shares" means the 50,000 shares of Common Stock that are
the subject of the Warrants, subject to adjustment from time to time as provided
herein;

          "Warrants" shall mean the right to purchase the Underlying Shares
pursuant to this Agreement, together with any divisions thereof;

          "Warrant Certificate" shall have the meaning set forth in the recitals
hereto;

          "Warrant Holder" means a person or entity in whose name the Warrants
shall be either initially or subsequently registered upon the books to be
maintained by the Company for such purpose.

          SECTION 2.  Duration and Exercise
                      ---------------------
               (a)  Duration.  Subject to the provisions of Section 4 hereof,
                    --------
the Warrants may be exercised from time to time, upon the terms and subject to
the conditions set forth herein, at any time before the Underlying Share
Expiration Date. If the Warrants are not exercised before the Underlying Share
Expiration Date, the Warrant Holder shall no longer be entitled to purchase the
Underlying Shares and all rights hereunder to purchase such Underlying Shares
shall thereupon cease.

               (b)  Exercise.
                    --------

                    (i)    A Warrant Holder may exercise the Warrants, in whole
or in part, to purchase the Underlying Shares in such amounts as may be elected
upon surrender of the Warrant Certificates therefor with the subscription form
thereon duly executed, to the Company at its corporate office at 8000 Towers
Crescent Drive, Suite 1400, Vienna, Virginia 22182, together with the full
Underlying Share Purchase Price for each Underlying Share to be purchased,
(i) in lawful money of the United States, or by certified check or bank
draft payable in United States dollars to the order of the Company or
(ii) cancellation of all or any part of the unpaid principal amount of
indebtedness outstanding under the Loan Agreement in an amount equal to the
Underlying Share Purchase Price and upon compliance with and subject to the
conditions set forth herein and in the Warrant Certificate.

                    (ii)   Upon receipt of such Warrant Certificates together
with the Subscription Form attached hereto as Exhibit D (or a reasonable
                                              ---------
facsimile thereof) thereon duly executed and accompanied by payment of the
Underlying Share Purchase Price for the number of Underlying Shares for which
such Warrants are then being exercised, the Company shall, subject to Section
                                                                      -------
5(b) hereof, cause to be issued and delivered promptly, but in all events within
----
three (3) Business Days of receipt by the Company of the Underlying Share
Purchase Price, to the Warrant Holder certificates for such shares of Common
Stock in such denominations as are requested by the Warrant Holder.

                                      -3-
<PAGE>

                    (iii)  In case a Warrant Holder shall exercise Warrants with
respect to less than all of the Underlying Shares, the Company will execute a
new Warrant Certificate, as represented by a warrant certificate substantially
in the form attached hereto as Exhibit A, exercisable for the balance of the
Underlying Shares that may be purchased upon exercise of such Warrants and
deliver such new Warrant Certificate to the Warrant Holder. Warrant Certificates
shall be executed on behalf of the Company by the Company's Chairman of the
Board, President or any Vice President and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary.

                    (iv)   Warrants shall be deemed to have been exercised
immediately prior to the close of business on the Exercise Date, and the person
entitled to receive the Underlying Shares and any Warrant Certificate
representing the unexercised portion of the Warrants deliverable upon such
exercise shall be treated for all purposes as the holder of such Underlying
Shares and unexercised Warrants, respectively, upon such exercise as of the
close of business on the Exercise Date.

                    (v)    The Company covenants and agrees that it will pay
when due and payable any and all taxes that may be payable in respect of the
issue of the Warrants or the issue of any Underlying Shares. The Company shall
not, however, be required to pay any tax that may be payable in respect of any
transfer by the Warrant Holder of the Warrants or any Underlying Shares to any
person or entity at the time of surrender. Until the payment of the tax referred
to in the previous sentence and the presentation to the Company by the Warrant
Holder of reasonable proof of such payment, the Company shall not be required to
issue such Underlying Shares or new Warrant Certificates representing
unexercised Warrants to any transferee.

               (c)  Cashless Exercise.  In lieu of a cash payment of the
                    -----------------
Underlying Share Purchase Price, a Warrant Holder may exercise the Warrants, in
whole or in part, by presentation and surrender of the Warrants to the Company,
together with a Cashless Exercise Form attached hereto as Exhibit B (or a
                                                          ---------
reasonable facsimile thereof) duly executed (a "Cashless Exercise"). Acceptance
                                                -----------------
by the Company of such presentation and surrender shall be deemed a waiver of
the Warrant Holder's obligation to pay all or any portion of the Underlying
Share Purchase Price, as the case may be. In the event of a Cashless Exercise,
the Warrant Holder shall exchange the Warrants for that number of shares of
Common Stock determined by multiplying the number of shares of Common Stock for
which the Warrants are being exercised by a fraction, the numerator of which
shall be the difference between the then current market price per share of the
Common Stock and the Underlying Share Purchase Price, and the denominator of
which shall be the then current market price per share of Common Stock. For
purposes of any computation under this Section 2(c), the then current market
                                       ------------
price per share of Common Stock at any date shall be deemed to be the average
for the ten (10) consecutive business days immediately prior to the Cashless
Exercise of the daily closing prices of the Common Stock on the principal
national securities exchange on which the Common Stock is admitted to trading or
listed, or if not listed or admitted to trading on any such exchange, the last
reported sales prices as included for quotation on Nasdaq, or if not included
for quotation on Nasdaq, the average of the highest reported bid and lowest
reported asked prices as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System, or if not then publicly traded, the
fair market price of the Common Stock as determined by the Board of Directors of
the Company.

                                      -4-
<PAGE>

          SECTION 3.  Covenants
                      ---------

               (a)  Issuance and Sale of Underlying Shares.  The Company
                    --------------------------------------
covenants that it will at all times reserve and keep available, free from
preemptive rights, out of its authorized Common Stock, solely for the purpose of
issuance upon exercise of the Warrants, such number of shares of Common Stock as
shall equal the aggregate number of the Underlying Shares. The Company covenants
that all shares of Common Stock that shall be issuable upon exercise of the
Warrants shall, at the time of delivery and, subject to Section 2(c) hereof,
upon receipt by the Company of the Underlying Share Purchase Price, be duly and
validly issued, fully paid, nonassessable and free from all taxes, liens and
charges with respect to the issue thereof (other than those which the Company
shall promptly pay or discharge).

          The Company hereby authorizes and directs the Transfer Agent for the
Common Stock at all times to reserve such number of authorized shares of Common
Stock as shall be required for such purpose.  The Company will keep a copy of
this Agreement on file with the Transfer Agent.  The Company will supply such
Transfer Agent with duly executed certificates for such purposes and will
provide or otherwise make available any cash which may be payable as provided in
Section 5(b) hereof.  The Company will furnish such Transfer Agent with a copy
of all notices of adjustments and certificates related thereto transmitted to
the Warrant Holder pursuant to Section 4(p) hereof.

               (b)  Registration Rights Agreement.  Lender, any transferee of
                    -----------------------------
Lender's interests hereunder and any subsequent transferee thereof shall be
entitled to the benefits of that certain Registration Rights Agreement between
Lender and the Company of even date herewith, to the extent provided for in the
Registration Rights Agreement.

               (c)  SEC Reports.  So long as the Warrants remain outstanding,
                    -----------
the Company shall cause copies of all financial reports, documents, and other
reports (or copies of such portions of any of the foregoing) which the Company
provides to its stockholders (whether pursuant to Section 13 or 15(d) of the
Exchange Act or otherwise) to be mailed to the Warrant Holder at his, her or its
address appearing in the register of warrant holders maintained by the Company,
in each case, within 15 days of filing with the SEC. If the Company is not
subject to the requirements of Section 13 or 15(d) of the Exchange Act, the
Company shall nevertheless continue to cause quarterly and annual reports
comparable to those which it would be required to file on Form 10-Q and Form 10-
K, respectively, pursuant to Section 13 or 15(d) of the Exchange Act as if it
were subject to the requirements of either such section, to be so filed with the
SEC (but only if the SEC permits such filings) and mailed to the Warrant Holder,
in each case, within the same time periods as would have applied (including
under the preceding sentence) had the Company been subject to the requirements
of Section 13 or 15(d) of the Exchange Act.

               (d)  Restrictive Legend.  Each Warrant Certificate and
                    ------------------
certificate evidencing shares of Common Stock issued to the Warrant Holder
following the exercise of Warrants shall bear the following restrictive legend
until such time as the transfer of such security is not restricted under the
federal securities laws:

          THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
          BEEN REGISTERED UNDER THE SECURITIES

                                      -5-
<PAGE>

          ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
          SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, ASSIGNED,
          TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF
          EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT
          UNDER THE ACT, OR (II) AN OPINION OF COUNSEL, IF SUCH
          OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE
          ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT
          IS AVAILABLE..

          SECTION 4.  Adjustment of Underlying Share Purchase Price and Number
                      --------------------------------------------------------
of Underlying Shares.  The number of Underlying Shares purchasable upon the
--------------------
exercise of the Warrants and the payment of the Underlying Share Purchase Price
shall be subject to adjustment from time to time as follows:

               (a)  Stock Splits, Combinations, etc.  In case the Company shall
                    -------------------------------
hereafter, but prior to 5:00 p.m. (California time) on the Underlying Share
Expiration Date: (i) pay a dividend or make a distribution on its Common Stock
in shares of its capital stock (whether such distribution consists of shares of
Common Stock or of capital stock of any other class); (ii) subdivide its
outstanding shares of Common Stock; (iii) combine its outstanding shares of
Common Stock into a smaller number of shares; or (iv) issue by reclassification
of its shares of Common Stock any shares of capital stock of the Company, the
Underlying Share Purchase Price in effect and the number of Underlying Shares
issuable upon exercise of the Warrants immediately prior to such action shall be
adjusted so that the Warrant Holder shall be entitled to receive that number of
shares of Common Stock of the Company at the same aggregate Underlying Share
Purchase Price that the Warrant Holder would have owned immediately following
such action had the Warrants been exercised immediately prior thereto. An
adjustment made pursuant to this paragraph shall become effective on the day
which is immediately after the record date in the case of a dividend and shall
become effective on the day which is immediately after the effective date in the
case of a subdivision, combination or reclassification. If, as a result of an
adjustment made pursuant to this paragraph, the Warrant Holder shall become
entitled to receive shares of two or more classes of capital stock of the
Company, the Board of Directors of the Company (whose determination shall be
conclusive) shall determine the allocation of the adjusted Underlying Share
Purchase Price between or among shares of such classes of capital stock.

               (b)  Reclassification, Combination, Mergers, etc.  In case of any
                    --------------------------------------------
reclassification or change of outstanding shares of Common Stock issuable upon
exercise of the Warrants (other than as set forth in paragraph (a) above and
other than a change in par value, or from par value to no par value, or from no
par value to par value or as a result of a subdivision or combination), or in
case of any consolidation or merger of the Company with or into another
corporation or entity (other than a merger in which the Company is the
continuing corporation and which does not result in any reclassification or
change of the then outstanding shares of Common Stock or other capital stock
issuable upon exercise of the Warrants), or in the case of any sale or
conveyance of all or substantially all of the assets of the Company followed by
a related distribution to holders of shares of Common Stock or cash, securities
or other property, then as a condition of such reclassification, change,
consolidation, merger, or sale of assets, the Company or such successor
corporation or entity, as the case may be, shall forthwith make lawful and
adequate

                                      -6-
<PAGE>

provision whereby the Warrant Holder shall have the right thereafter to receive
on exercise of the Warrants (provided such exercise occurs prior to 5:00 p.m.
(California time) on the Underlying Share Expiration Date) the kind and amount
of shares of stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, or sale of assets, by a holder
of shares of Common Stock immediately prior to such reclassification, change,
consolidation, merger, or sale of assets, and the Company or such successor
corporation or entity shall enter into a supplemental warrant agreement with the
Warrant Holder so providing. Such provisions shall include provision for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 4. If the issuer of securities
                                 ---------
deliverable upon exercise of the Warrants under the supplemental warrant
agreement is an affiliate of the formed or surviving corporation or other
entity, that issuer shall join in the supplemental warrant agreement. The above
provisions of this paragraph (b) shall similarly apply to successive
reclassification and changes of shares of Common Stock and to successive
consolidations or mergers.

               (c)  Issuance of Options or Convertible Securities.  In the event
                    ---------------------------------------------
the Company shall, at any time or from time to time after the date hereof, but
prior to 5:00 p.m. (California time) on the Underlying Share Expiration Date,
issue, sell, distribute or otherwise grant in any manner (including by
assumption) any rights to subscribe for or to purchase, or any warrants or
options for the purchase of, Common Stock or any stock or securities convertible
into or exchangeable for Common Stock (any such rights, warrants or options
being herein called "Options" and any such convertible or exchangeable stock or
                     -------
securities being herein called "Convertible Securities"), whether or not such
                                ----------------------
Options or rights to convert or exchange such Convertible Securities are
immediately exercisable, and the price per share at which Common Stock is
issuable upon the exercise of such Options or upon the conversion or exchange of
such Convertible Securities (determined by dividing (1) the aggregate amount, if
any, received or receivable by the Company as consideration for the issuance,
sale, distribution or granting of such Options or such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the exercise of all such Options or upon conversion or
exchange of all such Convertible Securities, plus, in the case of Options to
acquire Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or exchange of all such
Convertible Securities, by (2) the total maximum number of shares of Common
Stock issuable upon the exercise of all such Options or upon the conversion or
exchange of all such Convertible Securities or upon the conversion or exchange
of all Convertible Securities issuable upon the exercise of all such Options)
shall be less than the current market price per share of the Common Stock on the
record date that the Company becomes obligated to make such issuance, sale,
distribution or granting of such Options or Convertible Securities except in
connection with the issuance or sale of any Exempt Securities (as defined in
paragraph (n) below) (any such event being herein called an "Option Issuance"),
                                                             ---------------
then, effective upon such Option Issuance:

                    (i)    the Underlying Share Purchase Price shall be reduced
to the price (calculated to the nearest one tenth of one cent ($0.001))
determined by multiplying the Underlying Share Purchase Price in effect
immediately prior to such Option Issuance by a fraction, the numerator of which
shall be the sum of (X) the number of shares of Common Stock outstanding
(exclusive of any treasury shares) immediately prior to such Option Issuance
multiplied by the current market price per share of Common Stock on the date of
such Option Issuance, plus (Y) the consideration, if any, received by the
Company upon such Option Issuance, and the denominator of which shall be the
product of (A) the total number of shares of Common Stock outstanding

                                      -7-
<PAGE>

(exclusive of any treasury shares) immediately after such Option Issuance,
multiplied by (B) the current market price per share of Common Stock on the
record date for such Option Issuance; and

                    (ii)   (2) the number of Underlying Shares purchasable upon
the exercise of the Warrants shall be increased to a number determined by
multiplying the number of Underlying Shares so purchasable immediately prior to
the record date for such Option Issuance by a fraction, the numerator of which
shall be the Underlying Share Purchase Price in effect immediately prior to the
adjustment required by clause (1) of this Section 4(c) and the denominator of
which shall be the Underlying Share Purchase Price in effect immediately after
such adjustment.

          For purposes of the foregoing, the total maximum number of shares of
Common Stock issuable upon exercise of all such Options or upon conversion or
exchange of all such Convertible Securities or upon the conversion or exchange
of the total maximum amount of the Convertible Securities issuable upon the
exercise of all such Options shall be deemed to have been issued as of the date
of such Option Issuance and thereafter shall be deemed to be outstanding and the
Company shall be deemed to have received as consideration therefor such price
per share, determined as provided above.  Except as provided in paragraphs (j)
and (k) below, no additional adjustment of the Underlying Share Purchase Price
shall be made upon the actual exercise of such Options or upon conversion or
exchange of the Convertible Securities or upon the conversion or exchange of the
Convertible Securities issuable upon the exercise of such Options.

               (d)  Dividends and Distributions.  In the event the Company
                    ---------------------------
shall, at any time or from time to time after the date hereof, but prior to
5:00 p.m. (California time) on the Underlying Share Expiration Date, distribute
to all the holders of Common Stock any dividend or other distribution of cash,
evidences of its indebtedness, other securities or other properties or assets
(in each case other than (1) dividends payable in Common Stock, Options or
Convertible Securities and (2) any cash dividend that, when added to all other
cash dividends paid in the one year prior to the declaration date of such
dividend, does not exceed 5% of the current market price per share of Common
Stock on such declaration date), or any options, warrants or other rights to
subscribe for or purchase any of the foregoing, then:

                    (i)    the Underlying Share Purchase Price shall be
decreased to a price determined by multiplying the Underlying Share Purchase
Price then in effect by a fraction, the numerator of which shall be the current
market price per share of Common Stock on the record date for such distribution
less the sum of (X) the cash portion per share, if any, of such distribution of
Common Stock outstanding (exclusive of any treasury shares) on the record date
for such distribution plus (Y) the then fair market value per share of Common
Stock outstanding (exclusive of any treasury shares) on the record date for such
distribution of that portion, if any, of such distribution consisting of
evidences of indebtedness, other securities, properties assets, options,
warrants or subscription of purchase rights, and the denominator of which shall
be such current market price per share of the Common Stock on the record date
for such distribution; and

                    (ii)   the number of Underlying Shares purchasable upon the
exercise of the Warrants shall be increased to a number determined by
multiplying the number of Underlying Shares so purchasable immediately prior to
the record date for such distribution by a fraction, the numerator of which
shall be the Underlying Share Purchase Price in effect immediately

                                      -8-
<PAGE>

prior to the adjustment required by clause (1) of this Section 4(d) and the
                                                       ------------
denominator of which shall be the Underlying Share Purchase Price in effect
immediately after such adjustment.

          The adjustments required by this paragraph (d) shall be made whenever
                                           -------------
any such distribution occurs retroactive to the record date for the
determination of stockholders entitled to receive such distribution.

               (e)  Sale of Common Stock Below its Current Market Price.  Except
                    ---------------------------------------------------
in connection with the issuance or sale of any Exempt Securities (as defined in
paragraph (n) below), if the Company shall at any time or from time to time
after the date hereof, issue or sell any shares of Common Stock and the price
per share at which such shares were issued or sold shall be less than the
current market price per share of the Common Stock on the date the Company
becomes obligated to make such issuance or sale, then, effective upon such
issuance or sale:

                    (i)    the Underlying Share Purchase Price shall be reduced
to the price (calculated to the nearest one tenth of one cent ($0.001))
determined by multiplying the Underlying Share Purchase Price in effect
immediately prior to such issuance or sale by a fraction, the numerator of which
shall be the sum of (A) the number of shares of Common Stock outstanding
(exclusive of any treasury shares) immediately prior to such issuance or sale
multiplied by the current market price per share of Common Stock on the date of
such issuance or sale, plus (B) the consideration received by the Company upon
such issuance or sale, and the denominator of which shall be the product of
(X) the total number of shares of Common Stock outstanding (exclusive of any
treasury shares) immediately after such issuance or sale, multiplied by (Y) the
current market price per share of Common Stock on the date of such issuance or
sale; and

                    (ii)   the number of Underlying Shares purchasable upon the
exercise of the Warrants shall be increased to a number determined by
multiplying the number of Underlying Shares so purchasable immediately prior to
the date of such issuance or sale by a fraction, the numerator of which shall be
the Underlying Share Purchase Price in effect immediately prior to the
adjustment required by clause (i) of this sentence and the denominator of which
shall be the Underlying Share Purchase Price in effect immediately after such
adjustment.

               (f)  Current Market Price.  For the purpose of any computation of
                    --------------------
current market price under this Section 4 and Section 5(b) hereof, the current
                                ---------     ------------
market price per share of the Common Stock at any date shall be (x) for purposes
of Section 5(b), the closing price on the Business Day immediately prior to the
exercise of the Warrants and (y) in all other cases, the average of the daily
closing prices for the 5 consecutive trading days immediately preceding the date
in question. The closing price for any day shall be the last reported sale price
or, in case no such reported sale takes place on such day, the average of the
closing bid and asked prices for such day, in each case (1) on the principal
national securities exchange on which the shares of Common Stock are listed or
to which such shares are admitted to trading or (2) if the Common Stock is not
listed or admitted to trading on a national securities exchange, in the over-
the-counter market as included for quotation on Nasdaq or any comparable system
or (3) if the Common Stock is not included for quotation on Nasdaq or a
comparable system, as furnished by two members of the National Association of
Securities Dealers, Inc. selected from time to time in good faith by the Board
of Directors of the Company for that purpose. In the absence of all of the
foregoing, or if for any reason the current market price per share cannot be
determined pursuant to the foregoing provisions

                                      -9-
<PAGE>

of this paragraph (f), the current market price per share shall be the fair
market value thereof as determined in good faith by the Board of Directors of
the Company.

               (g)  Consideration Received.  If any shares of Common Stock,
                    ----------------------
Options or Convertible Securities shall be issued, sold or distributed for
consideration other than cash, the amount of the consideration other than cash
received by the Company in respect thereof shall be deemed to be the then fair
market value of such consideration (as determined in good faith by the Board of
Directors of the Company). If any Options shall be issued in connection with the
issuance and sale of other securities of the Company, together comprising one
transaction in which no specific consideration is allocated to such Options by
the parties thereto, such Options shall be deemed to have been issued without
consideration. If the Company shall pay a dividend or make any other
distribution payable in Options or Convertible Securities, then such Options or
Convertible Securities shall be deemed to have been issued or sold without
consideration. In the case of an underwritten public offering, the amount of any
underwriting discount shall be deemed to be additional consideration received by
the Company as part of the issuance of the applicable securities.

               (h)  Deferral of Certain Adjustments.  No adjustment to the
                    -------------------------------
Underlying Share Purchase Price (including the related adjustment to the number
of Underlying Shares) shall be required hereunder unless such adjustment,
together with other adjustments carried forward as provided below, would result
in an increase or decrease of at least one percent (1%) of the Underlying Share
Purchase Price; provided that any adjustments which by reason of this paragraph
(i) are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. No adjustment need be made for a change in the par
value of the Common Stock. All calculations under this Section 4 shall be made
to the nearest one tenth of one cent ($0.001) or to the nearest whole share, as
the case may be.

               (i)  Changes in Options and Convertible Securities.  If the
                    ---------------------------------------------
exercise price provided for in any Options referred to in paragraph (c) above,
                                                          -------------
the additional consideration, if any, payable upon the conversion or exchange of
any Convertible Securities referred to in paragraph (c) above, or the rate at
which any Convertible Securities referred to in paragraph (c) above are
                                                -------------
convertible into or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to protect against
dilution upon an event which results in a related adjustment pursuant to this
Section 4), the Underlying Share Purchase Price then in effect and the number of
---------
Underlying Shares purchasable upon the exercise of the Warrants shall forthwith
be readjusted (effective only with respect to any exercise of the Warrants after
such readjustment) to the Underlying Share Purchase Price and number of
Underlying Shares so purchasable that would then be in effect had the adjustment
made upon the issuance, sale, distribution or granting of such Options or
Convertible Securities been made based upon such changed purchase price,
additional consideration or conversion rate, as the case may be, but only with
respect to such Options and Convertible Securities as then remain outstanding.

               (j)  Expiration of Options and Convertible Securities.  If, at
                    ------------------------------------------------
any time after any adjustment to the number of Underlying Shares purchasable
upon the exercise of the Warrants shall have been made pursuant to paragraph (c)
                                                                   -------------
or (j) above or this paragraph (k), any Options or Convertible Securities shall
   ---               -------------
have expired unexercised, the number of Underlying Shares so purchasable with
respect to any then outstanding Warrants shall, upon such expiration, be
readjusted and shall thereafter be such as they would have been had the Warrants
outstanding at the time of the

                                      -10-
<PAGE>

original adjustment been adjusted (or had the original adjustment not been
required, as the case may be) as if (i) the only shares of Common Stock deemed
to have been issued in connection with such Options or Convertible Securities
were the shares of Common Stock, if any, actually issued or sold upon the
exercise of such Options or Convertible Securities and (ii) such shares of
Common Stock, if any, were issued or sold for the consideration actually
received by the Company upon such exercise plus the aggregate consideration, if
any, actually received by the Company for the issuance, sale, distribution or
granting of all such Options or Convertible Securities, whether or not
exercised; provided that no such readjustment shall have the effect of
decreasing the number of such Underlying Shares so purchasable by an amount
(calculated by adjusting such decrease to account for all other adjustments made
pursuant to this Section 4 following the date of the original adjustment
referred to above) in excess of the amount of the adjustment initially made in
respect of the issuance, sale, distribution or granting of such Options or
Convertible Securities.

               (k)  Other Adjustments.  In the event that at any time, as a
                    -----------------
result of an adjustment made pursuant to this Section 4, the Warrant Holder
                                              ---------
shall become entitled to receive any securities of the Company other than
Underlying Shares, thereafter the number of such other securities so receivable
upon exercise of the Warrants and the Underlying Share Purchase Price applicable
to such exercise shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions with respect
to the shares of Common Stock contained in this Section 4.

               (l)  Common Stock.  As used in this Section 4, the term "Common
                    ------------                   ---------            ------
Stock" shall mean and include the Common Stock issued and outstanding on the
-----
date hereof and shall also include any capital stock of any class of the Company
thereafter authorized for issuance that is not limited to a fixed sum or
percentage in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary liquidation,
dissolution or winding up of the Company; provided, however, that the Underlying
                                          --------  -------
Shares shall include only shares of such class designated in the Company's
Certificate of Incorporation as Class A common stock or (i) in the case of any
reclassification, change, consolidation, merger, or sale of assets of the
character referred to in Section 4(b) hereof, the stock, securities or property
                         ------------
provided for in such section or (ii) in the case of any reclassification or
change in the number of Underlying Shares as a result of a subdivision or
combination or consisting of a change in par value, or from par value to no par
value, or from no par value to par value, such Underlying Shares as so
reclassified or changed.

               (m)  Determination of Net Sales Price.  In case of the sale for
                    --------------------------------
cash of any shares of Common Stock, Options, or Convertible Securities, the
consideration received by the Company therefor shall be deemed to be the net
sales price therefor (after deducting therefrom any expense paid or incurred by
the Company or any underwriting discounts or commissions or concessions paid or
allowed by the Company in connection therewith).

               (n)  Events Resulting in no Adjustments.  No adjustment to the
                    ----------------------------------
Underlying Share Purchase Price or to the number of Underlying Shares, however,
will be made upon (i) the issuance or exercise of any stock options under any
stock option plan or employee stock purchase plan of the Company that has been
approved by the Board of Directors of the Company; (ii) the issuance of shares
of Common Stock upon conversion of any shares of the Company's Series A
Preferred Stock outstanding on the date hereof; (iii) the issuance of any
securities in connection with the settlement or other resolution of the class
action lawsuit filed in the United States District

                                      -11-
<PAGE>

Court for the Eastern District of Virginia, captioned In re MicroStrategy Inc.
Securities Litigation, Civ. No. 00-473-A and the issuance of any shares of
Common Stock upon the exercise or conversion of any such securities; (iv) the
issuance of securities as consideration for mergers or consolidations or the
acquisition of businesses or their assets and the issuance of any shares of
Common Stock upon the exercise or conversion of any such securities; (v) the
issuance of Common Stock upon conversion of shares of the Company's Class B
Common Stock, provided such shares of Class B Common Stock were issued and
outstanding on the date hereof; (vi) the issuance of Common Stock upon the
exercise of warrants which are outstanding on the date hereof; (vii) the
issuance of Common Stock or warrants to purchase Common Stock in connection with
any strategic investor, vendor, lease or similar arrangement (the primary
purpose of which is not to raise equity capital), provided that the aggregate
number of shares of Common Stock subject to warrants and shares of Common Stock
which the Company may issue pursuant to this subclause (vii) shall not exceed
250,000 (subject to adjustment for stock splits, stock dividends, stock
combinations and other similar transactions); and (viii) the issuance of Common
Stock in a private placement to institutional investors at a price not less than
95% of the current market price per share of Common Stock on the date the
Company becomes obligated to make such issuance or sale (collectively, the
"Exempt Securities"). In the event the Company issues or sells Common Stock in a
 -----------------
private placement at a price less than 95% of the current market price per share
of Common Stock on the date the Company becomes obligated to make such issuance
or sale, Warrant Holder shall be entitled to an adjustment in the Underlying
Share Purchase Price and the Underlying Shares as provided in Section 4 herein.

               (o)  Notice of Change in Underlying, Share Purchase Price.  Upon
                    ----------------------------------------------------
any adjustment pursuant to this Section 4, the Company shall promptly thereafter
(i) cause to be prepared a certificate of the Chief Financial Officer of the
Company setting forth the Underlying Share Purchase Price after such adjustment
and setting forth in reasonable detail the method of calculation and the facts
upon which such calculations are based and setting forth the number of
Underlying Shares (or portion thereof) issuable after such adjustment in the
Underlying Share Purchase Price, upon exercise of the Warrants and payment of
the adjusted Underlying Share Purchase Price, which certificate shall be
conclusive evidence of the correctness of the matters set forth therein absent
manifest error, and (ii) send to the Warrant Holder at the address appearing on
the registry books maintained by the Company written notice of such adjustments
by first-class mail, postage prepaid.

               (p)  Notice of Certain Events.  With respect to any Notice Event,
                    ------------------------
the Company shall cause to be given to the Warrant Holder at such Warrant
Holder's address on the registry books maintained by the Company, at least 20
days prior to the applicable record date hereinafter specified, or in the case
of events for which there is no record date, at least fifteen (15) days prior to
the taking of such proposed action, by certified mail, return receipt requested,
postage prepaid, a written notice stating (i) the date as of which the holders
of record of shares of Common Stock entitled to receive any such rights,
options, warrants or distribution is to be determined, (iii) the initial
expiration date set forth in any tender offer or exchange offer for shares of
Common Stock, or (iii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is expected to
become effective or consummated and the date as of which it is expected that
holders of record of shares of Common Stock shall be entitled to exchange such
shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up. The failure to give the notice required by this
Section 4(q) or any defect therein shall not affect the legality or validity of
------------
any distribution, right, option, warrant, consolidation, merger, conveyance,
transfer, dissolution, or

                                      -12-
<PAGE>

liquidation or winding up, or the vote upon any action, provided that the
Warrant Holder shall retain any right to damages from the Company with respect
to such failure.

          SECTION 5.  Other Provisions Relating to Rights of the Warrant Holder
                      ---------------------------------------------------------

               (a)  Warrant Holder not a Stockholder.  The Warrant Holder, as
                    --------------------------------
such, shall not be entitled to vote or receive dividends or be deemed holders of
Common Stock for any purpose whatsoever, nor shall anything contained in this
Agreement be construed to confer upon the Warrant Holder, as such, any of the
rights of a stockholder of the Company including, but not limited to, the right
to vote for the election of directors or on any other matter, give or withhold
consent to any action by the Company (whether upon any recapitalization, issue
of stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings or other action affecting stockholders
(except for notices provided for in this Agreement), receive dividends or
subscription rights, or otherwise until Warrants shall have been exercised to
purchase Underlying Shares, at which time the person or persons in whose name or
names the certificate or certificates for the shares of Common Stock are
registered shall be deemed the holder or holders of record of such shares of
Common Stock for all purposes.

               (b)  Fractional Shares.  Anything contained herein to the
                    -----------------
contrary notwithstanding, the Company shall not be required to issue any
fractional shares of Common Stock in connection with the exercise of the
Warrants. In any case where the Warrant Holder would, except for the provisions
of this Section 5(b), be entitled under the terms of this Agreement to receive a
        ------------
fraction of a share of Common Stock upon the exercise of the Warrants, the
Company shall, upon the exercise of the Warrants and receipt of the Underlying
Share Purchase Price, issue the largest number of whole shares of Common Stock
purchasable upon exercise of the Warrants. The Warrant Holder expressly waives
his or her right to receive a certificate of any fraction of a share of Common
Stock upon the exercise hereof. However, with respect to any fraction of a share
of Common Stock called for upon any exercise hereof, the Company shall pay to
the Warrant Holder an amount in cash equal to such fraction multiplied by the
current market price per share of Common Stock determined pursuant to
Section 4(f) hereof.

               (c)  Absolute Owner.  Prior to due presentment for registration
                    --------------
of transfer of the Warrant Certificates, the Company may deem and treat the
Warrant Holder as the absolute owner of the Warrants for the purpose of any
exercise thereof and for all other purposes and the Company shall not be
affected by any notice to the contrary.

          SECTION 6.  Division, Split-Up, Combination, Exchange and Transfer of
                      ---------------------------------------------------------
Warrants
--------

               (a)  Request.  The Warrants may be divided, split up, combined or
                    -------
exchanged for other Warrants of like tenor to purchase a like aggregate number
of Underlying Shares. If the Warrant Holder desires to divide, split up, combine
or exchange the Warrants, he or she shall make such request in writing delivered
to the Company at its office in 8000 Towers Crescent Drive, Vienna, Virginia
22182, or as otherwise directed by the Company in writing, and shall surrender
such Warrant Certificates to be so divided, split up, combined or exchanged at
said office. Upon any such surrender for a division, split-up, combination or
exchange, the Company shall execute and deliver to the person entitled thereto a
new Warrant Certificate(s) as so requested

                                      -13-
<PAGE>

to the extent permitted by law. The Company may require the Warrant Holder to
pay a sum sufficient to cover any tax, governmental or other charge that may be
imposed in connection with any division, split-up, combination or exchange of
the Warrants.

               (b)  Initial Issuance to Lender.  The Company shall issue the
right to purchase 50,000 Underlying Shares to Lender, subject to adjustment as
provided herein, as represented by a Warrant Certificate issued to Lender in the
form attached hereto as Exhibit A or to Lender's designee or such officers of
Lender as Lender may direct.

               (c)  Assignment; Replacement of Warrant Certificates.  The
                    -----------------------------------------------
Warrants may be sold, transferred, assigned or hypothecated by Lender at any
time, in whole or in part, subject to compliance with federal and state
securities laws. Any division or assignment permitted of the Warrants shall be
made by surrender of the Warrant Certificates to the Company at its principal
office with the Form of Assignment attached as Exhibit C hereto duly executed.
                                               ---------
In such event, the Company shall, without charge, execute and deliver a new
Warrant Certificate in the name of the assignee named in such instrument of
assignment and the surrendered Warrant Certificates shall promptly be canceled.
Upon receipt by the Company of evidence satisfactory to it of the loss, theft,
destruction or mutilation of the Warrant Certificates and (in the case of loss,
theft or destruction) of reasonably satisfactory indemnification, and (in the
case of mutilation) upon surrender and cancellation of such Warrant
Certificates, the Company will execute and deliver a new Warrant Certificate of
like tenor and date and any such lost, stolen or destroyed Warrant Certificates
shall thereupon become void.

          SECTION 7.  Other Matters
                      -------------

               (a)  Taxes and Charges.  The Company will from time to time
                    -----------------
promptly pay, subject to the provisions of paragraph (5) of Section 2(b), all
                                           -------------    ------------
taxes and charges that may be imposed upon the Company in respect of the
issuance or delivery of the Warrants or the Underlying Shares.

               (b)  Notices.  Notice or demand pursuant to this Agreement to be
                    -------
given or made by the Warrant Holder to or on the Company shall be sufficiently
given or made if delivered or sent by registered or certified mail, postage
prepaid, return receipt requested, and addressed, until another address is
designated in writing by the Company, or by facsimile transmission, as follows:

                    MICROSTRATEGY INCORPORATED
                    8000 Towers Crescent Drive
                    Suite 1400
                    Vienna, Virginia 22182
                    Attention:  Mr. Mark Lynch
                    Facsimile No.:  703.847.4837

                    with a copy to:

                    Hale and Dorr LLP
                    60 State Street
                    Boston, Massachusetts 02109
                    Attention:  Mitchel Appelbaum, Esq.
                    Facsimile No.:  617.526.5000

                                      -14-
<PAGE>

          Notices to the Warrant Holder provided for in this Agreement shall be
deemed given or made by the Company if delivered or sent by mail, certified or
registered, return receipt requested, postage prepaid, or overnight courier or
facsimile transmission addressed to the Warrant Holder at his or her last known
address or facsimile number as shall appear on the registry books of the Company
and at the following address for Lender:

                    FOOTHILL CAPITAL CORPORATION
                    2450 Colorado Boulevard
                    Suite 3000 West
                    Santa Monica, California 90404
                    Attention:  Business Finance Division, Manager
                    Facsimile No.:  (310) 453-7413

                    With a copy to:

                    Brobeck, Phleger & Harrison, LLP
                    550 South Hope Street
                    Los Angeles, California 90071-2604
                    Attention: John F. Hilson, Esq.
                    Facsimile No.:  (213) 745-3345

               (c)  Governing Law.  The validity, interpretation and performance
                    -------------
of this Agreement shall be governed by the laws of the State of Delaware without
giving effect to the conflicts of laws and principles thereof.

               (d)  WAIVER OF JURY TRIAL.  THE COMPANY WAIVES (A) THE RIGHT TO
                    --------------------
TRIAL BY JURY (WHICH THE WARRANT HOLDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT,
PROCEEDING, OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE WARRANT, THE WARRANT CERTIFICATE OR THE REGISTRATION RIGHTS
AGREEMENT. THE COMPANY WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE
FOREGOING WAIVER WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED
ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

               (e)  Exclusive Benefit.  Nothing in this Agreement expressed or
                    -----------------
nothing that may be implied from any of the provisions hereof is intended, or
shall be construed, to confer upon, or give to, any person or corporation other
than the Company, Lender and the Warrant Holder any right, remedy or claim
hereunder, and all covenants, conditions, stipulations, promises and agreements
contained in this Agreement shall be for the sole and exclusive benefit of such
persons

                                      -15-
<PAGE>

and their successors, survivors and permitted assigns hereunder. This Agreement
is for the benefit of and is enforceable by any subsequent Warrant Holder.

               (f)  Headings.  The article headings herein are for convenience
                    ---------
only and are not part of this Agreement and shall not affect the interpretation
hereof.

                 [Remainder of page left intentionally blank.]

                                      -16-
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.

                              MICROSTRATEGY INCORPORATED

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

                              FOOTHILL CAPITAL CORPORATION

                              By: /s/ Brian Duffy
                                  ---------------------------------------
                                    Name:  Brian Duffy
                                    Title: Senior Vice President

                                      S-1

<PAGE>

                                   EXHIBIT A
                                   ---------

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, OR (II) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE
REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT IS AVAILABLE.

No. FCC - 1

                              Warrant Certificate

                           MICROSTRATEGY INCORPORATED

          This warrant certificate certifies that FOOTHILL CAPITAL CORPORATION,
or its registered assigns, is the registered holder of Warrants representing the
right to purchase 50,000 shares (the "Underlying Shares") of the Class A common
stock, par value $0.001 per share (the "Common Stock") of MICROSTRATEGY
INCORPORATED (the "Company") in accordance with the terms of that certain
Warrant Agreement dated February 9, 2001 between the Company and Foothill
Capital Corporation (the "Warrant Agreement").  The Warrants with respect to the
Underlying Shares expire on February 8, 2006 (the "Underlying Share Expiration
Date"), or on such expiration dates as may be extended pursuant to the terms of
the Warrant Agreement.  Capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to such terms in the Warrant Agreement.

          The Warrants entitle the registered holder, upon exercise from time to
time from 9:00 a.m. California City time on or after February 9, 2001 until 5:00
p.m. California time on the Underlying Share Expiration Date to purchase the
Underlying Shares at an exercise price per Underlying Share equal to $14.825
(the "Underlying Share Purchase Price") in lawful money of the United States of
America upon surrender of this certificate and payment of the Underlying Share
Purchase Price in accordance with the terms of the Warrant Agreement.  The
Underlying Share Purchase Price, the number of Underlying Shares issuable upon
exercise of the Warrants are subject to adjustment upon the occurrence of
certain events set of in the Warrant Agreement.

          The Warrants with respect to the Underlying Shares may not be
exercised after 5:00 p.m. (California time) on the Underlying Share Expiration
Date, and to the extent not exercised by such time such Warrants shall become
void.

                                      A-1
<PAGE>

          This warrant certificate shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to conflicts of
laws and principles thereof.

          IN WITNESS WHEREOF, MicroStrategy Incorporated has caused this warrant
certificate to be signed by its duly authorized officers.

Dated:  February 9, 2001
        ----------------

                                    MICROSTRATEGY INCORPORATED

                                    By:
                                        --------------------------------------
                                         Name:
                                         Title:

                                      A-2
<PAGE>

                                   EXHIBIT B
                                   ---------

                             CASHLESS EXERCISE FORM

To be executed upon exercise of Warrants pursuant to Section 2(c) of the Warrant
Agreement.

          The undersigned hereby irrevocably elects to surrender ___________
shares purchasable under the Warrants for such shares of Common Stock issuable
in exchange therefor pursuant to the Cashless Exercise provisions of the within
Warrants, as provided for in Section 2(c) of such Warrant Agreement.

          Please issue a certificate or certificates for such Common Stock in
the name of, and pay cash for fractional shares in the name of:

 ______________________________________________________________________________
           (Please print name, address, and social security number/
                          tax identification number:)

 ______________________________________________________________________________

and, if said number of shares of Common Stock shall not be all the shares of
Common Stock purchasable thereunder, then a new Warrant Certificate for the
balance remaining of the shares of Common Stock purchasable under the within
Warrants shall be registered in the name of the undersigned Warrant Holder or
its transferee as below indicated and delivered to the address stated below.

Dated: _________________

Name of Warrant Holder
or transferee:_________________________________________________________________
                                 (Please print)

Address: ______________________________________________________________________

Signature: ____________________________________________________________________

          NOTE:  Signature must conform to the name of Warrant Holder as
          specified on the face of the Warrants or with the name of the
          transferee appearing in the form of assignment attached as
          Exhibit C to the Warrant Agreement.

                                      B-1
<PAGE>

                                   EXHIBIT C
                                   ---------

                               FORM OF ASSIGNMENT

          For value received, the undersigned hereby sells, assigns and
transfers unto  ________________, whose address is _____________________________
_____________________________________________ and whose social security or other
identifying number is ________________, the right to purchase ________________
Underlying Shares evidenced by the within Warrants, and hereby irrevocably
constitutes and appoints the Secretary of MicroStrategy Incorporated (the
"Company") as his, her or its attorney-in-fact to transfer the same on the books
of the Company with full power of substitution and re-substitution.  If said
number of Underlying Shares is less than all of the Underlying Shares
purchasable hereunder, the undersigned requests that a new warrant certificate
representing the right to purchase the balance of such Underlying Shares be
registered in the name of _________________, whose address is __________________
_________________________________________, whose social security or other
identifying number is ______________, and that such warrant certificate be
delivered to ________________, whose address is ________________________________
____________________________________________.

Date: _____________                 [Transferor Name]

                                    By: __________________________________
                                    Name: ________________________________
                                    Title: _______________________________

                                      C-1
<PAGE>

                                   EXHIBIT D
                                   ---------

                               SUBSCRIPTION FORM

          The undersigned hereby irrevocably elects to exercise the right,
represented by this warrant certificate, to purchase _________________
Underlying Shares and [tenders payment herewith in the amount $_____________]
[or] [makes payment therefor by application pursuant to Section 2(b)(ii) of the
Warrant of $_________ aggregate principal amount of the outstanding indebtedness
under the Loan and Security Agreement] [or] [makes payment therefor by delivery
of the following Common Stock Certificates of the Company (properly endorsed for
transfer in blank) for cancellation by the Company pursuant to Section 2(b)(iii)
of the Warrant, certificates of which are attached hereto for cancellation
[list certificates by number and amount].  The undersigned requests that a
certificate for such Underlying Shares be registered in the name of
_______________, whose address is ______________________________________________
_______________________________________________, and whose social security or
other identifying number is ____________, and that such Underlying Shares be
delivered to ___________________, whose address is _____________________________
__________________________________________.  If said number of Underlying Shares
is less than all of the Underlying Shares purchasable hereunder, the undersigned
requests that a new warrant certificate representing the right to purchase the
balance of such Underlying Shares be registered in the name of _______________,
whose address is ______________________________________________ and whose social
security or other identifying number is ________________, and that such warrant
certificate be delivered to ______________, whose address is ___________________
_____________________________________________.

Date:                                  [Warrant Holder]

                                       By: ___________________________________
                                       Name: _________________________________
                                       Title: ________________________________

                                      D-1

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