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                                                                     EXHIBIT 3.1

                              ARTICLES OF AMENDMENT
                                     OF THE
                            ARTICLES OF INCORPORATION
                                       OF
                                WAVO CORPORATION


         The undersigned officer of WAVO Corporation (the "COMPANY"), a
corporation existing pursuant to the provisions of the Indiana Business
Corporation Law, as amended (the "Indiana Act"), desiring to give notice of
corporate action effectuating the amendment of certain provisions of the
Corporation's Articles of Incorporation, sets forth the following facts:

                                    ARTICLE I
                                    AMENDMENT

         Section 1. The Company was incorporated on November 13, 1990.

         Section 2. The name of the Company following this Amendment to the
Articles of Incorporation is WAVO Corporation.

         Section 3. The exact text of new subsection (3) of Article III,
Section C of the Articles of Incorporation is:

         (3)   Designation of Rights of Series D Convertible Preferred Shares.

         The Corporation is authorized to issue a Series of its Preferred Shares
consisting of 2,000 Preferred Shares having a stated value of Ten Thousand
Dollars ($10,000) per share, to be designated as the Series D Convertible
Preferred Stock (the "PREFERRED SHARES"). The rights, privileges and preferences
of the Series D Preferred Stock, and the limitations and restrictions thereon,
are as follows:

         (1) Dividends. The holders of the Preferred Shares shall be entitled to
receive dividends ("DIVIDENDS"), to the extent funds are legally available
therefor, at a rate of 10.0% per annum, which shall be cumulative, accrue daily
from the Issuance Date (as defined below) and be payable (a) with respect to
Preferred Shares issued on the Initial Issuance Date (as defined below) on the
first day of each Calendar Quarter (as defined below) beginning on the earlier
of (i) the first day of the Calendar Quarter immediately following the date on
which the Registration Statement (as defined below) is declared effective by the
SEC (as defined below) and (ii) January 1, 2000, and (b) with respect to any
Preferred Shares issued after the Initial Issuance Date, the first day of the
second Calender Quarter immediately following the applicable Issuance Date (each
a "DIVIDEND
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DATE"). If a Dividend Date is not a Business Day (as defined below) then the
Dividend shall be due and payable on the Business Day immediately following the
Dividend Date. Dividends shall be payable in shares of Common Stock (as defined
below) ("DIVIDEND SHARES") or, at the option of the Company, in cash, provided
that the Dividends which accrued during any period shall be payable in cash only
if the Company provides written notice ("DIVIDEND ELECTION NOTICE") to each
holder of Preferred Shares at least 10 Business Days prior to the Dividend Date.
Dividends to be paid in shares of Common Stock shall be paid in a number of
fully paid and nonassessable shares (rounded to the nearest whole share in
accordance with Section 2(b)) of Common Stock equal to the quotient of (a) the
Additional Amount (as defined below) and (b) the Applicable Daily Price (as
defined below) on the date which is two (2) trading days immediately prior to
the applicable Dividend Date. Notwithstanding the foregoing, the Company shall
not be entitled to pay Dividends in shares of Common Stock and shall be required
to pay such Dividends in cash if (a) any event constituting a Triggering Event
(as defined in Section 3(b)), or an event that with the passage of time would
constitute a Triggering Event if not cured, has occurred and is continuing on
the date of the Company's Dividend Election Notice or on the Dividend Date,
unless otherwise consented to in writing by the holder of Preferred Shares
entitled to receive such Dividend or (b) the Registration Statement (as defined
below) is not effective and available for the resale of all of the Registrable
Securities (as defined in the Registration Rights Agreement), including, without
limitation, the Dividend Shares, on the date of the Company's Dividend Election
Notice or on the Dividend Date. Any accrued and unpaid Dividends which are not
paid within five (5) Business Days of such accrued and unpaid dividends'
Dividend Date shall bear interest at the rate of 18.0% per annum from such
Dividend Date until the same is paid in full (the "DEFAULT INTEREST").

         (2) Conversion of Preferred Shares. Preferred Shares shall be
convertible into shares of the Company's common stock, no par value per share
(the "COMMON STOCK"), on the terms and conditions set forth in this Section 2.

                  (a) Certain Defined Terms. For purposes of these Articles of
Amendment, the following terms shall have the following meanings:

                           (i) "ADDITIONAL AMOUNT" means, on a per share basis,
the sum of (A) unpaid Default Interest through the date of determination plus
(B) the result of the following formula: (.10)(N/365)($10,000).

                           (ii) "APPROVED STOCK PLAN" shall mean any employee
benefit plan which has been approved by the Board of Directors of the Company,
pursuant to which the Company's securities may be issued to any employee,
officer, director or consultant for services provided to the Company.

                           (iii) "BUSINESS DAY" 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.

                           (iv) "CALENDAR QUARTER" means each of the period
beginning on and including January 1 and ending on and including March 31, the
period beginning on and


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including April 1 and ending on and including June 30, the period beginning on
and including July 1 and ending on and including September 30, and the period
beginning on and including October 1 and ending on and including December 31.

                           (v) "CLOSING BID PRICE" means, for any security as of
any date, the last closing bid price for such security on the Principal Market
(as defined below) as reported by Bloomberg Financial Markets ("BLOOMBERG"), or,
if the Principal Market is not the principal securities exchange or trading
market for such security, the last closing bid price of such security on the
principal securities exchange or trading market where such security is listed or
traded as reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no
closing bid price is reported for such security by Bloomberg, the last closing
trade price of such security as reported by Bloomberg, or, if no last closing
trade price is reported for such security by Bloomberg, the average of the bid
prices of any market makers for such security as reported in the "pink sheets"
by the National Quotation Bureau, Inc. If the Closing Bid Price cannot be
calculated for such security on such date on any of the foregoing bases, the
Closing Bid Price of such security on such date shall be the fair market value
as mutually determined by the Company and the holders of Preferred Shares. If
the Company and the holders of Preferred Shares are unable to agree upon the
fair market value of the Common Stock, then such dispute shall be resolved
pursuant to Section 2(d)(iii) below with the term "Closing Bid Price" being
substituted for the term "Weighted Average Price." All such determinations shall
be appropriately adjusted for any stock dividend, stock split or other similar
transaction during such period.

                           (vi) "CONVERSION AMOUNT" means the sum of (1) the
Additional Amount (as defined above), and (2) $10,000.

                           (vii) "CONVERSION PRICE" means, as of any Conversion
Date (as defined below) or other date of determination, the lowest Weighted
Average Price (as defined below) of the Common Stock during the six (6)
consecutive trading days ending on and including such date of determination (the
"APPLICABLE DAILY PRICE"); provided that in no event shall the Conversion Price
exceed the Fixed Conversion Price, each in effect as of such date and subject to
adjustment as provided herein.

                           (viii) "CONVERTIBLE SECURITIES" means any stock or
securities (other than Options) directly or indirectly convertible into or
exchangeable for Common Stock.

                           (ix) "FIXED CONVERSION PRICE" means, with respect to
any Preferred Share, as of any Conversion Date or other date of determination,
$10.00, subject to adjustment as provided herein.

                           (x) "INITIAL ISSUANCE DATE" means the first date on
which the Company issues Preferred Shares pursuant to the Securities Purchase
Agreement.

                           (xi) "ISSUANCE DATE" means, with respect to each
Preferred Share, the date of issuance of the applicable Preferred Share.


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                           (xii) "MATURITY DATE" means the date which is 549
days after the Initial Issuance Date, unless extended pursuant to Section
2(d)(vii).

                           (xiii) "N" means the number of days from, but
excluding, the last Dividend Date with respect to which dividends, along with
any Default Interest, has been paid by the Company on the applicable Preferred
Share, or the Issuance Date if no Dividend Date has occurred, through and
including the Conversion Date, the Maturity Date or other date of determination
for such Preferred Share, as the case may be, for which such determination is
being made.

                           (xiv) "OPTIONS" means any rights, warrants or options
to subscribe for or purchase Common Stock or Convertible Securities.

                           (xv) "PERSON" means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.

                           (xvi) "PRINCIPAL MARKET" means the Nasdaq National
Market, or if the Common Stock is not traded on the Nasdaq National Market, then
the principal securities exchange or trading market for the Common Stock.

                           (xvii) "REGISTRATION RIGHTS AGREEMENT" means that
certain registration rights agreement between the Company and the initial
holders of the Preferred Shares relating to the filing of a registration
statement covering the resale of the shares of Common Stock issuable upon
conversion of the Preferred Shares and exercise of the Warrants.

                           (xviii) "SECURITIES PURCHASE AGREEMENT" means that
certain securities purchase agreement between the Company and the initial
holders of the Preferred Shares.

                           (xix) "STATED VALUE" means $10,000.

                           (xx) "WARRANTS" means the warrants to purchase shares
of Common Stock issued by the Company pursuant to the Securities Purchase
Agreement.

                           (xxi) "WEIGHTED AVERAGE PRICE" means, for any
security as of any date, the dollar volume-weighted average price for such
security on the Principal Market (as reported by Bloomberg through its "Volume
at Price" function) or, if the Principal Market is not the principal securities
exchange or trading market for such security, the dollar volume-weighted average
price of such security on the principal securities exchange or trading market
where such security is listed or traded (as reported by Bloomberg through its
"Volume at Price" function), or if the foregoing do not apply, the dollar
volume-weighted average price of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by Bloomberg, or, if
no dollar volume-weighted average price is reported for such security by
Bloomberg, the average of the bid prices of each of the market makers for such
security as reported in the "pink sheets" by the National Quotation Bureau, Inc.
If the Weighted Average Price cannot


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be calculated for such security on such date on any of the foregoing bases, the
Weighted Average Price of such security on such date shall be the fair market
value as mutually determined by the Company and the holders of the Preferred
Shares. If the Company and the holders of the Preferred Shares are unable to
agree upon the fair market value of the Common Stock, then such dispute shall be
resolved pursuant to Section 2(d)(iii) below. All such determinations shall be
appropriately adjusted for any stock dividend, stock split or other similar
transaction during such period.

                  (b) Holder's Conversion Right; Mandatory Conversion. Subject
         to the provisions of Sections 5 and 8, at any time or times on or after
         the Issuance Date (as defined below), any holder of Preferred Shares
         shall be entitled to convert any whole number of Preferred Shares into
         fully paid and nonassessable shares of Common Stock in accordance with
         Section 2(d) at the Conversion Rate (as defined below). If any
         Preferred Shares remain outstanding on the Maturity Date, then,
         pursuant to Section 2(d)(vii), all such Preferred Shares shall be
         converted at the Conversion Rate as of such date in accordance with
         Section 2(d) or redeemed by the Company. The Company shall not issue
         any fraction of a share of Common Stock upon any conversion. All shares
         of Common Stock (including fractions thereof) issuable upon conversion
         of more than one Preferred Share by a holder thereof shall be
         aggregated for purposes of determining whether the conversion would
         result in the issuance of a fraction of a share of Common Stock. If,
         after the aforementioned aggregation, the issuance would result in the
         issuance of a fraction of a share of Common Stock, the Company shall
         round such fraction of a share of Common Stock up or down to the
         nearest whole share.

                  (c) Conversion. The number of shares of Common Stock issuable
         upon conversion of each Preferred Share pursuant to Section 2(b) shall
         be determined according to the following formula (the "CONVERSION
         RATE"):

                                            Conversion Amount
                                            -----------------
                                            Conversion Price

                  (d) Mechanics of Conversion. The conversion of Preferred
         Shares shall be conducted in the following manner:

                           (i) Holder's Delivery Requirements. To convert
Preferred Shares into shares of Common Stock on any date (the "CONVERSION
DATE"), the holder thereof shall (A) transmit by facsimile (or otherwise
deliver), for receipt on or prior to 11:59 p.m., Eastern Time on such date, a
copy of a fully executed notice of conversion in the form attached hereto as
Exhibit I (the "CONVERSION NOTICE") to the Company with a copy thereof to the
Company's designated transfer agent (the "TRANSFER AGENT") and (B) if required
by Section 2(d)(viii), surrender to a common carrier for delivery to the
Transfer Agent as soon as practicable following such date the original
certificates representing the Preferred Shares being converted (or an
indemnification undertaking with respect to such shares in the case of their
loss, theft or destruction) (the "PREFERRED STOCK CERTIFICATES").


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                           (ii) Company's Response. Upon receipt by the Company
of a copy of a Conversion Notice, the Company (1) shall immediately send, via
facsimile, a confirmation of receipt of such Conversion Notice to such holder
and the Transfer Agent, which confirmation shall constitute an instruction to
the Transfer Agent to process such Conversion Notice in accordance with the
terms herein and (2) on or before the third (3rd) Business Day following the
date of receipt by the Company of such Conversion Notice (the "SHARE DELIVERY
DATE"), (A) issue and deliver to the address as specified in the Conversion
Notice, a certificate, registered in the name of the holder or its designee, for
the number of shares of Common Stock to which the holder shall be entitled, or
(B) provided the Transfer Agent is participating in The Depository Trust Company
("DTC") Fast Automated Securities Transfer Program, upon the request of the
holder, credit such aggregate number of shares of Common Stock to which the
holder shall be entitled to the holder's or its designee's balance account with
DTC through its Deposit Withdrawal Agent Commission system. If the number of
Preferred Shares represented by the Preferred Stock Certificate(s) submitted for
conversion, as may be required pursuant to Section 2(d)(viii), is greater than
the number of Preferred Shares being converted, then the Company shall, as soon
as practicable and in no event later than three Business Days after receipt of
the Preferred Stock Certificate(s) (the "PREFERRED STOCK DELIVERY DATE") and at
its own expense, issue and deliver to the holder a new Preferred Stock
Certificate representing the number of Preferred Shares not converted.

                           (iii) Dispute Resolution. In the case of a dispute as
to the determination of the Weighted Average Price or the arithmetic calculation
of the Conversion Rate, the Company shall instruct the Transfer Agent to issue
to the holder the number of shares of Common Stock that is not disputed and
shall submit the disputed determinations or arithmetic calculations to the
holder via facsimile within one (1) Business Day of receipt of such holder's
Conversion Notice. If such holder and the Company are unable to agree upon the
determination of the Weighted Average Price or arithmetic calculation of the
Conversion Rate within two (2) Business Days of such disputed determination or
arithmetic calculation being submitted to the holder, then the Company shall
within one (1) Business Day submit via facsimile (A) the disputed determination
of the Weighted Average Price to an independent, reputable investment bank
selected by the Company and approved by the holders of a majority of the
Preferred Shares then outstanding or (B) the disputed arithmetic calculation of
the Conversion Rate to the Company's independent, outside accountant. The
Company shall cause the investment bank or the accountant, as the case may be,
to perform the determinations or calculations and notify the Company and the
holder of the results no later than forty-eight (48) hours from the time it
receives the disputed determinations or calculations. Such investment bank's or
accountant's determination or calculation, as the case may be, shall be binding
upon all parties absent error.

                           (iv) Record Holder. The person or persons entitled to
receive the shares of Common Stock issuable upon a conversion of Preferred
Shares shall be treated for all purposes as the record holder or holders of such
shares of Common Stock on the Conversion Date.

                           (v) Company's Failure to Timely Convert.


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                                    (A) Cash Damages. If (I) within five (5)
Business Days after the Company's receipt of the facsimile copy of a Conversion
Notice the Company shall fail to issue a certificate to a holder or credit such
holder's balance account with DTC for the number of shares of Common Stock to
which such holder is entitled upon such holder's conversion of Preferred Shares
or (II) within five (5) Business Days of the Company's receipt of a Preferred
Stock Certificate the Company shall fail to issue a new Preferred Stock
Certificate representing the number of Preferred Shares to which such holder is
entitled pursuant to Section 2(d)(ii), then in addition to all other available
remedies which such holder may pursue hereunder and under the Securities
Purchase Agreement (including indemnification pursuant to Section 8 thereof),
the Company shall pay additional damages to such holder for each date after the
Share Delivery Date such conversion is not timely effected and/or each date
after the Preferred Stock Delivery Date such Preferred Stock Certificate is not
delivered in an amount equal to 0.5% of the product of (I) the sum of the number
of shares of Common Stock not issued to the holder on or prior to the Share
Delivery Date and to which such holder is entitled and, in the event the Company
has failed to deliver a Preferred Stock Certificate to the holder on or prior to
the Preferred Stock Delivery Date, the number of shares of Common Stock issuable
upon conversion of the Preferred Shares represented by such Preferred Stock
Certificate, as of the Preferred Stock Delivery Date and (II) the Weighted
Average Price of the Common Stock on the Share Delivery Date, in the case of the
failure to deliver Common Stock, or the Preferred Stock Delivery Date, in the
case of failure to deliver a Preferred Stock Certificate. If the Company fails
to pay the additional damages set forth in this Section 2(d)(v) within five
Business Days of the date incurred, then the holder entitled to such payments
shall have the right at any time, so long as the Company continues to fail to
make such payments, to require the Company, upon written notice, to immediately
issue, in lieu of such cash damages, the number of shares of Common Stock equal
to the quotient of (X) the aggregate amount of the damages payments described
herein divided by (Y) the Conversion Price in effect on such Conversion Date as
specified by the holder in the Conversion Notice. The foregoing notwithstanding,
the damages set forth in this Section 2(d)(v)(A) shall be stayed with respect to
the number of shares of Common Stock and, if applicable, the Preferred Stock
Certificate for which there is a good faith dispute being resolved pursuant to,
and within the time periods provided for in Section 2(d)(iii), pending the
resolution of such dispute.

                                    (B) Void Conversion Notice; Adjustment of
Conversion Price. If for any reason a holder has not received all of the shares
of Common Stock prior to the tenth (10th) Business Day after the Share Delivery
Date with respect to a conversion of Preferred Shares, then the holder, upon
written notice to the Company, with a copy to the Transfer Agent, may void its
Conversion Notice with respect to, and retain or have returned, as the case may
be, any Preferred Shares that have not been converted pursuant to such holder's
Conversion Notice; provided that the voiding of a holder's Conversion Notice
shall not effect the Company's obligations to make any payments which have
accrued prior to the date of such notice pursuant to Section 2(d)(v)(A) or
otherwise. Thereafter, the Conversion Price of any Preferred Shares returned or
retained by the holder for failure to timely convert shall be adjusted to the
lesser of (I) the Conversion Price as in effect on the date on which the holder
voided the Conversion Notice and (II) the lowest Closing Bid Price during the
period beginning on the Conversion Date and ending on the date such holder
voided the Conversion Notice.


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                                    (C) Redemption. If for any reason a holder
has not received all of the shares of Common Stock prior to the tenth (10th)
Business Day after the Share Delivery Date with respect to a conversion of
Preferred Shares (a "CONVERSION FAILURE"), then the holder, upon written notice
to the Company, may require that the Company redeem, to the extent funds are
legally available therefor, all Preferred Shares held by such holder, including
the Preferred Shares previously submitted for conversion and with respect to
which the Company has not delivered shares of Common Stock, in accordance with
Section 3.

                           (vi) Pro Rata Conversion and Redemption. In the event
the Company receives a Conversion Notice from more than one holder of Preferred
Shares for the same Conversion Date and the Company can convert some, but not
all, of such Preferred Shares, the Company shall convert from each holder of
Preferred Shares electing to have Preferred Shares converted at such time a pro
rata amount of such holder's Preferred Shares submitted for conversion based on
the number of Preferred Shares submitted for conversion on such date by such
holder relative to the number of Preferred Shares submitted for conversion on
such date.

                           (vii) Mandatory Conversion or Redemption at Maturity.
If any Preferred Shares remain outstanding on the Maturity Date, then all such
Preferred Shares, at the Company's option, either (i) shall be converted at the
Conversion Price for such Preferred Shares as of such date as if the holders of
such Preferred Shares had given the Conversion Notice on the Maturity Date (a
"MATURITY DATE MANDATORY CONVERSION"), or (ii) shall be redeemed, to the extent
funds are legally available therefor, as of such date for an amount in cash per
Preferred Share (the "MATURITY DATE REDEMPTION PRICE") equal to the Liquidation
Preference (as defined in Section 11) (a "MATURITY DATE MANDATORY REDEMPTION").
The Company shall be deemed to have elected a Maturity Date Mandatory Redemption
unless it delivers written notice to each holder of Preferred Shares at least 10
Business Days prior to the Maturity Date of its election to effect a Maturity
Date Mandatory Conversion. If the Company elects a Maturity Date Mandatory
Redemption, then on the Maturity Date the Company shall pay to each holder of
Preferred Shares outstanding on the Maturity Date, by wire transfer of
immediately available funds, an amount per Preferred Share equal to the Maturity
Date Redemption Price. If the Company elects a Maturity Date Mandatory
Redemption and fails to redeem all of the Preferred Shares outstanding on the
Maturity Date by payment of the Maturity Date Redemption Price, then in addition
to any remedy such holder of Preferred Shares may have under these Articles of
Amendment, the Securities Purchase Agreement and the Registration Rights
Agreement, (X) the applicable Maturity Date Redemption Price payable in respect
of such unredeemed Preferred Shares shall bear interest at the rate of 1.5% per
month, prorated for partial months, until paid in full, and (Y) any holder of
Preferred Shares shall have the option to require the Company to convert any or
all of such holder's Preferred Shares that the Company elected to redeem under
this Section 2(d)(vii) and for which the Maturity Date Redemption Price
(together with any interest thereon) has not been paid into the number of shares
of Common Stock such holder would have received if such holder had given a
Conversion Notice for such Preferred Shares on the Maturity Date. On the
Maturity Date, all holders of Preferred Shares shall surrender all Preferred
Stock Certificates, duly endorsed for cancellation, to the Company or the
Transfer Agent. If the Company has elected a Maturity Date Mandatory Conversion
or has failed to pay the Maturity Date Redemption Price in a timely manner as
described above, then the Maturity Date shall be extended for any Preferred
Shares for as long


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as (A) the conversion of such Preferred Shares would violate the provisions of
Section 5, (B) a Triggering Event shall have occurred and be continuing, or (C)
an event shall have occurred and be continuing which with the passage of time
and the failure to cure would result in a Triggering Event.

                           (viii) Book-Entry. Notwithstanding anything to the
contrary set forth herein, upon conversion of Preferred Shares in accordance
with the terms hereof, the holder thereof shall not be required to physically
surrender the certificate representing the Preferred Shares to the Company
unless the full number of Preferred Shares represented by the certificate are
being converted. The holder and the Company shall maintain records showing the
number of Preferred Shares so converted and the dates of such conversions or
shall use such other method, reasonably satisfactory to the holder and the
Company, so as not to require physical surrender of the certificate representing
the Preferred Shares upon each such conversion. In the event of any dispute or
discrepancy, such records of the Company shall be controlling and determinative
in the absence of manifest error. Notwithstanding the foregoing, if Preferred
Shares represented by a certificate are converted as aforesaid, the holder may
not transfer the certificate representing the Preferred Shares unless the holder
first physically surrenders the certificate representing the Preferred Shares to
the Company, whereupon the Company will forthwith issue and deliver upon the
order of the holder a new certificate of like tenor, registered as the holder
may request, representing in the aggregate the remaining number of Preferred
Shares represented by such certificate. The holder and any assignee, by
acceptance of a certificate, acknowledge and agree that, by reason of the
provisions of this paragraph, following conversion of any Preferred Shares, the
number of Preferred Shares represented by such certificate may be less than the
number of Preferred Shares stated of the face thereof. Each certificate for
Preferred Shares shall bear the following legend:

                  ANY TRANSFEREE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW THE
                  TERMS OF THE COMPANY'S ARTICLES OF AMENDMENT RELATING TO THE
                  PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE, INCLUDING
                  SECTION 2(d)(viii) THEREOF. THE NUMBER OF PREFERRED SHARES
                  REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN THE NUMBER OF
                  PREFERRED SHARES STATED ON THE FACE HEREOF PURSUANT TO SECTION
                  2(d)(viii) OF THE ARTICLES OF AMENDMENT RELATING TO THE
                  PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE.

                  A COPY OF THE ARTICLES OF AMENDMENT WILL BE PROVIDED TO A
                  HOLDER OF PREFERRED SHARES UPON REQUEST IN WRITING AND FREE OF
                  CHARGE.

                           (e) Taxes. The Company shall pay any and all taxes
that may be payable with respect to the issuance and delivery of Common Stock
upon the conversion of Preferred Shares.


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                  (f) Adjustments to Conversion Price. The Conversion Price will
be subject to adjustment from time to time as provided in this Section 2(f).

                           (i) Adjustment of Fixed Conversion Price upon
Subdivision or Combination of Common Stock. If the Company at any time
subdivides (by any stock split, stock dividend, recapitalization or otherwise)
one or more classes of its outstanding shares of Common Stock into a greater
number of shares, the Fixed Conversion Price in effect immediately prior to such
subdivision will be proportionately reduced. If the Company at any time combines
(by combination, reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the Fixed
Conversion Price in effect immediately prior to such combination will be
proportionately increased.

                           (ii) Holder's Right of Alternative Conversion Price
Following Issuance of Convertible Securities. If the Company in any manner
issues or sells Convertible Securities or Options that are convertible into or
exchangeable for Common Stock at a price which varies or may vary with the
market price of the Common Stock, including by way of periodic reset(s) to a
fixed price (the formulation for such variable price being herein referred to as
the "VARIABLE PRICE"), and such Variable Price is not calculated using the same
formula used to calculate the Applicable Daily Price in effect immediately prior
to such issue or sale, the Company shall provide written notice thereof via
facsimile and overnight courier to each holder of the Preferred Shares
("VARIABLE NOTICE") on the date of issuance of such Convertible Securities or
Options. From and after the date the Company issues any such Convertible
Securities or Options with a Variable Price, a holder of Preferred Shares shall
have the right, but not the obligation, in its sole discretion to substitute the
Variable Price for the Applicable Daily Price upon conversion of any Preferred
Shares by designating in the Conversion Notice delivered upon conversion of such
Preferred Shares that solely for purposes of such conversion the holder is
relying on the Variable Price rather than the Applicable Daily Price then in
effect. A holder's election to rely on a Variable Price for a particular
conversion of Preferred Shares shall not obligate the holder to rely on a
Variable Price for any future conversions of Preferred Shares.

                           (iii) Other Events. If any event occurs of the type
contemplated by the provisions of this Section 2(f) but not expressly provided
for by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company's Board of Directors will make an appropriate adjustment in the
Conversion Price so as to protect the rights of the holders of the Preferred
Shares; provided that no such adjustment will increase the Conversion Price as
otherwise determined pursuant to this Section 2(f).

                           (vi) Notices.

                                    (A) Immediately upon any adjustment of the
Conversion Price pursuant to this Section 2(f), the Company will give written
notice thereof to each holder of Preferred Shares, setting forth in reasonable
detail, and certifying, the calculation of such adjustment.


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                                    (B) The Company will give written notice to
each holder of Preferred Shares at least ten (10) Business Days prior to the
date on which the Company closes its books or takes a record (I) with respect to
any dividend or distribution upon the Common Stock, (II) with respect to any pro
rata subscription offer to holders of Common Stock or (III) for determining
rights to vote with respect to any Organic Change, dissolution or liquidation,
provided that such information shall be made known to the public prior to or in
conjunction with such notice being provided to such holder.

                                    (C) The Company will also give written
notice to each holder of Preferred Shares at least ten (10) Business Days prior
to the date on which any Organic Change, dissolution or liquidation will take
place, provided that such information shall be made known to the public prior to
or in conjunction with such notice being provided to such holder.

                  (3) Redemption at Option of Holders.

                           (a) Redemption Option Upon Triggering Event. In
                  addition to all other rights of the holders of Preferred
                  Shares contained herein, after a Triggering Event (as defined
                  below), each holder of Preferred Shares shall have the right,
                  at such holder's option, to require the Company, to the extent
                  funds are legally available therefor, to redeem all or a
                  portion of such holder's Preferred Shares at a price per
                  Preferred Share equal to 120% of the Liquidation Preference
                  (the "REDEMPTION PRICE").

                           (b) "Triggering Event". A "TRIGGERING EVENT" shall be
                  deemed to have occurred at such time as any of the following
                  events:

                                    (i) the failure of the applicable
Registration Statement to be declared effective by the Securities and Exchange
Commission (the "SEC") on or prior to the date that is 30 days after the
applicable Effectiveness Deadline (as defined in the Registration Rights
Agreement);

                                    (ii) while the Registration Statement is
required to be maintained effective pursuant to the terms of the Registration
Rights Agreement, the effectiveness of the Registration Statement lapses for any
reason (including, without limitation, the issuance of a stop order) or is
unavailable to the holder of the Preferred Shares for sale of all of the
Registrable Securities (as defined in the Registration Rights Agreement) in
accordance with the terms of the Registration Rights Agreement, and such lapse
or unavailability continues for a period of five consecutive trading days
(excluding days during an Allowable Grace Period (as defined in the Registration
Rights Agreement));

                                    (iii) the suspension from trading or failure
of the Common Stock to be listed on the Nasdaq National Market, The New York
Stock Exchange, Inc. or The American Stock Exchange, Inc. for a period of five
consecutive trading days or for more than an aggregate of 10 trading days in any
365-day period;


                                      -11-
<PAGE>   12
                                    (iv) the Company's notice or the Transfer
Agent's notice, at the Company's direction, to any holder of Preferred Shares,
including by way of public announcement, at any time, of its intention not to
comply with a request for conversion of any Preferred Shares into shares of
Common Stock that is tendered in accordance with the provisions of these
Articles of Amendment, excluding, however, notices that relate solely to a
dispute under resolution in accordance with Section 2(d)(iii) provided that such
dispute has not been publicly disclosed;

                                    (v) a Conversion Failure (as defined in
Section 2(d)(v)(C));

                                    (vi) upon the Company's receipt of a
Conversion Notice, the Company shall not be obligated to issue shares of Common
Stock upon such Conversion due to the provisions of Section 15; or

                                    (vii) the Company breaches any
representation, warranty, covenant or other term or condition of the Securities
Purchase Agreement, the Registration Rights Agreement, the Warrants, these
Articles of Amendment or any other agreement, document, certificate or other
instrument delivered in connection with the transactions contemplated thereby
and hereby, except to the extent that such breach would not have a Material
Adverse Effect (as defined in Section 3(a) of the Securities Purchase Agreement)
and except, in the case of a breach of a covenant which is curable, only if such
breach continues for a period of at least 20 days.

                  (c) Mechanics of Redemption at Option of Buyer. Within one (1)
         day after the occurrence of a Triggering Event, the Company shall
         deliver written notice thereof via facsimile and overnight courier
         ("NOTICE OF TRIGGERING EVENT") to each holder of Preferred Shares. At
         any time after the earlier of a holder's receipt of a Notice of
         Triggering Event and such holder becoming aware of a Triggering Event,
         any holder of Preferred Shares then outstanding may require the Company
         to redeem all of the Preferred Shares by delivering written notice
         thereof via facsimile and overnight courier ("NOTICE OF REDEMPTION AT
         OPTION OF BUYER") to the Company, which Notice of Redemption at Option
         of Buyer shall indicate the number of Preferred Shares that such holder
         is electing to redeem.

                  (d) Payment of Redemption Price. Upon the Company's receipt of
         a Notice(s) of Redemption at Option of Buyer from any holder of
         Preferred Shares, the Company shall immediately notify each holder of
         Preferred Shares by facsimile of the Company's receipt of such notices
         and each holder which has sent such a notice shall promptly submit to
         the Transfer Agent such holder's Preferred Stock Certificates which
         such holder has elected to have redeemed. The Company shall deliver the
         applicable Redemption Price to such holder within five Business Days
         after the Company's receipt of a Notice of Redemption at Option of
         Buyer; provided that, if required by Section 2(d)(viii), a holder's
         Preferred Stock Certificates shall have been so delivered to the
         Transfer Agent. If the Company is unable to redeem all of the Preferred
         Shares submitted for redemption, the Company shall (i) redeem a pro
         rata amount from each holder of Preferred Shares based on the number of
         Preferred Shares submitted for redemption by such holder relative to
         the


                                      -12-
<PAGE>   13
         total number of Preferred Shares submitted for redemption by all
         holders of Preferred Shares and (ii) in addition to any remedy such
         holder of Preferred Shares may have under these Articles of Amendment
         and the Securities Purchase Agreement, pay to each holder interest at
         the rate of 1.5% per month (prorated for partial months) in respect of
         each unredeemed Preferred Share until paid in full.

                  (e) Void Redemption. In the event that the Company does not
         pay the Redemption Price within the time period set forth in Section
         3(d), at any time thereafter and until the Company pays such unpaid
         applicable Redemption Price in full, a holder of Preferred Shares shall
         have the option (the "VOID OPTIONAL REDEMPTION OPTION") to, in lieu of
         redemption, require the Company to promptly return to such holder any
         or all of the Preferred Shares that were submitted for redemption by
         such holder under this Section 3 and for which the applicable
         Redemption Price (together with any interest thereon) has not been
         paid, by sending written notice thereof to the Company via facsimile
         (the "VOID OPTIONAL REDEMPTION NOTICE"). Upon the Company's receipt of
         such Void Optional Redemption Notice, (i) the Notice of Redemption at
         Option of Buyer shall be null and void with respect to those Preferred
         Shares subject to the Void Optional Redemption Notice, (ii) the Company
         shall immediately return any Preferred Shares subject to the Void
         Optional Redemption Notice, and (iii) the Conversion Price of such
         returned Preferred Shares shall be adjusted to the lesser of (A) the
         Conversion Price as in effect on the date on which the Void Optional
         Redemption Notice is delivered to the Company and (B) the lowest
         Weighted Average Price during the period beginning on the date on which
         the Notice of Redemption at Option of Buyer is delivered to the Company
         and ending on the date on which the Void Optional Redemption Notice is
         delivered to the Company.

                  (f) Disputes; Miscellaneous. In the event of a dispute as to
         the determination of the arithmetic calculation of the Redemption
         Price, such dispute shall be resolved pursuant to Section 2(d)(iii)
         above with the term "Redemption Price" being substituted for the term
         "Conversion Rate". A holder's delivery of a Void Optional Redemption
         Notice and exercise of its rights following such notice shall not
         effect the Company's obligations to make any payments which have
         accrued prior to the date of such notice. In the event of a redemption
         pursuant to this Section 3 of less than all of the Preferred Shares
         represented by a particular Preferred Stock Certificate, the Company
         shall promptly cause to be issued and delivered to the holder of such
         Preferred Shares a preferred stock certificate representing the
         remaining Preferred Shares which have not been redeemed.

                  (4) Other Rights of Holders.

                           (a) Reorganization, Reclassification, Consolidation,
Merger or Sale. Any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the Company's assets
to another Person or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as "ORGANIC CHANGE." Prior to
the consummation of any (i) sale of all or substantially


                                      -13-
<PAGE>   14
all of the Company's assets to an acquiring Person or (ii) other Organic Change
following which the Company is not a surviving entity, the Company will secure
from the Person purchasing such assets or the successor resulting from such
Organic Change (in each case, the "ACQUIRING ENTITY") a written agreement (in
form and substance reasonably satisfactory to the holders of a majority of the
Preferred Shares then outstanding) to deliver to each holder of Preferred Shares
in exchange for such shares, a security of the Acquiring Entity evidenced by a
written instrument substantially similar in form and substance to the Preferred
Shares, including, without limitation, having a stated value and liquidation
preference equal to the Stated Value and the Liquidation Preference of the
Preferred Shares held by such holder, and satisfactory to the holders of a
majority of the Preferred Shares then outstanding. Prior to the consummation of
any other Organic Change, the Company shall make appropriate provision (in form
and substance reasonably satisfactory to the holders of a majority of the
Preferred Shares then outstanding) to insure that each of the holders of the
Preferred Shares will thereafter have the right to acquire and receive in lieu
of or in addition to (as the case may be) the shares of Common Stock immediately
theretofore acquirable and receivable upon the conversion of such holder's
Preferred Shares such shares of stock, securities or assets that would have been
issued or payable in such Organic Change with respect to or in exchange for the
number of shares of Common Stock which would have been acquirable and receivable
upon the conversion of such holder's Preferred Shares as of the date of such
Organic Change (without taking into account any limitations or restrictions on
the convertibility of the Preferred Shares).

                           (b) Optional Redemption Upon Change of Control. In
addition to the rights of the holders of Preferred Shares under Section 4(a),
upon a Change of Control (as defined below) of the Company each holder of
Preferred Shares shall have the right, at such holder's option, to require the
Company to redeem, to the extent funds are legally available therefor, all or a
portion of such holder's Preferred Shares at a price per Preferred Share equal
to the Liquidation Preference ("CHANGE OF CONTROL REDEMPTION PRICE"). No sooner
than 15 days nor later than 10 days prior to the consummation of a Change of
Control, but not prior to the public announcement of such Change of Control, the
Company shall deliver written notice thereof via facsimile and overnight courier
(a "NOTICE OF CHANGE OF CONTROL") to each holder of Preferred Shares. At any
time during the period beginning after receipt of a Notice of Change of Control
(or, in the event a Notice of Change of Control is not delivered at least 10
days prior to a Change of Control, at any time on or after the date which is 10
days prior to a Change of Control) and ending on the date of such Change of
Control, any holder of the Preferred Shares then outstanding may require the
Company to redeem all or a portion of the holder's Preferred Shares then
outstanding by delivering written notice thereof via facsimile and overnight
courier (a "NOTICE OF REDEMPTION UPON CHANGE OF CONTROL") to the Company, which
Notice of Redemption Upon Change of Control shall indicate (i) the number of
Preferred Shares that such holder is submitting for redemption, and (ii) the
applicable Change of Control Redemption Price, as calculated pursuant to this
Section 4(b). Upon the Company's receipt of a Notice(s) of Redemption Upon
Change of Control from any holder of Preferred Shares, the Company shall
promptly, but in no event later than one (1) Business Day following such
receipt, notify each holder of Preferred Shares by facsimile of the Company's
receipt of such Notice(s) of Redemption Upon Change of Control. The Company
shall deliver the applicable Change of Control Redemption Price simultaneous
with the consummation of the Change of Control; provided that, if required by
Section 2(d)(viii), a holder's Preferred Stock Certificates shall have been so
delivered to the Company. Payments provided for in this Section 4(b) shall have


                                      -14-
<PAGE>   15
priority to payments to other stockholders in connection with a Change of
Control. For purposes of this Section 4(b), "CHANGE OF CONTROL" means (i) the
consolidation, merger or other business combination of the Company with or into
another Person (other than (A) a consolidation, merger or other business
combination in which holders of the Company's voting power immediately prior to
the transaction continue after the transaction to hold, directly or indirectly,
the voting power of the surviving entity or entities necessary to elect a
majority of the members of the board of directors (or their equivalent if other
than a corporation) of such entity or entities, or (B) pursuant to a migratory
merger effected solely for the purpose of changing the jurisdiction of
incorporation of the Company), (ii) the sale or transfer of all or substantially
all of the Company's assets, or (iii) a purchase, tender or exchange offer made
to and accepted by the holders of more than the 50% of the outstanding shares of
Common Stock.

                           (c) Forced Delisting. If a redemption voided pursuant
to Section 3(e) was caused by a Triggering Event involving the Company's
inability to issue Conversion Shares because of the Exchange Cap (as defined in
Section 15), and if so directed by the holders of at least two-thirds (2/3) of
the Preferred Shares then outstanding, including shares of Preferred Shares
submitted for redemption pursuant to Section 3 with respect to which the
applicable Redemption Price has not been paid, in a Void Mandatory Redemption
Notice, the Company shall promptly as practicable delist the Common Stock from
the exchange or automated quotation system on which the Common Stock is traded
and have the Common Stock, at such holders' option, traded on the electronic
bulletin board or the "pink sheets".

                           (d) Purchase Rights. If at any time the Company
grants, issues or sells any Options, Convertible Securities or rights to
purchase stock, warrants, securities or other property pro rata to the record
holders of any class of Common Stock (the "PURCHASE RIGHTS"), then the holders
of Preferred Shares will be entitled to acquire, upon the terms applicable to
such Purchase Rights, the aggregate Purchase Rights which such holder could have
acquired if such holder had held the number of shares of Common Stock acquirable
upon complete conversion of the Preferred Shares (without taking into account
any limitations or restrictions on the convertibility of the Preferred Shares)
immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of
which the record holders of Common Stock are to be determined for the grant,
issue or sale of such Purchase Rights.

         (5) Limitation on Beneficial Ownership. The Company shall not effect
any conversion of Preferred Shares and no holder of Preferred Shares shall have
the right to convert Preferred Shares in excess of that number of Preferred
Shares which, upon giving effect to such conversion, would cause the aggregate
number of shares of Common Stock beneficially owned by the holder and its
affiliates to exceed 4.99% of the total outstanding shares of Common Stock
following such conversion. For purposes of the foregoing proviso, the aggregate
number of shares of Common Stock beneficially owned by the holder and its
affiliates shall include the number of shares of Common Stock issuable upon
conversion of the Preferred Shares with respect to which the determination of
such proviso is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (i) conversion of the remaining, nonconverted
Preferred Shares beneficially owned by the holder and its affiliates and (ii)
exercise or conversion


                                      -15-
<PAGE>   16
of the unexercised or unconverted portion of any other securities of the Company
(including, without limitation, any warrants or convertible preferred stock)
subject to a limitation on conversion or exercise analogous to the limitation
contained herein beneficially owned by the holder and its affiliates. Except as
set forth in the preceding sentence, for purposes of this Section 5, beneficial
ownership shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended. For purposes of this Section 5, in determining
the number of outstanding shares of Common Stock a holder may rely on the number
of outstanding shares of Common Stock as reflected in (1) the Company's most
recent Form 10-Q or Form 10-K, as the case may be, (2) a more recent public
announcement by the Company, or (3) any other notice by the Company or its
transfer agent setting forth the number of shares of Common Stock outstanding.
Upon the written request of any holder, the Company shall promptly, but in no
event later than one (1) Business Day following the receipt of such notice,
confirm in writing to any such holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to conversions of Preferred Shares and
exercise of Warrants (as defined below) by such holder and its affiliates since
the date as of which such number of outstanding shares of Common Stock was
reported. Notwithstanding the foregoing, each holder of Preferred Shares shall
have the sole obligation to determine whether the restrictions contained in this
Section 5 apply to such holder.

         (6) Redemption at the Company's Election. At any time or times during
the period beginning on the date that the applicable Registration Statement is
declared effective by the SEC and ending on and including the date which is one
(1) year after the Initial Issuance Date, the Company shall have the right, in
its sole discretion, to require that some or all of the outstanding Preferred
Shares be redeemed, to the extent funds are legally available therefor
("REDEMPTION AT COMPANY'S ELECTION"), for consideration per Preferred Share
equal to 110% of the Conversion Amount for such Preferred Share (the "COMPANY'S
ELECTION REDEMPTION PRICE"); provided that the Conditions to Redemption at the
Company's Election (as set forth below) are satisfied. The Company may exercise
its right to Redemption at Company's Election only by providing each holder of
Preferred Shares issued on such Issuance Date written notice ("NOTICE OF
REDEMPTION AT COMPANY'S ELECTION") at least 10 Business Days but not more than
20 Business Days prior to the date of consummation of such redemption
("COMPANY'S ELECTION REDEMPTION DATE"). If the Company elects to require
redemption of some, but not all, of the Preferred Shares issued on such Issuance
Date then outstanding, the Company shall require redemption of the pro rata
amount from each holder of such Preferred Shares based on the number of
Preferred Shares purchased by such holder on the Issuance Date relative to the
total number of Preferred Shares purchased on such Issuance Date (such amount
with respect to each holder being referred to herein as its "PRO RATA REDEMPTION
AMOUNT"). The Company's Notice of Redemption at Company's Election shall
indicate (x) the aggregate number of Preferred Shares the Company has elected to
redeem from all holders of Preferred Shares issued on such Issuance Date, (y)
the date selected by the Company for the Company's Election Redemption Date, and
(z) each holder's Pro Rata Redemption Amount of the Preferred Shares selected
for redemption. If the Company has exercised its right of Redemption at
Company's Election and the conditions of this Section 6, including the
Conditions to Redemption at Company's Election, have been satisfied, then each
holder's Pro Rata Redemption Amount of the Preferred Shares selected for
redemption which remain outstanding on the Company's Election Redemption Date
shall be redeemed as of the Company's Election Redemption Date by payment


                                      -16-
<PAGE>   17
by the Company to each such holder of Preferred Shares of the Company's Election
Redemption Price. If required by Section 2(d)(viii), all such holders of the
Preferred Shares being redeemed shall thereupon and within two Business Days
after the Company's Election Redemption Date or such earlier date as the Company
and each such holder of Preferred Shares mutually agree, surrender all Preferred
Shares being redeemed on such date to the Company. If the Company fails to pay
the full Company's Election Redemption Price on the Company's Election
Redemption Date with respect to a Preferred Share selected for redemption, then
the Redemption at Company's Election shall be null and void with respect to such
Preferred Share and the Holder shall be entitled to all the rights of a holder
of outstanding Preferred Shares. "CONDITIONS TO REDEMPTION AT THE COMPANY'S
ELECTION" means the following conditions: (i) during the period beginning on the
applicable Issuance Date and ending on and including the Company's Election
Redemption Date, the Company shall have delivered Conversion Shares upon
conversion of the Preferred Shares to the holders of the Preferred Shares on a
timely basis as set forth in Section 2(d)(ii); (ii) on each day during the
period beginning 30 days prior to the date of Notice of Redemption at Company's
Election and ending on and including the Company's Election Redemption Date the
Registration Statement shall be effective and available for the sale of at least
all of the Registrable Securities; (iii) on each day during the period beginning
30 days prior to the date of Notice of Redemption at Company's Election and
ending on and including the Company's Election Redemption Date, the Common Stock
is designated for quotation on the Nasdaq National Market or listed on The New
York Stock Exchange, Inc. or The American Stock Exchange, Inc. and is not
suspended from trading (excluding suspensions of not more than one day resulting
from business announcements by the Company); (iv) during the period beginning on
and including the date which is 30 days prior to the date of Notice of
Redemption at Company's Election and ending on and including the Company's
Election Redemption Date, there shall not have occurred a Triggering Event or an
event that with the passage of time would constitute a Triggering Event,
assuming it were not cured; (v) during the period beginning on the applicable
Issuance Date and ending on and including the date which is 31 days prior to the
date of Notice of Redemption at Company's Election there shall not have occurred
a Triggering Event, unless such Triggering Event was cured and the Company
delivered a Notice of Triggering Event in a timely manner to each holder with
respect to such Triggering Event; (vi) during the period beginning on the
applicable Issuance Date and ending on and including the Company's Election
Redemption Date, there shall not have occurred the consummation of a Change of
Control; (vii) the Company otherwise shall have been in compliance in all
material respects with these Articles of Amendment, the Securities Purchase
Agreement, the Warrants and the Registration Rights Agreement and shall not have
breached in any material respect any provision of these Articles of Amendment,
the Securities Purchase Agreement, the Warrants or the Registration Rights
Agreement; (viii) the Company shall not be entitled to deliver a Notice of
Redemption at Company's Election and no Company's Election Redemption Date may
occur during a Company's Mandatory Conversion Period (as defined in Section 7);
and (ix) no Company's Election Redemption Date may occur after the date which is
one (1) year after the Initial Issuance Date. Notwithstanding the above, but
subject to Section 5 and Section 8, any holder of Preferred Shares may convert
any Preferred Shares (including Preferred Shares selected for redemption) into
Common Stock pursuant to Section 2 on or prior to the date immediately preceding
the Company's Election Redemption Date. If the Company fails to timely pay any
Company's Election Redemption Price in accordance with this Section 6, then the
Company shall


                                      -17-
<PAGE>   18
not be permitted to submit another Notice of Redemption at Company's Election
without the prior written consent of the holders of at least two-thirds (2/3) of
the Preferred Shares then outstanding.

         (7) Conversion at the Company's Election. On any date during the period
beginning on the date which is 10 Business Days after the applicable
Registration Statement has been declared effective by the SEC and ending on and
including the date which is one (1) year after the Initial Issuance Date, the
Company shall have the right, in its sole discretion, to require that some or
all of the outstanding Preferred Shares issued on the applicable Issuance Date
be converted ("COMPANY'S CONVERSION ELECTION") at the applicable Conversion
Rate; provided that the Conditions to Conversion at the Company's Election (as
set forth below) are satisfied. The Company shall exercise its right to
Company's Conversion Election by providing each holder of Preferred Shares
issued on such Issuance Date written notice ("COMPANY'S CONVERSION ELECTION
NOTICE") on such date by facsimile and overnight courier. The date on which each
of such holders of the Preferred Shares receives the Company's Conversion
Election Notice is referred to herein as the "COMPANY'S CONVERSION ELECTION
NOTICE DATE". If the Company elects to require conversion of some, but not all,
of such Preferred Shares issued on such Issuance Date then outstanding, the
Company shall require conversion of the pro rata amount from each holder of such
Preferred Shares based on the number of Preferred Shares purchased by such
holder on such Issuance Date relative to the total number of Preferred Shares
purchased on such Issuance Date (such amount with respect to each holder of such
Preferred Shares being referred to herein as its "PRO RATA CONVERSION AMOUNT").
The Company's Conversion Election Notice shall indicate (x) the aggregate number
of such Preferred Shares the Company has selected for conversion, (y) the date
selected by the Company for conversion ("COMPANY'S ELECTION CONVERSION DATE"),
which date shall be not less than 10 Business Days or more than 60 Business Days
after the Company's Conversion Election Notice Date, and (z) each holder's Pro
Rata Conversion Amount. Subject to the satisfaction of all the conditions of
this Section 7 and provided that the Company has not delivered a Company's
Mandatory Conversion Period Termination Notice (in the manner described below)
with an effective date prior to the applicable Company's Election Conversion
Date, on the Company's Election Conversion Date each holder of Preferred Shares
selected for conversion will be deemed to have submitted a Conversion Notice in
accordance with Section 2(d)(i) for a number of Preferred Shares equal to the
result of (a) such holder's Pro Rata Conversion Amount, minus (b) the number of
such Preferred Shares converted by such holder during the Company's Mandatory
Conversion Period (as defined below); provided, however, in no event shall any
holder of Preferred Shares be required to convert a number of Preferred Shares
during any Company's Mandatory Conversion Period into a number of shares of
Common Stock in excess of such holder's pro rata portion (determined in the same
manner as the Pro Rata Conversion Amount above) of 15% of the trading volume of
the Common Stock on the Principal Market (as reported by Bloomberg) during the
Company's Mandatory Conversion Period. The Company may terminate a Conversion at
Company's Election prior to the Company's Election Conversion Date with respect
to any Preferred Shares not submitted for conversion prior to the effective date
of such termination by delivering written notice ("COMPANY'S MANDATORY
CONVERSION PERIOD TERMINATION NOTICE") to each holder of Preferred Shares not
later than 8:00 a.m., Eastern Time, on the Business Day prior to the effective
date of such termination, provided that the Company has not previously delivered
15 Company's Mandatory Conversion Period Termination Notices. "CONDITIONS TO
CONVERSION AT THE COMPANY'S ELECTION" means the following conditions: (i) on
each day during


                                      -18-
<PAGE>   19
the period beginning on and including the date which is the later of (A) the
date the applicable Registration Statement has been declared effective by the
SEC and (B) 30 days prior to the Company's Conversion Election Notice Date, and
ending on and including the Company's Election Conversion Date, the Registration
Statement which includes the Registrable Securities relating to the Preferred
Shares selected for conversion shall be effective and available for the sale of
no less than all the Registrable Securities required to be included in such
Registration Statement; (ii) on each day during the period beginning on the
applicable Issuance Date and ending on and including the Company's Election
Conversion Date, the Common Stock is designated for quotation on the Nasdaq
National Market or listed on The New York Stock Exchange, Inc. or The American
Stock Exchange, Inc. and shall not have been suspended from trading on such
exchanges (unless the Common Stock is listed on one of the other such exchanges
and trading in the Common Stock is not suspended on such other exchange) nor
shall delisting or suspension by such exchanges have been threatened either (A)
in writing by such exchanges or (B) by falling below the minimum listing
maintenance requirements of such exchanges; (iii) during the period beginning on
the applicable Issuance Date and ending on and including the Company's Election
Conversion Date, there shall not have occurred (A) an event constituting a
Change of Control or a Triggering Event, (B) an event that with the passage of
time and without being cured would constitute a Triggering Event, or (C) the
public announcement of a pending Change of Control which has not be abandoned or
terminated; (iv) the aggregate number of Preferred Shares selected for
conversion by the Company as reflected in the Company's Conversion Election
Notice is at least 50; (v) during the period beginning on the applicable
Issuance Date and ending on and including the Company's Election Conversion
Date, the Company shall have delivered shares of Common Stock upon conversion of
the Preferred Shares and upon exercise of the Warrants to the holders on a
timely basis as set forth in Section 2(d)(ii) hereof and Sections 2(a) and 2(b)
of the Warrants, respectively; (vi) the Company otherwise shall have been in
compliance in all material respects with these Articles of Amendment, the
Securities Purchase Agreement, the Warrants and the Registration Rights
Agreement and shall not have breached in any material respect any provision of
these Articles of Amendment, the Securities Purchase Agreement, the Warrants or
the Registration Rights Agreement; (vii) the Company shall not be entitled to
deliver a Company's Conversion Election Notice during any Company's Mandatory
Conversion Period; and (viii) no Company's Election Conversion Date may occur
after the date which is one (1) year after the Initial Issuance Date. "COMPANY'S
MANDATORY CONVERSION PERIOD" means, with respect to any Company's Conversion
Election, the period beginning on and including the Company's Conversion
Election Notice Date and ending on and including the earlier of (i) the
Company's Election Conversion Date and (ii) 6:00 p.m., Eastern Time, on the
effective date of a Company's Mandatory Conversion Period Termination Notice.

         (8) Restrictions on Conversions. The right of a holder of Preferred
Shares to convert Preferred Shares pursuant to Section 2(b) shall be limited as
set forth below. Subject to the exceptions described below, without the prior
consent of the Company, no holder of Preferred Shares shall be entitled to
convert any Preferred Shares during the period beginning on the Issuance Date of
such Preferred Shares and ending on and including the date which is one (1) year
after the Initial Issuance Date. Notwithstanding the foregoing, the conversion
restrictions set forth in this Section 8 shall not apply: (a) during a Company's
Mandatory Conversion Period, but only with respect to the number of Preferred
Shares set forth in a Company's Election Conversion Notice for such holder with
respect to such Company Mandatory Conversion Period; (b) on and after any date


                                      -19-
<PAGE>   20
on which the Common Stock is not listed or quoted on the Nasdaq National Market
or The New York Stock Exchange, Inc. or The American Stock Exchange, Inc. or has
been suspended from trading on any such exchange (excluding suspensions of not
more than one day resulting from business announcements by the Company or unless
the Common Stock is listed on one of the other such exchanges and trading in the
Common Stock is not suspended on such other exchange), or any such delisting or
suspension is threatened or pending either (I) in writing by such exchanges or
(II) by falling below the minimum listing maintenance requirements of such
exchanges; (c) on or after any date on which there shall have occurred an event
constituting a Change of Control or a Triggering Event or an event that with the
passage of time and without being cured would constitute a Triggering Event; (d)
on or after any date on which there shall have been an announcement of a pending
Change of Control; (e) on or after any date on which the Company issues or sells
or is deemed to have issued or sold any Convertible Securities or Options that
are convertible into or exercisable or exchangeable for shares of Common Stock
at a conversion or exercise price which varies or may vary with the market price
of the Common Stock, including by way of periodic resets to a fixed price; (f)
on or after any date on which the Company fails to pay the Company's Election
Redemption Price for any Preferred Shares in a timely manner in accordance with
a Redemption at Company's Election pursuant to Section 6; (g) on or after the
date the Company issues or sells any shares of Common Stock or any Convertible
Securities or Options (other than upon conversion of the Preferred Shares or the
1994 Preferred Shares (as defined in Section 11) or exercise of the Warrants or
in connection with any Approved Plan or shares of Common Stock issuable pursuant
to warrants or options outstanding prior to the Issuance Date, provided such
warrants or options are not amended after the Issuance Date), with respect to a
number of Preferred Shares representing an aggregate Conversion Amount equal to
the lesser of (I) such holder's pro rata portion (determined in the same manner
as Pro Rata Conversion Amount in Section 6) of the consideration received by the
Company in connection with such issuance or sale and (II) the aggregate
Conversion Amount represented by such holder's Preferred Shares; (h) at any time
during the period beginning on and including the date after the Issuance Date on
which the Closing Bid Price of the Common Stock is less than $3.00 (equitably
adjusted for stock splits, stock dividends, stock combinations and other similar
transactions) for 30 consecutive trading days immediately preceding such date (a
"MINIMUM PRICE DATE") and ending on the first date after the previous Minimum
Price Date on which the Closing Bid Price of the Common Stock is greater than or
equal to $3.00 (equitably adjusted for stock splits, stock dividends, stock
combinations and other similar transactions) for 30 consecutive trading days
immediately preceding such date; (i) on any date on which the Company is not a
party to the Loan and Security Agreement between Silicon Valley Bank and the
Company, dated October 14, 1997, as modified by that certain Loan Modification
Agreement entered into as of February 25, 1999 and effective as of January 13,
1999 and as further modified by that certain Loan Modification Agreement, dated
as of September 24, 1999, each by and between the Company and Silicon Valley
Bank (collectively referred to herein as the "SILICON VALLEY BANK LOAN") or a
credit facility with a bank which has terms which are no less favorable to the
Company than, and for an amount not less than, the Silicon Valley Bank Loan (in
either case, the "CREDIT FACILITY"), and the Company publicly discloses on or
before February 1, 2000 such renewal or new facility, or on any date after
January 31, 2000 on which the Company does not have access to the maximum amount
of the credit provided for under the Credit Facility; (j) on February 1, 2000,
if the Credit Facility does not have a term of at least one (1) year from such
date; (k) at any time during the period beginning on and including the date
after June 30, 2000 on


                                      -20-
<PAGE>   21
which the Closing Bid Price of the Common Stock is less than 125% of the average
of the Closing Bid Price of the Common Stock on the 10 consecutive trading days
immediately preceding the Initial Issuance Date (equitably adjusted for stock
splits, stock dividends, stock combinations and other similar transactions) for
15 consecutive trading days immediately preceding such date (a "125% PRICE
DATE") and ending on the first date after the previous 125% Price Date on which
the Closing Bid Price of the Common Stock is greater than or equal to 125% of
the average of the Closing Bid Price of the Common Stock on the 10 consecutive
trading days immediately preceding the Initial Issuance Date (equitably adjusted
for stock splits, stock dividends, stock combinations and other similar
transactions) for 15 consecutive trading days immediately preceding such date;
(k) on or after June 30, 2000, unless on June 30, 2000 each of the following
conditions is satisfied: (I) the Company's cash and short term, readily
marketable securities is not less than $5,000,000, (II) the Company's current
assets divided by current liabilities (each as determined in accordance with
U.S. Generally Accepted Accounting Principles) is not less than 1.25, (III) the
Closing Bid Price of the Common Stock on each of the five (5) consecutive
trading days immediately preceding June 30, 2000 is not less than 125% of the
arithmetic average of the Closing Bid Prices of the Common Stock on the 10
consecutive trading days immediately preceding the Initial Issuance Date
(subject to equitable adjustment for stock splits, stock dividends, stock
combinations and other similar transactions), (IV) at least 33% of the number of
Preferred Shares issued on the applicable Issuance Date have been converted into
shares of Common Stock pursuant to Section 2 on or prior to June 30, 2000, (V)
the Company has immediately available at least $2,000,000 under the Credit
Facility and (VI) on or before July 7, 2000 the Company publicly discloses
confirmation of the satisfaction of the conditions set forth in the immediately
preceding clauses (I) through (V), provided, however, that if the Company
publicly discloses confirmation of such conditions after July 7, 2000 but on or
prior to August 5, 2000, then the exclusion from the conversion restrictions of
this Section 8 shall no longer apply beginning on the first Business Day
following such public disclosure made after July 7, 2000 but on or prior to
August 5, 2000; or (m) with respect to any conversion of Preferred Shares at a
price equal to the Fixed Conversion Price then in effect.

         (9) Reservation of Shares. The Company shall, so long as any of the
Preferred Shares are outstanding, take all action necessary to reserve and keep
available out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Preferred Shares, such number of
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all of the Preferred Shares then outstanding; provided that the
number of shares of Common Stock so reserved shall at no time be less than 200%
of the number of shares of Common Stock for which the Preferred Shares are at
any time convertible (without regard to any limitations on conversions). The
initial number of shares of Common Stock reserved for conversions of the
Preferred Shares and each increase in the number of shares so reserved shall be
allocated pro rata among the holders of the Preferred Shares based on the number
of Preferred Shares held by each holder at the time of issuance of the Preferred
Shares or increase in the number of reserved shares, as the case may be. In the
event a holder shall sell or otherwise transfer any of such holder's Preferred
Shares, each transferee shall be allocated a pro rata portion of the number of
reserved shares of Common Stock reserved for such transferor. Any shares of
Common Stock reserved and allocated to any Person which ceases to hold any
Preferred Shares shall be allocated to the remaining holders of Preferred
Shares, pro rata based on the number of Preferred Shares then held by such
holders.


                                      -21-
<PAGE>   22
         (10) Voting Rights. Holders of Preferred Shares shall have no voting
rights, except as required by law, including but not limited to the Indiana
Business Corporation Law, and as expressly provided in these Articles of
Amendment.

         (11) Liquidation, Dissolution, Winding-Up. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
the holders of the Preferred Shares shall be entitled to receive in cash out of
the assets of the Company, whether from capital or from earnings available for
distribution to its stockholders (the "LIQUIDATION FUNDS"), before any amount
shall be paid to the holders of any of the capital stock of the Company of any
class junior in rank to the Preferred Shares in respect of the preferences as to
the distributions and payments on the liquidation, dissolution and winding up of
the Company, an amount per Preferred Share equal to the sum of (i) the Stated
Value and (ii) the Additional Amount for such Preferred Share (such sum being
referred to as the "LIQUIDATION PREFERENCE"); provided that, if the Liquidation
Funds are insufficient to pay the full amount due to the holders of Preferred
Shares and holders of shares of other classes or series of preferred stock of
the Company (including the Company's Series 1994 Cumulative Convertible
Preferred Stock outstanding on the Initial Issuance Date (the "1994 PREFERRED
SHARES"), that are of equal rank with the Preferred Shares as to payments of
Liquidation Funds (the "PARI PASSU SHARES"), then each holder of Preferred
Shares and Pari Passu Shares shall receive a percentage of the Liquidation Funds
equal to the full amount of Liquidation Funds payable to such holder as a
liquidation preference, in accordance with their respective Articles of
Amendment, as a percentage of the full amount of Liquidation Funds payable to
all holders of Preferred Shares and Pari Passu Shares. The purchase or
redemption by the Company of stock of any class, in any manner permitted by law,
shall not, for the purposes hereof, be regarded as a liquidation, dissolution or
winding up of the Company. Neither the consolidation or merger of the Company
with or into any other Person, nor the sale or transfer by the Company of less
than substantially all of its assets, shall, for the purposes hereof, be deemed
to be a liquidation, dissolution or winding up of the Company. No holder of
Preferred Shares shall be entitled to receive any amounts with respect thereto
upon any liquidation, dissolution or winding up of the Company other than the
amounts provided for herein; provided that a holder of Preferred Shares shall be
entitled to all amounts previously accrued with respect to amounts owed
hereunder.

         (12) Preferred Rank. All shares of Common Stock shall be of junior rank
to all Preferred Shares in respect to the preferences as to distributions and
payments upon the liquidation, dissolution and winding up of the Company. The
rights of the shares of Common Stock shall be subject to the preferences and
relative rights of the Preferred Shares. The Preferred Shares shall be of equal
rank to all the 1994 Preferred Shares in respect to the preferences as to
distributions and payments upon liquidation, dissolution and winding up of the
Company. Without the prior express written consent of the holders of not less
than two-thirds (2/3) of the then outstanding Preferred Shares, the Company
shall not hereafter authorize or issue additional or other capital stock that is
of senior or equal rank to the Preferred Shares in respect of the preferences as
to distributions and payments upon the liquidation, dissolution and winding up
of the Company. Without the prior express written consent of the holders of not
less than two-thirds (2/3) of the then outstanding Preferred Shares, the Company
shall not hereafter authorize or make any amendment to the Company's Articles of
Incorporation or bylaws, or file any resolution of the board of directors of the
Company with the Secretary of State of the State of Indiana or enter into any


                                      -22-
<PAGE>   23
agreement containing any provisions, which would adversely affect or otherwise
impair the rights or relative priority of the holders of the Preferred Shares
relative to the holders of the Common Stock or the holders of any other class of
capital stock (other than an amendment, resolution or agreement solely for the
purpose of increasing the authorized shares of any class of the Company's
capital stock other than the Preferred Shares and the 1994 Preferred Shares). In
the event of the merger or consolidation of the Company with or into another
corporation, the Preferred Shares shall maintain their relative powers,
designations and preferences provided for herein and no merger shall result
inconsistent therewith.

         (13) Participation. Subject to the rights of the holders, if any, of
the Pari Passu Shares, the holders of the Preferred Shares shall, as holders of
Preferred Stock, be entitled to such dividends paid and distributions made to
the holders of Common Stock to the same extent as if such holders of Preferred
Shares had converted the Preferred Shares into Common Stock (without regard to
any limitations on conversion herein or elsewhere) and had held such shares of
Common Stock on the record date for such dividends and distributions. Payments
under the preceding sentence shall be made concurrently with the dividend or
distribution to the holders of Common Stock.

         (14) Restriction on Redemption and Cash Dividends. Until all of the
Preferred Shares have been converted or redeemed as provided herein, the Company
shall not, directly or indirectly, redeem, or declare or pay any cash dividend
or distribution on, its Common Stock without the prior express written consent
of the holders of not less than two-thirds (2/3) of the then outstanding
Preferred Shares.

         (15) Limitation on Number of Conversion Shares. The Company shall not
be obligated to issue any shares of Common Stock upon conversion of the
Preferred Shares if the issuance of such shares of Common Stock would exceed
that number of shares of Common Stock which the Company may issue upon
Conversion of the Preferred Shares (the "EXCHANGE CAP") without breaching the
Company's obligations under the rules or regulations of the Principal Market, or
the market or exchange where the Common Stock is then traded, except that such
limitation shall not apply in the event that the Company (a) obtains the
approval of its stockholders as required by the applicable rules of the
Principal Market, or the market or exchange where the Common Stock is then
traded, (or any successor rule or regulation) for issuances of Common Stock in
excess of such amount or (b) obtains a written opinion from outside counsel to
the Company that such approval is not required, which opinion shall be
reasonably satisfactory to the holders of a majority of the Preferred Shares
then outstanding. Until such approval or written opinion is obtained, no
purchaser of Preferred Shares pursuant to the Securities Purchase Agreement (the
"PURCHASERS") shall be issued, upon conversion of Preferred Shares, shares of
Common Stock in an amount greater than the product of (i) the Exchange Cap
amount multiplied by (ii) a fraction, the numerator of which is the number of
Preferred Shares issued to such Purchaser pursuant to the Securities Purchase
Agreement and the denominator of which is the aggregate amount of all the
Preferred Shares issued to the Purchasers pursuant to the Securities Purchase
Agreement (the "CAP ALLOCATION AMOUNT"). In the event that any Purchaser shall
sell or otherwise transfer any of such Purchaser's Preferred Shares, the
transferee shall be allocated a pro rata portion of such Purchaser's Cap
Allocation Amount. In the event that any holder of Preferred Shares shall
convert all of such holder's Preferred Shares into a number of shares of Common
Stock which, in the


                                      -23-
<PAGE>   24
aggregate, is less than such holder's Cap Allocation Amount, then the difference
between such holder's Cap Allocation Amount and the number of shares of Common
Stock actually issued to such holder shall be allocated to the respective Cap
Allocation Amounts of the remaining holders of Preferred Shares on a pro rata
basis in proportion to the number of Preferred Shares then held by each such
holder.

         (16) Vote to Change the Terms of or Issue Additional Preferred Shares.
The affirmative vote at a meeting duly called for such purpose or the written
consent without a meeting, of the holders of not less than two-thirds (2/3) of
the then outstanding Preferred Shares, shall be required for (a) any change to
these Articles of Amendment or the Company's Articles of Incorporation which
would amend, alter, change or repeal any of the powers, designations,
preferences and rights of the Preferred Shares and (b) the issuance of Preferred
Shares other than pursuant to the Securities Purchase Agreement.

         (17) Lost or Stolen Certificates. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any Preferred Stock Certificates representing the Preferred
Shares, and, in the case of loss, theft or destruction, of any indemnification
undertaking by the holder to the Company in customary form and, in the case of
mutilation, upon surrender and cancellation of the Preferred Stock
Certificate(s), the Company shall execute and deliver new preferred stock
certificate(s) of like tenor and date; provided, however, the Company shall not
be obligated to re-issue preferred stock certificates if the holder
contemporaneously requests the Company to convert such Preferred Shares into
Common Stock.

         (18) Remedies, Characterizations, Other Obligations, Breaches and
Injunctive Relief. The remedies provided in these Articles of Amendment shall be
cumulative and in addition to all other remedies available under these Articles
of Amendment, at law or in equity (including a decree of specific performance
and/or other injunctive relief). No remedy contained herein shall be deemed a
waiver of compliance with the provisions giving rise to such remedy and nothing
herein shall limit a holder's right to pursue actual damages for any failure by
the Company to comply with the terms of these Articles of Amendment . The
Company covenants to each holder of Preferred Shares that there shall be no
characterization concerning this instrument other than as expressly provided
herein. Amounts set forth or provided for herein with respect to payments,
conversion and the like (and the computation thereof) shall be the amounts to be
received by the holder thereof and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the holders of the Preferred Shares and
that the remedy at law for any such breach may be inadequate. The Company
therefore agrees that, in the event of any such breach or threatened breach, the
holders of the Preferred Shares shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other security being
required.

         (19) Specific Shall Not Limit General; Construction. No specific
provision contained in these Articles of Amendment shall limit or modify any
more general provision


                                      -24-
<PAGE>   25
contained herein. These Articles of Amendment shall be deemed to be jointly
drafted by the Company and all Buyers and shall not be construed against any
person as the drafter hereof.

         (20) Failure or Indulgence Not Waiver. No failure or delay on the part
of a holder of Preferred Shares in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.

         (21) Notice. Whenever notice is required to be given under these
Articles of Amendment, unless otherwise provided herein, such notice shall be
given in accordance with Section 9(f) of the Securities Purchase Agreement.

         (22) Transfer of Preferred Shares. A holder of Preferred Shares and any
Permitted Assignees (as defined below) may assign some or all of its rights
hereunder or the Preferred Shares held by such holder to (a) without the consent
of the Company, any person or entity who, immediately prior to such assignment,
is (i) an affiliate of such holder or Permitted Assignee, (ii) a holder of
Preferred Shares or (iii) an entity or fund which has the same principal
investment adviser or manager as such holder of Preferred Shares or any
Permitted Assignee or any other holder of Preferred Shares, provided such
adviser or manager has the sole power to make decisions regarding any actions to
be taken by such entity or fund in connection with these Articles of Amendment
(each such person or entity described in the immediately preceding clauses (i),
(ii) or (iii) is referred to as "Permitted Assignee") and (b) with the prior
written consent of the Company, which consent shall not be unreasonably
withheld, to any person or entity. Notwithstanding the foregoing, each holder of
Preferred Shares shall be entitled to pledge such Preferred Shares in connection
with a bona fide margin account.


                                      -25-
<PAGE>   26
                                   ARTICLE II
                           MANNER OF ADOPTION AND VOTE

         Section 1. Action by Directors. The Board of Directors of the
Corporation, as of September 24, 1999, duly adopted resolutions approving the
above Amendment.

         Section 2. No Action by Shareholders. No shareholder action is required
for adoption of the above Amendment pursuant to IND. CODE Section 23-1-25-2.

         Section 3. Compliance with Legal Requirements. The manner of adoption
of the above Amendment and the vote by which it was adopted constitute full
legal compliance with the provisions of the Indiana Act, Articles of
Incorporation and the By-Laws of the Corporation.

         Section 4. Effective Date. The above Amendment shall become effective
when filed with the Indiana Secretary of State.

         I hereby verify, subject to penalties of perjury, that the facts
contained herein are true.

                                            ------------------------------------
                                            Name:
                                            Title:
<PAGE>   27
                                    EXHIBIT I

                                WAVO CORPORATION
                                CONVERSION NOTICE

Reference is made to the Articles of Amendment to the Articles of Incorporation
of WAVO Corporation for its Series D Convertible Preferred Stock (the "ARTICLES
OF AMENDMENT"). In accordance with and pursuant to the Articles of Amendment,
the undersigned hereby elects to convert the number of shares of Series D
Convertible Preferred Stock, no par value per share (the "PREFERRED SHARES"), of
WAVO Corporation, an Indiana corporation (the "COMPANY"), indicated below into
shares of Common Stock, no par value per share (the "COMMON STOCK"), of the
Company, as of the date specified below.

         Date of Conversion:____________________________________________________

         Number of Preferred Shares to be converted:____________________________

         Stock certificate no(s). of Preferred Shares to be converted:__________

Please confirm the following information:

         Conversion Price:____________________________

         Number of shares of Common Stock to be issued:_________________________

         Is the alternative Applicable Daily Price being relied on pursuant to
         Section 2(f)(ii) of the Articles of Amendment? (check one) YES ____ No
         ____

Please issue the Common Stock into which the Preferred Shares are being
converted and, if applicable, any check drawn on an account of the Company in
the following name and to the following address:

         Issue to:___________________________________________________________
                  ___________________________________________________________
                  ___________________________________________________________

         Facsimile Number:_______________________________

         Authorization:___________________________________
                         By:
                         Title:

         Dated:__________________________________________

         Account Number  (if electronic book entry transfer):___________________

         Transaction Code Number (if electronic book entry transfer):___________
    [NOTE TO HOLDER -- THIS FORM MUST BE SENT CONCURRENTLY TO TRANSFER AGENT]
<PAGE>   28
                                 ACKNOWLEDGMENT


         The Company hereby acknowledges this Conversion Notice and hereby
directs [TRANSFER AGENT] to issue the above indicated number of shares of Common
Stock in accordance with the Transfer Agent Instructions dated ___________ ___,
1999 from the Company and acknowledged and agreed to by [TRANSFER AGENT].


                                   WAVO CORPORATION


                                   By:_______________________________________
                                   Name:_____________________________________
                                   Title:____________________________________