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        UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 

        TRANSFERS
OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY, OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE
AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. 

        THE
NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION AS SET FORTH BELOW. 

        BY
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT); (2) AGREES THAT IT WILL NOT PRIOR TO THE
DATE THAT IS TWO YEARS AFTER THE LATER OF THE INITIAL ISSUANCE OF THE NOTE EVIDENCED HEREBY AND THE LAST DATE ON WHICH ELECTRO SCIENTIFIC INDUSTRIES, INC. (THE "COMPANY") OR ANY "AFFILIATE" (AS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY WAS THE OWNER OF THE NOTE (THE "RESTRICTION TERMINATION DATE") RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK
ISSUED UPON CONVERSION OF SUCH NOTE, EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (C) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM REGISTRATION PROVIDED UNDER THE SECURITIES ACT (IF AVAILABLE) OR (D) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE
TIME OF SUCH TRANSFER); AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(D) ABOVE) A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY BEFORE THE RESTRICTION TERMINATION DATE (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(D) ABOVE), THE HOLDER
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS NOTE TO BNY WESTERN TRUST COMPANY AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
APPLICABLE). THE HOLDER MUST, PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(D) ABOVE), FURNISH TO BNY WESTERN TRUST COMPANY AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE),
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON ANY TRANSFER OF THE NOTE EVIDENCED HEREBY PURSUANT TO CLAUSE 2(D) ABOVE OR UPON OR AFTER THE
RESTRICTION TERMINATION DATE. 

1

 
 
 

ELECTRO SCIENTIFIC INDUSTRIES, INC.    
    
    4.25% Convertible Subordinated Notes due 2006    
  

        CUSIP NO. 285229AA8 

No.:
1 

Issue
Date: December , 2001 

        ELECTRO
SCIENTIFIC INDUSTRIES, INC., a Oregon corporation, promises to pay to Cede & Co. or registered assigns, the principal sum of
[                        ] DOLLARS
($[                        ]) on December, 2006. 

        This
Note shall bear interest as specified on the other side of this Note. This Note is convertible as specified on the other side of this Note. 

        Additional
provisions of this Note are set forth on the other side of this Note. 

	Dated:                        , 2001	 	ELECTRO SCIENTIFIC INDUSTRIES, INC.
	

 	
 	
By	

 
	 	 	 	
 Name:

Title:

	TRUSTEE'S CERTIFICATE OF AUTHENTICATION	 	 
	

BNY WESTERN TRUST COMPANY

as Trustee, certifies that this is one of the Notes referred to in the within-mentioned Indenture (as defined on the other side of this Note).	
 	

 
	

By	

 	
 	

 
	 	
 Authorized Signatory	 	 
	

Dated:	

 	
 	

 
	 	
	 	 

2

 
4.25% Convertible Subordinated Note due 2006 

        Capitalized
terms used herein but not defined shall have the meanings assigned to them in the Indenture unless otherwise indicated. 

1.    Cash Interest.    

        The
Company promises to pay interest at the Interest Rate in cash on the principal amount of this Note. The Company will pay cash interest semiannually in arrears on June 1 and December
1 of each year (each an "Interest Payment Date"), beginning on June 21, 2002, to Holders of record at the close of business on the preceding June 6 and December 6 (whether or not a business day) (each
a "Regular Record Date"), as the case may be, immediately preceding such Interest Payment Date. Cash interest on the Notes will accrue from the most recent date to which interest has been paid or duly
provided or, if no interest has been paid, from the Issue Date. Cash interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay cash interest on overdue
principal, or if shares of Common Stock (or cash in lieu of fractional shares) in respect of a conversion of this Note in accordance with the terms of Article 10 of the Indenture are not delivered
when due, at the rate borne by the Notes, and it shall pay interest in cash on overdue installments of cash interest at the same rate to the extent lawful. All such overdue cash interest shall be
payable on demand. 

        In
accordance with the terms of the Registration Rights Agreement, during the first 90 days following a Registration Default (as defined in the Registration Rights Agreement), the
Interest Rate borne by the Notes shall be increased by 0.25% per annum on: 

	(A)
	the
91st day after the earliest date of original issuance of any of the Notes, if the Shelf Registration Statement is not filed with the
SEC;

	(B)
	the
181st day following the earliest date of original issuance of any of the Notes, if the Shelf Registration Statement is not declared
effective;

	(C)
	the
day after the fifth Business Day after the Shelf Registration Statement, previously declared effective, ceases to be effective or fails to be usable,
if a post-effective amendment (or report filed with the Exchange Act) that cures the Shelf Registration Statement is not filed during such five Business Day period; or

	(D)
	the
day after the 30th day in any consecutive three-month period or the day after the 90th day in any consecutive 12-month
period, as the case may be, that the prospectus contained in the Shelf Registration Statement has been suspended, if such suspension has not been terminated. 

From
and after the 91st day following such Registration Default, the Interest Rate borne by the Notes shall be increased by 0.50% per annum. In no event shall the Interest Rate borne by
the Notes be increased by more than 0.50% per annum. 

        Any
amount of additional interest will be payable in cash semiannually, in arrears, on each Interest Payment Date and will cease to accrue on the date the Registration Default is cured.
The Holder of this Security is entitled to the benefits of the Registration Rights Agreement. 

2.    Method of Payment.    

        Subject
to the terms and conditions of the Indenture, the Company will make payments in respect of the principal of, premium, if any, and cash interest on this Note and in respect of
Redemption Prices and Change in Control Repurchase Prices to Holders who surrender Notes to a Paying Agent to collect such payments in respect of the Notes. The Company will pay cash amounts in money
of the United States that at the time of payment is legal tender for payment of public and private debts. However, the Company may make such cash payments by check payable in such money. A Holder with
an aggregate principal amount in excess of $5,000,000 will be paid by wire transfer in immediately 

3

 

available funds at the election of such Holder. Any payment required to be made on any day that is not a Business Day will be made on the next succeeding Business Day. 

3.    Paying Agent, Conversion Agent and Registrar.    

        Initially,
BNY Western Trust Company (the "Trustee"), will act as Paying Agent, Conversion Agent and Registrar. The Company may appoint and change any Paying Agent, Conversion Agent,
Registrar or co-registrar without notice, other than notice to the Trustee except that the Company will maintain at least one Paying Agent in the State of New York, City of New York, The Borough of
Manhattan, which shall initially be an office or agency of the Trustee. The Company or any of its Subsidiaries or any of their Affiliates may act as Paying Agent, Conversion Agent, Registrar or
co-registrar. 

4.    Indenture.    

        The
Company issued the Notes under an Indenture dated as of December , 2001 (the Indenture"), between the Company and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as in effect from time to time (the "TIA"). Capitalized terms used herein and not defined herein have
the meanings ascribed thereto in the Indenture. The Notes are subject to all such terms, and Noteholders are referred to the Indenture and the TIA for a statement of those terms. 

        The
Notes are general unsecured obligations of the Company (except as provided in Paragraph 16 hereof) limited to $125,000,000 aggregate principal amount, or $150,000,000 aggregate
principal amount
if the Over-Allotment Option is exercised fully (subject to Section 2.07 of the Indenture). The Indenture does not limit other indebtedness of the Company, secured or unsecured. 

5.    Optional Redemption.    

        This
Note is not redeemable prior to December 21, 2004. This Note may be redeemed in whole or in part, upon not less than 20 nor more than 60 days notice, at any time on or after
December 21, 2004 and prior to Stated Maturity, at the option of the Company, at the redemption prices (expressed as percentages of the principal amount) listed in the table below: 

	Period
	 	Redemption

Price
	 
	December 21, 2004 through December 20, 2005	 	101.70	%
	December 21, 2005 through December 21, 2006	 	100.85	%

        if
redeemed during the periods below, plus any interest accrued but not paid prior to (but not including) the Optional Redemption Date. 

        If
fewer than all the Notes are to be redeemed, the Trustee shall select the particular Notes to be redeemed from the outstanding Notes by the methods as provided in the Indenture. If
any Note selected for partial redemption is converted in part before termination of the conversion right with respect to the portion of the Note so selected, the converted portion of such Note shall
be deemed to be the portion selected for redemption (provided, however, that the Holder of such Note so converted and deemed redeemed shall not be entitled to any additional interest payment as a
result of such deemed redemption than such Holder would have otherwise been entitled to receive upon conversion of such Note). Notes which have been converted during a selection of Notes to be
redeemed may be treated by the Trustee as outstanding for the purpose of such selection. 

        On
and after the Redemption Date, interest ceases to accrue on Notes or portions of Notes called for redemption, unless the Company defaults in the payment of the Redemption Price and
accrued and unpaid interest. 

        Notice
of redemption will be given by the Company to the Holders as provided in the Indenture. 

4

 

        No
sinking fund is provided for the Notes. 

6.    Repurchase by the Company at the Option of the Holder.    

        If
a Change in Control occurs, the Holder, at the Holder's option, shall have the right, in accordance with the provisions of the Indenture, to require the Company to repurchase the
Notes (or any portion of the principal amount hereof that is at least $1,000 or any whole multiple thereof, provided that the portion of the principal amount of this Note to be outstanding after such
repurchase is at least equal to $1,000) at the Change in Control Repurchase Price in cash or Common Stock or a combination thereof, plus any interest accrued and unpaid to the Change in Control
Repurchase Date. 

        Subject
to the conditions provided in the Indenture, the Company may elect to pay the Change in Control Repurchase Price (to the extent not paid in cash) by delivering a number of shares
of Common Stock equal to (i) the Change in Control Repurchase Price divided by (ii) 95% of the average of the Closing Prices per share for the five consecutive Trading Days immediately preceding and
including the third Trading Day prior to the Change in Control Repurchase Date. 

        No
fractional shares of Common Stock will be issued upon repurchase of any Notes. Instead of any fractional share of Common Stock which would otherwise be issued upon conversion of such
Notes, the Company shall pay a cash adjustment as provided in the Indenture. 

        A
Change in Control Repurchase Notice will be given by the Company to the Holders as provided in the Indenture. To exercise a repurchase right, a Holder must deliver to the Trustee a
written notice as provided in the Indenture. 

        Holders
have the right to withdraw any Change in Control Repurchase Notice by delivering to the Paying Agent a written notice of withdrawal in accordance with the provisions of the
Indenture. 

7.    Notice of Redemption.    

        Notice
of an optional redemption will be mailed at least 20 days but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at the Holder's registered
address. If money sufficient to pay the Redemption Price of all Notes (or portions thereof) to be redeemed on the Redemption Date is deposited with the Paying Agent prior to or on the Redemption Date,
immediately after such Redemption Date interest ceases to accrue on such Notes or portions thereof. Notes in denominations larger than $1,000 of principal amount may be redeemed in part but only in
whole multiples of $1,000 of principal amount. 

8.    Conversion.    

        Subject
to the next two succeeding sentences, a Holder of a Note may convert it into Common Stock of the Company at any time before the close of business on December 21, 2006. If the
Note is called for redemption, the Holder may convert it at any time before the close of business on the Business Day preceding the Redemption Date. A Note in respect of which a Holder has delivered a
Change in Control Repurchase Notice exercising the option of such Holder to require the Company to purchase such Note may be converted only if such notice of exercise is withdrawn in accordance with
the terms of the Indenture. 

        The
initial Conversion Price shall be equal to $38 per share of Common Stock, subject to adjustment in certain events described in the Indenture. The Company shall pay a cash adjustment
as provided in the Indenture in lieu of any fractional share of Common Stock. 

        To
convert a Note, a Holder must (1) complete and manually sign the conversion notice below (or complete and manually sign a facsimile of such notice) and deliver such notice to the
Conversion Agent, (2) surrender the Note to the Conversion Agent, (3) furnish appropriate endorsements and transfer documents if required by the Conversion Agent, the Company or the Trustee and (4)
pay any transfer or similar tax, if required. 

5

 

9.    Conversion Arrangement on Call for Redemption.    

        Any
Notes called for redemption, unless surrendered for conversion before the close of business on the Business Day preceding the Redemption Date, may be deemed to be purchased from the
Holders of such Notes at an amount not less than the Redemption Price, by one or more investment bankers or other purchasers who may agree with the Company to purchase such Notes from the Holders, to
convert them into Common Stock of the Company and to make payment for such Notes to the Trustee in trust for such Holders. 

10.    Denominations; Transfer; Exchange.    

        The
Notes are in fully registered form, without coupons, in denominations of $1,000 of principal amount and whole multiples of $1,000. A Holder may transfer or exchange Notes in
accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or
permitted by the Indenture. The Registrar need not transfer or exchange any Notes selected for redemption (except, in the case of a Note to be redeemed in part, the portion of the Note not to be
redeemed) or any Notes in respect of which a Change in Control Repurchase Notice has been given and not withdrawn (except, in the case of a Note to be purchased in part, the portion of the Note not to
be purchased) or any Notes for a period of 15 days before the mailing of a notice of redemption of Notes to be redeemed. 

11.    Persons Deemed Owners.    

        The
registered Holder of this Note may be treated as the owner of this Note for all purposes. 

12.    Unclaimed Money or Notes.    

        The
Trustee and the Paying Agent shall return to the Company upon written request any money or Notes held by them for the payment of any amount with respect to the Notes that remains
unclaimed for two years, subject to applicable unclaimed property law. After return to the Company, Holders entitled to the money or Notes must look to the Company for payment as general creditors
unless an applicable abandoned property law designates another person. 

13.    Amendment; Waiver.    

        Subject
to certain exceptions set forth in the Indenture, (i) the Indenture or the Notes may be amended with the written consent of the Holders of at least a majority in aggregate
principal amount of the Notes at the time outstanding and (ii) certain Defaults may be waived with the written consent of the Holders of a majority in aggregate principal amount of the Notes at the
time outstanding. Subject to certain exceptions set forth in the Indenture, without the consent of any Noteholder, the Company and the Trustee may amend the Indenture or the Notes to cure any
ambiguity, omission, defect or inconsistency, or to comply with Article 5 of the Indenture, to provide for uncertificated Notes in addition to or in place of certificated Notes or to make any change
that does not adversely affect the rights of any Noteholder, or to comply with any requirement of the SEC in connection with the qualification of the Indenture under the TIA. 

14.    Defaults and Remedies.    

        Under
the Indenture, Events of Default include (1) the Company fails to pay when due the principal of or premium, if any, on any of the Notes at maturity, upon redemption or exercise of
a repurchase right or otherwise, whether or not such payment is prohibited by Article 11 of the Indenture; (2) the Company fails to pay an installment of interest (including Additional Interest, if
any) on any of the Notes that continues for 30 days after the date when due, whether or not such payment is prohibited by Article 11 of the Indenture; provided that a failure to make any of the first
six scheduled interest payments on the Notes on the applicable interest payment dates will constitute an 

6

 

event of default with no grace period or cure period; (3) the Company fails to deliver shares of Common Stock, together with cash in lieu of fractional shares, when such Common Stock or cash in lieu
of fractional shares is required to be delivered upon conversion of a Note and such failure continues for 10 days after such delivery date; (4) the Company fails to perform or observe any other term,
covenant or agreement contained in the Notes or the Indenture for a period of 60 days after written notice of such failure, requiring the Company to remedy the same, shall have been given to the
Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Notes then outstanding; (5) (A) one or more defaults in the payment of
principal of or premium, if any, on any of the Company's Indebtedness aggregating [$5.0] million or more, when the same becomes due and payable at the scheduled maturity
thereof, and such default or defaults shall have continued after any applicable grace period and shall not have been cured or waived within a 30-day period after the date of such default or (B) any of
the Company's Indebtedness aggregating [$5.0] million or more shall have been accelerated or otherwise declared due and payable, or required to be prepaid or repurchased (other
than by regularly scheduled required prepayment) prior to the scheduled maturity thereof and such acceleration is not rescinded or annulled within a 30-day period after the date of such acceleration;
(6) certain events of bankruptcy, insolvency or reorganization with respect to the Company or any Significant Subsidiary or any Subsidiaries of the Company which in the aggregate would constitute a
Significant Subsidiary; (7) the Company's filing of our filing of, or any Significant Subsidiaries filing of, a voluntary petition seeking liquidation, reorganization arrangement, readjustment of
debts or for any other relief under the federal bankruptcy code; and (8) the Pledge Agreement shall cease to be in full force and effect or enforceable other than in accordance with its terms. If an
Event of Default (other than an Event of Default specified in clause (6) or (7) of Section 6.01 of the Indenture) occurs and is continuing, the Trustee, or the Holders of at least 25% in aggregate
principal amount of the Notes at the time outstanding, may declare all the Notes to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result
in the Notes becoming due and payable immediately upon the occurrence of such Events of Default. 

        Noteholders
may not enforce the Indenture or the Notes, except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Notes unless it receives reasonable
indemnity or security. Subject to certain limitations, Holders of a majority in aggregate principal amount of the Notes at the time outstanding may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Noteholders notice of any continuing Default (except a Default in payment of amounts specified in clause (1) or (2) above) if it determines that withholding notice
is in their interests. 

15.    Subordination    

        The
payment of principal of, premium, if any, and interest on the Notes will be subordinated in right of payment, as set forth in the Indenture, to the prior payment in full in cash or
cash equivalents of all Senior Indebtedness whether outstanding on the date of the Indenture or thereafter incurred. 

16.    Trustee Dealings with the Company.    

        Subject
to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise
deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 

17.    Security    

        The
Company has entered into the Pledge Agreement and purchased and pledged to the Collateral Agent for the benefit of the Trustee and the ratable benefit of the Holders Pledged
Securities in an amount sufficient upon receipt of scheduled interest and principal payments on such 

7

 

securities to provide for the payment in full of the first six scheduled interest payments due on the Notes. The Pledged Securities will be pledged by the Company to the Collateral Agent for the
benefit of the Trustee and the ratable benefit of the Holders and will be held by the Collateral Agent in the Collateral Account pending disbursement pursuant to the Pledge Agreement. 

18.    No Recourse Against Others.    

        A
director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. By accepting a Note, each Noteholder waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes. 

19.    Authentication.    

        This
Note shall not be valid until an authorized signatory of the Trustee manually signs the Trustee's Certificate of Authentication on the other side of this Note. 

20.    Abbreviations.    

        Customary
abbreviations may be used in the name of a Noteholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with
right of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 

21.    GOVERNING LAW.    

        THE
INDENTURE AND THIS NOTE WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 

        The
Company will furnish to any Noteholder upon written request and without charge a copy of the Indenture which has in it the text of this Note in larger type. Requests may be made to: 

Electro
Scientific Industries, Inc.

13900 N.W. Science Park Drive

Portland, OR 97229

Attention: General Counsel and Assistant Corporate Secretary 

8

 

	ASSIGNMENT FORM	 	CONVERSION NOTICE
	

To assign this Note, fill in the form below:	
 	

To convert this Note into Common Stock of the Company, check the box:
	

I or we assign and transfer this Note to	
 	

o
	 

    
	 	 
	    
	 	 
	(Insert assignee' sec. Or tax ID no.)	 	To convert only part of this Note, state the principal amount to be converted (which must be $1,000 or an integral multiple of $1,000):
	    
	 	$

	    
    
 (Print or type assignee's name, address and zip code)	 	If you want the stock certificate made out in another person's name, fill in the form below:

 

    
    

	And irrevocably appoint	 	(Insert other person's social sec. or tax ID no.)
	

                        agent to transfer this Note on the books of the Company. The agent may substitute another to act for
him.	
 	

    
    
    
    

	 	 	(Print or type other person's name, address and zip code)
	

    	
 	

 
	

	Date:	    
	 	Your Signature:	    

	    
 (Sign exactly as your name appears on the other side of this Note)

9

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ELECTRO SCIENTIFIC INDUSTRIES, INC. 4.25% Convertible Subordinated Notes due 2006<PAGE>
                                                                   EXHIBIT 10.11

                            FIRST AMENDMENT TO LEASE

          This First Amendment to Lease ("Amendment") is made as of the 9th day
of August, 2000, by and between Tysons Corner Property, LLC, a Virginia limited
liability company ("Landlord") and MicroStrategy, Inc., a Delaware corporation
("Tenant").

                                    RECITALS:

          WHEREAS, Pursuant to that certain Deed of Lease, dated as of January
7, 2000 ("Lease"), Landlord leases to Tenant approximately 146,480 square feet
of rentable area located on the second, third, fourth, fifth and sixth floors
("Existing Premises") of the building known as 1861 International Drive, McLean,
Virginia 22102 ("Building"), as more particularly described in said Lease; and

          WHEREAS, Landlord and Tenant desire to replace the drawings and
specifications forming a part of Exhibit H to the Lease for the purposes of
permitting Tenant to install one (1) Exterior Sign using the name,
"Strategy.com" in place of the one (1) Exterior Sign originally agreed to be
installed using the name, "MicroStrategy" on the Leesburg Pike side of the
Building, pursuant to the terms and conditions of the Lease, as modified in
accordance with the terms hereinafter set forth; and

          WHEREAS, Tenant desires to lease additional space located on the first
floor of the Building, which additional space contains a total of approximately
5,398 square feet of rentable area (the "Expansion Space") as depicted on the
attached Exhibit "A," which is incorporated herein by this reference, and
Landlord desires to lease said Expansion Space to Tenant on the terms set forth
herein; and

          WHEREAS, Tenant desires to provide Landlord with additional security
for the performance by Tenant of its obligations under the Lease; and

          WHEREAS, Landlord and Tenant desire to modify the terms of the Lease
as set forth herein.

          NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the mutual receipt and legal sufficiency of which are hereby
acknowledged, it is hereby agreed as follows:

          1. Recitals. The foregoing recitals are incorporated herein by this
             --------
reference as if fully set forth at this point in the text of this Amendment.

          2. Integration. The recitals and following terms and conditions shall
             -----------
constitute part of the Lease and be incorporated therein by reference.

<PAGE>

     3. Exterior Signs. (a) The original Exhibit H to the Lease is hereby
        --------------                   ---------
deleted and replaced with the attached Exhibit H to this Amendment. The
                                       ---------
intention of the revised Exhibit is to permit Tenant to install (pursuant to the
terms and conditions of the Lease): (i) one (1) Exterior Sign on the upper
facade of the east side of the Building in a location visible to street traffic
on Route 7 ("Leesburg Pike") with the name "Strategy.com" depicted on it, as
shown on pages 2, 4 and 6 of the attached Exhibit H, and to install (as
                                          ---------
contemplated in the original Exhibit H); and (ii) (as contemplated in the
                             ---------
original Lease) the existing Exterior Sign on the uppermost part of the facade
of the west side of the Building in a location visible from International Drive
with the name "MicroStrategy" depicted on it, as shown on pages 1, 5 and 7 of
the attached Exhibit H. The foregoing shall not be construed to limit or
             ---------
restrict Tenant's right to relocate the sign described in clause (ii) above in
accordance with the terms of Section 2.3 of the Lease and the details specified
                             -----------
on pages 8 and 9 of the attached Exhibit H. In light of the foregoing
                                 ----------
replacement of Exhibit H, the reference in the second sentence in Section 2.3 of
               ---------                                          -----------
the Lease to specific page numbers in Exhibit H is hereby modified to refer to
                                      ---------
pages 6, 7 and 8 (rather than pages 5, 6 and 7 of the original Exhibit).

     (b) In light of Tenant's leasing of the Expansion Space, clause (i) of the
sixth sentence of Section 2.3(c) of the Lease (with respect to Landlord's
reservation of certain signage rights for a potential third party tenant in such
Expansion Space) is no longer applicable. Therefore: (1) the sixth (6/th/)
sentence of Section 2.3 (c) of the Lease is deleted and hereby replaced with the
following sentence: "The parties further acknowledge that said one hundred
eighty five (185) square foot total is based upon the method of measurement
which Landlord expects will be applied by Fairfax County to the proposed
Exterior Signs set forth in Tenant's preliminary plans therefor."; and (2) the
eighth (8/th/) sentence of Section 2.3(c) of the Lease is hereby deleted and
replaced with the following sentence: "If Tenant is successful in its appeal to
Fairfax County in this regard, Tenant may relocate the smaller of the two
Exterior Signs to the alternative location specified in Exhibit H, and increase
                                                        ---------
the size of the smaller of the two Exterior Signs to at least that set forth in
Exhibit H; and, (2) without reducing that portion of the total Building signage
---------
square footage available to Tenant below one hundred eighty-five (185) square
feet, Tenant shall use such additional Building signage square footage
allocation which becomes available based upon Tenant's appeal, including the
twenty (20) square feet of signage that Landlord was previously reserving for
use by an additional first floor tenant."

     4. Delivery of Expansion Space. (a) Upon the parties' full execution and
        ---------------------------
delivery of this Amendment, Landlord shall deliver and Tenant shall accept the
Expansion Space in its current "as is" condition; Landlord having completed
Landlord's Work (as the same is defined in Paragraph A of Exhibit C to the
                                           -----------    ---------
Lease, except as modified below), with respect to the first floor of the
Building. Landlord represents that the existing "as is" condition of the
Expansion Space is consistent with the description of the Base Building Shell
set forth in Paragraph A of Exhibit C to the Lease except that: (i)
             -----------    ---------
notwithstanding the terms of Paragraph A.2 of Exhibit C, there are five (5)
                             -------------    ---------
freeze protector fan powered induction units with electric heaters and
electronic thermostatic control installed in the Expansion Space; (ii)
notwithstanding the terms of Paragraph A.7 of Exhibit C, the spacing of the
                             -------------    ---------
window mullions on the first floor varies; and (iii)

                                       2

<PAGE>

  on the Termination Date (as such term is defined in Section 1.3 of the Lease,
                                                      -----------
  subject to modification pursuant to the express terms of the Lease).

         5. Expansion Space Improvements. (a) Following Landlord's delivery of
            ----------------------------
  possession of the Expansion Space to Tenant, Tenant, subject to the terms of
  this Paragraph 5, will construct in the Expansion Space all improvements and
  alterations beyond the First Floor Shell Condition of such Expansion Space
  pursuant to the plans and specifications which are approved by Landlord prior
  to the commencement of any work by Tenant in the Expansion Space. Within
  thirty (30) days after the Expansion Effective Date, Tenant will deliver to
  Landlord for approval final working drawings and specifications for all
  improvements and alterations beyond the First Floor Shell Condition of the
  Expansion Space which Tenant desires ("Expansion Improvements"). All such
  final working drawings will: (i) comply with the ADA and all other applicable
  codes, laws, rules, regulations and statutes, (ii) be consistent with the
  terms and limitations set forth in Exhibit L to the Lease, (iii) include the
                                     ---------
  installation of ductwork and additional variable air volume boxes in the
  Expansion Space (beyond the equipment described above in the definition of the
  First Floor Shell Condition) which shall be attached to and incorporated into
  the Building's HVAC system serving the Expansion Space; (iv) be substantially
  consistent with the Improvements described in the Exhibit C-l to the Lease
                                                    -----------
  with respect to the third and fifth floor portions of the Premises. All plans
  for the Expansion Improvements require Landlord's prior written approval (and
  notwithstanding any time periods set forth above, Tenant shall not commence
  performance of any Expansion Improvements in any portion of the Expansion
  Space until Landlord has approved the Final Plans for such Expansion
  Improvements), which approval will not be unreasonably withheld provided
  that the foregoing conditions are met. As modified by any Landlord-required
  changes, the final working drawings will be the "Final Plans" with respect
  to the Expansion Improvements. Tenant is solely responsible for determining
  whether or not it is a public accommodation and for compliance with ADA
  within the Expansion Space. Tenant's approval of the Final Plans constitutes
  an acknowledgment by Tenant that they comply with ADA and all other applicable
  codes, laws, rules, regulations and statutes. Landlord's approal of the plans,
  specifications and working drawings for the Expansion Improvements shall
  create no responsibility or liability on the part of Landlord for their
  completeness, design sufficiency, or compliance with any codes, laws, rules,
  regulations or statutes of governmental agencies or authorities. If Tenant
  requires any changes in the Final Plans (the "Tenant Changes"), Tenant must
  present Landlord with revised drawings and specifications. If Landlord
  approves the Tenant Changes, Tenant will incorporate such changes into the
  Expansion Improvements. Tenant shall not be obligated to utilize building
  standard materials in connection with the Expansion Improvements, provided
  that the materials selected by Tenant shall be subject to Landlord's prior
  written approval and shall be consistent with the design and finishes of Class
  A office space in the Tysons Corner submarket.

                                       4

<PAGE>

         (b) The Expansion Improvements shall be performed by Tenant, at its
 sole cost and expense (subject to partial reimbursement in accordance with the
 terms of subparagraph (c) below) and in accordance with the terms of Section
                                                                      -------
 3.1(c) of the Lease and Paragraphs B and D of Exhibit C to the Lease, as
 ------                  ------------------    ---------
 modified and clarified by the following terms of this Paragraph 5.

         (c) Tenant will bear all costs relating to the Expansion Improvements,
  including the "Tenant's Costs," as defined in Paragraph C of Exhibit C to the
                                                -----------    ---------
  Lease, provided however, that Landlord will credit against such Tenant's Costs
  an allowance ("Expansion Improvement Allowance") of $170,037.00, which
  Expansion Improvement Allowance shall be paid by Landlord in accordance with
  the following procedures:

         1. Tenant, as construction manager, will enter into contracts with all
         contractors and subcontractors performing the Expansion Improvements.
         As such, Tenant will be responsible for all Tenant's Costs associated
         with the Expansion Improvements, subject to partial reimbursement in
         accordance with the terms set forth below. Tenant will approve in
         writing and thereafter submit to Landlord for payment invoices from
         Tenant's contractors and subcontractors who have performed work and
         delivered materials in connection with the Expansion Improvements
         (which may include, in addition to hard construction costs, only the
         following "soft" costs associated with the Improvements: architectural,
         design and engineering fees, the cost of procuring permits and
         Reimbursable Generator Costs (subject to the terms of Exhibit C to the
                                                               ---------
         Lease) (collectively, "Approved Invoices").

         2. Tenant shall submit to Landlord from time to time Approved Invoices
         accompanied by partial lien waivers (in form reasonably acceptable to
         Landlord) from all contractors and subcontractors submitting such
         Invoices. Such Invoices and accompanying lien waivers shall be
         delivered to Landlord on or before the fifteenth (15/th/) day of each
         calendar month.

         3. To the extent that any portion of the Expansion Improvement
         Allowance remains unpaid up to a total of $153,033.30, any such
         previously unpaid Approved Invoices shall be paid by Landlord on or
         before the thirtieth (30/th/) day of the immediately succeeding
         calendar month.

         4. Upon completion of the Expansion Improvements and delivery by Tenant
         to Landlord of: (i) a Certificate of Occupancy for the Expansion Space,
         (ii) full and complete lien waivers from all contractors or
         subcontractors performing work or delivering materials with respect to
         the Expansion Improvements, and (iii) previously unpaid Approved
         Invoices for work and materials forming a part of the Expansion
         Improvements totaling at least the amount requested by Tenant, Landlord
         will pay such Invoices to the extent that any portion of the total
         Improvement Allowance $170,037.00 remains unpaid.

                                       5

<PAGE>

     6. Expansion Space Base Rent. (a) In addition to Tenant's Base Rent
        -------------------------
obligations with respect to the Existing Premises, beginning on Expansion
Commencement Date (as defined below), Tenant shall also pay Landlord Base Rent
with respect to the Expansion Space in the initial amount of $195,677.50 per
annum ("Expansion Space Base Rent"), payable in equal monthly installments of
$16,306.46. Beginning on the first day of the second Lease Year (as defined in
Section 1.7 of the Lease, said Expansion Space Base Rent will be escalated on
-----------
the first day of each Lease Year during the Term in accordance with the
following schedule:

               Annual Expansion Space     Monthly Expansion Space
               ----------------------     -----------------------
  Lease Year      Base Rent                    Base Rent
  ----------      ---------                    ---------
     1            $ 195,677.50                 $ 16,306.46
     2            $ 200,569.43                 $ 16,714.12
     3            $ 205,583.66                 $ 17,131.97
     4            $ 210,723.25                 $ 17,560.27
     5            $ 215,991.33                 $ 17,999.28
     6            $ 221,391.11                 $ 18,449.26
     7            $ 226,925.88                 $ 18,910.49
     8            $ 232,599.02                 $ 19,383.25
     9            $ 238,413.99                 $ 19,867.83
    10            $ 244,374.33                 $ 20,364.53
    11            $ 250,483.68                 $ 20,873.64

The "Expansion Commencement Date" shall be the earlier to occur of: (i)
November 15, 2000, and (ii) the date on which Tenant substantially completes the
Expansion Improvements in the Expansion Space and the Expansion Space can be
occupied for business operations (including the completion of other work and
installations beyond the Expansion Improvements necessary for Tenant's business
operations).

     (b) In light of the additional Base Rent payable with respect to the
Expansion Space, notwithstanding the terms of Section 3.l(e)(ii) or any other
provision of the Lease to the contrary, with respect to the period beginning on
the Commencement Date (as defined in the Lease) and ending on December 31, 2000,
Tenant's total Base Rent obligations with respect to the entire Premises
(including the Existing Premises and the Expansion Space) shall be at least
$3,099,345.24 (as such amount may be increased by virtue of: (i) Tenant's
accelerated occupancy of the fourth (4/th/) floor portion of the Premises in
accordance with the terms of Section 3.1 of the Lease, and/or (ii) the
occurrence of the Expansion Commencement Date prior to November 15, 2000 in
accordance with the foregoing terms of this Paragraph 6). [The parties
acknowledge that the foregoing total Base Rent figure represents the sum of the
$3,074,342.00 figure set forth in Section 3.l(e)(ii) of the Lease and
$25,003.24 (the total Expansion Space Base Rent payable for the period November
15, 2000 through December 31, 2000).]

                                       6

<PAGE>

     7.  Expansion Space Additional Rent. In addition to the aforesaid Expansion
         -------------------------------
Space Base Rent, Tenant shall also pay Landlord Additional Rent with respect to
the Expansion Space in the form of the Excess Operating Costs and Real Estate
Taxes attributable to the Expansion Space pursuant to the terms of Article IV of
the Lease. Therefore, notwithstanding any provision of the Lease to the
contrary, from and after the Expansion Commencement Date, "Tenant's Share" of
"Operating Costs" and "Real Estate Taxes" (as such terms are defined in Sections
                                                                        --------
1.5 and 1.6 of the Lease) shall be increased to eighty nine and l/l0th percent
-----------
(89.1%) of such Operating Costs and Real Estate Taxes. [The parties
acknowledge that the foregoing Tenant's Share was determined by dividing the
total Net Rentable Area of the Existing Premises and the Expansion Space by the
Net Rentable Area of the Building.]

     8.  Parking. (a) In light of Tenant's leasing of the Expansion Space, from
         -------
and after the Expansion Effective Date, the number of Tenant's Allocated Parking
Spaces (as defined in Exhibit E to the Lease) shall increase by an additional
                      ---------
twenty (20) Spaces (which additional twenty (20) Spaces were determined based
upon a ration of 3.7 Spaces per 1,000 square feet of Net Rentable Area in the
Expansion Space, as such ratio is set forth in Exhibit E). In addition to the
                                               ---------
Allocated Parking Spaces determined on the basis of the aforesaid ratio,
beginning on the Expansion Effective Date and throughout the balance of the
Term, the total number of Allocated Parking Spaces shall be increased by an
additional eighteen (18) Spaces. All of the Spaces referenced in this
Paragraph 8 shall be leased subject to and in accordance with the terms of
Exhibit E to the Lease.
---------

     (b) So long as Tenant continues to lease and occupy at least four (4) full
floors in the Building, if any additional parking spaces become available which
are not committed to other tenants or occupants of the Building or reserved by
Landlord in connection with its efforts to lease additional space in the
Building, Landlord will notify Tenant of the availability of such spaces, and
Tenant may lease the same (on an unreserved basis) subject to and in accordance
with the terms of Exhibit E to the Lease.
                  ---------

     (c) The parties acknowledge that the operation of the Building's parking
Garage is subject to the certain limitations and restrictions due to agreements
executed prior to the date of this Agreement between Landlord and owners and
lessee's of the shopping center parcel adjacent to the Building, and recorded
among the land records of Fairfax County, Virginia prior to the date hereof
("Outside Agreements") and that Landlord's operation of the Garage and Tenant's
use thereof is subject to the terms of such Agreements. Landlord represents and
warrants that none of the terms of such Outside Agreements prevent Landlord from
fulfilling its obligations under Exhibit E or any other provision of the Lease.
                                 ---------
However, the parties further acknowledge that said Outside Agreements include an
obligation on the part of Landlord to allow access to the Garage on weekends and
holidays and after 6:00 p.m. on weekdays.

                                       7

<PAGE>
     9.  Renewal Options. The Renewal Options set forth in Section 15.23 of the
         ---------------                                   -------------
Lease will be applicable to the Expansion Space. However, in light of the
addition of the Expansion Space to the Premises, Section 15.23(a)(v) of the
                                                 -------------------
Lease is hereby deleted and replaced with the following language: "(v) (1)
Tenant exercises the first option with respect to a portion of the Premises
consisting completely of full floors of the Building (and, with respect to the
first floor portion of the Premises only, so much of the first floor of the
Building as is then leased by Tenant hereunder); it being the understanding of
the parties that the first option may not be exercised with respect to portions
of any floor of the Building, except the first floor of the Building (and then
only due to the fact that the Premises does not include the entire first floor
of the Building); and (2) Tenant exercises the second option with respect to the
entire Premises (as the same is constituted at the time of such exercise)."

     10. Overtime HVAC Service. The parties acknowledge that the worksheets
         ---------------------
attached to Exhibit F to the Lease do not include a calculation of the estimated
            ---------
hourly overtime HVAC costs for providing overtime HVAC service to a partial
floor such as the Expansion Space. Therefore, with respect to any overtime HVAC
service provided to the Expansion Space, the calculation of the depreciation
component of Landlord's HVAC costs will be made in accordance with the terms of
the worksheet attached hereto as Exhibit F and incorporated herein by this
                                 ---------
reference. The other components of Landlord's costs associated with providing
overtime HVAC service will be made in the same manner as set forth in the
attached worksheet based upon Landlord actual costs for such other components as
of the date of Tenant's use of such overtime HVAC, as set forth in Section 5.2
of the Lease.

     11. Additional Security. (a) Upon Tenant's execution of this Amendment,
         -------------------
Tenant will deliver to Landlord, as additional security for Tenant's performance
of its obligations hereunder, an Additional Security Deposit (herein so called)
of Two Million Four Hundred Ninety-nine Thousand Sixty-five and 60/100 Dollars
($2,499,075.60). Said Additional Security Deposit may be delivered in the form
of a Cash Security Deposit (as described in Section 1.9 of the Lease) or an
                                            -----------
unconditional, irrevocable letter of credit in the amount of the Additional
Security Deposit, which Letter of Credit satisfies the requirement of Section
                                                                      -------
1.9 of the Lease. Upon Tenant's delivery of the Additional Security Deposit, the
---
same shall be held with and added to the initial $2,303,397.90 Security Deposit
paid by Tenant. The resulting total Security Deposit of Four Million Eight
Hundred Two Thousand Four Hundred Sixty-three and 50/l00 Dollars
($4,802,473.50) shall be held by Landlord in accordance with the terms of
Section 1.9 of the Lease, as modified hereby.
-----------

     (b) The parties have agreed to revised terms regarding the reduction of the
amount of the Security Deposit. As a result, the fourth, fifth and sixth
sentences of Section 1.9(a) of the Lease are hereby deleted and replaced with
the following language: "Provided that no Default (as defined in Section 11.1,
                                                                 ------------
Section 1.8 and elsewhere in this Lease) has occurred prior to such date, the
-----------
amount of such Cash Security Deposit or Letter of Credit shall be subject to
subsequent adjustment in accordance with the following terms: on the first day
of the sixty-first (61/st/) full

                                       8

<PAGE>

calender month following the Final Commencement Date (as defined in Section 3.1
                                                                    -----------
of the Lease) and thereafter on the first day of the seventy-third (73/rd/),
eighty-fifth (85/th/) and ninety-seventh (97/th/) full calendar months following
the Final Commencement Date, the amount of the Security Deposit shall be reduced
by an amount equal to Nine Hundred Sixty Thousand, Four Hundred Ninety-two and
70/l00 Dollars ($960,494.70) per year, and on the first day of the one hundred
ninth (109/th/) full calendar month following the Final Commencement Date the
amount of the Security Deposit shall be reduced by One Hundred Sixty Thousand
Eighty-two and 12/100) Dollars ($160,082.48). Therefore, subject to the
conditions set forth above, the amount of the Security Deposit shall be
periodically reduced as follows: on the first day of the sixty-first (6l/st/)
full calendar month following the Final Commencement Date, to Three Million,
Eight Hundred Forty-one Thousand, Nine Hundred Seventy-eight and 80/l00 Dollars
($3,841,978.80); on the first day of the seventy-third (73/rd/) full calendar
month following the Final Commencement Date, to Two Million, Eight Hundred
Eighty-one Thousand, Four Hundred Eighty-four and 1O/100 Dollars
($2,881,484.10); on the first day of the eighty-fifth (85/th/)full calendar
month following the Final Commencement Date, to One Million Nine Hundred Twenty
Thousand, Nine Hundred Eighty-nine and 40/100 Dollars ($1,920,989.40); on the
first day of the ninety-seventh (97/th/)full calendar month following the Final
Commencement Date to Nine Hundred Sixty Thousand, Four Hundred Ninety-two and
70/l00 Dollars ($960,494.70); and on the first day of the one hundred ninth
(lO9/th/) full calendar month following the Final Commencement Date to Eight
Hundred Thousand, Four Hundred Ten and 58/100 Dollars ($800,412.22). Said
remaining balance of such Security Deposit shall be held by Landlord throughout
the balance of the Lease Term in accordance with the terms of Section 1.9 of the
                                                              -----------
Lease."

     12. Square Footage of Existing Premises. The parties acknowledge that
         -----------------------------------
Section 1.1 of the Lease contains a typographical error in that the total Net
-----------
Rentable Area of the Building is misstated in the textual description of the
same. Notwithstanding any provision of Section 1.1 of the Lease to the contrary,
the total Net Rentable Area of the Building is one hundred seventy thousand four
hundred seventy-one (170,471) square feet.

     13. Building Security. Landlord will continue to use diligent efforts to
         -----------------
perform its obligations under the Lease with respect to Building security and
the operation of the Building's elevators in relation thereto.

     14. Brokerage. Except as listed below, Tenant and Landlord represent to
         ---------
each other that the indemnifying party has not incurred any liability for
commissions or similar compensation to third parties in connection with this
Amendment, and, except for commissions due Brokers (defined below) (which shall
be paid by Landlord pursuant to a separate agreement with Brokers), Tenant and
Landlord shall indemnify and hold each other harmless against any liability
arising from any claims for such compensation, including costs and reasonable
attorneys' fees. "Brokers" means CB Commercial ("Landlord's Broker") and Cushman
& Wakefield of Virginia, Inc. and Zalco Realty, Inc. (collectively, "Tenant's
Broker").

                                       9

<PAGE>

     15. Capitalized Terms. Capitalized terms used herein and not otherwise
         -----------------
defined herein shall have the respective meanings ascribed thereto in the Lease.
Whenever there is a conflict between this Amendment and the Lease, the
provisions of this Amendment shall take precedence and the Lease shall be
construed accordingly.

     16. Terms of Lease Ratified and Confirmed. Landlord and Tenant hereby
         -------------------------------------
acknowledge that all of the terms, covenants and conditions of the Lease, as
hereby modified, amended or supplemented, are hereby ratified and confirmed and
shall continue to be and remain in full force and effect throughout the
remainder of the Term of the Lease.

     17. Severability. Each and every covenant, agreement, obligation, or other
         ------------
provision contained in this Amendment is, and shall be construed to be, a
separate and independent covenant and agreement of the party bound thereby, and
shall not be construed to be dependant on any other provision of this Amendment
or the Lease (unless this Amendment or the Lease specifically provides
otherwise). If any term or provision of this Amendment shall, to any extent, be
declared invalid or unenforceable, the remainder of this Amendment and the
application of any term or provision, to persons or circumstances other than
those as to which the application is declared invalid or unenforceable, shall
not be affected.

     18. Captions. The Paragraph captions are for convenience of reference only
         --------
and shall not be deemed to limit, affect or have any effect on the
interpretation of the provisions of this Amendment or the Lease.

     19. No Further Modification. Except as expressly provided in this
         -----------------------
Amendment, the Lease remains in full force and effect and is not otherwise
modified or amended. The terms of this Amendment and the Lease contain the
entire agreement of the parties as to the matters covered hereby. No terms,
conditions, representations, warranties, promises, or understandings, of any
nature whatsoever, express or implied, have been made or relied upon by either
of the parties hereto. This Amendment may not be modified, waived, discharged or
terminated other than by a writing executed by the parties hereto.

     20. Binding Effect. It is understood and agreed that this Amendment shall
         --------------
not be binding upon Landlord or Tenant until both Tenant and Landlord shall have
executed and delivered the same.

     21. Successors and Assigns. This Amendment shall inure to the benefit of
         ----------------------
and bind the successors and (subject to the provisions of the Lease) the assigns
of the respective parties.

     22. Governing Law. The terms of this Amendment and the Lease shall be
         -------------
construed and enforced in accordance with the laws of the Commonwealth of
Virginia (without regard to any choice of law provisions thereof).

                           (signature pages to follow)

<PAGE>

                              LANDLORD:
                              --------

                              TYSONS CORNER PROPERTY LLC,
                              A Virginia limited liability company

ATTEST:                       By:  L&B Realty Advisors, Inc.,
------                             a Delaware corporation
                                   Its investment manager

[illegible]                   By:  /s/ Daniel L Plumlee [seal]
                                ------------------------------
                              Name:  Daniel L. Plumlee
                                   ---------------------------
                              Title: President & Chief Investment Officer
                                     -----------------------------------
                              Date:

                        [Tenant's Signature Page Follows]

<PAGE>

WITNESS:                      TENANT:
-------                       -------

                              MICROSTRATEGY, INC.,
                              a Delaware corporation

[illegible]                   By: /s/ Mark Lynch [seal]
                                  ---------------------
                              Name:  Mark Lynch
                                   ------------
                              Title:   CFO
                                    -------
                              Date:    8-10-00
                                   ------------

                                List of Exhibits
                                ----------------

Exhibit A      Expansion Space
Exhibit B      Not Used
Exhibit C      Not Used
Exhibit D      Not Used
Exhibit E      Not Used
Exhibit F      Calculation Method Regarding After-hours HVAC Cost with respect
               to Expansion Space
Exhibit G      Not Used
Exhibit H      Tenant's Signage Specifications

                                       12

<PAGE>

                                   Exhibit "A"

                                 EXPANSION SPACE
                                 ---------------

                       [First Floor Schematic of Building]

<PAGE>

                                   Exhibit "F"

             CALCULATION METHOD REGARDING AFTER-HOURS HVAC COST FOR
             ------------------------------------------------------
                                EXPANSION SPACE
                                ---------------

                                 (see attached)

<PAGE>

                        OVERTIME HVAC CALCULATION FORMAT
                              7/182000 @ 15:45 Hrs

Project:                 1861 International Drive    Cost to run first floor
A/C Units                                  =1
Design KW:                                 =n/a
Minimum Load Package Units                 =1
Chiller Tonage Rating                      =58
                                           REVISED

Step One:  Electrical Costs:

Average KW Cost:                           =      $0.045            Per Kwh
Building Average Voltage:                  =       460               Volts

A.  Package Units (1) has three (3) compressors & one fan.
     Min. Load (1 Units)                   =       58 Min. Tonage
     One fan @ 26.5a                       =       21.089 Kw
     Two compressors @ 20.5a               =       32.628
     Total Kw                              =       53.717           53.72 KWh

B.   Condenser Water Pumps (2)                     50 HP each
     Condenser pumps needed:  1            =       62.0 AMPS
     Total Kw                              =       49.34 Kw         49.34 KWh

C.   Cooling Tower Fans:
     Fan motors:  1                        =       24.9 AMPS
     Run Time (Full time w/VFD)            =       50%
     Total Kw                              =        9.9077           9.91 KWh

D.   VAV Boxes (ESTIMATE):
     5 w/14 Kw heat & 1/2hp fan, 277v      =       74.709 Kw
     10w/10Kw heat & 1/3 hp fan,277v       =      106.09 Kw
     Run Time:                             =       50%
     Total Kw                              =       90.402 Kw        90.40 KWh

Total A-D Kw:
     Water Chilling Unit:                  =                        53.72 KWh
     Chilled/Condenser Pumps:              =                        49.34 KWh
     Cooling Tower Fans                    =                         9.91 KWh
     VAV Boxes (ESTIMATE)                  =                        90.40 KWh

Total KWh Condition:                       =                       203.37 KWh

<PAGE>

Step Two: Cooling Tower Water Usage

# of Pumps Used:                        =        1 Pumps
Condenser Pump Rate:                    =     1275 GPM's
Chiller Tonage Rating:                  =       58 Tons

(A)  Cooling Tower Evaporation Make-up & Bleed:                    Total Values:
     Minimum Load (A/C Units)           =       58 Tons
     Evaporation Rate                   =        1% of GPM Rate       1.00%  Ton
     # of Pumps:                        =        1                 1275.00  PGPM
     Total Pump GPM Rate:               =     1275                   12.75 1% Rt
     Bleed Cycles=(Egpm/C-1)                     3 cycl               6.38  CGPM
     Total Make-up = Rate + Cycles                                   19.13  TMup
     Hourly Evaporation rate = E rate x 60 min.                    1147.50  HMup
     #1 Load Tonage x Hourly E rate = Make-Up Rate                 1147.50  LMup

Water & Sewage charges:
     Water is supplied bu City of Fairfax. Cooling towers have to be
     Metered to ualify for the water only (no sewer) rate:
     1,000 gallons = 1 unit charge      =        $    2.33
     One gallon                         =        $0.002330
     LMup / 1 Unit = Unit x Cost = Cost per/hr.  $    2.67

Total Water Make-up Unit Cost:                                  $      2.67 Hr

Step Three: Equipment Depreciation

Equipment cost:
Package A/C Units (12 total):                    $350,000.00
Package A/C Units Operating (1 total):                          $ 29,166.67
Cooling Towers (2 total):                        $ 60,000.00
Cooling Towers Operating: (1 total):                            $ 30,000.00
Condenser Pumps (2 total):                       $ 10,000.00
Condenser Pumps Operating (1 total):                            $  5,000.00
Tower and Pump Piping:                                          $ 48,000.00
VAV Boxes:                                       $428,000.00
VAV Boxes Operating (9% total):                  (ESTIMATE)     $ 38,909.09

     1.  Equipment Cost:                                        $151,075.76
     2.  Estimated Life:                                                 20 Yrs
     3.  Annual Run Time:                                              3208 Hrs

Total Equipment Depreciation Cost                               $      2.35 Hr

<PAGE>

Step Four: Equipment Maintenance Cost

E.M.C. = Maintenance Cost divided by Annual operating hours. Total Cost Per Year
     Maintenance Cost:
     1.  Air Filters                         $4,000 / 2          $2,000.00
     2.  Water Treatment & Supplies          $4,500 / 2          $2,250.00
     3.  HVAC Supplies                       $4,200 / 2          $2,100.00
     4.  MISC. Supplies                      $1,500 / 2          $  750.00
         Annual Operating Hours                3208
Total Cost:                                                      $7,100.00

Total Equipment Maintenance Cost:                                $    0.37 Prhr

Step Five: Calculation Totals Per Condition                  Total Cost Per Hour

     1.  Electrical Cost:                         =              $    9.15 E.C.
     2.  Water Cost:                              =              $    2.67 W.C.
     3.  Equipment Depreciation Cost              =              $    2.35 EDC
     4.  Equipment Maintenance Cost               =              $    0.37 EMC

Total Cost Per Hour:                              =              $   14.55 Prhr

Step Six:  Operating Cost:                        =              $   14.55 PrHr

     Management Overhead=     15%                 =              $    2.18

Total Operating Cost Per Hour:                    =              $   16.73
Tenant Split: A. 5398 RSF [MicroStratgey]                        $    7.05
              B. 7412 RSF [Fidelity]                             $    9.68

Editors Note: A exact split may be derived by separating out actual CFM used,
but that is not known

<PAGE>

                                  Exhibit "H"

                        TENANT'S SIGNAGE SPECIFICATIONS
                        -------------------------------

<PAGE>

                      [Schematic of MicroStrategy signage]

                                    Exhibit H
                                   Page 1 of 9

<PAGE>

                       [Schematic of Strategy.com signage]

                                    Exhibit H
                                   Page 2 of 9

<PAGE>

                      [Creative Signage Systems letterhead]

January 4, 2000

MicroStrategy
8000 Crescent Drive
Vienna, VA 22182
Attn: Bill Painter

RE:  Signage

Dear Mr. Painter:

Please find the attached drawing of the main site sign identification, which
consists of the logo in channel letters, fabricated from a satin finished
stainless steel. The face of each letter is #2283 red acrylic. Each letter is
internally illuminated with neon tubing. The face side tubing is clear red while
the back side tubing is white. The letter faces are illuminated in red while the
wall is haloed in a soft white.

Should you have any questions or require any additional information, please do
not hesitate to call.

Sincerely,

/s/ John B. Mayer
-----------------
John B. Mayer,
President

<TABLE>

<S><C>
9101 51st PLACE - COLLEGE PARK, MD 20740 - Phone: 301/345-3700 - Fax: 301/220-1289
                    Web Site Address: www.creativesignage.com
</TABLE>

                                    Exhibit H
                                   Page 3 of 9

<PAGE>

  [Schematic of exterior of building showing placement of Strategy.com signage]

                                    Exhibit H
                                   Page 4 of 9

<PAGE>

 [Schematic of exterior of building showing placement of MicroStrategy signage]

Subject to the terms of Paragraph 2.3 of the Lease, Tenant to install two (2)
signs on the exterior facades of the Building; the total allowable signage
square footage for both signs combined shall not exceed one hundred eighty-five
(185) square feet.

                                    Exhibit H
                                   Page 5 of 9

<PAGE>

                      [Photograph of exterior of building]

                                    Exhibit H
                                   Page 6 of 9

<PAGE>

                      [Photograph of exterior of building]

                                    Exhibit H
                                   Page 7 of 9

<PAGE>

                      [Photograph of exterior of building]

                                    Exhibit H
                                   Page 8 of 9

<PAGE>

                      [Schematic of MicroStrategy signage]

                                    Exhibit H
                                   Page 9 of 9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00035-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00035-of-00352.parquet"}]]