Document:

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                              Repligen Corporation
                                117 Fourth Avenue
                                Needham, MA 02494

                                                              March 8, 2000

Paramount Capital, Inc.
787 Seventh Avenue
48th Floor
New York, NY 10019
ATTN: David Tanen

         RE: Termination of July 1, 1999 Financial Advisory Agreement,
             AGREEMENT TO PAY TERMINATION FEE, AND MUTUAL RELEASE

Dear Mr. Tanen:

         This letter (1) memorializes the termination of the Financial Advisory
Agreement by and between Repligen Corporation (the "COMPANY") and Paramount
Capital, Inc., its affiliates, related entities and designees ("PARAMOUNT"),
dated July 1, 1999 (the "ADVISORY AGREEMENT"); (2) memorializes the Company's
conditional agreement to pay to Paramount a termination fee as set forth in
Section 2 below if, and only if, this letter agreement is executed and returned
by Paramount no later than March 8, 2000 and the Company closes the transactions
contemplated by the Stock Purchase Agreement dated as of March 7, 2000 by and
among the Company and the parties thereto (the "Stock Purchase Agreement"); and
(3) memorializes the general mutual release by and between Paramount and the
Company.

         1.       TERMINATION OF THE ADVISORY AGREEMENT.

         Notwithstanding the language in the Advisory Agreement, the parties
hereby agree to immediately and completely terminate the Advisory Agreement and
all of their rights and obligations thereunder.

         2.       ADVISORY AGREEMENT TO PAY TERMINATION PAYMENT.

         In consideration for the termination of the Advisory Agreement and the
execution of this letter agreement, the Company promises to pay Paramount
$200,000.00 (the "TERMINATION PAYMENT") by wire transfer or by Company check
within one (1) business day after the closing of the transactions contemplated
by the Stock Purchase Agreement. The parties acknowledge and agree that the
Termination Payment shall be paid in lieu of any other payments which may be due
in respect of the Advisory Agreement or otherwise under the Advisory Agreement.
The parties further agree that the above promise to pay the Termination Payment
constitutes consideration for this letter agreement, and is not reflective of
the value of the Advisory Agreement nor of the validity of any claim for payment
under the Advisory Agreement.

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Paramount Capital, Inc.
March 8, 2000
Page 2

         3.       CONDITIONAL MUTUAL RELEASE.

         Paramount and the Company, in exchange for valuable consideration the
receipt of which is hereby acknowledged, for themselves and for any past,
present, and future employees, officers, directors, agents, attorneys,
shareholders, partners, representatives, affiliates, predecessors, successors,
heirs, executors, administrators, and assigns (together the "RELEASORS"), hereby
mutually, absolutely, unconditionally, and completely release, remise, and
forever discharge each other, as well as their respective past, present, and
future employees, officers, directors, agents, attorneys, shareholders,
partners, representatives, affiliates, predecessors, successors, heirs,
executors, administrators, and assigns (together the "RELEASEES") of and from
all debts, demands, actions, causes of action, suits, accounts, convenants,
contracts, agreements, torts, damages, and any and all claims, demands, and
liabilities whatsoever, of every name and nature, both in law and in equity,
whether liquidated or unliquidated, past, present or future, known or unknown,
foreseen or unforeseen, which the Releasors now have or have ever had against
the Releasees, whether asserted or could have been asserted, or whether related
to any claims which were asserted or could have been asserted, by way of claim,
counterclaim, or otherwise, regarding amounts due and owing for work performed
or any payment or other consideration owed or payable in connection with the
Advisory Agreement. This Conditional Mutual Release shall be deemed effective
upon the payment by the Company to Paramount of the Termination Payment.

         4.       MISCELLANEOUS.

         (a) This agreement is the entire agreement among Paramount and the
Company with respect to the subject matter hereof and supercedes all prior and
contemporaneous oral and written agreements and discussions.

         (b) This agreement may be executed in counterparts and shall constitute
one agreement binding on Paramount and the Company, notwithstanding that they
did not sign the same original or counterpart.

         (c) This agreement is binding upon and shall inure to the benefit of
Paramount and the Company, their respective agents, employees, representatives,
officers, directors, divisions, subsidiaries, affiliates, assignes, heirs and
successors-in-interest.

         (d) If any provision of this agreement is held invalid, the invalidity
shall not affect the other provisions which can be given effect without the
invalid provisions and to this end the provisions of this agreement are declared
severable.

                                      * * *

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Paramount Capital, Inc.
March 8, 2000
Page 3

If the foregoing is acceptable to Paramount, please cause this letter to be
executed and returned to me as evidence of your agreement to the terms herein as
of the date set forth above. Thank you for your attention to this matter.

                                           Very truly yours,

                                       /s/ Walter C. Herlihy
                                           -------------------------------------
                                           Walter C. Herlihy
                                           President and Chief Executive Officer

PARAMOUNT CAPITAL, INC.

/s/ Lindsay A. Rosenwald, M.D.
--------------------------------------------
Name: Lindsay A. Rosenwald, M.D.

Title: Chairman<PAGE>

                                                                     EXHIBIT 4.1

                           FIRST ARTICLES OF AMENDMENT

                                       TO
                 RESTATED AND AMENDED ARTICLES OF INCORPORATION
                                       FOR
                          MICROWARE SYSTEMS CORPORATION

                 MICROWARE SYSTEMS CORPORATION, an Iowa corporation (the
"Corporation"), pursuant to the provisions of Section 490.602 of the Business
Corporation Act of the State of Iowa, does hereby amend its Restated and Amended
Articles of Incorporation ("Articles of Incorporation"), and for that purpose,
submits the following statements:

A. The name of the corporation is MICROWARE SYSTEMS CORPORATION.

B. The Articles of Incorporation are hereby amended to add the following
provisions to Article V of the Articles of Incorporation:

         1. DESIGNATION AND ISSUANCE. The Corporation shall issue 3,500
shares of the Series I Preferred Stock (the "Preferred Shares") pursuant to a
Securities Purchase Agreement, dated on or about the date hereof ("Purchase
Agreement"), between the Corporation and the initial subscribers for the
Preferred Shares thereunder (the "Subscribers"). Each of such Preferred
Shares shall rank equally in all respects.

         2. DIVIDENDS.

           (a) CUMULATIVE. The holders of the Preferred Shares shall be
entitled to receive cumulative dividends at the per share rate of four
percent (4%) of the Liquidation Preference (as defined below) of each
Preferred Share, per annum accruing daily and payable quarterly on March 31,
June 30, September 30 and December 31 of each year (each a "Dividend Payment
Date") commencing with the first Dividend Payment Date occurring after the
original issuance date of such share, in preference and priority to any
payment of any dividend on the Common Stock (as defined below) or any other
class or series of equity security of the Corporation. Such dividends shall
accrue on any given share from the most recent date on which a dividend has
been paid with respect to such share, or if no dividends have been paid, from
the date of the original issuance of such share, and such dividends shall
accrue from day to day whether or not declared, based on the actual number of
days elapsed. If at any time dividends on the outstanding Preferred Shares at
the rate set forth above shall not have been paid or declared and set apart
for payment with respect to all preceding periods, the amount of the
deficiency shall be fully paid or declared and set apart for payment, but
without interest, before any distribution, whether by way of dividend or
otherwise, shall be declared or paid upon or set apart for the shares of any
other class or series of equity security of the Corporation. For so long as
any Preferred Shares are outstanding, the Corporation shall not pay any
dividends on any shares of Common

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Stock or any shares of any other capital stock, or repurchase any shares of
Common Stock or capital stock, without having received written consent of
two-thirds in interest of the holders of Preferred Shares, except as
otherwise provided herein or in the Purchase Agreement or Registration Rights
Agreement (as such terms are defined herein) with respect to the Options,
Preferred Shares, Warrants and underlying Common Shares thereof. For purposes
of computing any per diem accrual, calculations shall be made using a 360-day
year.

           (b)   PIK PAYMENT OR CASH PAYMENT. Any dividend payable on
the outstanding Preferred Shares shall be paid by adding the amount thereof
to the Liquidation Preference (as defined below) of such Preferred Shares.
Upon the payment of dividends as required by the immediately preceding
sentence, such dividends will be deemed paid in full. Notwithstanding the
foregoing, the Corporation may pay dividends in cash if on 10 Trading Days'
(as defined below) irrevocable prior written notice, it informs the holders
of the Preferred Shares of its election to pay cash dividends. Following
notice of payment of cash dividends by the Corporation, all dividends on the
Preferred Shares shall be paid in cash, until such time as the Corporation
provides 10 Trading Days' irrevocable written notice to the holders of
Preferred Shares of its election to pay dividends in-kind.

         3. LIQUIDATION PREFERENCE. In the event of any liquidation,
dissolution or winding up of the Corporation, either voluntary or
involuntary, the holders of the Preferred Shares shall be entitled to
receive, out of the assets of the Corporation available for distribution to
stockholders, prior and in preference to any distribution of any assets of
the Corporation to the holders of any other class or series of equity
securities, the amount of $1,000 per share plus (i) dividends added to the
Liquidation Preference in accordance with Section 2(b) above; (ii) all
accrued but unpaid dividends; and (iii) all "Monthly Delay Payments" payable
under the Registration Rights Agreement (as defined below) (the "Liquidation
Preference").

         4. REGISTRATION OF PREFERRED SHARES. The holders of Preferred
Shares shall enjoy the benefits of the Registration Rights Agreement dated
the date hereof ("Registration Rights Agreement") between the Corporation and
Subscribers in connection with the Purchase Agreement.

         5. CONVERSION. Each holder of the Preferred Shares shall have
the right at any time and from time to time, at the option of such holder, to
convert any or all Preferred Shares held by such holder, for such number of
fully paid, validly issued and nonassessable shares ("Common Shares") of
common stock, no par value, of the Corporation ("Common Stock"), free and
clear of any liens, claims or encumbrances, as is determined by dividing (i)
the Liquidation Preference times the number of Preferred Shares being
converted (the "Conversion Amount"), by (ii) the applicable Conversion Price
determined as hereinafter provided in effect on the Conversion Date.
Immediately following such conversion, the rights of the holders of converted
Preferred Shares shall cease and the persons entitled to receive the Common
Shares upon the conversion of Preferred Shares shall be treated for all
purposes as having become the owners of such Common Shares, subject to the
rights provided herein to holders.

           (a)   MECHANICS OF CONVERSION. To convert Preferred Shares
into Common Shares, the holder shall give written notice ("Conversion
Notice") to the Corporation in the form of page

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1 of the form agreed to by the Subscribers in the Purchase Agreement (which
Conversion Notice may be given by facsimile transmission no later than the
Conversion Date) stating that such holder elects to convert the same and
shall state therein the number of Preferred Shares to be converted and the
name or names in which such holder wishes the certificate or certificates for
Common Shares to be issued (the conversion date specified in such Conversion
Notice shall be referred to herein as the "Conversion Date"). Either
simultaneously with the delivery of the Conversion Notice, or within one (1)
Trading Day (as defined below) thereafter, the holder shall deliver (which
also may be done by facsimile transmission) page 2 to the form agreed to by
the Subscribers in the Purchase Agreement indicating the computation of the
number of Common Shares to be received. As soon as possible after delivery of
the Conversion Notice, such holder shall surrender the certificate or
certificates representing the Preferred Shares being converted, duly
endorsed, at the office of the Corporation or, if identified in writing to
all the holders by the Corporation, at the offices of any transfer agent for
such shares. The Corporation shall, immediately upon receipt of such
Conversion Notice, issue and deliver to or upon the order of such holder,
against delivery of the certificates representing the Preferred Shares which
have been converted, a certificate or certificates for the number of Common
Shares to which such holder shall be entitled (with the number of and
denomination of such certificates designated by such holder), and the
Corporation shall immediately issue and deliver to such holder a certificate
or certificates for the number of Preferred Shares (including any fractional
shares) which such holder has not yet elected to convert hereunder but which
are evidenced in part by the certificate(s) delivered to the Corporation in
connection with such Conversion Notice. The Corporation shall effect such
issuance of Common Shares (and certificates for unconverted Preferred Shares)
within three (3) Trading Days of the Conversion Date and shall transmit the
certificates by messenger or overnight delivery service to reach the address
designated by such holder within three (3) Trading Days after the receipt of
such Conversion Notice ("T+3"). If certificates evidencing the Common Shares
are not received by the holder within five (5) Trading Days of the Conversion
Notice, then the holder will be entitled to revoke and withdraw its
Conversion Notice, in whole or in part, at any time prior to its receipt of
those certificates. In lieu of delivering physical certificates representing
the Common Shares issuable upon conversion of Preferred Shares, provided the
Corporation's transfer agent is participating in the Depository Trust Company
("DTC") Fast Automated Securities Transfer ("FAST") program, upon request of
the holder, the Corporation shall use its best efforts to cause its transfer
agent to electronically transmit the Common Shares issuable upon conversion
or exercise to the holder, by crediting the account of the holder's prime
broker with DTC through its Deposit Withdrawal Agent Commission ("DWAC")
system. The time periods for delivery described above shall apply to the
electronic transmittals through the DWAC system. The parties agree to
coordinate with DTC to accomplish this objective. The conversion pursuant to
this Section 5 shall be deemed to have been made immediately prior to the
close of business on the Conversion Date. The person or persons entitled to
receive the Common Shares issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such Common Shares at the
close of business on the Conversion Date.

                       The term "Trading Day" means a day on which there is
trading on the Nasdaq National Market or such other market or exchange on
which the Common Stock is then principally traded.

<PAGE>

                       If a holder of Preferred Shares converts any of such
holder's Preferred Shares, the Corporation shall pay any documentary or stamp
or similar issue or transfer tax due on the issue of shares of Common Stock
upon the conversion. However, such holder shall pay any such tax that is due
because the shares of Common Stock are issued in a name other than such
holder's name.

                       The Corporation's obligation to issue Common Shares
upon conversion of Preferred Shares shall, except as set forth below, be
absolute, is independent of any covenant of any holder of Preferred Shares,
and shall not be subject to: (i) any offset or defense; or (ii) any claims
against the holders of Preferred Shares whether pursuant to this Certificate,
the Purchase Agreement, the Registration Rights Agreement or otherwise.

                 (b)   DETERMINATION OF CONVERSION PRICE.

                           The Conversion Price applicable with respect to the
         Preferred Shares (the "Conversion Price") shall be the lesser of:

                                    (A) the price ("Fixed Price") equal to 105%
                           of the Closing Price (as defined below), subject to
                           adjustment as hereinafter set forth, or

                                    (B) the price (the "Market Price") equal to
                           the average of the two (2) lowest closing bid prices
                           of the Common Stock recorded on the Principal Market
                           (as defined below) (as reported by the Bloomberg
                           financial network or any successor reporting service)
                           during the fifteen (15) Trading Days (the "Market
                           Price Period") immediately prior to the Conversion
                           Date (including the Trading Day immediately preceding
                           the Conversion Date).

                           "Closing Price" shall mean the average of the closing
         bid prices of the Common Stock recorded on the Principal Market (as
         reported by the Bloomberg financial network or any successor reporting
         service) for the five (5) Trading Days (the "Closing Price Period")
         immediately following the Closing Date.

                           "Principal Market" shall mean Nasdaq National Market
         or such other market where the Common Stock is then listed for trading.

                 (c)   STOCK SPLITS; DIVIDENDS; ADJUSTMENTS.

                           (i)   If the Corporation, at any time while the
         Preferred Shares are outstanding, (A) shall pay a stock dividend or
         otherwise make a distribution or distributions on any equity securities
         (including instruments or securities convertible into or exchangeable
         for such equity securities) in shares of Common Stock, (B) subdivide
         outstanding Common Shares into a larger number of shares, or (C)
         combine outstanding Common Stock into a smaller number of shares, then
         each Affected Conversion Price (as defined below) shall be multiplied
         by a fraction, the numerator of which shall be the number of shares of
         Common Stock outstanding before such event and the denominator of which
         shall be the number of shares of Common Stock

<PAGE>

         outstanding after such event. Any adjustment made pursuant to this
         Section 5(c)(i) shall become effective immediately after the record
         date for the determination of stockholders entitled to receive such
         dividend or distribution and shall become effective immediately
         after the effective date in the case of a subdivision or combination.

                                 As used herein, the Affected Conversion
         Prices (each an "Affected Conversion Price") shall refer to: (i) the
         Fixed Price; and (ii) each reported price for the Common Stock on the
         Principal Market occurring on any Trading Day included in the Market
         Price Period or Closing Price Period, which Trading Day occurred before
         the record date in the case of events referred to in clause (A) of this
         subparagraph 5(c)(i) and the effective date in the case of the events
         referred to in clauses (B) and (C) of this subparagraph 5(c)(i).

                           (ii)  In the event that the Corporation issues or
         sells any Common Stock or securities which are convertible into or
         exchangeable for its Common Stock (other than Preferred Shares), or any
         warrants or other rights to subscribe for or to purchase or any options
         for the purchase of its Common Stock (other than shares or options
         issued or which may be issued pursuant to (i) the Corporation's current
         or future employee, director or BONA FIDE consultant option plans or
         shares issued upon exercise of options, warrants or rights outstanding
         on the date of the Purchase Agreement and listed in the Corporation's
         most recent periodic report filed under the Securities Exchange Act of
         1934, as amended, or (ii) arrangements with the holders of Preferred
         Shares) at an effective purchase price per share which is less than the
         greater of (1) the closing market price per share of the Common Stock
         on the Principal Market on the Trading Day next preceding such issue or
         sale or, in the case of issuances to holders of its Common stock, the
         date fixed for the determination of stockholders entitled to receive
         such warrants, rights, or options ("Fair Market Price") or (2) the
         Fixed Price, then in each such case, the Fixed Price in effect
         immediately prior to such issue or sale or record date, as applicable,
         shall be reduced effective concurrently with such issue or sale to an
         amount determined by multiplying the Fixed Price then in effect by a
         fraction, (x) the numerator of which shall be the sum of (1) the number
         of shares of Common Stock and Convertible Securities (as defined below)
         outstanding immediately prior to such issue or sale, plus (2) the
         number of shares of Common Stock which the aggregate consideration
         received by the Corporation for such additional shares would purchase
         at such Fixed Price or Fair Market Price, as the case may be; and (y)
         the denominator of which shall be the number of shares of Common Stock
         and Convertible Securities (as defined below) of the Company
         outstanding immediately after such issue or sale.

                                 For purposes of the preceding paragraph, in
         the event that the effective purchase price is less than both the Fair
         Market Price and the Fixed Price, then the calculation method which
         yields the greatest downward adjustment in the Conversion Price shall
         be used.

<PAGE>

                                 For the purposes of the foregoing
         adjustment, in the case of the issuance of any convertible
         securities, warrants, options or other rights to subscribe for or to
         purchase or exchange for, shares of Common Stock ("Convertible
         Securities"), the maximum number of shares of Common Stock issuable
         upon exercise, exchange or conversion of such Convertible Securities
         shall be deemed to be outstanding, provided that no further
         adjustment shall be made upon the actual issuance of Common Stock
         upon exercise, exchange or conversion of such Convertible Securities.

                           (iii) If the Corporation, at any time while the
         Preferred Shares are outstanding, shall distribute to all holders of
         Common Stock evidences of its indebtedness or assets or cash or rights
         or warrants to subscribe for or purchase any security of the
         Corporation or any of its subsidiaries (excluding those referred to in
         Sections 5(c)(i) or 5(c)(ii) above), then concurrently with such
         distributions to holder of Common Stock, the Corporation shall
         distribute to holders of the Preferred Shares, the amount of such
         indebtedness, assets, cash or rights or warrants which the holders of
         Preferred Shares would have received had they converted all their
         Preferred Shares into Common Shares immediately prior to the record
         date for such distribution.

                           (iv)  Whenever the Conversion Price is adjusted
         pursuant to Section 5(c)(i) or (ii) above or the Corporation makes a
         distribution as described in Section 5(c)(iii) above, the Corporation
         shall promptly mail to each holder of the Preferred Shares a notice
         setting forth the Conversion Price after such adjustment and setting
         forth a brief statement of the facts requiring such adjustment, or
         setting forth a description of the distribution and the facts
         surrounding same.

                           (v)   All calculations under this Section 5(c)
         shall be made to the nearest cent or to the nearest 1/100th of a
         share, as the case may be.

                           (vi)  No adjustment in the Conversion Price shall
         reduce the Conversion price below the then par value of the Common
         Stock.

                           (vii) The Corporation from time to time may reduce
         the Conversion Price by any amount for any period of time if the period
         is at least 20 Trading Days and if the reduction is irrevocable during
         the period. Whenever the Conversion Price is reduced, the Corporation
         shall mail to the holders of Preferred Shares a notice of the
         reduction. The Corporation shall mail, first class, postage prepaid,
         the notice at least 15 days before the date the reduced Conversion
         Price takes effect. The notice shall state the reduced Conversion Price
         and the period it will be in effect. A reduction of the Conversion
         Price does not change or adjust the Conversion Price otherwise in
         effect for purposes of Section 5(c)(i), (ii), or (iii).

                  (d)  NOTICE OF RECORD DATE. In the event of any taking by
the Corporation of a record date of the holders of any class of securities
for the purpose of determining the holders thereof who are entitled to
receive any dividend or other distribution, any security or right

<PAGE>

convertible into or entitling the holder thereof to receive additional Common
Shares, or any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to
receive any other right, the Corporation shall deliver to each holder of
Preferred Shares at least 20 days prior to the date specified therein, a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution, security or right and the amount and
character of such dividend, distribution, security or right.

                  (e)  ISSUE TAXES. The Corporation shall pay any and all
issue and other taxes, excluding any income, franchise or similar taxes, that
may be payable in respect of any issue or delivery of Common Shares on
conversion of Preferred Shares pursuant hereto. However, the holder of any
Preferred Shares shall pay any tax that is due because the Common Shares
issuable upon conversion thereof are issued in a name other than such
holder's name.

                  (f)  RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its
authorized but unissued Common Stock, solely for the purposes of effecting
the conversion of the Preferred Shares, an amount of Common Shares equal to
200% of the number of shares issuable upon conversion of the Preferred Shares
at the then applicable Conversion Price. The Corporation promptly will take
such corporate action as may, in the opinion of its outside counsel, be
necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose, including
without limitation engaging in best efforts to obtain the requisite
stockholder approval.

                  (g)  FRACTIONAL SHARES. No fractional shares shall be
issued upon the conversion of any Preferred Shares. All Common Shares
(including fractions thereof) issuable upon conversion of more than one
Preferred Share by a holder thereof and all Preferred Shares issuable upon
the purchase thereof shall be aggregated for purposes of determining whether
the conversion and/or purchase would result in the issuance of any fractional
share. If, after the aforementioned aggregation, the conversion and/or
purchase would result in the issuance of a fraction of a share of Common
Stock, the Corporation shall, in lieu of issuing any fractional share, either
round up the number of shares to the next highest whole number or, at the
Corporation's option, pay the holder otherwise entitled to such fraction a
sum in cash equal to the fair market value of such fraction on the Conversion
Date (as determined in good faith by the Board of Directors of the
Corporation).

                  (h)  REORGANIZATION, MERGER OR GOING PRIVATE. In case of
any reorganization or any reclassification of the capital stock of the
Corporation or any consolidation or merger of the Corporation with or into
any other corporation or corporations or a sale or transfer of all or
substantially all of the assets of the Corporation to any other person or a
"going private" transaction under Rule 13e-3 promulgated pursuant to the
Exchange Act, then, as part of such reorganization, consolidation, merger, or
transfer if the holders of shares of Common Stock receive any publicly traded
securities as part or all of the consideration for such reorganization,
consolidation, merger or sale, then it shall be a condition precedent of any
such event or transaction that provision shall be made such that each
Preferred Share shall thereafter be convertible into such new securities at a
conversion price and pricing formula which places the holders of Preferred
Shares in an economically equivalent position as they would have been if not
for such event. In addition to the foregoing, if the holders of shares of
Common Stock receive any non-publicly traded securities or other property or
cash as part or all of the

<PAGE>

consideration for such reorganization, consolidation, merger or sale, then
such distribution shall be treated to the extent thereof as a distribution
under Section 5(c) above and such Section shall also apply to such
distribution.

                  (i)  LIMITATIONS ON HOLDER'S RIGHT TO CONVERT.

                           (i)  Notwithstanding anything to the contrary
         contained herein, the number of shares of Common Stock that may be
         acquired by the holder upon conversion pursuant to the terms hereof
         shall not exceed a number that, when added to the total number of
         shares of Common Stock deemed beneficially owned by such holder (other
         than by virtue of the ownership of securities or rights to acquire
         securities that have limitations on the holder's right to convert,
         exercise or purchase similar to the limitation set forth herein),
         together with all shares of Common Stock deemed beneficially owned by
         the holder's "affiliates" (as defined in Rule 144 of the Act)
         ("AGGREGATION PARTIES") that would be aggregated for purposes of
         determining whether a group under Section 13(d) of the Securities
         Exchange Act of 1934 as amended, exists, would exceed 9.99% of the
         total issued and outstanding shares of the Common Stock (the
         "RESTRICTED OWNERSHIP PERCENTAGE"); PROVIDED that (w) each holder shall
         have the right at any time and from time to time to reduce its
         Restricted Ownership Percentage immediately upon notice to the
         Corporation and (x) each holder shall have the right (subject to
         waiver) at any time and from time to time, to increase its Restricted
         Ownership Percentage immediately in the event of the announcement as
         pending or planned, of a transaction or event referred to in Section
         5(m) below.

                          (ii)  Each time (a "COVENANT TIME") the holder or an
         Aggregation Party makes a Triggering Acquisition (as defined below) of
         shares of Common Stock (the "TRIGGERING SHARES"), the holder will be
         deemed to covenant that it will not, during the balance of the day on
         which such Triggering Acquisition occurs, and during the 61-day period
         beginning immediately after that day, acquire additional shares of
         Common Stock pursuant to rights-to-acquire existing at that Covenant
         Time, if the aggregate amount of such additional shares so acquired
         (without reducing that amount by any dispositions) would exceed (x)
         9.99% of the number of shares of Common Stock outstanding at that
         Covenant Time (including the Triggering Shares) minus (y) the number of
         shares of Common Stock actually owned by the holder at that Covenant
         Time (regardless of how or when acquired, and including the Triggering
         Shares). A "TRIGGERING ACQUISITION" means the giving of a Conversion
         Notice or any other acquisition of Common Stock by the holder or an
         Aggregation Party; PROVIDED, however, that with respect to the giving
         of such Conversion Notice, if the associated issuance of shares of
         Common Stock does not occur, such event shall cease to be a Triggering
         Acquisition and the related covenant under this paragraph shall
         terminate. At each Covenant Time, the holder shall be deemed to waive
         any right it would otherwise have to acquire shares of Common Stock to
         the extent that such acquisition would violate any covenant given by
         the holder under this paragraph. Notwithstanding anything to the
         contrary in the Transaction Documents, in the event of a conflict
         between any covenant given under this paragraph and any obligation of
         the holder to convert Preferred Shares pursuant to the Transaction
         Documents, the former shall supersede the latter, and the latter shall
         be reduced accordingly. For the avoidance of doubt:

<PAGE>

                           (A)      The covenant to be given pursuant to this
                                    paragraph will be given at every Covenant
                                    Time and shall be calculated based on the
                                    circumstances then in effect. The making of
                                    a covenant at one Covenant Time shall not
                                    terminate or modify any prior covenants.

                           (B)      The holder may therefore from time to time
                                    be subject to multiple such covenants, each
                                    one having been made at a different Covenant
                                    Time, and some possibly being more
                                    restrictive than others. The holder must
                                    comply with all such covenants then in
                                    effect.

                           (iii) OVERALL LIMIT ON COMMON STOCK ISSUABLE.
         Notwithstanding anything contained herein to the contrary, the number
         of shares of Common Stock issuable by the Company and acquirable by the
         holders hereunder, together with such shares issuable by the Company
         and acquirable by the holders under the Warrants and Options, shall not
         exceed 19.99% of the shares of Common Stock outstanding on the Closing
         Date, subject to appropriate adjustment for stock splits, stock
         dividends, or other similar recapitalizations affecting the Common
         Stock (the "MAXIMUM COMMON STOCK ISSUANCE"), unless the issuance of
         such shares in excess of the Maximum Common Stock Issuance shall first
         be approved by the Company's shareholders in accordance with applicable
         law and the By-laws and Articles of Incorporation of the Company. The
         Company agrees that if at any point in time (the "Trigger Date") the
         number of Common Shares issued pursuant to conversion of the Preferred
         Shares and exercise of the Warrants and Options, together with the
         number of Common Shares that would then be issuable by the Company in
         the event of conversion of all the Preferred Shares and exercise of all
         the Warrants and Options then outstanding, would exceed the Maximum
         Common Stock Issuance but for this Section 5(i)(iii), then the Company
         shall promptly call a shareholders meeting to obtain shareholder
         approval for the issuance of Common Shares hereunder in excess of the
         Maximum Common Stock Issuance. If such shareholder approval is not
         obtained within 60 days of the Trigger Date, then each holder of
         Preferred Shares shall have the right to sell to the Company such
         number of Preferred Shares, Warrants and Options which cannot be
         converted or exercised due to such Maximum Common Stock Issuance
         limitation at a redemption price equal to the "Mandatory Repurchase
         Price" (as defined in the Registration Rights Agreement).

                  (j)  CERTIFICATE FOR CONVERSION PRICE ADJUSTMENT. The
Corporation shall promptly furnish or cause to be furnished to each holder a
certificate prepared by the Corporation setting forth any adjustments or
readjustments of the Conversion Price pursuant to this Section 5.

                  (k)  SPECIFIC ENFORCEMENT. The Corporation agrees that
irreparable damage would occur in the event that any of the provisions of these
Articles of Amendment were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the holders of
Preferred Shares shall be entitled to specific performance, injunctive relief or
other equitable remedies to prevent or cure breaches of the provisions of these
Articles of Amendment and to enforce specifically the terms and provisions
hereof, this being in addition to any other remedy to which any of them may be
entitled under agreement, at law or in equity.

<PAGE>

                  (l)  MANDATORY REPURCHASE. Notwithstanding anything
contained in Section 5(h) hereof, each holder of Preferred Shares shall have
the unilateral option and right to compel the Corporation to repurchase any
or all of such holder's Preferred Shares by delivering a written notice
requiring such repurchase, at a price per Preferred Share equal to the
Mandatory Repurchase Price, if at any time and from time to time there is an
announcement or public disclosure that any of the following transactions or
events involving or affecting the Corporation is expected to occur or any of
the following transactions or events occurs; provided, that payment of the
Mandatory Repurchase Price shall be subject to and conditioned upon the
consummation or occurrence of such transaction or event, and such payment of
the Mandatory Repurchase Price shall be a condition precedent of any such
transaction or occurrence:

                           (i)   A Change in Control Transaction (as defined
         below);

                           (ii)  A "going private" transaction under Rule 13e-3
         promulgated pursuant to the Exchange Act; or

                           (iii) A tender offer by the Corporation under Rule
         13e-4 promulgated pursuant to the Exchange Act.

                           A "Change in Control Transaction" will be deemed
to exist if (i) there occurs any consolidation or merger of the Corporation
with or into any other corporation or other entity or person (whether or not
the Corporation is the surviving corporation), or any other corporate
reorganization or transaction or series of related transactions in which in
excess of 50% of the Corporation's voting power is transferred through a
merger, consolidation, tender offer or similar transaction, (ii) any person
(as defined in Section 13(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), together with its affiliates and associates
(as such terms are defined in Rule 405 under the Securities Act of 1933, as
amended (the "Act")), beneficially owns or is deemed to beneficially own (as
described in Rule 13d-3 under the Exchange Act without regard to the 60-day
exercise period) in excess of 50% of the Corporation's voting power, (iii)
there is a replacement of more than one-half of the members of the
Corporation's Board of Directors which is not approved by those individuals
who are members of the Corporation's Board of Directors on the date thereof,
in one or a series of related transactions or (iv) a sale or transfer of all
or substantially all of the assets of the Corporation, determined on a
consolidated basis.

                  (m)  MANDATORY CONVERSION.

                       (x)  Subject to subsections (m)(y) and (m)(z) below, the
         Preferred Shares shall be automatically converted into Common Shares on
         the two (2) year anniversary of the Closing Date (the "Mandatory
         Conversion Date"); provided, however, that such Mandatory Conversion
         Date shall be deferred, at the sole option of a holder of Preferred
         Shares, for such number of days as is equal to 1.5 times the number of
         days (A) there is a lack of Effective Registration (as defined below),
         but not including the first 90 days after the Closing; (B) there is not
         a sufficient amount of Common Stock available for conversion of all
         outstanding Preferred Shares and exercise of all the Warrants and
         Options; (C) for any other reason the Corporation refuses or announces
         its refusal to honor conversion of Preferred Shares or exercise of the
         Warrants or Options; or (D) for

<PAGE>

         any other reason there is a suspension, restriction or limitation in
         the ability of holders of Preferred Shares, Warrants or Options to
         sell Common Shares received upon conversion of Preferred Shares or
         exercise of the Warrants or Options pursuant to the prospectus
         included in the Registration Statement (as defined in the
         Registration Rights Agreement).

                              For purposes of the preceding paragraph, a
         lack of Effective Registration shall be deemed to have occurred at any
         time the Common Shares issuable upon conversion of the Preferred Shares
         or exercise of the Warrants or Options are not capable of being sold on
         an Approved Market (as defined in the Purchase Agreement) pursuant to
         an effective registration statement and deliverable prospectus.

                         (y)  Notwithstanding the preceding subsection
         (m)(x), no holder of Preferred Shares shall be obligated to convert
         any Preferred Shares held by such holder on the Mandatory Conversion
         Date (and there shall be no automatic conversion) unless and until
         each of the following conditions has been satisfied or exists, each
         of which shall be a condition precedent to any such forced
         conversion:

                              (A)  no material default or breach exists
                           which has not been cured, and no event shall have
                           occurred which constitutes (or would constitute with
                           notice or the passage of time or both) a material
                           default or breach of the Purchase Agreement, the
                           Registration Rights Agreement, the Warrants, the
                           Options or these Articles of Amendment, which has not
                           been cured;

                              (B)  none of the events described in clauses
                           (i) through (iv) of Section 2(b) of the Registration
                           Rights Agreement shall have occurred and be
                           continuing;

                              (C)  the Registration Statement (as defined
                           in the Registration Rights Agreement) is effective
                           and holders have received unlegended certificates
                           representing Common Shares with respect to all
                           conversions for which Conversion Notices have been
                           given and with respect to all exercises of Warrants
                           and Options for which Notices or Exercise have been
                           given; and

                              (D)  the Corporation and its subsidiaries on
                           a consolidated basis has assets with a net realizable
                           fair market value exceeding its liabilities and is
                           able to pay all its debts as they become due in the
                           ordinary course of business, and the Corporation is
                           not subject to any liquidation, dissolution or
                           winding up of its affairs, or any bankruptcy,
                           insolvency or similar proceeding.

                         (z)  Notwithstanding Section 5(m)(x) above, no
         holder's Preferred Shares shall be subject to mandatory conversion
         to the extent such mandatory conversion would result in the holder
         of Preferred Shares exceeding any of the limitations contained in
         Section 5(i) above. In such event, the Preferred Shares of such
         holder shall be converted in such amount until such limitation is
         reached, and the remaining Preferred

<PAGE>

         Shares shall be purchased by the Corporation at the Mandatory
         Redemption Price (as defined in the Registration Rights Agreement).

                         Such forced conversion shall be subject to and
governed by all the provisions relating to voluntary conversion of the
Preferred Shares contained herein.

         6.  VOTING RIGHTS. In addition to all other requirements imposed by
Iowa law, and all other voting rights granted under the Corporation's
Articles of Incorporation, the affirmative vote of two-thirds in interest of
the Corporation's outstanding Preferred Shares shall be necessary for (i) any
amendment, modification or repeal of the provisions contained in these
Articles of Amendment (whether by merger, consolidation or otherwise) or for
any merger, reclassification, consolidation or reorganization, or (ii) any
other amendment to the Articles of Incorporation or the by-laws of the
Corporation that may amend or change or adversely affect any of the rights,
preferences, or privileges of the Preferred Shares, provided, however, that
holders of Preferred Shares (other than the Investor under the Purchase
Agreement and their affiliates) who are affiliates of the Corporation (and
the Corporation itself) shall not participate in such vote and the Preferred
Shares of such holders shall be disregarded and deemed not to be outstanding
for purposes of such vote.

         7.  NOTICES. The Corporation shall distribute to the holders of
Preferred Shares copies of all notices, materials, annual and quarterly
reports, proxy statements, information statements and any other documents
distributed generally to the holders of shares of Common Stock of the
Corporation, at such times and by such method as such documents are
distributed to such holders of such Common Stock.

         8.  REPLACEMENT CERTIFICATES. The certificate(s) representing the
Preferred Shares held by any holder of Preferred Shares may be exchanged by
such holder at any time and from time to time for certificates with different
denominations representing an equal aggregate number of Preferred Shares, as
reasonably requested by such holder, upon surrendering the same. No service
charge will be made for such registration or transfer or exchange. Upon
receipt by the Corporation of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of any stock certificate representing
the Preferred Shares and, in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to it, or upon surrender and cancellation
of such stock certificate if mutilated, the Corporation will make and deliver
a new stock certificate of like tenor and dated as of such cancellation at no
charge to the holder.

         9.  ATTORNEYS' FEES. In connection with enforcement by a holder of
Preferred Shares of any obligation of the Corporation hereunder, the
prevailing party shall be entitled to recovery of reasonable attorneys' fees
and expenses incurred.

         10. NO REISSUANCE. No Preferred Shares acquired by the Corporation
by reason of redemption, purchase, conversion or otherwise shall be reissued.

<PAGE>

         11. SEVERABILITY OF PROVISIONS. If any right, preference or
limitation of the Preferred Shares set forth in these Articles of Amendment
or Articles of Incorporation (as either is amended from time to time) is
invalid, unlawful or incapable of being enforced by reason of any rule or law
or public policy, all other rights, preferences and limitations set forth in
these Articles of Amendment or Articles of Incorporation, which can be given
effect without the invalid, unlawful or unenforceable right, preference or
limitation shall nevertheless remain in full force and effect, and no right,
preference or limitation herein set forth be deemed dependent upon any such
other right, preference or limitation unless so expressed herein.

         12. LIMITATIONS. Except as may otherwise be required by law and as
are set forth in the Purchase Agreement and the Registration Rights
Agreement, the Preferred Shares shall not have any powers, preference or
relative participating, optional or other special rights other than those
specifically set forth in these Articles of Amendment (as may be amended from
time to time) or otherwise in the Articles of Incorporation of the
Corporation.

C. The date of adoption of these Articles of Amendment is April 19, 2000.

D. These Articles of Amendment was duly adopted by the Board of
Directors of the Corporation without shareholder action, and shareholder
action was not required pursuant to authority expressly vested in the Board
of Directors of the Corporation by Article V of the Restated and Amended
Articles of Incorporation of the Corporation.

Signed on April 19, 2000

                          MICROWARE SYSTEMS CORPORATION

                          By: /s/ Kenneth B. Kaplan
                                  Name:    Kenneth B. Kaplan
                                  Title:   President

                           By: /s/ George E. Leonard
                                   Name:     /s/ George E. Leonard
                                   Title:   Secretary

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