Document:

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                                  GENRAD, INC.

                               SEVERANCE AGREEMENT

         This SEVERANCE AGREEMENT is entered into between GenRad, Inc. (the
"Company") and Peter Miles ("Executive") effective as of the 1st day of
September 2000.

         Executive is a key executive of the Company and a vital part of its
management. In consideration of Executive's continued employment with the
Company, the parties agree as follows:

         1. TERM; WINDOW PERIOD. The term during which this Agreement (the
"Agreement") will be in effect (the "Term") will begin on the date of this
Agreement (the "Effective Date") and, except as provided below, will
terminate on the date which is one year from the date the Company advises
Executive in writing that the Company is terminating this Agreement. If a
Change of Control (as defined in Exhibit A) occurs during the Term, the
Agreement will remain in effect until all obligations hereunder have been
discharged. The period starting on the date of such a Change of Control and
ending on the third anniversary of the Change of Control will be a "Window
Period" during which special provisions of this Agreement will apply.

         2. POSITIONS AND DUTIES. Subject to the provisions of the Agreement:

                  2.1 Executive is currently employed or to be employed by
the Company as its Vice-President, Diagnostic Solutions, with
responsibilities consistent with this position. The Company may hereafter
reassign Executive to a different position, with responsibilities consistent
with such new position, provided that such different position shall not
entail responsibilities materially less than those of Executive's current
position.

                  2.2 Executive will devote his entire business time and
attention and his best efforts to the duties and services of his positions.
However, Executive may serve on boards of directors of other businesses and
attend to personal investments and community and charitable service, provided
that such activities are not competitive with the business of the Company and
do not interfere with the performance of Executive's duties to the Company.

         3. COMPENSATION AND BENEFITS. During his employment by the Company,
the Company will provide compensation and benefits to Executive as follows:

                  3.1 BASE SALARY. "Base Salary" means the remuneration
regularly paid to Executive for services rendered in connection with the
Executive's employment with the Company. Executive's Base Salary as of the
Effective Date will be (pound) 100,000.00 (UK - Sterling) per year, payable
in accordance with the applicable payroll practices of the Company. The
Company will review Executive's Base Salary annually, and Executive will
receive such adjustment in base salary, if any, for each succeeding year as
the Board of Directors of the Company (the "Board") determines in its sole
discretion.

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Executive's Base Salary will not be decreased during any Window Period, and
will not be decreased other than during a Window Period except as part of a
general reduction in which the base salaries of all corporate officers of the
Company have been decreased.

                  3.2 PERFORMANCE BONUS. Executive will be eligible for an
annual performance bonus, which (except as provided below) shall be
determined by the Board in its sole discretion. Executive's bonus for any
year ending during a Window Period will not be less than 100 percent of his
bonus for the completed year immediately preceding the Change of Control.

                  3.3 OTHER BENEFITS. Executive will be entitled to
participate in all plans, policies and arrangements (or in any successor or
supplemental plans, policies or arrangements) generally made available to
officers of the Company. Such benefits shall not be reduced during the Window
Period, provided, however, that any changes in the terms of such benefit
programs generally applicable to other program participants shall be
applicable to Executive. Notwithstanding the foregoing, Executive shall not
be entitled to participate in any severance or comparable plan, policy or
arrangement maintained by the Company and generally available to its other
employees other than that set forth in this Agreement.

         4. SEVERANCE BENEFITS.

                  4.1 SEVERANCE BENEFITS DURING WINDOW PERIOD. If the Company
terminates Executive's employment without Cause (as defined below) during a
Window Period, or if Executive terminates his employment with the Company for
Good Reason (as defined below) during a Window Period, and subject to
Sections 4.3 and 5 below, the Company will provide severance benefits to
Executive as follows (all payments and other benefits provided under this
Section 4.1 being called collectively the "Severance Benefits"):

                           (a) Within 10 days following the Effective Date of
                  the Release and Waiver described in Section 4.3, the Company
                  will pay to Executive a lump-sum cash amount equal to two
                  hundred percent (200%) of the sum of (A) Executive's annual
                  Base Salary in effect immediately prior to the termination
                  (or, if his Base Salary has been reduced within 60 days of the
                  termination or at any time after the Change of Control, his
                  Base Salary in effect prior to the reduction), plus (B) the
                  amount of the bonus earned by Executive for the fiscal year
                  completed immediately prior to the termination.

                           (b) Within 10 days following the Effective Date of
                  the Release and Waiver described in Section 4.3, the Company
                  will also pay to Executive a pro-rata portion of his target
                  bonus (provided for in Section 3.2 above) for the year of
                  termination.

                           (c) The Company will continue for a period of three
                  years from the date of employment termination to provide
                  Executive with the same or

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                  substantially similar insurance benefits and other health and
                  welfare benefits referenced in Section 3.3 above (subject to
                  any contribution to premiums required of plan participants
                  generally) other than participation in the Company's 401k plan
                  and any Company sponsored stock purchase plan. To the extent
                  the Company is unable to provide such benefits to Executive
                  under its existing plans and arrangements, it will either
                  arrange to provide Executive with substantially similar
                  benefits upon comparable terms or pay Executive cash amounts
                  equal to Executive's cost of obtaining such benefits. The
                  Company's obligation to provide each such benefit shall
                  terminate immediately upon Executive's becoming eligible
                  (either as a participant or a dependent) to participate in a
                  plan providing comparable benefits sponsored by another
                  employer, except that the Company shall pay any increase in
                  the contribution to premiums required of Executive (or the
                  plan participant of whom Executive is a dependent, if
                  applicable) in order to participate in such other employer's
                  plan.

                           (d) Notwithstanding any contrary provisions of the
                  plans or arrangements under which they are granted, all
                  options to purchase Company stock held by Executive will
                  become exercisable immediately upon the Effective Date of the
                  Release and Waiver described in Section 4.3.

                  4.2 SEVERANCE BENEFITS OTHER THAN DURING WINDOW PERIOD. If
the Company terminates Executive's employment without Cause other than during
a Window Period, or if Executive terminates his employment with the Company
for Good Reason other than during a Window Period, and subject to Sections
4.3 and 5 below, the Company will provide severance benefits to Executive as
follows (all payments and other benefits provided under this Section 4.2 also
being called collectively "Severance Benefits"):

                           (a) Within 10 days following the Effective Date of
                  the Release and Waiver described in Section 4.3, the Company
                  will pay to Executive a lump-sum cash amount equal to one
                  hundred percent (100%) of Executive's annual Base Salary in
                  effect immediately prior to the termination (or, if his Base
                  Salary has been reduced within 60 days of the termination, his
                  Base Salary in effect prior to the reduction).

                           (b) Subject to the last sentence of this subsection
                  (b), the Company will continue for a period of one year from
                  the date of employment termination to provide Executive with
                  the same or substantially similar insurance benefits and other
                  health and welfare benefits referenced in Section 3.3 above
                  (subject to any contribution to premiums required of plan
                  participants generally) other than participation in the
                  Company's 401k plan and any Company sponsored stock purchase
                  plan. To the extent the Company is unable to provide such
                  benefits to Executive under its existing plans and
                  arrangements, it will either arrange to provide Executive with
                  substantially similar benefits upon comparable terms or pay
                  Executive cash amounts equal to the cost the Company

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                  would have incurred to provide such benefits. The Company's
                  obligation to provide each such benefit shall terminate
                  immediately upon Executive's becoming eligible (either as a
                  participant or a dependent) to participate in a plan providing
                  comparable benefits sponsored by another employer, except that
                  the Company shall pay any increase in the contribution to
                  premiums required of Executive (or the plan participant of
                  whom Executive is a dependent, if applicable) in order to
                  participate in such other employer's plan.

                  4.3 GENERAL RELEASE AND CONFIDENTIALITY AGREEMENT. The
Company's obligation to pay and provide the Severance Benefits is conditioned
on Executive's prior execution and delivery (without subsequent revocation,
to the extent permitted therein) of a General Release, Waiver and
Confidentiality Agreement in the form attached as Exhibit B hereto (a
"Release and Waiver"). The Company shall deliver a form of Release and Waiver
to Executive, for his or her execution, within 10 days following a
termination of Executive's employment that entitles him or her to Severance
Benefits under Section 4.1 or 4.2. In the event Executive fails to execute
and deliver a Release and Waiver to the Company within 60 days following the
delivery of the same to him or her, Executive will be deemed to have waived
his or her rights to Severance Benefits under Section 4.1 or 4.2.

                  4.4 TERMINATION BY COMPANY FOR CAUSE, BY EXECUTIVE WITHOUT
GOOD REASON, OR ON ACCOUNT OF DEATH OR DISABILITY. Notwithstanding Section
4.1 or 4.2, as applicable, Executive shall not be entitled to any Severance
Benefits under such Section in the event that (a) the Company terminates
Executive's employment for Cause, (b) Executive terminates his or her
employment with the Company other than on account of Good Reason (including
adherence to the procedural requirements set forth in the definition of "Good
Reason"), or (c) Executive's employment is terminated on account of his or
her death or Disability.

                  4.5 EFFECT ON RIGHTS UNDER COBRA. For the purposes of Part
6 of Title I of the Employee Retirement Income Security Act of 1974 and
Section 4980B of the Internal Revenue Code of 1986 (the "Code"), the
qualifying event applicable to the Executive (and his qualifying
beneficiaries, if any) whose employment terminates during the Term (other
than for Cause) shall be the effective date of such employment termination
notwithstanding any continuation of benefits pursuant to subsection 4.1(c)
above.

                  4.6 DEFINITIONS. As used herein, the following terms have
the following meanings:

                           (a) "Cause" means (a) willful malfeasance or gross
                  negligence in the performance by Executive of his or her
                  duties, (b) fraud or dishonesty by Executive with respect to
                  the Company, or (c) Executive's conviction of a felony, or of
                  a misdemeanor that the Company reasonably determines has had a
                  material adverse effect on the Company including through
                  publicity.

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                           (b) "Disability" means Executive's inability for a
                  period of not less than 60 consecutive days, as a result of
                  physical or mental incapacity, to perform each of the material
                  duties of his or her position, if a qualified physician chosen
                  by the Company and reasonably approved by Executive (or his or
                  her conservator) has determined upon examination that it is
                  probable that such inability will continue for an additional
                  60 consecutive days. Executive agrees to submit to one or more
                  such examinations if reasonably requested by the Company.

                           (c) "Good Reason" means (i) failure by the Company to
                  maintain Executive in the position described in Section 2
                  (including any position to which Executive may be reassigned
                  as provided in Section 2), (ii) assignment to Executive of
                  duties materially inconsistent with his or her nominal
                  position, or the removal of the authority and responsibility
                  which is reasonably necessary for Executive to carry out his
                  or her duties in such position, (iii) relocation of
                  Executive's principal place of work to a location more than 50
                  miles from the previous location or (iv) failure by the
                  Company to provide Executive with the compensation and
                  benefits described in Section 3, in each case provided that
                  (x) within 60 days following the onset of such Good Reason
                  Executive gives written notice of his or her resignation
                  identifying the event or change constituting Good Reason and
                  (y) the Company does not alleviate the Good Reason so
                  identified within 10 days following its receipt of such notice
                  from Executive.

         5. LIMITATIONS ON SEVERANCE BENEFITS.

                  5.1 Except as provided in Section 5.2 below, the payments
and benefits to which Executive would otherwise be entitled under Section 4
of this Agreement will be reduced to the extent necessary to prevent
Executive from becoming liable for the excise tax levied on certain "excess
parachute payments" under section 4999 of the Code. If a reduction is made
under this Section 5.1, Executive will have the right to determine which
payments and benefits will be reduced.

                  5.2 The limitations of Section 5.1 will not apply if:

                           (i)      the present value, net of all federal, state
                                    and other income and excise taxes, of all
                                    payments and benefits to which Executive is
                                    entitled hereunder without such limitations,
                                    exceeds

                           (ii)     the present value, net of all federal, state
                                    and other income and excise taxes, of all
                                    payments and benefits to which Executive
                                    would be entitled hereunder if such
                                    limitations applied.

                  5.3 Determinations under this Section 5 will be made by the
firm of certified public accountants then serving as the Company's auditor
unless Executive has reasonable objections to the use of that firm, in which
case the determinations will

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be made by a comparable firm chosen by Executive after consultation with the
Company. The determinations of such firm will be binding upon the Company and
Executive.

         6. EMPLOYMENT "AT WILL". Neither this Agreement nor the Severance
Benefits to be provided to Executive hereunder shall be deemed to limit,
replace or otherwise affect the "at will" nature of Executive's employment
with the Company. Executive's employment with the Company continues to be for
an unspecified term and may be terminated at will at any time with or without
cause or notice by either the Company or Executive. This at-will relationship
cannot be changed absent an express intent as set forth in a separate and
individualized written employment contact signed by both Executive and the
Chief Executive Officer of the Company.

         7. WITHHOLDING. All payments required to be made by the Company to
Executive under this Agreement will be subject to the withholding of such
amounts, if any, relating to tax and other payroll deductions as may be
required by law.

         8. FEES AND EXPENSES. In the event of a termination of Executive's
employment during a Window Period, the Company will pay any and all fees and
expenses (including legal fees and other costs of arbitration or litigation)
that may be incurred by Executive in enforcing his or her rights under this
Agreement. Fees and expenses incurred by Executive in connection with his or
her execution of a Release and Waiver shall not be construed as having been
incurred in connection with the enforcement of his or her rights hereunder.

         9. NO DUTY TO MITIGATE. Severance Benefits payable under this
Agreement as a result of termination of Executive's employment will be
considered severance pay in consideration of Executive's past service and his
or her continued service from the Effective Date, and Executive's entitlement
thereto will neither be governed by any duty to mitigate his or her damages
by seeking further employment nor offset by any compensation that he or she
may receive from other employment (except to the extent expressly provided in
Section 4.2(b) herein with respect to insurance benefits).

         10. CONFIDENTIALITY AND EXCLUSIVITY. Executive agrees to maintain
the confidentiality of the Company's (and its related entities' and
projects') books, records, financial information, technical information,
business plans and/or strategies, and other confidential and/or proprietary
matters unless required to make disclosure in the performance of his or her
duties for the Company or as a result of a legal proceeding or other legally
mandated cause. The parties recognize and agree that should the Company be
required to pursue a claim against Executive under this Section 10, the
Company will likely be required to seek injunctive relief as well as damages
at law. Accordingly, Section 11, Arbitration, will not apply to any action by
the Company against Executive for violation of this Section 10. Executive
agrees for purposes of any disputes arising under this Section 10 to submit
to the exclusive jurisdiction of the federal and state courts in the
Commonwealth of Massachusetts.

         11. ARBITRATION. Except as otherwise provided in Section 10, any
dispute or controversy between the parties involving the construction or
application of any terms,

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covenants or conditions of this Agreement, or any claim arising out of or
relating to this Agreement, that is not resolved within 20 days by the
parties will be settled by arbitration in Boston, Massachusetts, in
accordance with the rules of the American Arbitration Association then in
effect, and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof and Executive hereby waives
any right to resolve such dispute or controversy by any other procedure,
including, without limitation, any administrative claims procedure set forth
in a benefit or similar plan, or by any other forum, including, without
limitation, any other judicial forum, the Department of Labor or the Internal
Revenue Service. The Company and Executive agree that the arbitrator(s) will
have no authority to award punitive or exemplary damages or so-called
consequential or remote damages such as damages for emotional distress. Any
decision of the arbitrator(s) will be final and binding upon the parties.
Upon request, the arbitrator(s) shall submit written findings of fact and
conclusions of law. The parties agree that the fees and costs incurred for
the arbitration shall be assessed equally to Executive and the Company and
that each party shall bear its own attorneys' fees and costs in connection
with its own representation. The parties agree and understand that they
hereby waive their rights to a jury trial of any dispute or controversy
relating to the matters specified above in this Section 11.

         12. RIGHTS OF SURVIVORS. If Executive dies after becoming entitled
to Severance Benefits under Section 4 following termination of employment but
before all such Severance Benefits have been provided, (a) all unpaid cash
amounts will be paid to the beneficiary that have been designated by
Executive in writing (the "beneficiary"), or if none, to Executive's estate,
(b) all applicable insurance coverage will be provided to Executive's family
as though Executive had continued to live, and (c) any stock options that
become exercisable under Section 4 will be exercisable by the beneficiary, or
if none, the estate.

         13. SUCCESSORS. This Agreement will inure to and be binding upon the
Company's successors and assigns and upon the Executive's heirs, executors,
legal administrators and guardians. This Agreement shall not be assignable by
Executive.

         14. SUBSIDIARIES. For purposes of this Agreement, employment by a
corporation or other entity that is controlled directly or indirectly by the
Company will be deemed to be employment by the Company. Thus, references in
the Agreement to "Company" include such corporations or other entities where
appropriate in the context.

         15. AMENDMENT OR MODIFICATION; WAIVER. Except as provided in clause
(1) of Exhibit A, this Agreement may not be amended unless agreed to in
writing by Executive and the Company. No waiver by either party of any breach
of this Agreement will be deemed a waiver of a subsequent breach.

         16. SEVERABILITY. In the event that any provision of this Agreement
is determined to be invalid or unenforceable, the remaining provisions shall
remain in full force and effect to the fullest extent permitted by law. In
the event that any provision is unenforceable on the basis that it is
overbroad, in lieu of deletion such provision shall be deemed limited to the
extent necessary so as to render it enforceable to the maximum extent
permitted by law.

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         17. CONTROLLING LAW. This Agreement will be controlled and
interpreted pursuant to Massachusetts's law without regard to the conflict of
law principles thereof.

         18. SUPERSEDED AGREEMENT. This Agreement supersedes any prior or
Contemporaneous agreement or understanding, written or oral, between the
parties with respect to the subject matter hereof.

         19. NOTICES. Any notices required or permitted to be sent under this
Agreement are to be delivered by hand or mailed by registered or certified
mail, return receipt requested, or by any recognized express courier service,
and addressed as follows:

             IF TO THE COMPANY:
             GenRad, Inc.
             7 Technology Park Drive
             Westford, MA  01886-0033
             Attn: President

             IF TO EXECUTIVE:
             Peter Miles
             5 Lansdown Close
             Cheadle Holme
             Stockport Cheshire SK8 7HU UK

         Either party may change its address for receiving notices by giving
notice to the other party.

                                      * * *

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         IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first set forth above.

                                       "EXECUTIVE":

                                       ____________________________
                                       Peter Miles

                                       ____________________________
                                       Date

                                       GENRAD, INC.

                              By:      ____________________________
                                       Robert Dutkowsky,
                                       Chairman of the Board, President & CEO

                                       ____________________________
                                       Date

                                    EXHIBIT A

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         "Change of Control" means the occurrence of any of the following
events:

         (1)   any Person becomes the owner of 20% or more of the Company's
               Common Stock; provided, however, that the Board of Directors
               of the Company may unilaterally amend this clause (1) to
               increase the 20% threshold to any percentage up to, but not
               exceeding, 50%; or

         (2)   individuals who, as of the Effective Date, constitute the
Board of Directors of the Company (the "Continuing Directors") cease for any
reason to constitute at least a majority of such Board; provided, however,
that any individual becoming a director after the Effective Date whose
election or nomination for election by the Company's shareholders was
approved by a vote of at least a majority of the Continuing Directors will be
deemed to be a Continuing Director, but excluding for this purpose any such
individual whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Securities and Exchange Act of 1934
(the "Exchange Act")) or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board; or

         (3)   approval by the shareholders of the Company of a
reorganization, merger, consolidation or other transaction that will result
in the transfer of ownership of more than 50% of the Company's Common Stock;
or

         (4)   liquidation or dissolution of the Company or sale of
substantially all of the Company's assets.

         In addition, for purposes of this definition the following terms
have the meanings set forth below:

         "Common Stock" means the then outstanding Common Stock of the
Company plus, for purposes of determining the stock ownership of any Person,
the number of unissued shares of Common Stock which such Person has the right
to acquire (whether such right is exercisable immediately or only after the
passage of time) upon the exercise of conversion rights, exchange rights,
warrants or options or otherwise. Notwithstanding the foregoing, the term
"Common Stock" does not include shares of preferred stock or convertible debt
or options or warrants to acquire shares of Common Stock (including any
shares of Common Stock issued or issuable upon the conversion or exercise
thereof) to the extent that the Board expressly so determines in any future
transaction or transactions.

                                       A-1

         A Person will be deemed to be the "owner" of any Common Stock of
which such Person would be the "beneficial owner", as such term is defined in
Rule 13d-3 promulgated by the Securities and Exchange Commission under the
Exchange Act.

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         "Person" has the meaning used in Section 13(d) of the Exchange Act,
except that "Person" does not include (i) the Executive, an Executive Related
Party, or any group of which the Executive or Executive Related Party is a
member, or (ii) the Company or a wholly-owned subsidiary of the Company or an
employee benefit plan (or related trust) of the Company or of a wholly-owned
subsidiary.

         An "Executive Related Party" means any affiliate or associate of the
Executive other than the Company or a subsidiary of the Company. The terms
"affiliate" and "associate" have the meanings given in Rule 12b-2 under the
Exchange Act; the term "registrant" in the definition of "associate" means,
in this case, the Company.

                                       A-2<PAGE>
                                  EXHIBIT 10.3

                         REGISTRATION RIGHTS AGREEMENT

            THIS REGISTRATION RIGHTS AGREEMENT, dated as of May __, 2001 (this
"Agreement"), is made by and between Microware Systems Corporation, an Iowa
corporation (the "Company"), and the entity named on the signature page hereto
(the "Initial Investor").

                              W I T N E S S E T H:

            WHEREAS, upon the terms and subject to the conditions of the
Securities Purchase Agreement, dated as of November 28, 2000, between the
Initial Investor and the Company (the "Securities Purchase Agreement";
capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Securities Purchase Agreement), the Company issued and sold to
the Initial Investor a 8% Convertible Debenture, in the principal amount of
$2,000,000 (the "Debenture") which term, as used herein shall have the meaning
ascribed to it in the Securities Purchase Agreement);

            WHEREAS, the Company and the Initial Investor entered into that
certain Registration Rights Agreement, dated November 28, 2000 (the "November
Registration Agreement") whereby the Company agreed to register the Conversion
Shares (as defined in the November Registration Agreement) pursuant to the terms
thereof;

            WHEREAS, the Debenture provided for two Tranches, each of
$1,000,000, from the Initial Investor, one that was funded on November 28, 2000
(the "Tranche I") and the second Tranche which was payable upon the registration
of the Conversion Shares;

            WHEREAS, the Securities and Exchange Commission ("SEC") permitted
the registration of the Conversion Shares applicable to the first $1,000,000
Tranche, it would not permit the simultaneous registration of the Conversion
Shares applicable to the second $1,000,000 Tranche ("Tranche II");

            WHEREAS, the Initial Investor agreed pursuant to the terms hereof
and Section 1(a) of the Securities Purchase Agreement to fund Tranche II to the
Company prior to the registration of the Conversion Shares issuable upon the
conversion of Tranche II (the "Registrable Securities");

            WHEREAS, in connection with the Initial Investor's funding of
Tranche II, the Section 1(a) of the Securities Purchase Agreement requires that
the Company provide certain registration rights under the Securities Act of
1933, as amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, the "Securities Act"), with respect to the
Registrable Securities;

                                       1
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            NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investor hereby agree as follows:

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

            (a) "Investor" means the Initial Investor and any permitted
transferee or assignee who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.

            (b) "Potential Material Event" means any of the following: (i) the
possession by the Company of material information not ripe for disclosure in a
registration statement, which shall be evidenced by determinations in good faith
by the Board of Directors of the Company that disclosure of such information in
the registration statement would be detrimental to the business and affairs of
the Company; or (ii) any material engagement or activity by the Company which
would, in the good faith determination of the Board of Directors of the Company,
be adversely affected by disclosure in a registration statement at such time,
which determination shall be accompanied by a good faith determination by the
Board of Directors of the Company that the registration statement would be
materially misleading absent the inclusion of such information.

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

            (d) "Registrable Securities" means the Conversion Shares issuable
upon the conversion of Tranche II into the Common Stock of the Company.

            (e) "Registration Statement" means a registration statement of the
Company under the Securities Act.

            2. Registration.

            (a) Mandatory Registration. The Company shall prepare and file with
the SEC, as soon as possible after the Closing Date, but no later than thirty
(30) days following the Closing Date, a Registration Statement on Form S-3, or
other available form, registering for resale by the Investor all of the
Registrable Securities, but in no event less than two hundred percent (200%) of
the aggregate number of shares into which the Tranche II of the Debenture would
be convertible at the time of filing of the Registration Statement (assuming for
such purposes that the entire principal and interest balance of Tranche II of
the Debenture had been

                                       2
<PAGE>

eligible to be converted, and had been converted, into Conversion Shares in
accordance with their terms, whether or not such eligibility or conversion had
in fact occurred as of such date). The Registration Statement shall also state
that, in accordance with Rule 416 and 457 under the Securities Act, it also
covers such indeterminate number of additional shares of Common Stock as may
become issuable upon conversion of Tranche II of the Debenture to prevent
dilution resulting from stock splits, or stock dividends. The Company will use
its best efforts to cause the Registration Statement to be declared effective no
later than ninety (90) days after the Closing Date. If at any time the number of
shares of Common Stock into which Tranche II of the Debenture may be converted
equals more than seventy five percent (75%) of the aggregate number of shares of
Common Stock then registered, the Company shall, within ten (10) business days
after receipt of a written notice from any Investor, either (i) further amend
the Registration Statement filed by the Company pursuant to the preceding
sentence, if such Registration Statement has not been declared effective by the
SEC at that time, to register 200% of the aggregate of all shares of Common
Stock into which Tranche II of the Debenture may then or in the future be
converted, or (ii) if such Registration Statement has been declared effective by
the SEC at that time, file with the SEC an additional Registration Statement on
Form S-3, or other available forum as may be appropriate, to register (A) 200%
of the aggregate shares of Common Stock into which Tranche II of the Debenture
may then or in the future be converted, less (B) the aggregate number of shares
of Common Stock already registered which have not been issued upon conversions
of Tranche II of the Debenture. The Registration Statement shall not include any
shares other than the Registrable Securities, and certain other shares that the
Company is obligated to Register as set forth in Schedule 5(b), without the
consent of the Investor. Nothing contained in this Agreement shall modify or
amend any of the terms of the November Registration Agreement as it applies to
(i) the Conversion Shares issuable upon the conversion of Tranche I (and
interest thereon) and (ii) shares issuable upon the exercise of the Warrants (as
defined in the November Registration Agreement).

            (b) Payments by the Company.

                  (i) If the Registration Statement covering the Registrable
Securities is not filed with the SEC on or before thirty (30) days after the
Closing Date (the "Required Filing Date"), then the Company shall pay Investor a
late filing penalty (collectively "Late Filing Penalties"), (i) on the first day
after the Required Filing Date, an amount equal to two percent (2%) of the
amount of Tranche II (the "Purchase Price"), and (ii) on each subsequent monthly
anniversary of the Required Filing Date, if the Registration Statement has not
been filed in proper form on or before such date, an amount equal to two percent
(2%) of the Purchase Price.

            (ii) If the Registration Statement covering the Registrable
Securities is not effective within the earlier of (a) seven (7) business days
after notice by the SEC that it may be declared effective (including the
issuance by the SEC of a "no review letter"), or (b) ninety (90) days following
the Closing Date (the "Required Effective Date"), then the Company shall pay
Investor a late effective date penalty (collectively "Late Effective Date
Penalties")(sometimes Late Filing Penalties and Late Effective Penalties are
collectively referred to as "Late Penalties"), (i) on the first day after the
Required Effective Date, an amount equal to two percent

                                       3
<PAGE>

(2%) of the Purchase Price and (ii) on each subsequent monthly anniversary of
the Required Effective Date, if the Registration Statement has not been declared
effective on or before such date, an amount equal to two percent (2%) of the
Purchase Price.

                  (iii) By way of illustration and not in limitation of the
foregoing, assuming a Closing Date of February 3, 2000 (X) if the Registration
Statement is timely filed but is not declared effective until July 15, 2000
(assuming for the purpose of this example that the SEC has not previously
provided notice that it may be declared effective), the aggregate Late Effective
Date Penalty will equal 6% percent of the Purchase Price (2% on May __, the 90th
day after the Closing Date , plus 2% each on June 2 and July 2) or (Y) if the
Registration Statement is filed on May __ and is not declared effective until
June 15, 2000 (assuming for the purpose of this example that the SEC has not
previously provided notice that it may be declared effective), the aggregate
Late Filing Penalty will equal 4% of the Purchase Price (2% on March 4, the 30th
day after the Closing Date, plus 2% on May __) and the aggregate Late Effective
Date Penalty will equal 4% percent of the Purchase Price (2% on May __, the 90th
day after the Closing Date, plus 2% on June 2).

                  (iv) In addition to and not in lieu of the payment of
penalties hereunder, if the Registration Statement is not filed within sixty
(60) days after the Closing Date, or the Registration Statement is not declared
effective within one hundred eighty (180) days after the Closing Date, Investor
may, at its option, require the Company, to redeem Tranche II of the Debenture
in full (within three (3) days after its delivery of a redemption notice to the
Company), in cash, which redemption amount shall be calculated as set forth in
Section 6 of the Debenture.

                  (v) Late Penalties will be payable to the Investor by the
Company in cash or other immediately available funds on the date such Late
Penalty is incurred.

                  (vi) The parties acknowledge that the damages which may be
incurred by the Investor if the Registration Statement is not filed by the
Required Filing Date or if the Registration Statement has not been declared
effective by the Required Registration Date may be difficult to ascertain. The
parties agree that the Late Penalties represent a reasonable estimate on the
part of the parties, as of the date of this Agreement, of the amount of such
damages. The payment of the Late Penalties to the Investor shall not limit the
Investor's other rights and remedies hereunder or under any other document
entered into in connection herewith.

                  (vii) Notwithstanding the foregoing, the amounts payable by
the Company pursuant to this provision shall not be payable to the extent any
delay in the effectiveness of the Registration Statement occurs because of an
act of, or a failure to act or to act timely by the Investor or its counsel if
the Company timely forwards to counsel any

                                       4
<PAGE>

required documents or in the event all of the Registrable Securities may be sold
pursuant to Rule 144 or another available exemption under the Act.

            3. Obligations of the Company. In connection with the registration
of the Registrable Securities, the Company shall do each of the following.

            (a) Prepare promptly, and file with the SEC by the Required Filing
Date, the Registration Statement with respect to not less than the number of
Registrable Securities provided in Section 2(a) above, and thereafter use its
reasonable best efforts to cause each Registration Statement relating to
Registrable Securities to become effective by the Required Effective Date and
keep the Registration Statement effective at all times until the earliest (the
"Registration Period") of (i) the date that is two (2) years after the Closing
Date, (ii) the date when the Investor may sell all Registrable Securities under
Rule 144 or (iii) the date the Investor no longer own any of the Registrable
Securities, which Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading;

            (b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration effective at all times during the
Registration Period, and, during the Registration Period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement;

            (c) The Company shall permit counsel designated by the Investor to
review the Registration Statement and all amendments and supplements thereto a
reasonable period of time (but not less than three (3) business days or more
than five (5) business days) prior to their filing with the SEC, and not file
any document in a form to which such counsel reasonably objects.

            (d) Notify the Investor, its counsel and managing underwriters, if
any, immediately (and, in the case of (i)(A) below, not less than five (5) days
prior to such filing) and (if requested by any such Person) confirm such notice
in writing no later than one (1) Business Day following the day (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment to the
Registration Statement is proposed to be filed; (B) whenever the Commission
notifies the Company whether there will be a "review" of such Registration
Statement; (C) whenever the Company receives (or representatives of the Company
receive on its behalf) any oral or written comments from the Commission in
respect of a Registration Statement (copies or, in the case of oral comments,
summaries of such comments shall be promptly furnished by the Company to the
Investor); and (D) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the

                                       5
<PAGE>

Commission or any other Federal or state governmental authority for amendments
or supplements to the Registration Statement or Prospectus or for additional
information; (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement covering any or all
of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) if at any time any of the representations or warranties of the
Company contained in any agreement (including any underwriting agreement)
contemplated hereby ceases to be true and correct in all material respects; (v)
of the receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; and (vi) of the occurrence of any event that to the
best knowledge of the Company makes any statement made in the Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. In addition, the Company shall furnish the Investor with
copies of all intended written responses to the comments contemplated in clause
(C) of this Section 3(d) not later than one (1) Business Day in advance of the
filing of such responses with the Commission so that the Investor shall have the
opportunity to comment thereon.

            (e) Furnish to Investor and its legal counsel identified to the
Company, (i) promptly after the same is prepared and publicly distributed, filed
with the SEC, or received by the Company, one (1) copy of the Registration
Statement, each preliminary prospectus and prospectus, and each amendment or
supplement thereto, and (ii) such number of copies of a prospectus, and all
amendments and supplements thereto and such other documents, as Investor may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by Investor;

            (f) As promptly as practicable after becoming aware of such event,
notify Investor of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and use its best efforts promptly to prepare a supplement
or amendment to the Registration Statement or other appropriate filing with the
SEC to correct such untrue statement or omission, and deliver a number of copies
of such supplement or amendment to Investor as it may reasonably request;

            (g) As promptly as practicable after becoming aware of such event,
notify Investor (or, in the event of an underwritten offering, the managing
underwriters) of the issuance by the SEC of a Notice of Effectiveness or any
notice of effectiveness or any stop order or other suspension of the
effectiveness of the Registration Statement at the earliest possible time;

                                       6
<PAGE>

            (h) Notwithstanding the foregoing, if at any time or from time to
time after the date of effectiveness of the Registration Statement, the Company
notifies the Investor in writing of the existence of a Potential Material Event,
the Investor shall not offer or sell any Registrable Securities, or engage in
any other transaction involving or relating to the Registrable Securities, from
the time of the giving of notice with respect to a Potential Material Event
until Investor receives written notice from the Company that such Potential
Material Event either has been disclosed to the public or no longer constitutes
a Potential Material Event; provided, however, that the Company may not so
suspend the right to such holders of Registrable Securities for more than two
twenty (20) day periods in the aggregate during any 12-month period ("Suspension
Period") with at least a ten (10) business day interval between such periods,
during the periods the Registration Statement is required to be in effect;

            (i) Use its reasonable efforts to secure or maintain, as applicable,
NASD-NMS authorization and quotation for such Registrable Securities and,
without limiting the generality of the foregoing, to arrange for at least two
market makers to register with the National Association of Securities Dealers,
Inc. ("NASD") as such with respect to such Registrable Securities;

            (j) Provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement;

            (k) Cooperate with the Investor who hold Registrable Securities (or,
subject to receipt by the Company of appropriate notice and documentation, as
may be required by the Securities Purchase Agreement, the Debentures, or this
Agreement, securities convertible into Registrable Securities) being offered to
facilitate the timely preparation and delivery of certificates for the
Registrable Securities to be offered pursuant to the Registration Statement and
enable such certificates for the Registrable Securities to be in such
denominations or amounts as the case may be, as the Investor may reasonably
request, and, within five (5) business days after a Registration Statement which
includes Registrable Securities is ordered effective by the SEC, the Company
shall deliver, and shall cause legal counsel selected by the Company to deliver,
to the transfer agent for the Registrable Securities (with copies to the
Investor whose Registrable Securities or securities convertible into Registrable
Securities are included in such Registration Statement) an appropriate
instruction and opinion of such counsel; provided, however, that nothing in this
subparagraph (j) shall be deemed to waive any of the provisions regarding the
conditions or method of conversion of the Debentures into Registrable
Securities; and

            (l) Take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities pursuant to
the Registration Statement.

            4. Obligations of the Investor. In connection with the registration
of the Registrable Securities, Investor shall have the following obligations:

            (a) As a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a

                                       7
<PAGE>

particular Investor, Investor shall furnish to the Company such information
regarding itself, the Registrable Securities held by it, and the intended method
of disposition of the Registrable Securities held by it, as shall be reasonably
required to effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request. At least five (5) days prior to the first anticipated filing
date of the Registration Statement, the Company shall notify Investor of the
information the Company requires from Investor (the "Requested Information") if
Investor elects to have any of its Registrable Securities included in the
Registration Statement. If at least two (2) business days prior to the filing
date the Company has not received the Requested Information from an Investor (a
"Non-Responsive Investor"), then the Company may file the Registration Statement
without including Registrable Securities of such Non-Responsive Investor;

            (b) To cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless Investor has notified the Company in writing of its
election to exclude all of its Registrable Securities from the Registration
Statement; and

            (c) Upon receipt of any notice from the Company of the happening of
any event of the kind described in Section 3(e) or 3(f), above, Investor shall
immediately discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until Investor's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 3(e) or 3(f) and, if so directed by the Company, Investor shall deliver
to the Company (at the expense of the Company) or destroy (and deliver to the
Company a certificate of destruction) all copies in Investor's possession, of
the prospectus covering such Registrable Securities current at the time of
receipt of such notice.

            5. Expenses of Registration. (a) All reasonable expenses (other than
underwriting discounts and commissions of Investor) incurred in connection with
registrations, filings or qualifications pursuant to Section 3, including,
without limitation, all registration, listing, and qualifications fees, printers
and accounting fees, the fees and disbursements of counsel for the Company, and
a reasonable fee for Investor's legal counsel not exceeding $5,000, shall be
borne by the Company.

            (b) Except as and to the extent specifically set forth in Schedule
5(b) attached hereto, neither the Company nor any of its subsidiaries has, as of
the date hereof, nor shall the Company nor any of its subsidiaries, on or after
the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Investor herein
or otherwise conflicts with the provisions hereof. Except as and to the extent
specifically set forth in Schedule 5(b) attached hereto, neither the Company nor
any of its subsidiaries has previously entered into any agreement granting any
registration rights with respect to any of its securities to any person or
entity. Without limiting the generality of the foregoing, without the written
consent of the Investor, the Company shall not grant to any person the right to
request the Company to register any securities of the Company under the
Securities Act unless the rights so

                                       8
<PAGE>

granted are subject in all respects to the prior rights in full of the Investor
set forth herein, and are not otherwise in conflict or inconsistent with the
provisions of this Agreement.

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

            (a) To the extent permitted by law, the Company will indemnify and
hold harmless Investor, its directors, officers, managers, representatives,
agents and "controlling persons" within the meaning of the Securities Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (each, an
"Indemnified Person" or "Indemnified Party"), against any losses, claims,
damages, liabilities or expenses (joint or several) incurred (collectively,
"Claims") to which any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon any of the following statements, omissions or violations in the
Registration Statement, or any post-effective amendment thereof, or any
prospectus included therein: (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
post-effective amendment thereof or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) any untrue statement or alleged untrue
statement of a material fact contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation under the
Securities Act, the Exchange Act or any state securities law (the matters in the
foregoing clauses (i) through (iii) being, collectively, "Violations"). Subject
to clause (b) of this Section 6, the Company shall reimburse the Investor,
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by it in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a) shall not (I) apply to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof; (II) be available to the extent such Claim is based on a failure of the
Investor to deliver or cause to be delivered the prospectus made available by
the Company; or (III) apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld. Investor will indemnify the Company
and its officers, directors and agents against any claims arising out of or
based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company, by or on behalf of Investor,
expressly for use in connection with the preparation of the Registration
Statement, subject to such limitations and conditions as are applicable to the
Indemnification provided by the Company pursuant to this

                                       9
<PAGE>

Section 6. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the Indemnified Person and shall
survive the transfer of the Registrable Securities by the Investor pursuant to
Section 9.

            (b) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be. In case any such action is brought against any Indemnified Person
or Indemnified Party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such Indemnified Person or
Indemnified Party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such Indemnified Person or Indemnified
Party under this Section 6 for any reasonable legal or other reasonable
out-of-pocket expenses subsequently incurred by such Indemnified Person or
Indemnified Party in connection with the defense thereof other than reasonable
costs of investigation, unless the indemnifying party shall not pursue the
action of its final conclusion. The Indemnified Person or Indemnified Party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and reasonable out-of-pocket
expenses of such counsel shall not be at the expense of the indemnifying party
if the indemnifying party has assumed the defense of the action with counsel
reasonably satisfactory to the Indemnified Person or Indemnified Party. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person or Indemnified Party under this
Section 6, except to the extent that the indemnifying party is prejudiced in its
ability to defend such action. The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.

            7. Contribution. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 6 to the fullest extent permitted by
law; provided, however, that (a) no contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6; (b) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any seller
of Registrable Securities who was not guilty of such fraudulent
misrepresentation; and (c) contribution by any seller of Registrable Securities
shall be limited in

                                       10
<PAGE>

amount to the net amount of proceeds received by such seller from the sale of
such Registrable Securities.

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

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

            (b) use its best efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act; and

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

            9. Assignment of the Registration Rights. The rights to have the
Company register Registrable Securities pursuant to this Agreement shall be
automatically assigned by an Investor to any transferee of the Registrable
Securities (or all or any portion of any Debentures of the Company which is
convertible into such securities) permitted or allowable by the terms of the
Securities Purchase Agreement only if: (a) Investor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment, (b) the
Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (i) the name and address of such transferee or
assignee and (ii) the securities with respect to which such registration rights
are being transferred or assigned, (c) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act and applicable state securities
laws, and (d) at or before the time the Company received the written notice
contemplated by clause (b) of this sentence the transferee or assignee agrees in
writing with or in favor of the Company to be bound by all of the provisions
contained herein, a copy of which shall be provided to the Company. The copies
referred to in clauses (a) and (d) of the immediately preceding sentence may be
redacted to delete certain financial and other details of the transaction
between the Investor and its transferee if the same is included in the document
to be provided to the Company. In the event of any delay in filing or
effectiveness of the Registration Statement as a result of such assignment, the
Company shall not be liable for any damages arising from such delay, or the
payments set forth in Section 2(c) hereof.

            10. Amendment of Registration Rights. Any provision of each such
Agreement may be amended and the observance thereof may be waived (either
generally or in a

                                       11
<PAGE>

particular instance and either retroactively or prospectively), only with the
written consent of the Company and Investor. Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon Investor and the Company.

            11. Pre-funding of Tranche II. The Initial Investor hereby agrees
that within two (2) business days after the Escrow Agent (as defined in the
Securities Purchase Agreement) receives written notice from the Company that the
currently pending "Registration Statement" on Form S-3 (filed pursuant to the
November Registration Agreement) has been declared effective, the Initial
Investor shall pay to the Company $1,000,000 in full satisfaction of its
obligation to pay the "Second Tranche" as set forth in Section 1(a) of the
Securities Purchase Agreement. In lieu of the Company issuing a second 8%
Convertible Debenture for the sum of $1,000,000, as contemplated in Section 1(a)
of the Securities Purchase Agreement, the principal balance of the existing
Debenture shall be increased to the aggregate sum of $2,000,000.

            12. Miscellaneous.

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

            (b) Any notice or communication required or permitted by this
Agreement shall be given in writing addressed as follows:

         If to Company:             Microware Systems Corporation
                                    1500 Northwest 118th Street
                                    Des Moines, Iowa 50325
                                    ATTN: CFO
                                    Telephone No.: (515) 223-8000
                                    Telecopier No.: (515) 327-5528

         with a copy to:

                                    Arthur Don, Esq.
                                    D'Ancona & Pflaum, Esq.
                                    111 E. Wacker Drive, Ste. 2800
                                    Chicago, Illinois 60601
                                    Telephone No.: (312) 602-2000
                                    Telecopier No.: (312) 602-3000

If to Investor:
                                    c/o Navigator Management
                                    P.O. Box 972

                                       12
<PAGE>

                                    Road Town
                                    Tortola, British Virgin Islands
                                    Telephone No.: (284) 494-4770
                                    Telecopier No.: (284) 494-4771

All notices shall be served personally by telecopy, by telex, by overnight
express mail service or other overnight courier, or by first class registered or
certified mail, postage prepaid, return receipt requested. If served personally,
or by telecopy, notice shall be deemed delivered upon receipt (provided that if
served by telecopy, sender has written confirmation of delivery); if served by
overnight express mail or overnight courier, notice shall be deemed delivered
forty-eight (48) hours after deposit; and if served by first class mail, notice
shall be deemed delivered seventy-two (72) hours after mailing. Any party may
give written notification to the other parties of any change of address for the
sending of notices, pursuant to any method provided for herein.

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

            (d) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of California for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Any litigation based thereon, or arising out of,
under, or in connection with, this agreement or any course of conduct, course of
dealing, statements (whether oral or written) or actions of the Company or
Purchaser shall be brought and maintained exclusively in the state or Federal
courts of the State of California, sitting in the City of Los Angeles. The
Company hereby expressly and irrevocably submits to the jurisdiction of the
state and federal Courts of the State of California for the purpose of any such
litigation as set forth above and irrevocably agrees to be bound by any final
judgment rendered thereby in connection with such litigation. The Company
further irrevocably consents to the service of process by registered mail,
postage prepaid, or by personal service within or without the State of
California. The Company hereby expressly and irrevocably waives, to the fullest
extent permitted by law, any objection which it may have or hereafter may have
to the laying of venue of any such litigation brought in any such court referred
to above and any claim that any such litigation has been brought in any
inconvenient forum. To the extent that the Company has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution or otherwise) with respect to itself or its property, the Company
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement and the related agreements entered into in connection herewith.

            (e) If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of

                                       13
<PAGE>

the remainder of this Agreement or the validity or enforceability of this
Agreement in any other jurisdiction.

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

            (g) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.

            (h) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning thereof.

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

            (j) The Company acknowledges that any failure by the Company to
perform its obligations under Section 3(a) hereof, or any delay in such
performance could result in loss to the Investors, and the Company agrees that,
in addition to any other liability the Company may have by reason of such
failure or delay, the Company shall be liable for all direct damages caused by
any such failure or delay, unless the same is the result of force majeure.
Neither party shall be liable for consequential damages.

            (k) This Agreement, the Securities Purchase Agreement and the other
documents referenced therein constitute the entire agreement among the parties
hereto with respect to the subject matter hereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof. This Agreement may
be amended only by an instrument in writing signed by the party to be charged
with enforcement thereof.

            (l) Any default by an individual Investor hereunder or any related
agreement, including, without limitation, the Securities Purchase Agreement,
shall not be deemed a default by any other Investor and shall not excuse the
Company's performance hereunder or thereunder with respect to the non-defaulting
Investors.

            (m) In the event of any action for breach of or to enforce or
declare rights under any provision of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees and costs, to be paid by the losing
party.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       14
<PAGE>

            IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.

                       Microware Systems Corporation, an Iowa corporation

                       By: /s/ George Leonard
                       Name: George Leonard
                       Title: EVP, CFO and COO

                       Elder Court, LLC, a Cayman Islands limited liability
                       company

                       By: ______________________________
                                Manager

                                       15

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