Document:

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                                                                    EXHIBIT 10.1

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                          REGISTRATION RIGHTS AGREEMENT

     REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of June 17,
2000, by and among MicroStrategy, Incorporated, a Delaware corporation, with
headquarters located at 8000 Towers Crescent Drive, Vienna, Virginia 22182 (the
"Company"), and the undersigned buyers (each, a "Buyer" and collectively, the
"Buyers").

     WHEREAS:

     A. In connection with the Securities Purchase Agreement by and among the
parties hereto of even date herewith (the "Securities Purchase Agreement"), the
Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell to the Buyers shares of the
Company's Series A Convertible Preferred Stock (the "Preferred Shares"), which
will be convertible into shares of the Company's Class A common stock, par value
$0.001 per share (the "Common Stock") (as converted, the "Conversion Shares") in
accordance with the terms of the Company's Certificate of Designations,
Preferences and Rights of the Preferred Stock (the "Certificate of
Designations");

     B. To induce the Buyers to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"), and
applicable state securities laws.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the Buyers
hereby agree as follows:

     1. DEFINITIONS.
        -----------
     As used in this Agreement, the following terms shall have the following
meanings:

        a. "Investor" means a Buyer, any transferee or assignee thereof to whom
a Buyer assigns its rights under this Agreement and who agrees to become bound
by the provisions of this Agreement in accordance with Section 9 and any
transferee or assignee thereof to whom a transferee or assignee assigns its
rights under this Agreement and who agrees to become bound by the provisions of
this Agreement in accordance with Section 9.

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

        c. "Register," "registered," and "registration" refer to a registration
effected by
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preparing and filing one or more Registration Statements (as defined below) in
compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any
successor rule providing for offering securities on a continuous or delayed
basis ("Rule 415"), and the declaration or ordering of effectiveness of such
Registration Statement(s) by the United States Securities and Exchange
Commission (the "SEC").

        d. "Registrable Securities" means (i) the Conversion Shares issued or
issuable upon conversion of the Preferred Shares, (ii) the Dividend Shares (as
defined in the Certificate of Designations) issued in relation to the Preferred
Shares and (iii) any shares of capital stock issued or issuable with respect to
the Conversion Shares, the Preferred Shares or the Dividend Shares issued in
relation to the Preferred Shares as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, without regard to any
limitations on conversions of Preferred Shares.

        e. "Registration Statement" means a registration statement or
registration statements of the Company filed under the 1933 Act covering the
Registrable Securities.

Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement.

     2. REGISTRATION.
        ------------

        a. Mandatory Registration. The Company shall prepare, and, as soon as
        ----------------------
practicable but in no event later than 30 days after the Initial Closing Date
(as defined in the Securities Purchase Agreement) (the "Filing Deadline"), file
with the SEC the Registration Statement on Form S-3 covering the resale of all
of the Registrable Securities. In the event that Form S-3 is unavailable for
such a registration, the Company shall use such other form as is available for
such a registration, subject to the provisions of Section 2(d). The Registration
Statement prepared pursuant hereto shall register for resale at least that
number of shares of Common Stock equal to the product of (x) 1.25 and (y) the
number of Registrable Securities as of the trading day immediately preceding the
date the Registration Statement is initially filed with the SEC (after giving
effect to the Mandatory Closing (as defined in the Securities Purchase
Agreement), if any), subject to adjustment as provided in Section 2(e). The
Company shall use its best efforts to have the Registration Statement declared
effective by the SEC as soon as practicable, but in no event later than the date
which is 180 days after the Initial Closing Date (the "Effectiveness Deadline").

        b. Allocation of Registrable Securities. The initial number of
           ------------------------------------
Registrable Securities included in any Registration Statement and each increase
in the number of Registrable Securities included therein shall be allocated pro
rata among the Investors based on the number of Registrable Securities held by
each Investor at the time the Registration Statement covering such initial
number of Registrable Securities or increase thereof is declared effective by
the SEC. In the event that an Investor sells or otherwise transfers any of such
Investor's Registrable Securities, each transferee shall be allocated a pro rata
portion of the then remaining number of Registrable
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Securities included in such Registration Statement for such transferor. Any
shares of Common Stock included in a Registration Statement and which remain
allocated to any Person which ceases to hold any Registrable Securities covered
by such Registration Statement shall be allocated to the remaining Investors,
pro rata based on the number of Registrable Securities then held by such
Investors which are covered by such Registration Statement.

        c. Legal Counsel. Subject to Section 5 hereof, the Buyers holding at
           -------------
least two-thirds (2/3) of the Registrable Securities shall have the right to
select one legal counsel to review and oversee any offering pursuant to this
Section 2 ("Legal Counsel"), which shall be Katten Muchin Zavis or such other
counsel as thereafter designated by the holders of at least two-thirds (2/3) of
the Registrable Securities. The Company shall reasonably cooperate with Legal
Counsel in performing the Company's obligations under this Agreement.

        d. Ineligibility for Form S-3. In the event that Form S-3 is not
           --------------------------
available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the Registrable
Securities on another appropriate form reasonably acceptable to the holder of at
least two-thirds (2/3) of the Registrable Securities and (ii) undertake to
register the Registrable Securities on Form S-3 as soon as such form is
available, provided that the Company shall maintain the effectiveness of the
Registration Statement then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been declared
effective by the SEC.

        e. Sufficient Number of Shares Registered. In the event the number of
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shares available under a Registration Statement filed pursuant to Section 2(a)
is insufficient to cover all of the Registrable Securities required to be
covered by such Registration Statement or an Investor's allocated portion of the
Registrable Securities pursuant to Section 2(b), the Company shall amend the
Registration Statement, or file a new Registration Statement (on the short form
available therefor, if applicable), or both, so as to cover at least 125% of the
number of such Registrable Securities as of the trading day immediately
preceding the date of the filing of such amendment or new Registration
Statement, in each case, as soon as practicable, but in any event not later than
fifteen (15) days after the necessity therefor arises. The Company shall use it
best efforts to cause such amendment and/or new Registration Statement to become
effective as soon as practicable following the filing thereof. For purposes of
the foregoing provision, the number of shares available under a Registration
Statement shall be deemed "insufficient to cover all of the Registrable
Securities" if at any time the number of Registrable Securities issued or
issuable upon conversion of the Preferred Shares covered by such Registration
Statement is greater than the number of shares of Common Stock available for
resale under such Registration Statement. The calculation set forth in the
foregoing sentence shall be made without regard to any limitations on the
conversion of the Preferred Shares and such calculation shall assume that the
Preferred Shares are then convertible into shares of Common Stock at the then
prevailing Conversion Rate (as defined in the Certificate of Designations).

        f. Effect of Failure to File and Obtain and Maintain Effectiveness of
           ------------------------------------------------------------------
Registration Statement. If, other than solely as a result of an Investor Delay
----------------------
(as defined below), (i) a Registration Statement covering all the Registrable
Securities and required to be filed by the Company
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pursuant to this Agreement is not (A) filed with the SEC on or before the Filing
Deadline or (B) declared effective by the SEC on or before the Effectiveness
Deadline or (ii) on any day after the Registration Statement has been declared
effective by the SEC sales of all the Registrable Securities required to be
included on such Registration Statement cannot be made (other than during an
Allowable Grace Period (as defined in Section 3(r)) pursuant to the Registration
Statement (including, without limitation, because of a failure to keep the
Registration Statement effective, to disclose such information as is necessary
for sales to be made pursuant to the Registration Statement or to register
sufficient shares of Common Stock), then, as partial relief for the damages to
any holder by reason of any such delay in or reduction of its ability to sell
the underlying shares of Common Stock (which remedy shall not be exclusive of
any other remedies available at law or in equity), the Company shall pay to each
holder of Preferred Shares an amount in cash per Preferred Share held equal to
the product of (A) $10,000 multiplied by (B) the product of (I) 0.00033
multiplied by (II) the sum of (x) the number of days after the Filing Deadline
that such Registration Statement is not filed with the SEC, plus (y) the number
of days after the Effectiveness Deadline that the Registration Statement is not
declared effective by the SEC, plus (z) the number of days after the
Registration Statement has been declared effective by the SEC that such
Registration Statement is not available (other than during an Allowable Grace
Period) for the sale of at least all the Registrable Securities required to be
included on such Registration Statement pursuant to section 2(e). The payments
to which a holder shall be entitled pursuant to this Section 2(f) are referred
to herein as "Registration Delay Payments." Registration Delay Payments shall be
paid on the earlier of (I) the last day of the calendar month during which such
Registration Delay Payments are incurred and (II) the third business day after
the event or failure giving rise to the Registration Delayed Payments is cured.
In the event the Company fails to make Registration Delay Payments in a timely
manner, such Registration Delay Payments shall bear interest at the rate of 1.5%
per month (prorated for partial months) until paid in full. An "Investor Delay"
shall mean any period for which the Registration Statement is not effective or
sales of Registrable Securities may not be made solely attributable to changes
required by the Investors in the Registration Statement after the Registration
Statement has been declared effective by the SEC with respect to information
required by this Agreement to be provided to the Company by such Investors for
purposes of inclusion in the Registration Statement, with respect to changes in
the plan of distribution or the failure of the Investors to conduct their review
of the Registration Statement pursuant to Section 3(c) of this Agreement within
five (5) days of their receipt of the Registration Statement.

     3. RELATED OBLIGATIONS.
        -------------------

     At such time as the Company is obligated to file a Registration Statement
with the SEC pursuant to Section 2(a) or 2(e), the Company will use its best
efforts to effect the registration of the Registrable Securities in accordance
with the intended method of disposition thereof and, pursuant thereto, the
Company shall have the following obligations:

        a. The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities (but in no
event later than the Filing Deadline) and use its best efforts to cause such
Registration Statement relating to the Registrable Securities to become
effective as soon as practicable after such filing (but in no event later than
the Effectiveness
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Deadline). The Company shall keep each Registration Statement effective pursuant
to Rule 415 at all times until the earlier of (i) the date as of which the
Investors may sell all of the Registrable Securities covered by such
Registration Statement without restriction pursuant to Rule 144(k) (or successor
thereto) promulgated under the 1933 Act or (ii) the date on which the Investors
shall have sold all the Registrable Securities covered by such Registration
Statement (the "Registration Period"), which Registration Statement (including
any amendments or supplements thereto and prospectuses contained therein) shall
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein, or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading. The term
"best efforts" shall mean, among other things, that the Company shall submit to
the SEC, within five (5) business days after the Company learns that no review
of a particular Registration Statement will be made by the staff of the SEC or
that the staff has no further comments on the Registration Statement, as the
case may be, a request for acceleration of effectiveness of such Registration
Statement to a time and date not later than 48 hours after the submission of
such request.

        b. Subject to Section 3(r), the Company shall prepare and file with the
SEC such amendments (including post-effective amendments) and supplements to a
Registration Statement and the prospectus used in connection with such
Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep such Registration
Statement effective at all times during the Registration Period, and, during
such period, comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such Registration
Statement. In the case of amendments and supplements to a Registration Statement
which are required to be filed pursuant to this Agreement (including pursuant to
this Section 3(b)) by reason of the Company filing a report on Form 10-K, Form
10-Q or Form 8-K or any analogous report under the Securities Exchange Act of
1934, as amended (the "1934 Act"), the Company shall have incorporated such
report by reference into the Registration Statement, if applicable, or shall
file such amendments or supplements with the SEC on the same day on which the
1934 Act report is filed which created the requirement for the Company to amend
or supplement the Registration Statement.

        c. The Company shall (A) permit Legal Counsel to review and comment upon
(i) the Registration Statement at least five (5) days prior to its filing with
the SEC and (ii) all other Registration Statements and all amendments and
supplements to all Registration Statements (except for Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and any
similar or successor reports) within a reasonable number of days prior to their
filing with the SEC, and (B) not file any Registration Statement or amendment or
supplement thereto in a form to which Legal Counsel reasonably objects. The
Company shall not submit a request for acceleration of the effectiveness of a
Registration Statement or any amendment or supplement thereto without the prior
approval of Legal Counsel, which consent shall not be unreasonably withheld. The
Company shall furnish to Legal Counsel, without charge, (i) any correspondence
from the SEC or the staff of the SEC to the Company or its representatives
relating to any Registration Statement, (ii) promptly after the same is prepared
and filed with the SEC, one copy of any Registration Statement
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and any amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference and all exhibits and (iii) upon the
effectiveness of any Registration Statement, one copy of the prospectus included
in such Registration Statement and all amendments and supplements thereto. The
Company shall reasonably cooperate with Legal Counsel in performing the
Company's obligations pursuant to this Section 3.

        d. The Company shall furnish to each Investor whose Registrable
Securities are included in any Registration Statement, without charge,
(i) promptly after the same is prepared and filed with the SEC, at least one
copy of such Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by
reference, all exhibits and each preliminary prospectus, (ii) upon the
effectiveness of any Registration Statement, ten (10) copies of the prospectus
included in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as such Investor may reasonably request)
and (iii) such other documents, including copies of any preliminary or final
prospectus, as such Investor may reasonably request from time to time in order
to facilitate the disposition of the Registrable Securities owned by such
Investor.

        e. Subject to Section 3(r), the Company shall use its reasonable best
efforts to (i) register and qualify, unless an exemption from registration and
qualification applies, the resale by Investors of the Registrable Securities
covered by a Registration Statement under such other securities or "blue sky"
laws of all the jurisdictions in the United States, (ii) prepare and file in
those jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(e), (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction. The Company shall promptly notify
Legal Counsel and each Investor who holds Registrable Securities of the receipt
by the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or "blue sky" laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.

        f. The Company shall notify Legal Counsel and each Investor in writing
of the happening of any event, as promptly as practicable after becoming aware
of such event, as a result of which the prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading (provided that in no event shall such notice contain any
material, nonpublic information), and, subject to Section 3(r), promptly prepare
a supplement or amendment to such Registration Statement to correct such untrue
statement or omission, and deliver ten (10) copies of
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such supplement or amendment to Legal Counsel and each Investor (or such other
number of copies as Legal Counsel or such Investor may reasonably request). The
Company shall also promptly notify Legal Counsel and each Investor in writing
(i) when a prospectus or any prospectus supplement or post-effective amendment
has been filed, and when a Registration Statement or any post-effective
amendment has become effective (notification of such effectiveness shall be
delivered to Legal Counsel and each Investor by facsimile on the same day of
such effectiveness and by overnight mail), (ii) of any request by the SEC for
amendments or supplements to a Registration Statement or related prospectus or
related information, and (iii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.

        g. Subject to Section 3(r), the Company shall use its reasonable best
efforts to prevent the issuance of any stop order or other suspension of
effectiveness of a Registration Statement, or the suspension of the
qualification of any of the Registrable Securities for sale in any jurisdiction
and, if such an order or suspension is issued, to obtain the withdrawal of such
order or suspension at the earliest possible moment and to notify Legal Counsel
and each Investor who holds Registrable Securities being sold of the issuance of
such order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.

        h. At the reasonable request of any Investor, the Company shall furnish
to such Investor, on the date of the effectiveness of the Registration Statement
and thereafter from time to time on such dates as an Investor may reasonably
request (i) a letter, dated such date, from the Company's independent certified
public accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the Investors, and (ii) an opinion, dated as of such date, of
counsel representing the Company for purposes of such Registration Statement, in
form, scope and substance as is customarily given in an underwritten public
offering, addressed to the Investors.

        i. The Company shall make available for inspection by (i) any Investor,
(ii) Legal Counsel and (iii) one firm of accountants or other agents retained by
the Investors (collectively, the "Inspectors"), all pertinent financial and
other records, and pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably deemed necessary by each
Inspector, and cause the Company's officers, directors and employees to supply
all information which any Inspector may reasonably request; provided, however,
that each Inspector shall agree to hold in strict confidence and shall not make
any disclosure (except to an Investor) or use of any Record or other information
which the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the 1933 Act, (b) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement of which
the Inspector has knowledge. Each Investor agrees that it shall, upon learning
that disclosure of such Records is sought in or by a court or governmental body
of competent jurisdiction or through other means, give prompt notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent
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disclosure of, or to obtain a protective order for, the Records deemed
confidential.

        j. The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.

        k. The Company shall use its reasonable best efforts either to (i) cause
all the Registrable Securities covered by a Registration Statement to be listed
on each securities exchange on which securities of the same class or series
issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, or
(ii) secure designation and quotation of all the Registrable Securities covered
by the Registration Statement on the Nasdaq National Market, or (iii) if,
despite the Company's reasonable best efforts to satisfy the preceding clause
(i) or (ii), the Company is unsuccessful in satisfying the preceding clause
(i) or (ii), to secure the inclusion for quotation on The Nasdaq SmallCap Market
for such Registrable Securities and, without limiting the generality of the
foregoing, to use its reasonable best efforts to arrange for at least two market
makers to register with the National Association of Securities Dealers, Inc.
("NASD") as such with respect to such Registrable Securities. The Company shall
pay all fees and expenses in connection with satisfying its obligation under
this Section 3(k).

        l. The Company shall cooperate with the Investors who hold Registrable
Securities being offered and, to the extent applicable, facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legend)
representing the Registrable Securities to be offered pursuant to a Registration
Statement and enable such certificates to be in such denominations or amounts,
as the case may be, as the Investors may reasonably request and registered in
such names as the Investors may request.

        m. If requested by an Investor, the Company shall (i) as soon as
practicable incorporate in a prospectus supplement or post-effective amendment
such information as an Investor reasonably requests to be included therein
relating to the sale and distribution of Registrable Securities, including,
without limitation, information with respect to the number of Registrable
Securities being offered or sold, the purchase price being paid therefor and any
other terms of the offering of the Registrable Securities to be sold in such
offering; (ii) as soon as practicable make all required filings of such
prospectus supplement or post-effective amendment after being notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment; and (iii) as soon as practicable, supplement or make amendments to
any Registration Statement if reasonably
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requested by an Investor of such Registrable Securities.

        n. The Company shall use its reasonable best efforts to cause the
Registrable Securities covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable Securities.

        o. The Company shall make generally available to its security holders as
soon as practical, but not later than 90 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 under the 1933 Act) covering a twelve-month period beginning not later
than the first day of the Company's fiscal quarter next following the effective
date of the Registration Statement.

        p. The Company shall otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC in connection with any registration
hereunder.

        q. Within two (2) business days after a Registration Statement which
covers Registrable Securities is ordered effective by the SEC, the Company shall
deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to the Investors
whose Registrable Securities are included in such Registration Statement)
confirmation that such Registration Statement has been declared effective by the
SEC in the form attached hereto as Exhibit A.
                                   ---------

        r. Notwithstanding anything to the contrary herein, at any time after
the Registration Statement has been declared effective by the SEC, the Company
may delay the disclosure of material non-public information concerning the
Company the disclosure of which at the time is not, in the good faith opinion of
the Board of Directors of the Company and its counsel, in the best interest of
the Company and, in the opinion of counsel to the Company, otherwise required (a
"Grace Period"); provided, that the Company shall promptly (i) notify the
Investors in writing of the existence of material non-public information giving
rise to a Grace Period (provided that in each notice the Company will not
disclose the content of such material non-public information to the Investors)
and the date on which the Grace Period will begin, and (ii) notify the Investors
in writing of the date on which the Grace Period ends; and, provided further,
that no Grace Period shall exceed 15 consecutive days and during any 365 day
period such Grace Periods shall not exceed an aggregate of 30 days and the first
day of any Grace Period must be at least two trading days after the last day of
any prior Grace Period (an "Allowable Grace Period"); provided, however, that
such 15 and 30 day periods shall be extended to 30 and 90 days, respectively, in
the event that such Grace Period is pursuant to an acquisition by the Company
which is required to be reported under Item 2 of Form 8-K and for which pro
forma financial information is required to be reported pursuant to Regulation
S-X promulgated under the 1933 Act. For purposes of determining the length of a
Grace Period above, the Grace Period shall begin on and include the date the
holders receive the notice referred to in clause (i) and shall end on and
include the later of the date the holders receive the notice referred to in
clause (ii) and the date referred to in such notice. The provisions of Section
3(g) hereof shall not be applicable during the period of any Allowable Grace
Period. Upon expiration of
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the Grace Period, the Company shall again be bound by the first sentence of
Section 3(f) with respect to the information giving rise thereto unless such
material non-public information is no longer applicable.

     4. OBLIGATIONS OF THE INVESTORS.
        ----------------------------

        a. At least seven (7) business days prior to the first anticipated
filing date of a Registration Statement, the Company shall notify each Investor
in writing of the information the Company requires from each such Investor if
such Investor elects to have any of such Investor's Registrable Securities
included in such Registration Statement. It shall be a condition precedent to
the obligations of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities of a particular Investor
that such Investor shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request.

        b. Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of any Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from such Registration Statement.

        c. Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(g) or
the first sentence of 3(f), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Investor's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(g) or the
first sentence of 3(f) or receipt of notice that no supplement or amendment is
required. Notwithstanding anything to the contrary, the Company shall cause its
transfer agent to deliver unlegended shares of Common Stock to a transferee of
an Investor in accordance with the terms of the Securities Purchase Agreement in
connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the Investor's receipt of
a notice from the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f) and for which the Investor has not
yet settled.

     5. EXPENSES OF REGISTRATION.
        ------------------------

     All reasonable expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Sections 2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company shall be paid by the Company. The Company shall also
reimburse the Investors for the fees and disbursements of Legal Counsel in
connection with registration, filing or qualification pursuant to Sections 2 and
3 of this Agreement which amount shall
<PAGE>

                                                                         PAGE 11

be limited to $10,000.

     6. INDEMNIFICATION.
        ---------------

     In the event any Registrable Securities are included in a Registration
Statement under this Agreement:

        a. To the fullest extent permitted by law, the Company will, and hereby
does, indemnify, hold harmless and defend each Investor, the directors,
officers, partners, employees, agents, representatives of, and each Person, if
any, who controls any Investor within the meaning of the 1933 Act or the 1934
Act (each, an "Indemnified Person"), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys'
fees, amounts paid in settlement or expenses, joint or several, (collectively,
"Claims") incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified Damages"), to which any of them
may become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the securities
or other "blue sky" laws of any jurisdiction in which Registrable Securities are
offered ("Blue Sky Filing"), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, (iii) any violation or alleged violation by the Company of
the 1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable Securities pursuant to a Registration Statement or
(iv) any material violation of this Agreement (the matters in the foregoing
clauses (i) through (iv) being, collectively, "Violations"). Subject to Section
6(c), the Company shall reimburse the Indemnified Persons, promptly as such
expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim by an Indemnified Person arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person for such
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto, if
such prospectus was timely made available by the Company pursuant to Section
3(d); (ii) with respect to any preliminary prospectus, shall not inure to the
benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
<PAGE>

                                                                         PAGE 12

benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to Section 3(d), and the
Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a violation and such Indemnified
Person, notwithstanding such advice, used it or failed to deliver the correct
prospectus as required by the 1933 Act and such correct prospectus was timely
made available pursuant to Section 3(d); (iii) shall not be available to the
extent such Claim is based on a failure of the Investor to deliver or to cause
to be delivered the prospectus made available by the Company, including a
corrected prospectus, if such prospectus or corrected prospectus was timely made
available by the Company pursuant to Section 3(d); and (iv) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of the Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9.

        b. In connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a), the Company, each of its directors, each of its officers
who signs the Registration Statement each Person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act (each an "Indemnified
Party"), against any Claim or Indemnified Damages to which any of them may
become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such
Claim or Indemnified Damages arise out of or are based upon any Violation, in
each case to the extent, and only to the extent, that such Violation occurs in
reliance upon and in conformity with written information furnished to the
Company by such Investor expressly for use in connection with such Registration
Statement; and, subject to Section 6(c), such Investor will reimburse any legal
or other expenses reasonably incurred by an Indemnified Party in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and the agreement with respect to
contribution contained in Section 7 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Investor, which consent shall not be unreasonably withheld;
provided, further, however, that the Investor shall be liable under this Section
6(b) for only that amount of a Claim or Indemnified Damages as does not exceed
the net proceeds to such Investor as a result of the sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
such Indemnified Party and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9. Notwithstanding anything to
the contrary contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any preliminary prospectus shall not inure to the
benefit of any Indemnified Party if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected on a timely basis in
the prospectus, as then amended or supplemented.

        c. Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such
Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is
to be made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one counsel for such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying
<PAGE>

                                                                         PAGE 13

party would be inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party and any other party
represented by such counsel in such proceeding. In the case of an Indemnified
Person, legal counsel referred to in the immediately preceding sentence shall be
selected by the Investors holding at least two- thirds (2/3) in interest of the
Registrable Securities included in the Registration Statement to which the Claim
relates. The Indemnified Party or Indemnified Person shall cooperate fully with
the indemnifying party in connection with any negotiation or defense of any such
action or Claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnified Party or
Indemnified Person which relates to such action or Claim. The indemnifying party
shall keep the Indemnified Party or Indemnified Person fully apprized at all
times as to the status of the defense or any settlement negotiations with
respect thereto. No indemnifying party shall be liable for any settlement of any
action, claim or proceeding effected without its prior written consent,
provided, however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. No indemnifying party shall, without the prior
written consent of the Indemnified Party or Indemnified Person, consent to entry
of any judgment or enter into any settlement or other compromise which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified Person of a release from all liability
in respect to such Claim or litigation. Following indemnification as provided
for hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.

        d. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.

        e. The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.

     7. CONTRIBUTION.
        ------------

     To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that: (i) no person
involved in the sale of Registrable Securities which person is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) in connection with such sale shall be entitled to contribution from any
person involved in such sale of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such
<PAGE>

                                                                         PAGE 14

seller from the sale of such Registrable Securities pursuant to such
Registration Statement.

     8. REPORTS UNDER THE 1934 ACT.
        --------------------------

     With a view to making available to the Investors the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of the
SEC that may at any time permit the Investors to sell securities of the Company
to the public without registration ("Rule 144"), the Company agrees to:

        a. make and keep public information available, as those terms are
understood and defined in Rule 144;

        b. file with the SEC in a timely manner all reports and other documents
required of the Company under the 1933 Act and the 1934 Act so long as the
Company remains subject to such requirements (it being understood that nothing
herein shall limit the Company's obligations under Section 4(c) of the
Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and

        c. furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company, if
true, that it has complied with the reporting requirements of Rule 144, the 1933
Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company, and
(iii) such other information as may be reasonably requested to permit the
investors to sell such securities pursuant to Rule 144 without registration.

     9. ASSIGNMENT OF REGISTRATION RIGHTS.
        ---------------------------------

     The rights under this Agreement shall be automatically assignable by the
Investors to any transferee of Registrable Securities having a value of at least
$5,000,000 if: (i) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company within ten (10) days after such assignment; (ii) the Company is, within
ten (10) days after such transfer or assignment, furnished with written notice
of (a) the name and address of such transferee or assignee, and (b) the
securities with respect to which such registration rights are being transferred
or assigned; (iii) immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is restricted under
the 1933 Act and applicable state securities laws; (iv) at or before the time
the Company receives the written notice contemplated by clause (ii) of this
sentence the transferee or assignee agrees in writing with the Company to be
bound by all of the provisions contained herein; and (v) such transfer shall
have been made in accordance with the applicable requirements of the Securities
Purchase Agreement.

     10. AMENDMENT OF REGISTRATION RIGHTS.
         --------------------------------

     Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
<PAGE>

                                                                         PAGE 15

or prospectively), only with the written consent of the Company and Investors
who then hold at least two-thirds (2/3) of the Registrable Securities. Any
amendment or waiver effected in accordance with this Section 10 shall be binding
upon each Investor and the Company. No such amendment shall be effective to the
extent that it applies to less than all of the holders of the Registrable
Securities. No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of this Agreement
unless the same consideration also is offered to all of the parties to this
Agreement.

    11. MISCELLANEOUS.
        -------------

        a. A Person is deemed to be a holder of Registrable Securities whenever
such Person owns or is deemed to own of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.

        b. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one business day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:

     If to the Company:

        MicroStrategy, Incorporated
        8000 Towers Crescent Drive
        Vienna, Virginia 22182
        Telephone:  (703) 848-8600
        Facsimile:  (703) 847-4837
        Attention:  Mark S. Lynch, Chief Financial Officer

     With a copy to:

        Hale and Dorr LLP
        60 State Street
        Boston, Massachusetts 02109
        Telephone:  (617) 526-6000
        Facsimile:  (617) 526-5000
        Attention:  Thomas S. Ward, Esq.
<PAGE>

                                                                         PAGE 16

     If to Legal Counsel:

         Katten Muchin Zavis
         525 West Monroe Street, Suite 1600
         Chicago, Illinois 60661-3693
         Telephone:  312-902-5200
         Facsimile:  312-902-1061
         Attention:  Robert J. Brantman, Esq.

If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers attached hereto, with copies to such Buyer's representatives as set forth
on the Schedule of Buyers, or to such other address and/or facsimile number
and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

        c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

        d. All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York. Each party hereby irrevocably submits to the non- exclusive
jurisdiction of the state and federal courts sitting the City of New York,
borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of
<PAGE>

                                                                         PAGE 17

this Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

        e. This Agreement, the Securities Purchase Agreement and the Certificate
of Designations constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement, the Securities Purchase Agreement and the
Certificate of Designations supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and thereof.

        f. Subject to the requirements of Section 9, this Agreement shall inure
to the benefit of and be binding upon the permitted successors and assigns of
each of the parties hereto.

        g. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.

        h. This Agreement may be executed in identical counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

        i. Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.

        j. All consents and other determinations required to be made by the
Investors pursuant to this Agreement shall be made, unless otherwise specified
in this Agreement, by Investors holding at least two-thirds (2/3) of the
Registrable Securities, determined as if all of the Preferred Shares then
outstanding have been converted into Registrable Securities without regard to
any limitations on conversion of the Preferred Shares.

        k. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent and no rules of strict
construction will be applied against any party.

        l. This Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person.

                                   * * * * * *
<PAGE>

                                                                         PAGE 18

     IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.

COMPANY:                            BUYERS:

MICROSTRATEGY, INCORPORATED         HFTP INVESTMENT L.L.C.

By: /s/ Michael J. Saylor              By:   Promethean Asset Management L.L.C
   --------------------------          Its:  Investment Manager
Name: Michael J. Saylor
Its: President and CEO                 By: /s/ James S. O'Brien, Jr.
                                          --------------------------------
                                       Name: James S. O'Brien, Jr.
                                       Title: Managing Member

                                       LEONARDO, L.P.

                                       By:  Angelo, Gordon & Co., L.P.
                                       Its: General Partner

                                       By: /s/ Michael L. Gordon
                                           -------------------------------
                                       Name: Michael L. Gordon
                                       Title: Chief Operating Officer

                                       FISHER CAPITAL LTD.

                                       By: /s/ Daniel J. Hopkins
                                          --------------------------------
                                       Name: Daniel J. Hopkins
                                       Its: Authorized Signatory

                                       WINGATE CAPITAL LTD.

                                       By: /s/ Daniel J. Hopkins
                                          --------------------------------
                                       Name: Daniel J. Hopkins
                                       Its: Authorized Signatory
<PAGE>

                                                                         PAGE 19

                               SCHEDULE OF BUYERS

<TABLE>
<CAPTION>
                                              Investor Address                   Investor's Legal Representatives'
        Investor's Name                     and Facsimile Number                   Address and Facsimile Number
------------------------------  ------------------------------------------   -------------------------------------
<S>                             <C>                                          <C>
HFTP Investment L.L.C.          c/o Promethean Asset Management L.L.C.       Promethean Investment Group, L.L.C.
                                750 Lexington Avenue, 22nd Floor             750 Lexington Ave., 22nd Floor
                                New York, NY 10022                           New York, NY 10022
                                Attention: David M. Kittay                   Attn:  David M. Kittay
                                           John Floegel                             John Floegel
                                Telephone: (212) 702-5200                    Telephone: 212-702-5200
                                Facsimile: (212) 758-9334                    Facsimile: 212-758-9334
                                Residence: New York
                                                                             Katten Muchin Zavis
                                                                             525 W. Monroe Street
                                                                             Chicago, Illinois 60661-3693
                                                                             Attention: Robert J. Brantman, Esq.
                                                                             Telephone: (312) 902-5200
                                                                             Facsimile: (312) 902-1061

Leonardo, L.P.                  c/o Angelo, Gordon & Co., L.P.               Angelo, Gordon & Co., L.P.
                                245 Park Avenue - 26th Floor                 245 Park Avenue - 26th Floor
                                New York, New York 10167                     New York, New York 10167
                                Attention: Ari Storch                        Attention: Ari Storch
                                           Adam J. Chill                                Adam J. Chill
                                Facsimile: (212) 867-6449                    Facsimile: (212) 867-6449
                                Telephone: (212) 692-2035                    Telephone: (212) 692-2035
                                Residence: Cayman Islands

Fisher Capital Ltd.             c/o Citadel Investment Group, L.L.C.         Katten Muchin Zavis
                                225 West Washington Street                   525 W. Monroe Street
                                Chicago, Illinois  60606                     Chicago, Illinois 60661-3693
                                Attn:    Daniel J. Hopkins                   Attn:    Robert J. Brantman, Esq.
                                         Kenneth A. Simpler                  Telephone: (312) 902-5200
                                Telephone: (312) 696-2100                    Facsimile: (312) 902-1061
                                Facsimile: (312) 338-0780
                                Residence: Cayman Islands

Wingate Capital Ltd.            c/o Citadel Investment Group, L.L.C.         Katten Muchin Zavis
                                225 West Washington Street                   525 W. Monroe Street
                                Chicago, Illinois  60606                     Chicago, Illinois 60661-3693
                                Attn:    Daniel J. Hopkins                   Attn:     Robert J. Brantman, Esq.
                                         Kenneth A. Simpler                  Telephone: (312) 902-5200
                                Telephone: (312) 696-2100                    Facsimile: (312) 902-1061
                                Facsimile: (312) 338-0780
                                Residence: Cayman Islands

</TABLE>
<PAGE>

                                                                         PAGE 20

                                                                       EXHIBIT A

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

[TRANSFER AGENT]
Attn:

     Re: MicroStrategy, Incorporated

Ladies and Gentlemen:

     We are counsel to MicroStrategy, Incorporated, a Delaware corporation (the
"Company"), and have represented the Company in connection with that certain
Securities Purchase Agreement (the "Purchase Agreement") entered into by and
among the Company and the buyers named therein (collectively, the "Holders")
pursuant to which the Company issued to the Holders shares of its Series A
Convertible Preferred Stock, par value $0.001 per share, (the "Preferred
Shares") convertible into shares of the Company's Class A common stock, par
value $0.001 per share (the "Common Stock"). Pursuant to the Purchase Agreement,
the Company also has entered into a Registration Rights Agreement with the
Holders (the "Registration Rights Agreement") pursuant to which the Company
agreed, among other things, to register the Registrable Securities (as defined
in the Registration Rights Agreement), including the shares of Common Stock
issuable upon conversion of the Preferred Shares, under the Securities Act of
1933, as amended (the "1933 Act"). In connection with the Company's obligations
under the Registration Rights Agreement, on ____________ ___, 2000, the Company
filed a Registration Statement on Form S-3 (File No. 333-_____________) (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") relating to the Registrable Securities which names each of the Holders as
a selling stockholder thereunder.

     In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.

                                                     Very truly yours,

                                                     [ISSUER'S COUNSEL]

                                                     By:_____________________

CC:     [LIST NAMES OF HOLDERS]<PAGE>

                                                                    Exhibit 10.2
                                                                          PAGE 1

                          SECURITIES PURCHASE AGREEMENT

     SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of June 17, 2000,
by and among MicroStrategy Incorporated, a Delaware corporation, with
headquarters located at 8000 Towers Crescent Drive, Vienna, Virginia 22182 (the
"Company"), and the investors listed on the Schedule of Buyers attached hereto
(individually, a "Buyer" and collectively, the "Buyers").

     WHEREAS:

     A. The Company and the Buyers are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Rule 506
of Regulation D ("Regulation D") as promulgated by the United States Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act").

     B. The Company has authorized the following new series of its preferred
stock, par value $0.001 per share: the Company's Series A Convertible Preferred
Stock (the "Preferred Stock"), which shall be convertible into shares of the
Company's Class A common stock, par value $0.001 per share (the "Common Stock")
(as converted, the "Conversion Shares"), in accordance with the terms of the
Company's Certificate of Designations, Preferences and Rights of the Preferred
Stock, in the form attached hereto as Exhibit A (the "Certificate of
                                      ---------
Designations").

     C. The Buyers wish to purchase, upon the terms and conditions stated in
this Agreement, initially an aggregate of 12,500 shares of Preferred Stock (the
"Initial Preferred Shares") in the respective amounts set forth opposite each
Buyer's name on the Schedule of Buyers.

     D. In the event that the Conversion Price (as defined in the Certificate of
Designations) on the date immediately following the last day of the Pricing
Period (as defined in the Certificate of Designations) is greater than $125,
then, subject to the terms and conditions set forth in this Agreement, the
Buyers will be required to buy and the Company will be required to sell an
aggregate additional number of shares of Preferred Stock (pro rata based on the
number of Initial Preferred Shares each Buyer purchased in relation to the total
number of Initial Preferred Shares issued) (the "Mandatory Preferred Shares")
equal to the lesser of (I) 5,000, and (II) the difference of (a) the product of
(i) 100, multiplied by (ii) the Conversion Price on the date immediately
following the last day of the Pricing Period, minus (b) 12,500. The Initial
Preferred Shares and the Mandatory Preferred Shares collectively are referred to
in this Agreement as the "Preferred Shares."

     E. Contemporaneously with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as Exhibit B (the "Registration Rights
                                             ---------
Agreement") pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.

     NOW THEREFORE, the Company and the Buyers hereby agree as follows:
<PAGE>

                                                                          PAGE 2

     1. PURCHASE AND SALE OF PREFERRED SHARES.
        -------------------------------------

        a. Purchase of Preferred Shares. Subject to the satisfaction (or waiver
           ----------------------------
of the conditions set forth in Sections 6(a) and 7(a) below, the Company shall
issue and sell to each Buyer and each Buyer severally agrees to purchase from
the Company the respective number of Initial Preferred Shares set forth opposite
such Buyer's name on the Schedule of Buyers (the "Initial Closing"). In the
event that the Conversion Price (as defined in the Certificate of Designations)
on the date immediately following the last day of the Pricing Period (as defined
in the Certificate of Designations) is greater than $125, then, subject to the
satisfaction (or waiver) of the conditions set forth in Sections 1(c), 6(b) and
7(b), each Buyer shall buy and the Company shall sell that number of Mandatory
Preferred Shares equal to such Buyer's pro rata portion (based on the number of
Initial Preferred Shares each Buyer purchased in relation to the total number of
Initial Preferred Shares issued) of an aggregate number of Mandatory Preferred
Shares equal to the lesser of (I) 5,000, and (II) the difference of (a) the
product of (i) 100, multiplied by (ii) the Conversion Price on the date
immediately following the last day of the Pricing Period, minus (b) 12,500 (the
"Mandatory Closing"). The purchase price (the "Purchase Price") of each
Preferred Share at each of the Closings shall be $10,000. "Business Days" means
any day other than Saturday, Sunday or other day on which commercial banks in
the city of New York are authorized or required by law to remain closed.

        b. The Initial Closing Date. The date and time of the Initial Closing
           ------------------------
(the "Initial Closing Date") shall be 10:00 a.m. Central Time, within two (2)
Business Days following the date hereof, subject to the satisfaction (or waiver)
of the conditions to the Initial Closing set forth in Sections 6(a) and 7(a) (or
such later date as is mutually agreed to by the Company and the Buyers). The
Initial Closing shall occur on the Initial Closing Date at the offices of Katten
Muchin Zavis, 525 West Monroe Street, Suite 1600, Chicago, Illinois 60661-3693.

        c. The Mandatory Closing Date. The date and time of the Mandatory
           --------------------------
Closing (the "Mandatory Closing Date") shall be 10:00 a.m. Central Time, on the
third (3rd) Business Day following the last day of the Pricing Period, subject
to satisfaction (or waiver) of the conditions to the Mandatory Closing set forth
in Sections 6(b) and 7(b) and the conditions set forth in this Section 1(c) (or
such later date as is mutually agreed to by the Company and the Buyers). The
Company shall deliver written notice by facsimile (the "Mandatory Share Notice")
to each Buyer on the first (1st) Business Day after the last day of the Pricing
Period (the "Mandatory Share Notice Date"). The Mandatory Share Notice shall set
forth (x) confirmation of the Conversion Price as of the date immediately
following the last day of the Pricing Period, and (y) in the event that the
Conversion Price is greater than $125 on the date immediately following the last
day of the Pricing Period, (I) each Buyer's pro rata portion of the aggregate
number of Mandatory Preferred Shares, each determined in accordance with Section
1(a), which each Buyer is required to purchase at such Mandatory Closing, (II)
each Buyer's aggregate Purchase Price for the Mandatory Preferred Shares and
(III) the date of the Mandatory Closing Date which date shall be the third (3rd)
Business Day after the last day of the Pricing Period. The Mandatory Closing
shall occur on the Mandatory Closing Date at the offices of Katten Muchin Zavis,
525 West Monroe Street, Suite 1600, Chicago, Illinois 60661-3693.
<PAGE>

                                                                          PAGE 3

        d. Form of Payment. On each of the Closing Dates, (A) each Buyer shall
           ---------------

pay the Purchase Price to the Company for the Preferred Shares to be issued and
sold to such Buyer by wire transfer of immediately available funds in accordance
with the Company's written wire instructions, less any amount withheld at the
Initial Closing for expenses pursuant to Section 4(l), and (B) the Company shall
deliver to each Buyer, stock certificates (in the denominations as such Buyer
shall request) (the "Preferred Stock Certificates") representing such number of
the Preferred Shares which such Buyer is then purchasing hereunder, duly
executed on behalf of the Company and registered in the name of such Buyer or
its designee.

     2. BUYER'S REPRESENTATIONS AND WARRANTIES.
        --------------------------------------

        Each Buyer represents and warrants with respect to only itself that:

        a. Investment Purpose. Such Buyer (i) is acquiring the Preferred Shares
           ------------------
and (ii) upon conversion of the Preferred Shares, will acquire the Conversion
Shares then issuable (the Preferred Shares, the Conversion Shares and the
Dividend Shares (as defined in the Certificate of Designations) collectively are
referred to herein as the "Securities"), for its own account for investment only
and not with a view towards, or for resale in connection with, the public sale
or distribution thereof, except pursuant to sales registered or exempted under
the 1933 Act; provided, however, that by making the representations herein, such
Buyer does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time,
provided further, however, that such disposition shall be in accordance with or
pursuant to a registration statement or an exemption under the 1933 Act.

        b. Accredited Investor Status. Such Buyer is an "accredited investor" as
           --------------------------
that term is defined in Rule 501(a)(3) of Regulation D under the 1933 Act.

        c. Reliance on Exemptions. Such Buyer understands that the Securities
           ----------------------
are being offered and sold to it in reliance on specific exemptions from the
registration requirements of the United States federal and state securities laws
and that the Company is relying in part upon the truth and accuracy of, and such
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire the Securities.

        d. Information. Such Buyer and its advisors, if any, have been furnished
           -----------
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Securities which
have been requested by such Buyer. Such Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by such Buyer or
its advisors, if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's representations and warranties contained
in Sections 3 and 9(m) below. Such Buyer understands that its investment in the
Securities involves a high degree of risk. Such Buyer has sought such
accounting, legal and tax advice as it has considered necessary to make an
informed investment
<PAGE>

                                                                          PAGE 4

decision with respect to its acquisition of the Securities.

        e. No Governmental Review. Such Buyer understands that no United States
           ----------------------
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

        f. Transfer or Resale. Such Buyer understands that except as provided in
           ------------------
the Registration Rights Agreement: (i) the Securities have not been and are not
being registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) such Buyer shall have delivered to the Company an
opinion of counsel, in a generally acceptable form, to the effect that such
Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (C) such Buyer
provides the Company with reasonable assurance that such Securities can be sold,
assigned or transferred pursuant to Rule 144 promulgated under the 1933 Act (or
a successor rule thereto) ("Rule 144"); (ii) any sale of the Securities made in
reliance on Rule 144 may be made only in accordance with the terms of Rule 144
and further, if Rule 144 is not applicable, any resale of the Securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 1933 Act) may
require compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register the Securities under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder. Notwithstanding the foregoing, the Securities may be
pledged in connection with a bona fide margin account or other loan secured by
the Securities.

        g. Legends. Such Buyer understands that the certificates or other
           -------
instruments representing the Preferred Shares and, until such time as the sale
of the Conversion Shares have been registered under the 1933 Act as contemplated
by the Registration Rights Agreement, the stock certificates representing the
Conversion Shares, except as set forth below, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
     UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
     SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
     TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
     STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
     OR APPLICABLE STATE SECURITIES LAWS OR (B) AN OPINION OF COUNSEL REASONABLY
     SATISFACTORY TO THE COMPANY, IN A GENERALLY ACCEPTABLE FORM, THAT
     REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES
     LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
     NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
     WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THE SECURITIES.
<PAGE>

                                                                          PAGE 5

The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for resale under the 1933 Act, (ii) in connection with
a sale transaction, such holder provides the Company with an opinion of counsel
reasonably satisfactory to the Company, in a generally acceptable form, to the
effect that a public sale, assignment or transfer of the Securities may be made
without registration under the 1933 Act, or (iii) such holder provides the
Company with reasonable assurances (including, if requested by the Company,
delivering such reasonable assurances to the Company's counsel in connection
with such counsel rendering an opinion on the validity of a sale by such Buyer
pursuant to Rule 144) that the Securities can be sold pursuant to Rule 144
without any restriction as to the number of securities acquired as of a
particular date that can then be immediately sold.

        h. Authorization; Enforcement; Validity. This Agreement and the
           ------------------------------------
Registration Rights Agreement have been duly and validly authorized, executed
and delivered on behalf of such Buyer and are valid and binding agreements of
such Buyer enforceable against such Buyer in accordance with their terms,
subject as to enforceability to general principles of equity and to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.

        i. Residency. Such Buyer is a resident of that country specified in its
           ---------
address on the Schedule of Buyers.

     3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
        ---------------------------------------------

        The Company represents and warrants to each of the Buyers that:

        a. Organization and Qualification. The Company and its "Subsidiaries"
           ------------------------------
(which for purposes of this Agreement means any entity in which the Company,
directly or indirectly, owns capital stock or holds an equity or similar
interest which ownership entitles the Company to elect a majority of the board
of directors or similar governing body of such entity) are corporations duly
organized and validly existing in good standing under the laws of the
jurisdiction in which they are incorporated, and have the requisite corporate
power and authorization to own their properties and to carry on their business
as now being conducted. Each of the Company and its Subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect. As used in this Agreement, "Material Adverse Effect"
means any material adverse effect on the business, properties, assets,
operations, results of operations, or financial condition of the Company and its
Subsidiaries, if any, taken as a whole, or on the transactions contemplated
hereby or by the agreements and instruments to be entered into in connection
herewith, or on the authority or ability of the Company to perform its
obligations under the Transaction Documents (as defined below) or the
Certificate of Designations. A complete list of entities in which the Company,
directly or indirectly, owns capital stock or holds an equity or similar
<PAGE>

                                                                          PAGE 6

interest is set forth on Schedule 3(a).
                         -------------

        b. Authorization; Enforcement; Validity. The Company has the requisite
           ------------------------------------
corporate power and authority to enter into and perform its obligations under
this Agreement, the Registration Rights Agreement, the Irrevocable Transfer
Agent Instructions (as defined in Section 5) and each of the other agreements
entered into by the parties hereto in connection with the transactions
contemplated by this Agreement (collectively, the "Transaction Documents"), and
to issue the Securities in accordance with the terms hereof and thereof. The
execution and delivery of the Transaction Documents by the Company and the
execution and filing of the Certificate of Designations by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including without limitation the issuance of the Preferred Shares and the
reservation for issuance and the issuance of the Conversion Shares issuable upon
conversion thereof, have been duly authorized by the Company's Board of
Directors and no further consent or authorization is required by the Company,
its Board of Directors or its stockholders (except to the extent that
stockholder approval may be required pursuant to the rules of the Nasdaq
National Market for the issuance of a number of Conversion Shares greater than
19.99% of the number of shares of Common Stock outstanding immediately prior to
the Initial Closing Date (the "Nasdaq 19.99% Rule")). The Transaction Documents
have been duly executed and delivered by the Company. The Transaction Documents
constitute the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies. The
Certificate of Designations has been filed prior to the Initial Closing Date
with the Secretary of State of the State of Delaware and will be in full force
and effect, enforceable against the Company in accordance with its terms and
shall not have been amended unless in compliance with its terms.

        c. Capitalization. As of the date hereof, the authorized capital stock
           --------------
of the Company consists of (i) 100,000,000 shares of Class A common stock, of
which as of the date hereof 24,566,078 shares are issued and outstanding,
19,482,664 shares are reserved for issuance pursuant to the Company's stock
option and purchase plans, 55,175,515 shares are reserved for issuance pursuant
to conversion of the Company's Class B common stock and 78,334 shares are
issuable and reserved for issuance pursuant to securities (other than the
Preferred Stock, stock option and purchase plans and the Company's Class B
common stock) exercisable or exchangeable for, or convertible into, shares of
Common Stock, (ii) 100,000,000 shares of Class B common stock, of which as of
the hereof 55,175,515 shares are issued and outstanding and (iii) 5,000,000
shares of preferred stock, of which as of the date hereof, none are issued and
outstanding. All of such outstanding shares have been, or upon issuance will be,
validly issued and are fully paid and nonassessable. Except as disclosed in
Schedule 3(c), (A) no shares of the Company's capital stock are subject to
-------------
preemptive rights or any other similar rights (arising under Delaware law,
Virginia law, the Company's Certificate of Incorporation or By-laws or any
agreement or instrument to which the Company is a party) any liens or
encumbrances granted or created by the Company; (B) there are no outstanding
debt securities issued by the Company; (C) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company or any of its
<PAGE>

                                                                          PAGE 7

Subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries; (D) there are
no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of their securities under the 1933 Act
(except the Registration Rights Agreement); (E) there are no outstanding
securities or instruments of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries; (F) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities as described in this Agreement; and (G) the Company does not have
any stock appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement. The Company has furnished to each Buyer true and
correct copies of the Company's Certificate of Incorporation, as amended and as
in effect on the date hereof (the "Certificate of Incorporation"), and the
Company's By-laws, as amended and as in effect on the date hereof (the
"By-laws"), and the terms of all securities convertible into or exercisable or
exchangeable for Common Stock and the material rights of the holders thereof in
respect thereto except for stock options granted under any employee benefit plan
or director stock option plan of the Company approved by the board of directors
of the Company.

        d. Issuance of Securities. The Preferred Shares are duly authorized and,
           ----------------------
upon issuance in accordance with the terms hereof, shall be (i) validly issued,
fully paid and non-assessable, (ii) free from all taxes, liens and charges with
respect to the issuance thereof and (iii) entitled to the rights and preferences
set forth in the Certificate of Designations. As of the Initial Closing, at
least 4,000,000 shares of Common Stock (subject to adjustment pursuant to the
Company's covenant set forth in Section 4(f) below) will have been duly
authorized and reserved for issuance upon conversion of the Preferred Shares.
Upon conversion or issuance in accordance with the Certificate of Designations,
the Conversion Shares and the Dividend Shares, as the case may be, will be
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof, with the holders being entitled to
all rights accorded to a holder of Common Stock. The issuance by the Company of
the Securities is exempt from registration under the 1933 Act.

        e. No Conflicts. The execution, delivery and performance of the
           ------------
Transaction Documents by the Company, the performance by the Company of its
obligations under the Certificate of Designations and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without
limitation, the reservation for issuance and issuance of the Conversion Shares)
will not (i) result in a violation of the Certificate of Incorporation or the
By-laws; (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
material agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party; (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations and the rules and regulations of the Principal Market
<PAGE>

                                                                          PAGE 8

(as defined below)) applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected. Neither the Company nor its Subsidiaries is in violation of any
term of its Certificate of Incorporation or its By-laws or their organizational
charter or by-laws, respectively. Except as disclosed in Schedule 3(e), neither
                                                         -------------
the Company or any of its Subsidiaries is in violation of any term of or in
default under any contract, agreement, mortgage, indebtedness, indenture,
instrument, judgment, decree or order or any statute, rule or regulation
applicable to the Company or its Subsidiaries, except where such violations and
defaults would not result, either individually or in the aggregate, in a
Material Adverse Effect. The business of the Company and its Subsidiaries is not
being conducted, and shall not be conducted, in violation of any law, ordinance
or regulation of any governmental entity, except where such violations would not
result, either individually or in the aggregate, in a Material Adverse Effect.
Except as specifically contemplated by this Agreement, as required under the
1933 Act, as required by Blue Sky filings or as required by the Nasdaq 19.99%
Rule, the Company is not required to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental agency or
any regulatory or self-regulatory agency in order for it to execute, deliver or
perform any of its obligations under or contemplated by the Transaction
Documents or to perform its obligations under the Certificate of Designations in
accordance with the terms hereof or thereof. Except as disclosed in Schedule
                                                                    --------
3(e), all consents, authorizations, orders, filings and registrations which the
---
Company is required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof. The Company and its
Subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing. The Company is not in violation of the listing
requirements of the Principal Market, including, without limitation, the
requirements set forth in Rule 4310(c)(25)(H)(i) of The Nasdaq Stock Market's
Marketplace Rules and has no actual knowledge of any facts which would
reasonably lead to delisting or suspension of the Common Stock by the Principal
Market in the foreseeable future.

        f. SEC Documents; Financial Statements. Since December 31, 1998, the
           -----------------------------------
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "1934 Act") (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC Documents"). A
complete list of the Company's SEC Documents is set forth on Schedule 3(f).
                                                             -------------
Except as disclosed on Schedule 3(f), as of the date hereof, the SEC Documents,
                       -------------
as they may have been subsequently amended by filings made by the Company with
the SEC prior to the date hereof, complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents. None of the SEC
Documents, as of the date hereof and as they may have been subsequently amended
by filings made by the Company with the SEC prior to the date hereof, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except as disclosed on Schedule 3(f), as of their respective dates,
                                   -------------
the financial statements of the Company included in the SEC Documents complied
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto. Except as
disclosed on Schedule
             --------
<PAGE>

                                                                          PAGE 9

3(f), such financial statements have been prepared in accordance with generally
----
accepted accounting principles, consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they may exclude footnotes or may be condensed or summary statements)
and fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). No other information provided by or on
behalf of the Company to the Buyers which is not included in the SEC Documents,
including, without limitation, information referred to in Section 2(d), contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made, not misleading. Neither the
Company nor any of its Subsidiaries nor any of their officers, directors,
employees or agents have provided the Buyers with any material, nonpublic
information. As of the date hereof, the Company meets the requirements for use
of Form S-3 for registration of the resale of Registrable Securities (as defined
in the Registration Rights Agreement). The Company is not required to file and
will not be required to file any agreement, note, lease, mortgage, deed or other
instrument entered into prior to the date hereof and to which the Company is a
party or by which the Company is bound which has not been previously filed as an
exhibit to its reports filed with the SEC under the 1934 Act.

        g. Absence of Certain Changes. Except as disclosed in Schedule 3(g) or
           --------------------------                         -------------
as disclosed in the Company's Annual Report on Form 10-K for the Year Ended
December 31, 1999 or Quarterly Report on Form 10-Q for the period ending March
31, 2000, since December 31, 1999, there has been no change or development that
has had or could reasonably be expected to have a Material Adverse Effect. The
Company has not taken any steps, and does not currently expect to take any
steps, to seek protection pursuant to any bankruptcy law nor does the Company or
any of its Subsidiaries have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy proceedings or any actual
knowledge of any fact which would reasonably lead a creditor to do so. Except as
disclosed in Schedule 3(g) or as disclosed in the Company's Quarterly Report on
             -------------
Form 10-Q for the period ending March 31, 2000, since December 31, 1999, the
Company has not declared or paid any dividends, sold any assets, individually or
in the aggregate, in excess of $500,000 outside of the ordinary course of
business or had capital expenditures, individually or in the aggregate, in
excess of $1,000,000.

        h. Absence of Litigation. There is no action, suit, proceeding, inquiry
           ---------------------
or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the Company
or any of its Subsidiaries, threatened against or affecting the Company, the
Common Stock or any of the Company's Subsidiaries or any of the Company's or the
Company's Subsidiaries' officers or directors in their capacities as such,
except as expressly set forth in Schedule 3(h) or, with respect to the Company
                                 -------------
and its Subsidiaries, to the extent that such action or threatened action does
not set forth potential liability, claims or charges, individually or in the
aggregate, in excess of $1,000,000. Except as set forth in Schedule 3(h), to the
                                                           -------------
knowledge of the Company none of the directors or officers of the Company have
been involved in securities related litigation during the past five years.
<PAGE>

                                                                         PAGE 10

        i. Acknowledgment Regarding Buyer's Purchase of Preferred Shares. The
           -------------------------------------------------------------
Company acknowledges and agrees that each of the Buyers is acting solely in the
capacity of an arm's length purchaser with respect to the Transaction Documents
and the Certificate of Designations and the transactions contemplated hereby and
thereby. The Company further acknowledges that each Buyer is not acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to the Transaction Documents and the Certificate of Designations and the
transactions contemplated hereby and thereby and any advice given by any of the
Buyers or any of their respective representatives or agents in connection with
the Transaction Documents and the Certificate of Designations and the
transactions contemplated hereby and thereby is merely incidental to such
Buyer's purchase of the Securities. The Company further represents to each Buyer
that the Company's decision to enter into the Transaction Documents has been
based solely on the independent evaluation by the Company and its
representatives.

        j. No Undisclosed Events, Liabilities, Developments or Circumstances.
           -----------------------------------------------------------------
Except for the issuance of the Preferred Stock contemplated by this Agreement,
no event, liability, development or circumstance has occurred or exists, or is
contemplated to occur, with respect to the Company or its Subsidiaries or their
respective business, properties, operations or financial condition, that would
be required to be disclosed by the Company under applicable securities laws on a
registration statement on Form S-1 filed with the SEC relating to an issuance
and sale by the Company of its Common Stock and which has not been publicly
disclosed.

        k. No General Solicitation. Neither the Company, nor any of its
           -----------------------
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 1933 Act) in connection with the offer or sale of the
Securities.

        l. No Integrated Offering. Neither the Company, nor any of its
           ----------------------
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of the
issuance by the Company of any of the Securities under the 1933 Act or cause
this offering of the Securities to be integrated with prior offerings by the
Company for purposes of the 1933 Act or, except as set forth on Schedule 3(l),
                                                                -------------
any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of any exchange or automated quotation system on
which any of the securities of the Company are listed or designated, nor will
the Company or any of its Subsidiaries take any action or steps that would
require registration of the issuance by the Company of any of the Securities
under the 1933 Act or, except as set forth on Schedule 3(l), cause the offering
                                              -------------
of the Securities to be integrated with other offerings.

        m. Employee Relations. Neither the Company nor any of its Subsidiaries
           ------------------
is involved in any union labor dispute nor, to the knowledge of the Company or
any of its Subsidiaries, is any such dispute threatened. None of the Company's
or its Subsidiaries' employees is a member of a union which relates to such
employee's relationship with the Company, neither the Company nor any of its
Subsidiaries is a party to a collective bargaining agreement, and the Company
and its
<PAGE>

                                                                         PAGE 11

Subsidiaries believe that their relations with their employees are good.
No executive officer (as defined in Rule 501(f) of the 1933 Act) has notified
the Company that such officer intends to leave the Company or otherwise
terminate such officer's employment with the Company. No executive officer, to
the best knowledge of the Company and its Subsidiaries, is, or is now expected
to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability with respect to
any of the foregoing matters.

        n. Intellectual Property Rights. To the best of the Company's knowledge,
           ----------------------------
the Company and its Subsidiaries own or possess adequate rights or licenses to
use all trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and other intellectual
property rights necessary to conduct their respective businesses as now
conducted, except where the failure to own or possess such rights would not
result, either individual or in the aggregate, in a Material Adverse Effect.
Except as set forth on Schedule 3(n), to the best of the Company's knowledge,
                       -------------
none of the Company's trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets or other
intellectual property rights have expired or terminated, or are expected to
expire or terminate within two years from the date of this Agreement, except
where such expiration or termination would not result, either individually or in
the aggregate, in a Material Adverse Effect. The Company and its Subsidiaries do
not have any knowledge of any infringement by the Company or its Subsidiaries of
trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses, trade secrets
or other intellectual property rights of others, or of any development of
similar or identical trade secrets or technical information by others and,
except as set forth on Schedule 3(n), there is no claim, action or proceeding
                       -------------
being made or brought against, or to the Company's knowledge, being threatened
against, the Company or its Subsidiaries regarding its trademarks, trade names,
service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, trade secrets, or infringement of
other intellectual property rights. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties.

        o. Title. The Company and its Subsidiaries have good and marketable
           -----
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects except such as are described in Schedule 3(o) or such as do not
                                        -------------
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and any of its
Subsidiaries. Any real property and facilities held under lease by the Company
and any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and facilities by the
Company and its Subsidiaries.
<PAGE>

                                                                         PAGE 12

        p. Insurance. The Company and each of its Subsidiaries are insured by
           ---------
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect, taken as a
whole.

        q. Regulatory Permits. Except for Permits (as defined below) the absence
           ------------------
of which would not result, either individually or in the aggregate, in a
Material Adverse Effect, the Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses (the "Permits"), and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such Permit.

        r. Internal Accounting Controls. The Company and each of its
           ----------------------------
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

        s. No Materially Adverse Contracts, Etc. Neither the Company nor any of
           ------------------------------------
its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is expected in the future to have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a
party to any contract or agreement which in the judgment of the Company's
officers has or is expected to have a Material Adverse Effect.

        t. Tax Status. The Company and each of its Subsidiaries (i) has made or
           ----------
filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes), (ii) has paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and for which the Company has made appropriate reserves for on its books, and
(iii) has set aside on its books provisions reasonably adequate for the payment
of all taxes for periods subsequent to the periods to which such returns,
reports or declarations (referred to in clause (i) above) apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the
<PAGE>

                                                                         PAGE 13

Company know of no basis for any such claim.

        u. Transactions With Affiliates. Except as set forth on Schedule 3(u)
           ----------------------------                         -------------
and in the SEC Documents filed at least five (5) days prior to the date hereof,
and other than the grant of stock options disclosed on Schedule 3(c), none of
                                                       -------------
the officers, directors or employees of the Company is presently a party to any
transaction with the Company or any of its Subsidiaries (other than for services
as employees, officers and directors), including any contract, agreement or
other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring
payments to or from any such officer, director or employee or, to the knowledge
of the Company, any corporation, partnership, trust or other entity in which any
such officer, director, or employee has a substantial interest or is an officer,
director, trustee or partner.

        v. Application of Takeover Protections. The Company and its board of
           -----------------------------------
directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Certificate of Incorporation or the laws of
the state of its incorporation which is or could become applicable to the Buyers
as a result of the transactions contemplated by this Agreement, including,
without limitation, the Company's issuance of the Securities and the Buyers'
ownership of the Securities.

        w. Rights Agreement. The Company has not adopted a shareholder rights
           ----------------
plan or similar arrangement relating to accumulations of beneficial ownership of
Common Stock or a change in control of the Company.

        x. No Other Agreements. The Company has not, directly or indirectly,
           -------------------
made any agreements with any Buyers relating to the terms or conditions of the
transactions contemplated by the Transaction Documents except as set forth in
the Transaction Documents.

     4. COVENANTS.
        ---------

        a. Best Efforts. Each party shall use its best efforts to timely satisfy
           ------------
each of the conditions to be satisfied by it as provided in Sections 6 and 7 of
this Agreement.

        b. Form D and Blue Sky. The Company agrees to file a Form D with respect
           -------------------
to the Securities as required under Regulation D and to provide a copy thereof
to each Buyer promptly after such filing. The Company shall, on or before each
of the Closing Dates, take such action as the Company shall reasonably determine
is necessary in order to obtain an exemption for or to qualify the Securities
for, sale to the Buyers at each of the Closings pursuant to this Agreement under
applicable securities or "Blue Sky" laws of the states of the United States, and
shall provide evidence of any such action so taken to the Buyers on or prior to
each of the Closing Dates. The Company shall make all filings and reports
relating to the offer and sale of the Securities required under applicable
securities or "Blue Sky" laws of the states of the United States following each
of the Closing Dates.
<PAGE>

                                                                         PAGE 14

        c. Reporting Status. Until the later of (i) the date which is one year
           ----------------
after the date as of which the Investors (as that term is defined in the
Registration Rights Agreement) may sell all of the Conversion Shares without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto) and (ii) the date which is one (1) year after the Maturity Date (as
defined in the Certificate of Designations) (the "Reporting Period"), the
Company shall file all reports required to be filed with the SEC pursuant to the
1934 Act, and the Company shall not terminate its status as an issuer required
to file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.

        d. Use of Proceeds. The Company will use the proceeds from the sale of
           ---------------
the Preferred Shares for substantially the same purposes and in substantially
the same amounts as indicated in Schedule 4(d).
                                 -------------

        e. Financial Information. The Company agrees to send the following to
           ---------------------
each Investor (as that term is defined in the Registration Rights Agreement)
during the Reporting Period: (i) within two (2) days after the filing thereof
with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly Reports
on Form 10-Q, any Current Reports on Form 8-K and any registration statements
(other than on Form S-8) or amendments filed pursuant to the 1933 Act, provided
that if any such report is not filed with the SEC through EDGAR then the Company
shall deliver a copy of such report to each Investor by facsimile on the same
day it is filed with the SEC; (ii) on the same day as the release thereof,
facsimile copies of all press releases issued by the Company or any of its
Subsidiaries; and (iii) copies of any notices and other information made
available or given to the stockholders of the Company generally,
contemporaneously with the making available or giving thereof to the
stockholders.

        f. Reservation of Shares. The Company shall take all action necessary to
           ---------------------
at all times have authorized, and reserved for the purpose of issuance, no less
than 125% of the number of shares of Common Stock needed to provide for the
issuance of the shares of Common Stock upon conversion of all outstanding
Preferred Shares (without regard to any limitations on conversions).

        g. Listing. The Company shall promptly secure the listing of all of the
           -------
Registrable Securities (as defined in the Registration Rights Agreement) upon
each national securities exchange and automated quotation system, if any, upon
which shares of Common Stock are then listed (subject to official notice of
issuance) and shall maintain, so long as any other shares of Common Stock shall
be so listed, such listing of all Registrable Securities from time to time
issuable under the terms of the Transaction Documents and the Certificate of
Designations. The Company shall maintain the Common Stock's authorization for
quotation on the Nasdaq National Market ("NASDAQ") or listing on The New York
Stock Exchange, Inc. ("NYSE") (as applicable, the "Principal Market"). Neither
the Company nor any of its Subsidiaries shall take any action which would be
reasonably expected to result in the delisting or suspension of the Common Stock
from the Principal Market. The Company shall pay all fees and expenses in
connection with satisfying its obligations under this Section 4(g).
<PAGE>

                                                                         PAGE 15

        h. Filing of Form 8-K. On or before the second (2nd) Business Day
           ------------------
following the Initial Closing Date the Company shall file a Current Report on
Form 8-K with the SEC describing the terms of the transactions contemplated by
the Transaction Documents and including as exhibits to such Current Report on
Form 8-K this Agreement, the Certificate of Designations and the Registration
Rights Agreement, in the form required by the 1934 Act. On or before the first
(1st) Business Day following the Mandatory Closing Date, if any, the Company
shall file a Current Report on Form 8-K with the SEC describing the transaction
consummated on the Mandatory Closing Date.

        i. Proxy Statement. The Company shall provide each stockholder entitled
           ---------------
to vote at the next annual meeting of stockholders of the Company (after the
annual meeting scheduled for June 19, 2000), which meeting shall occur on or
before July 31, 2001 (the "Stockholder Meeting Deadline"), a proxy statement,
which has been previously reviewed by the Buyers and a counsel of their choice,
soliciting each such stockholder's affirmative vote at such annual stockholder
meeting for approval of the Company's issuance of all of the Securities as
described in this Agreement in accordance with applicable law and the rules and
regulations of the Principal Market (such affirmative approval being referred to
herein as the "Stockholder Approval"), and the Company shall use its best
efforts to solicit its stockholders' approval of such issuance of the Securities
and to cause the Board of Directors of the Company to recommend to the
stockholders that they approve such proposal.

        j. Corporate Existence. So long as a Buyer beneficially owns any
           -------------------
Preferred Stock, the Company shall maintain its corporate existence and shall
not sell all or substantially all of the Company's assets, except in the event
of a merger or consolidation or sale of all or substantially all of the
Company's assets, where the surviving or successor entity in such transaction
(i) assumes the Company's obligations hereunder and under the agreements and
instruments entered into in connection herewith and (ii) is a publicly traded
corporation whose common stock is quoted on or listed for trading on Nasdaq or
NYSE.

        k. Pledge of Securities. The Company acknowledges and agrees that the
           --------------------
Securities may be pledged by an Investor (as defined in the Registration Rights
Agreement) in connection with a bona fide margin agreement or other loan secured
by the Securities. The pledge of Securities shall not be deemed to be a
transfer, sale or assignment of the Securities hereunder, and no Investor
effecting a pledge of Securities shall be required to provide the Company with
any notice thereof or otherwise make any delivery to the Company pursuant to
this Agreement, any other Transaction Document or the Certificate of
Designations, including without limitation, Section 2(f) of this Agreement;
provided that an Investor and its pledgee shall be required to comply with the
provisions of Section 2(f) hereof in order to effect a sale, transfer or
assignment of Securities to such pledgee. The Company hereby agrees to execute
and deliver such documentation as a pledgee of the Securities may reasonably
request in connection with a pledge of the Securities to such pledgee by an
Investor.

        l. Expenses. Subject to Section 9(l) below, at the Initial Closing, the
           --------
Company shall pay an expense allowance of $50,000 (of which $25,000 has
previously been paid) to HFTP Investment L.L.C. (a Buyer), which amount, less
any amount paid prior to the Initial Closing, shall be
<PAGE>

                                                                         PAGE 16

withheld by such Buyer from its Purchase Price to be paid at the Initial
Closing.

        m. Good Standing. Within 10 Business Days of the date hereof, the
           -------------
Company shall deliver a good standing certificate to each of the Buyers,
certifying the Company's qualification to do business and its good standing in
the State of Virginia as certified by the Secretary of State of the State of
Virginia.

     5. TRANSFER AGENT INSTRUCTIONS.
        ---------------------------

        The Company shall issue irrevocable instructions to its transfer agent
in the form attached hereto as Exhibit C (the "Irrevocable Transfer Agent
                               ---------
Instructions"), and any subsequent transfer agent, to issue certificates,
registered in the name of each Buyer or its respective nominee(s), for the
Conversion Shares in such amounts as specified from time to time by each Buyer
to the Company upon conversion of the Preferred Shares. Prior to registration of
the Conversion Shares under the 1933 Act, all such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement. The Company
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5 and stop transfer instructions to
give effect to Section 2(f) hereof (in the case of the Conversion Shares, prior
to registration of the Conversion Shares under the 1933 Act) will be given by
the Company to its transfer agent and that the Securities shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Registration Rights Agreement. If a Buyer
provides the Company with an opinion of counsel, in a generally acceptable form,
to the effect that a public sale, assignment or transfer of Securities may be
made without registration under the 1933 Act or the Buyer provides the Company
with reasonable assurances (including, if requested by the Company, delivering
such reasonable assurances to the Company's counsel in connection with such
counsel rendering an opinion on the validity of a sale by such Buyer pursuant to
Rule 144) that the Securities can be sold pursuant to Rule 144 without any
restriction as to the number of securities acquired as of a particular date that
can then be immediately sold, the Company shall permit the transfer, and, in the
case of the Conversion Shares, promptly instruct its transfer agent to issue one
or more certificates in such name and in such denominations as specified by such
Buyer and without any restrictive legend. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the Buyers by
vitiating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 5 will be inadequate and agrees, in the event of
a breach or threatened breach by the Company of the provisions of this Section
5, that the Buyers shall be entitled, in addition to all other available
remedies, to an order and/or injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic loss
and without any bond or other security being required.

     6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
        ----------------------------------------------

        a. Initial Closing Date. The obligation of the Company to issue and sell
           --------------------
the Initial Preferred Shares to each Buyer at the Initial Closing is subject to
the satisfaction, at or before the Initial Closing Date, of each of the
following conditions, provided that these conditions are for the Company's sole
benefit and may be waived by the Company at any time in its sole discretion by
<PAGE>

                                                                         PAGE 17

providing each Buyer with prior written notice thereof:

         (i) Such Buyer shall have executed each of the Transaction Documents
     to which it is a party and delivered the same to the Company.

         (ii) The Certificate of Designations shall have been filed with the
     Secretary of State of the State of Delaware;

         (iii) Such Buyer shall have delivered to the Company the Purchase
     Price (less in the case of HFTP Investment L.L.C., the amounts withheld
     pursuant to Section 4(l)) for the Initial Preferred Shares being purchased
     by such Buyer at the Initial Closing by wire transfer of immediately
     available funds pursuant to the wire instructions provided by the Company.

         (iv) The representations and warranties of such Buyer shall be true
     and correct as of the date when made and as of the Initial Closing Date as
     though made at that time (except for representations and warranties that
     speak as of a specific date), and such Buyer shall have performed,
     satisfied and complied with the covenants, agreements and conditions
     required by the Transaction Documents to be performed, satisfied or
     complied with by such Buyer at or prior to the Initial Closing Date.

        b. Mandatory Closing Date. The obligation of the Company hereunder to
           ----------------------
issue and sell the Mandatory Preferred Shares to each Buyer at the Mandatory
Closing is subject to the satisfaction, at or before such Mandatory Closing
Date, of each of the following conditions, provided that these conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion by providing each Buyer with prior written notice thereof:

        (i) Such Buyer shall have delivered to the Company the Purchase Price
     for the Mandatory Preferred Shares being purchased by such Buyer at the
     Mandatory Closing by wire transfer of immediately available funds pursuant
     to the wire instructions provided by the Company.

        (ii) The representations and warranties of such Buyer shall be true and
     correct as of the date when made and as of the Mandatory Closing Date as
     though made at that time (except for representations and warranties that
     speak as of a specific date), and such Buyer shall have performed,
     satisfied and complied with the covenants, agreements and conditions
     required by the Transaction Documents to be performed, satisfied or
     complied with by such Buyer at or prior to the Mandatory Closing Date.

     7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
        -------------------------------------------------

        a. The Initial Closing. The obligation of each Buyer hereunder to
           -------------------
purchase the Initial Preferred Shares from the Company at the Initial Closing is
subject to the satisfaction, at or before the Initial Closing Date, of each of
the following conditions, provided that these conditions are for each Buyer's
sole benefit and may be waived by such Buyer at any time in its sole discretion
by
<PAGE>

                                                                         PAGE 18

providing the Company with prior written notice thereof:

        (i)   The Company shall have executed each of the Transaction Documents
     and delivered the same to such Buyer.

        (ii)  The Certificate of Designations shall have been filed with the
     Secretary of State of the State of Delaware, and a copy thereof certified
     by the Secretary of State of the State of Delaware shall have been
     delivered to such Buyer.

        (iii) The Common Stock (x) shall be designated for quotation or listed
     on the Principal Market and (y) shall not have been suspended by the SEC or
     the Principal Market from trading on the Principal Market nor shall
     suspension by the SEC or the Principal Market have been threatened either
     (A) in writing by the SEC or the Principal Market or (B) by falling below
     the minimum listing maintenance requirements of the Principal Market; and
     the Conversion Shares issuable upon conversion of the Preferred Shares
     shall be listed upon the Principal Market.

        (iv)  The representations and warranties of the Company shall be true
     and correct as of the date when made and as of the Initial Closing Date as
     though made at that time (except for representations and warranties that
     speak as of a specific date) and the Company shall have performed,
     satisfied and complied with the covenants, agreements and conditions
     required by the Transaction Documents to be performed, satisfied or
     complied with by the Company at or prior to the Initial Closing Date. Such
     Buyer shall have received a certificate, executed by the Chief Executive
     Officer of the Company, dated as of the Initial Closing Date, to the
     foregoing effect and as to such other matters as may be reasonably
     requested by such Buyer, including, without limitation, an update as of the
     Initial Closing Date regarding the representation contained in Section 3(c)
     above.

        (v)   Such Buyer shall have received the opinion of Hale and Dorr LLP,
     dated as of the Initial Closing Date, in the form of Exhibit D, attached
                                                          ---------
     hereto.

        (vi)  The Company shall have executed and delivered to such Buyer the
     Preferred Stock Certificates (in such denominations as such Buyer shall
     request) for the Preferred Shares being purchased by such Buyer at the
     Initial Closing.

        (vii) The Board of Directors of the Company shall have adopted
     resolutions consistent with Section 3(b) above and in a form reasonably
     acceptable to such Buyer (the "Resolutions").

        (viii) As of the Initial Closing Date, the Company shall have reserved
     out of its authorized and unissued Common Stock, solely for the purpose of
     effecting the conversion of the Preferred Shares, at least 4,000,000 shares
     of Common Stock.

        (ix)  The Irrevocable Transfer Agent Instructions, in the form of
     Exhibit C attached
     ---------
<PAGE>

                                                                         PAGE 19

     hereto, shall have been delivered to and acknowledged in writing by the
     Company's transfer agent.

        (x)   The Company shall have delivered to such Buyer a certificate
     evidencing the incorporation and good standing of the Company and each
     Subsidiary in such entity's state of incorporation or organization issued
     by the Secretary of State of such state of incorporation or organization as
     of a date within ten days of the Initial Closing Date.

        (xi)  The Company shall have delivered to such Buyer a certified copy
     of the Certificate of Incorporation as certified by the Secretary of State
     of the State of Delaware as of a date within ten days of the Initial
     Closing Date.

        (xii) The Company shall have delivered to such Buyer a secretary's
     certificate, dated as of the Initial Closing Date, certifying as to (A) the
     Resolutions, (B) the Certificate of Incorporation and (C) the By-laws, each
     as in effect at the Initial Closing.

        (xiii) The Company shall have made all filings under all applicable
     federal and state securities laws necessary to consummate the issuance of
     the Securities pursuant to this Agreement in compliance with such laws.

        (xiv) The Company shall have delivered to such Buyer a letter from the
     Company's transfer agent certifying the number of shares of Common Stock
     outstanding as of a date within five days of the Initial Closing Date.

        (xv)  The Company shall have received the approval of the requisite
     number of stockholders to amend the Company's Certificate of Incorporation
     to increase the authorized number of shares of Common Stock from
     100,000,000 to 330,000,000 and shall have filed an amendment to its
     Certificate of Incorporation reflecting such increase.

        (xvi) The Company shall have delivered to the Buyers such other
     documents relating to the transactions contemplated by the Transaction
     Documents as the Buyers or their counsel may reasonably request.

        b. Mandatory Closing Date. The obligation of each Buyer hereunder to
           ----------------------
purchase the Mandatory Preferred Shares from the Company at the Mandatory
Closing is subject to the satisfaction, at or before the Mandatory Closing Date,
of each of the following conditions, provided that these conditions are for each
Buyer's sole benefit and may be waived by such Buyer at any time in its sole
discretion:

        (i)   The Company shall have complied with and satisfied all of the
     requirements of Section 1(c).

        (ii)  The Certificate of Designations, shall be in full force and
     effect and shall not have been amended since the Initial Closing Date, and
     a copy thereof certified by the
<PAGE>

                                                                         PAGE 20

     Secretary of State of the State of Delaware shall have been delivered to
     such Buyer.

        (iii) The Common Stock (x) shall be designated for quotation or listed
     on the Principal Market and (y) shall not have been suspended by the SEC or
     the Principal Market from trading on or delisted from the Principal Market
     nor shall delisting or suspension by such Principal Market have been
     threatened either (A) in writing by the SEC or the Principal Market or (B)
     by falling below the minimum listing maintenance requirements of the
     Principal Market; and all of the Conversion Shares issuable upon conversion
     of the Mandatory Preferred Shares shall be listed upon the Principal
     Market.

        (iv)  The representations and warranties of the Company shall be true
     and correct as of the date when made and as of the Mandatory Closing Date
     as though made at that time (except for representations and warranties that
     speak as of a specific date) and the Company shall have performed,
     satisfied and complied with the covenants, agreements and conditions
     required by the Transaction Documents or the Certificate of Designations to
     be performed, satisfied or complied with by the Company at or prior to the
     Mandatory Closing Date. Such Buyer shall have received a certificate,
     executed by the Chief Executive Officer of the Company, dated as of the
     Mandatory Closing Date, to the foregoing effect and as to such other
     matters as may be reasonably requested by such Buyer including, without
     limitation, an update as of the Mandatory Closing Date regarding the
     representation contained in Section 3(c) above.

        (v)   Such Buyer shall have received the opinion of Hale and Dorr, LLP
     dated as of the Mandatory Closing Date, in the form of Exhibit D attached
                                                            ---------
     hereto, with such changes as are reasonably acceptable to such Buyer.

        (vi)  The Company shall have executed and delivered to such Buyer the
     Preferred Stock Certificates (in such denominations as such Buyer shall
     request) for the Mandatory Preferred Shares being purchased by such Buyer
     at the Mandatory Closing.

        (vii) The Board of Directors of the Company shall have adopted, and
     shall not have amended, the Resolutions.

        (viii) As of the Mandatory Closing Date, the Company shall have
     reserved out of its authorized and unissued Common Stock, solely for the
     purpose of effecting the conversion of the Preferred Shares, a number of
     shares of Common Stock equal to at least 125% of the number of shares of
     Common Stock which would be issuable upon conversion in full of the then
     outstanding Preferred Shares and the Mandatory Preferred Shares (without
     regard to any limitations on conversions).

        (ix)  The Irrevocable Transfer Agent Instructions shall remain in
     effect as of the Mandatory Closing Date and the Company shall cause its
     Transfer Agent to deliver a letter to the Buyers to that effect.

        (x)   The Company shall have delivered to such Buyer a certificate
     evidencing the
<PAGE>

                                                                         PAGE 21

     incorporation and good standing of the Company and each Subsidiary in the
     state of such entity's state of incorporation or organization issued by the
     Secretary of State of such state of incorporation or organization as of a
     date within ten days of the Mandatory Closing Date.

        (xi)  The Company shall have delivered to such Buyer a certified copy
     of its Certificate of Incorporation as certified by the Secretary of State
     of the State of Delaware within ten days of the Mandatory Closing Date.

        (xii) The Company shall have delivered to such Buyer a secretary's
     certificate, dated as of the Mandatory Closing Date, certifying as to (A)
     the Resolutions, (B) the Certificate of Incorporation and (C) the Bylaws,
     each as in effect at the Mandatory Closing.

        (xiii) The Company shall have delivered to such Buyer a letter from
     the Company's transfer agent certifying the number of shares of Common
     Stock outstanding as of a date within five days of the Mandatory Closing
     Date.

        (xiv) The Company shall have made all filings under all applicable
     federal and state securities laws necessary to consummate the issuance of
     the Securities pursuant to this Agreement in compliance with such laws.

        (xv)  The Conversion Price on the date immediately following the last
     date of the Pricing Period was greater than $125.

        (xiv) The Company shall have delivered to such Buyer such other
     documents relating to the transactions contemplated by this Agreement as
     such Buyer or its counsel may reasonably request.

     8. INDEMNIFICATION. In consideration of each Buyer's execution and delivery
        ---------------
of the Transaction Documents and acquiring the Securities thereunder and in
addition to all of the Company's other obligations under the Transaction
Documents and the Certificate of Designations, the Company shall defend,
protect, indemnify and hold harmless each Buyer and each other holder of the
Securities and all of their stockholders, officers, directors, employees and
direct or indirect investors and any of the foregoing persons' agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"Indemnitees") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
(c) any cause of action, suit or claim brought or made against such Indemnitee
(other than a cause of action, suit or claim which is
<PAGE>

                                                                         PAGE 22

(x) brought or made by the Company and (y) is not a shareholder derivative suit)
and arising out of or resulting from (i) the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (ii) any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of the
issuance of the Securities or (iii) the status of such Buyer or holder of the
Securities as an investor in the Company. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law. Except as
otherwise set forth herein, the mechanics and procedures with respect to the
rights and obligations under this Section 8 shall be the same as those set forth
in Sections 6(a) and (d) of the Registration Rights Agreement, including,
without limitation, those procedures with respect to the settlement of claims
and the Company's rights to assume the defense of claims.

     9. MISCELLANEOUS.
        -------------

        a. Governing Law; Jurisdiction; Jury Trial. All questions concerning the
           ---------------------------------------
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

        b. Counterparts. This Agreement may be executed in two or more identical
           ------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party; provided that a facsimile signature shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile
signature.

        c. Headings. The headings of this Agreement are for convenience of
           --------
reference and shall not form part of, or affect the interpretation of, this
Agreement.
<PAGE>

                                                                         PAGE 23

        d. Severability. If any provision of this Agreement shall be invalid or
           ------------
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

        e. Entire Agreement; Amendments. This Agreement supersedes all other
           ----------------------------
prior oral or written agreements between each Buyer, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended or waived other than by an instrument in writing signed
by the Company and the holders of at least two-thirds (2/3)(b) of the Initial
Preferred Shares on the Initial Closing Date or, if prior to the Initial Closing
Date, the Buyers listed on the Schedule of Buyers as being obligated to purchase
at least two-thirds (2/3)(b) of the Initial Preferred Shares. No such amendment
shall be effective to the extent that it applies to less than all of the holders
of the Preferred Shares then outstanding. No consideration shall be offered or
paid to any person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents or the Certificate of Designations
unless the same consideration also is offered to all of the parties to the
Transaction Documents or holders of Preferred Shares, as the case may be.

        f. Notices. Any notices, consents, waivers or other communications
           -------
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) Business Day after deposit
with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:

     If to the Company:

           MicroStrategy Incorporated
           8000 Towers Crescent Drive
           Vienna, Virginia 22182
           Telephone:   (703) 848-8600
           Facsimile:   (703) 847-4837
           Attention:   Mark S. Lynch, Chief Financial Officer

     With a copy to:

           Hale and Dorr LLP
           60 State Street
           Boston, Massachusetts 02109
<PAGE>

                                                                         PAGE 24

           Telephone:    (617) 526-6000
           Facsimile:    (617) 526-5000
           Attention:    Thomas S. Ward, Esq.

     If to the Transfer Agent:

           American Stock Transfer & Trust Co.
           40 Wall Street, 46th Floor
           New York, NY 10005
           Telephone:   (718) 921-8360
           Facsimile:   (718) 921-8310
           Attention:   Karen Lazar

     If to a Buyer, to it at the address and facsimile number set forth on
the Schedule of Buyers, with copies to such Buyer's representatives as set forth
on the Schedule of Buyers, or at such other address and/or facsimile number
and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party five days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a nationally recognized overnight
delivery service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.

        g. Successors and Assigns. This Agreement shall be binding upon and
           ----------------------
inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Preferred Shares. The Company shall not assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the holders of at least two-thirds (2/3) of the Preferred Shares then
outstanding, including by merger or consolidation, except pursuant to a Change
of Control (as defined in Section 4(b) of the Certificate of Designations) with
respect to which the Company is in compliance with Section 4 of the Certificate
of Designations and Section 4(j) of this Agreement. A Buyer may assign some or
all of its rights hereunder without the consent of the Company, provided,
however, that the transferee has agreed in writing to be bound by the applicable
provisions of this Agreement and the Company has consented to such assignment
and assumption, which consent shall not be unreasonably withheld.
Notwithstanding anything to the contrary contained in the Transaction Documents,
the Buyers shall be entitled to pledge the Securities in connection with a bona
fide margin account or other loan secured by the Securities.

        h. No Third Party Beneficiaries. This Agreement is intended for the
           ----------------------------
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

        i. Survival. Unless this Agreement is terminated under Section 9(l), the
           --------
representations and warranties of the Company and the Buyers contained in
Sections 2 and 3, the
<PAGE>

                                                                         PAGE 25

agreements and covenants set forth in Sections 4, 5 and 9, and the
indemnification provisions set forth in Section 8, shall survive the Closings.
Each Buyer shall be responsible only for its own representations, warranties,
agreements and covenants hereunder.

        j. Publicity. The Company and each Buyer shall have the right to approve
           ---------
before issuance any press releases or any other public statements with respect
to the transactions contemplated hereby; provided, however, that the Company
shall be entitled, without the prior approval of any Buyer, to make any press
release or other public disclosure with respect to such transactions as is
required by applicable law and regulations (although each Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a copy
thereof).

        k. Further Assurances. Each party shall do and perform, or cause to be
           ------------------
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

        l. Termination. In the event that the Initial Closing shall not have
           -----------
occurred with respect to a Buyer on or before five (5) Business Days from the
date hereof due to the Company's or such Buyer's failure to satisfy the
conditions set forth in Sections 6(a) and 7(a) above (and the nonbreaching
party's failure to waive such unsatisfied condition(s)), the nonbreaching party
shall have the option to terminate this Agreement with respect to such breaching
party at the close of business on such date without liability of any party to
any other party; provided, however, that if this Agreement is terminated
pursuant to this Section 9(l), the Company shall remain obligated to reimburse
any nonbreaching Buyer for the expenses described in Section 4(l) above.

        m. Placement Agent. The Company acknowledges that it has not engaged a
           ---------------
placement agent in connection with the sale of the Preferred Shares, however the
Company has engaged Chase H&Q Securities Corp. and Friedman, Billings & Ramsey,
Inc. as financial advisors in connection with the sale of the Preferred Shares.
The Company shall be responsible for the payment of any placement agent's fees,
financial advisory fees, or brokers' commissions relating to or arising out of
the transactions contemplated hereby. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including, without limitation,
attorney's fees and out-of-pocket expenses) arising in connection with any such
claim.

        n. No Strict Construction. The language used in this Agreement will be
           ----------------------
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

        o. Remedies. Each Buyer and each holder of the Securities shall have all
           --------
rights and remedies set forth in the Transaction Documents and the Certificate
of Designations and all rights and remedies which such holders have been granted
at any time under any other agreement or contract and all of the rights which
such holders have under any law. Any person having any
<PAGE>

                                                                         PAGE 26

rights under any provision of this Agreement shall be entitled to enforce such
rights specifically (without posting a bond or other security), to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law.

        p. Payment Set Aside. To the extent that the Company makes a payment or
           -----------------
payments to any Buyer hereunder or pursuant to the Registration Rights
Agreement, the Certificate of Designations or the Buyers enforce or exercise
their rights hereunder or thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

                                   * * * * * *
<PAGE>

                                                                         PAGE 27

     IN WITNESS WHEREOF, the Buyers and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.

COMPANY:                               BUYERS:

MICROSTRATEGY INCORPORATED             HFTP INVESTMENT L.L.C.
                                       By:  Promethean Asset Management, L.L.C.
                                       Its: Investment Manager
By: /s/ Michael J. Saylor
   ----------------------------
    Name: Michael J. Saylor            By: /s/ James S. O'Brien, Jr.
    Title:President and CEO                -------------------------------
                                           Name: James S. O'Brien, Jr.
                                           Title:Managing Member

                                       LEONARDO, L.P.

                                       By:  Angelo, Gordon & Co., L.P.
                                       Its:  General Partner

                                       By: /s/ Michael L. Gordon
                                          --------------------------------
                                           Name: Michael L. Gordon
                                           Title: Chief Operating Officer

                                       FISHER CAPITAL LTD.

                                       By: /s/ Daniel J. Hopkins
                                          --------------------------------
                                           Name: Daniel J. Hopkins
                                           Its: Authorized Signatory

                                       WINGATE CAPITAL LTD.

                                       By: /s/ Daniel J. Hopkins
                                           -------------------------------
                                           Name: Daniel J. Hopkins
                                           Its: Authorized Signatory
<PAGE>

                                                                         PAGE 28

                               SCHEDULE OF BUYERS
<TABLE>
<CAPTION>

                                                                   Number
                                                                     of
                                Investor Address                  Preferred  Investor's Representatives' Address
   Investor Name              and Facsimile Number                 Shares          and Facsimile Number
----------------------    --------------------------------------- ---------  ------------------------------------
<S>                       <C>                                     <C>        <C>
HFTP Investment L.L.C.    c/o Promethean Asset Management, L.L.C.  2,000     Promethean Investment Group, L.L.C.
                          750 Lexington Avenue, 22nd Floor                   750 Lexington Ave., 22nd Floor
                          New York, NY 10022                                 New York, NY 10022
                          Attn:    David M. Kittay                           Attn:    David M. Kittay
                                   John Floegel                                       John Floegel
                          Telephone: (212) 702-5200                          Telephone: (212) 702-5200
                          Facsimile: (212) 758-9334                          Facsimile: (212) 758-9334
                          Residence: New York
                                                                             Katten Muchin  Zavis
                                                                             525 W. Monroe, Suite 1600
                                                                             Chicago, Illinois  60661-3693
                                                                             Attn:    Robert J. Brantman, Esq.
                                                                             Telephone: (312) 902-5200
                                                                             Facsimile: (312) 902-1061

Leonardo, L.P.            c/o Angelo, Gordon & Co., L.P.           4,500     Angelo, Gordon & Co., L.P.
                          245 Park Avenue - 26th Floor                       245 Park Avenue - 26th Floor
                          New York, New York 10167                           New York, New York 10167
                          Attention: Ari Storch                              Attention: Ari Storch
                                    Adam J. Chill                                      Adam J. Chill
                          Facsimile: (212) 867-6449                          Facsimile: (212) 867-6449
                          Telephone: (212) 692-2035                          Telephone: (212) 692-2035
                          Residence: Cayman Islands

Fisher Capital Ltd.       c/o Citadel Investment Group, L.L.C.     4,080     Katten Muchin Zavis
                          225 West Washington Street                         525 W. Monroe Street
                          Chicago, Illinois  60606                           Chicago, Illinois 60661-3693
                          Attn:    Daniel J. Hopkins                         Attn:     Robert J. Brantman, Esq.
                                   Kenneth A. Simpler                        Telephone: (312) 902-5200
                          Telephone: (312) 696-2100                          Facsimile: (312) 902-1061
                          Facsimile: (312) 338-0780
                          Residence: Cayman Islands

Wingate Capital Ltd.      c/o Citadel Investment Group, L.L.C.     1,920     Katten Muchin Zavis
                          225 West Washington Street                         525 W. Monroe Street
                          Chicago, Illinois  60606                           Chicago, Illinois 60661-3693
                          Attn:    Daniel J. Hopkins                         Attn:     Robert J. Brantman, Esq.
                                   Kenneth A. Simpler                        Telephone: (312) 902-5200
                          Telephone: (312) 696-2100                          Facsimile: (312) 902-1061
                          Facsimile: (312) 338-0780
                          Residence: Cayman Islands

</TABLE>
<PAGE>

                                                                         PAGE 29

                                    SCHEDULES
                                    ---------

Schedule 3(a)   -    Subsidiaries
Schedule 3(c)   -    Capitalization
Schedule 3(e)   -    Conflicts
Schedule 3(f)   -    SEC Documents
Schedule 3(g)   -    Material Changes
Schedule 3(h)   -    Litigation
Schedule 3(l)   -    Integration
Schedule 3(n)   -    Intellectual Property
Schedule 3(o)   -    Liens
Schedule 3(u)   -    Transactions with Affiliates
Schedule 4(d)   -    Use of Proceeds

                                    EXHIBITS
                                    --------

Exhibit A       -    Form of Certificate of Designations
Exhibit B       -    Form of Registration Rights Agreement
Exhibit C       -    Form of Irrevocable Transfer Agent Instructions
Exhibit D       -    Form of Company Counsel Opinion

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