EXHIBIT 10.14
FOURTH MODIFICATION
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OF BUSINESS LOAN/SECURITY AGREEMENT
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THIS FOURTH MODIFICATION OF BUSINESS LOAN/SECURITY AGREEMENT ("Fourth
Modification") is made as of September 25, 1998, by and between MicroStrategy
Incorporated, having an address at 0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 0000,
Xxxxxx, XX 00000 (the "Borrower") and NationsBank, N.A., a national banking
corporation, having an address of 0000 Xxxxxxxxxx Xxxxx, Xxxxx 000, XxXxxx,
Xxxxxxxx 00000 (the "Lender").
RECITALS
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A. The Borrower and the Lender entered into a Business Loan/Security
Agreement, dated as of December 10, 1996 (but executed on September
30, 1997).
B. The Borrower and the Lender previously amended the Loan Agreement
by Modification of Business Loan/Security Agreement, Second
Modification of Business Loan/Security Agreement and Third
Modification of Business Loan/Security Agreement. (The Loan Agreement,
as so amended, is hereinafter called the "Loan Agreement.")
C. The parties desire further to amend the Loan Agreement for the
following purposes: (i) to reduce the maximum amount of revolving
credit to Five Million Dollars ($5,000,000.00); (ii) to eliminate the
"Non-Use Fee;" (iii) to extend the maturity date of the Revolving Note
to January 31, 1999; and (iv) for certain other purposes hereinafter
set forth;
D. The Borrower's obligation to repay advances under the Loan
Agreement is evidenced by a Revolving Promissory Note, dated as of
December 10, 1996, as amended, which is being further amended by
Fourth Modification of Revolving Note, of even date herewith.
E. Capitalized terms used in this Fourth Modification and not defined
herein have the meanings ascribed to them in the Loan Agreement.
AGREEMENTS
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NOW, THEREFORE, in consideration of the premises, the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrower and the
Lender hereby agree as follows:
1. The maximum amount of the Revolving Credit, as stated in Paragraphs 1(a)
and 3(b) of the Loan Agreement, is reduced to Five Million Dollars
($5,000,000.00).
2. The term "Borrowing Base," as used in the Loan Agreement, as modified by
this Fourth Modification, shall mean eighty percent (80%) of the then
current amount of the Net
Outstanding Amount of Domestic Trade Accounts Receivable (as defined in the
Loan Agreement), less the Maximum Drawable Amount.
3. The fifth sentence of Paragraph 3(a) of the Loan Agreement is deleted in
its entirety and replaced with the following:
None of the Applications shall request (and none of the Letters of Credit
shall provide for) any expiry date for the related Letter of Credit,
whether by automatic renewal or otherwise, later than January 31,1999,
unless agreed to by Lender in writing.
4. The last sentence of Paragraph 3(a) of the Loan Agreement is deleted in its
entirety and replaced with the following:
If the Revolving Credit shall have matured (after giving full effect to
any renewals or extensions), and if the Maximum Drawable Amount has not
been reduced to zero at the date of the maturity of the Revolving Credit
(i.e., a letter of credit or letters of credit issued by the Lender
under the Loan Agreement remain outstanding and potentially drawable),
then the Borrower's covenants and obligations under the Loan Agreement,
as amended, shall continue in full force and effect, and the security
interest granted by the Loan Agreement shall remain in full force and
effect, until such time as the Maximum Drawable Amount is reduced to
zero.
5. The maturity date of the Revolving Note is extended to January 31, 1999, as
stated in the Fourth Modification of Revolving Note. The interest rate
under the Revolving Note is amended as stated in the Fourth Modification of
Revolving Note.
6. The Lender is simultaneously releasing the Substitute Limited Guaranty of
Payment, dated November 25, 1997, by Xxxxxxx X. Xxxxxx (the "Guaranty").
The Borrower consents to the release of the Guaranty, and agrees that the
release of the Guaranty shall not alter, diminish or otherwise affect the
Borrower's obligations to the Lender under the Revolving Note, as amended,
the Loan Agreement, as amended, or any other document evidencing or
securing the Revolving Credit (collectively, the "Loan Documents"). The
continued effectiveness of the Guaranty shall no longer be a condition of
advances under the Revolving Loan. Provisions making certain defaults
under the Guaranty defaults under the Loan Agreement shall have no further
force or effect.
7. Provisions of the Loan Agreement authorizing the Lender to charge a Non-Use
Fee are deleted in their entirety.
8. The Borrower warrants and represents to the Lender that:
a. Borrower has the power and authority to enter into this Fourth
Modification, to perform its obligations hereunder, to execute all
documents being executed and delivered in connection herewith, and to
incur the obligations provided for herein, all of which have been duly
authorized and approved in accordance with the Borrower's
organizational documents;
b. This Fourth Modification, together with all documents executed in
connection herewith or pursuant hereto, shall constitute when executed
the valid and legally binding obligations of the Borrower in
accordance with their respective terms;
c. All representations and warranties made in the Loan Agreement
remain true and correct at the date hereof, except the following
changes: NONE ; and
d. The Borrower's obligations under the Loan Documents remain valid
and enforceable obligations, and the execution and delivery of this
Fourth Modification and the other documents executed in connection
herewith shall not be construed as a novation of the Loan Agreement or
the other Loan Documents.
9. Borrower promises to pay, when billed, Lender's legal fees incurred in
connection with this Fourth Modification, not to exceed One Thousand
Dollars ($1,000.00). Borrower promises to pay also the Lender's legal fees
for the Second and Third Modifications of the Business Loan/Security
Agreement, statements for which are being sent to the Borrower on or
shortly before the date hereof.
10. Except as modified by this Fourth Modification and the other amendments
mentioned in the recitals above, the Loan Agreement remains in full force
and effect and unmodified. Borrower warrant and represent that it has no
offsets or defenses to its obligations under the Loan Documents, as so
modified.
11. The following clause is added to the Loan Agreement as an inducement to
Lender's agreement to this Fourth Modification:
The Borrower represents to the Lender that the Borrower has (i)
initiated a review and assessment of all areas within its and each of
its subsidiaries' business and operations (including those affected by
suppliers and vendors) that could be adversely affected by the "Year
2000 Problem" (that is, the risk that computer applications used by the
Borrower or any of its subsidiaries (or its suppliers and vendors) may
be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999
using a four digit year date), (ii) developed a plan and timeline for
addressing the Year 2000
Problem on a timely basis, and (iii) to date, implemented that plan in
accordance with that timetable. The Borrower reasonably believes that
all computer applications (including those of its suppliers and vendors)
that are material to its or any of its subsidiaries' business and
operations will on a timely basis be able to perform properly date-
sensitive functions for all dates before and after January 1, 2000 (that
is, be "Year 2000 compliant"), except to the extent that a failure to do
so could not reasonably be expected to have material adverse effect on
the Borrower's business operations, business prospects, perspective or
future condition.
12. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR
DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT,
SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL
ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES
OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF
J.A.M.S./ENDISPUTE OR ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL
RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL
RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN
ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS INSTRUMENT, AGREEMENT, OR
DOCUMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING,
TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT
APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
(i) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE COUNTY
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OF ANY BORROWER'S DOMICILE AT TIME OF THE EXECUTION OF THIS INSTRUMENT,
AGREEMENT OR DOCUMENT AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN
ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING
THE ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE,
BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN
ADDITIONAL 60 DAYS.
(ii) RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION
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SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE
STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS
INSTRUMENT, AGREEMENT, OR DOCUMENT; OR (II) BE A WAIVER BY THE LENDER OF
THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY
EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE LENDER HERETO (A) TO
EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO
FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO
OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT
LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A
RECEIVER. THE LENDER MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON
SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE,
DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT
TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THIS EXERCISE OF SELF
HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR
FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER
OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO
ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH
REMEDIES.
IN WITNESS WHEREOF, the undersigned have duly executed this Fourth
Modification as of the day and year first hereinabove set forth.
MICROSTRATEGY INCORPORATED
By:
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Xxxx X. Xxxxx
Vice President and Chief Financial
Officer
[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]
NATIONSBANK, N.A.
By:
_________________________
Xxxxxx Xxxxxxx
Vice President
