EXHIBIT 10.15
Mr. Xxxx Xxxxx
MicroStrategy Incorporated January 29, 1999
0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Dear Xxxx:
NationsBank, N.A. (the "Bank") is pleased to offer to MicroStrategy
Incorporated, a Delaware corporation (the "Borrower") its commitment to
establish the credit facility described in Section I hereof (the "Loan") subject
to the terms and conditions set forth in Section II hereof.
I. The Loan.
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A. Type of Credit Revolving Line of Credit. The Borrower may obtain advances up to the Principal Amount. Subject
Facility: to the foregoing, amounts borrowed and repaid or prepaid may be re-borrowed. As a sub-
feature under this Line of Credit, the Borrower may obtain letters of credit issued by the Bank
("Credits") up to the Letter of Credit Amount by executing and delivering to the Bank one or more letter
of credit applications. Subject to the foregoing, as Credits expire, or as the Bank is reimbursed for
payments made by the Bank pursuant to the Credits, the Borrower may apply for additional Credits. At no
time may the aggregate amount of unpaid advances plus the aggregate amount of outstanding Credits exceed
the Principal Amount.
B. "Principal Amount": $25,000,000.00.
C. "Letter of Credit Amount": $5,000,000.00.
D. Purpose: To support the working capital needs of the Borrower and to
finance Investments (defined below).
MicroStrategy Incorporated
January 29, 1999
Page 2
E. Interest Rate: Advances under the Loan shall bear interest at a variable rate equal to the Index plus the Variance. For
purposes of the Loan, the "Index" means that variable rate of interest (rounded upwards, if necessary, to
the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the three-month
London interbank offered rate for deposits in U.S. Dollars at approximately 11:00 a.m. (London time) on
the second preceding business day, as adjusted from time to time in the Bank's sole discretion for then-
applicable reserve requirements, deposit insurance assessment rates and other regulatory costs. If, for
any reason, such rate is not available, the term "Index" shall mean the fluctuating rate of interest
equal to the three-month rate of interest (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the three month London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) on the second preceding business day as adjusted from
time to time in the Bank's sole discretion for then-applicable reserve requirements, deposit insurance
assessment rates and other regulatory costs; provided, however, if more than one rate is specified on
Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates. For
purposes of the Loan, the term "Variance" means a rate per annum which is to be determined with reference
to the Funded Debt Ratio (defined below) at the time of determination, as follows:
If the Funded Debt Ratio in
effect is ... ...then the Variance is:
Greater than or less than 1:1 1.00%
Less than 1:1 but 2:1 1.25%
Less than 2:1 but 3:1 1.50%
Less than 3:1 but 3.5:1 1.75%
The interest rate on the Loan will change quarterly in
accordance with changes in the Index and the Funded Debt
Ratio. Interest on the Loan shall be calculated on the
basis of a 360-day year, for the actual number of days
elapsed.
MicroStrategy Incorporated
January 29, 1999
Page 3
F. Payments:
(1) Interest. Accrued interest shall be payable in consecutive
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monthly installments, and in full on the Maturity Date.
(2) Principal. Amounts paid by the Bank in honoring Credits shall be
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reimbursed by the Borrower on demand. Principal on advances
shall be payable in full on the Maturity Date.
(3) Optional Prepayments. Principal on the Loan may be prepaid at any
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time in whole or in part without penalty.
G. "Maturity Date": May 31, 2001.
H. Fees: The Borrower shall pay the following fees to the Bank:
(1) Commitment Fee. A commitment fee of $25,000.00, one-half of
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which being payable upon the acceptance of this commitment,
as set forth below, with the remaining one-half being
payable on the Closing Date.
(2) Unused Fee. A fee of .20% per annum of the average unused
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portion of the Loan, payable quarterly in arrears.
(3) Letter of Credit Fee. A fee of 1.0% per annum of the
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average outstanding amount of Credits, payable quarterly in
arrears.
I. Investments: Advances may be requested and received for the purpose
of engaging in any transaction, or any series of
related transactions, by which the Borrower directly or
indirectly acquires an interest in, or in any way
otherwise makes a debt or equity investment in, any
entity (each, an "Investment"). The requirements for
each Investment shall be customary for transactions of
this type and size, but shall be, at a minimum, as
follows:
(a) The entity in which the Investment is made is
in substantially the same, or a related, line of
business as the Borrower.
MicroStrategy Incorporated
January 29, 1999
Page 4
(b) No default or event of default shall have
occurred and be continuing or shall occur after giving
effect to such Investment.
J. Credits: Each Credit shall be issued for a term not to exceed
one (1) year, although any Credit may be automatically
renewed in accordance with the terms and conditions of
said Credit and the related application. Credits may
be denominated in U.S. Dollars, Canadian Dollars,
Pounds Sterling, Dutch Guilders, Spanish Pesetas,
Austrian Schillings, the European Union's single
currency (the "Euro"), the Italian Lira, the German
Deutsche-Xxxx or the French Franc.
II. Terms and Conditions. Each of the following is a precondition to the
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obligation of the Bank to establish the Loan:
A. Documentation: The Borrower and the Guarantors (collectively, the
"Obligors") shall execute and deliver or cause to be delivered to the
Bank such instruments, documents, certificates, opinions and
assurances as the Bank may request in connection with the
establishment of the Loan (the "Loan Documents") and in connection
with the Obligors' respective authority and capacity to accept the
Loan and execute the Loan Documents (including, without limitation,
corporate resolutions and authorizations, letters of consent); and the
Borrower shall be required to take such other action in connection
with the Loan as the Bank may reasonably request. The Bank's forms of
Loan Documents shall be used. In addition to the standard provisions
that are normally contained in documents relating to a loan similar to
the Loan, the Loan Documents shall contain the following provisions:
(1) A right of setoff upon the occurrence of a default.
(2) Representations, warranties and covenants requiring that any
computer application which is material to the operations of the
Borrower, its subsidiaries, or any of its material vendors or
suppliers be Year 2000 Compliant (as defined by the British
Standard Institute) by September 30, 1999, except to the extent
that the failure to do so could not reasonably be expected to
have a material adverse effect upon the financial condition of
the Borrower.
MicroStrategy Incorporated
January 29, 1999
Page 5
(3) A late fee of 5% of the amount of any scheduled payment which is
not paid within 10 days after its scheduled due date.
(4) A post-maturity rate of 4% per annum over the interest rate
otherwise from time to time in effect.
(5) The following affirmative and negative covenants:
(a) The Borrower shall be required to submit to the Bank, among
other things, (i) annual consolidated financial statements
within one hundred fifty (150) days after its fiscal year-
end, (ii) annual consolidated projections for the next
fiscal year within 30 days after its fiscal year-end, (iii)
quarterly consolidated financial statements within 45 days
after the end of each fiscal quarter, (iv) quarterly
accounts receivable agings within 45 days after the end of
each fiscal quarter and (v) such other financial information
as the Bank may from time to time request.
(b) The Borrower shall be required, among other things, to
maintain its properties and insurance, pay all taxes and
comply with all laws, and notify the Bank of any actual or
potential contingent liabilities in excess of insurance by
$500,000. The Borrower shall be prohibited from, among
other things, (i) changing (without prior notice to the
Bank), or suffering any change in, Xxxxxxx X. Xxxxxx'x
status as CEO, President and majority shareholder of the
Borrower; (ii) incurring additional liens on its assets,
except operating and capital leases, purchase money liens
and certain standard permitted liens; (iii) changing its
conduct or type of business in any material respect; (iv)
sales of assets in excess of $350,000 in the aggregate in
any fiscal year of the Borrower; and (v) incurring
additional indebtedness (other than capital, operating
leases and purchase money debt) in excess of $750,000 in the
aggregate outstanding at any one time.
(c) The Bank shall be allowed to make periodic audits of the
books and records of the Borrower at the Bank's reasonable
discretion during normal business hours.
(d) During the term of the Loan, the following financial
covenants must be observed, and shall be measured quarterly:
MicroStrategy Incorporated
January 29, 1999
Page 6
(i) Maximum Funded Debt to EBITDA ratio (the "Funded Debt
Ratio"): 3.5 to 1.0, measured on a rolling 4-quarter
basis, commencing December 31, 1998.
(ii) Minimum Current Maturity Coverage Ratio: 1.25 to
1.0, measured on a rolling 4-quarter basis, commencing
December 31, 1998.
As used herein and in the Loan Documents, the following
terms shall have the following meanings:
"Funded Debt" means all interest-bearing indebtedness for
all borrowed money.
"Current Maturity Coverage Ratio" means net income, plus
depreciation, plus taxes, plus interest expense, minus
distributions to shareholders; to the current year's current
maturities of long-term debt (not including the Loan), plus
current portion of capital leases, plus interest expense.
B. "Closing Date": The Loan shall be closed on such date as is mutually
satisfactory to the Borrower and the Bank, but not later than February
28, 1999 unless we agree in writing to a later date. In the event the
Loan is not closed by the Closing Date, this commitment shall expire
and the Bank shall have no further obligation hereunder.
C. Expenses: All documentation shall be prepared by the Bank's counsel,
Xxxx & Valentine, L.L.P., and shall be in form and substance
reasonably satisfactory to the Bank and its counsel. The Borrower
shall be responsible for the expenses of the Bank reasonably incurred
(including the fees of Bank counsel, not to exceed $10,000.00 plus
out-of-pocket expenses; provided, however, that excessive negotiation
or unforeseen circumstances may increase this amount) whether or not
the Loan closes.
D. Other requirements:
(1) No material adverse change in the Obligors' financial condition
or prospects, or in the condition of any security, between the
date hereof and the Closing Date.
MicorStrategy Incorporated
January 29, 1999
Page 7
(2) The Bank will require an opinion letter from the Obligors'
counsel, acceptable to it in form, which verifies the proper
authorization, execution, delivery, and enforceability of the
Loan Documents, and which opines as to certain other matters
required by the Bank.
(3) There shall exist no default in any of the Borrower's obligations
or in the Borrower's compliance with any applicable legal
requirements which, in the Bank's reasonable judgment, materially
impairs the prospect that the Borrower will pay and perform the
Loan in accordance with its terms.
This commitment is not assignable by operation of law or otherwise without
the Bank's prior written consent. This letter evidences an agreement between
the Borrower and the Bank only and is not to be relied upon by any third party
without the prior written consent of the Bank. No statements, agreements or
representations, oral or written, which may have been made by the Bank or by any
employee, agent or broker acting on the Bank's behalf, with respect to the
transactions contemplated by this letter, will be of any force or effect, except
to the extent stated in this letter, and all prior agreements and
representations in respect of such transactions are merged herein so that this
letter contains the entire agreement between the Bank and the Borrower. This
letter may not be amended, modified, supplemented or terminated except by
written agreement signed by the Borrower and the Bank.
Upon the Borrower's acceptance of the offer contained in this letter,
signed and returned to the Bank together with one-half of the above-referenced
Commitment Fee, the Bank shall proceed with the preparation of the Loan
Documents. The Bank's obligations hereunder shall expire unless this letter,
together with one-half of the Commitment Fee, is signed and returned to the Bank
on or before February 15, 1999.
This letter, the agreements evidenced hereby, and the transactions
contemplated hereby, shall be governed in all respects by the laws of the
Commonwealth of Virginia.
Very truly yours,
NATIONSBANK, N.A.
By:
____________________________
Xxxxxxxxxxx Xxxx Xxxxx,
Assistant Vice President
MicroStrategy Incorporated
January 29, 1999
Page 8
The undersigned hereby accepts the foregoing Commitment and agrees to
consummate the transactions contemplated therein.
MICROSTRATEGY INCORPORATED [SEAL] Date: _________________
By:___________________________
Title:__________________________
