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                                                                     EXHIBIT 4.2


                   CERTIFICATE OF DESIGNATIONS OF THE POWERS,
                PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL
                 AND OTHER SPECIAL RIGHTS OF PREFERRED STOCK AND
                  QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS
                                     THEREOF

                                       OF

               SERIES D 5% CUMULATIVE CONVERTIBLE PREFERRED STOCK

                                       FOR

                       CHROMAVISION MEDICAL SYSTEMS, INC.


        CHROMAVISION MEDICAL SYSTEMS, INC., a Delaware corporation (the
"CORPORATION"), pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, does hereby make this Certificate of
Designations and does hereby state and certify that pursuant to the authority
expressly vested in the Board of Directors of the Corporation by the Certificate
of Incorporation of the Corporation, as amended to date, the Board of Directors
duly adopted the following resolutions, which resolutions remain in full force
and effect as of the date hereof:

        RESOLVED, that, pursuant to Section 4 of the Certificate of
Incorporation of the Corporation, as amended to date, the Board of Directors
hereby authorizes the issuance of, and fixes the designation and preferences and
relative, participating, optional and other special rights, and qualifications,
limitations and restrictions, of a series of preferred stock of the Corporation
consisting of 12,500 shares, par value $0.01, to be designated "Series D 5%
Cumulative Convertible Preferred Stock."

        RESOLVED, that each share of Series D 5% Cumulative Convertible
Preferred Stock shall rank equally in all respects and shall be subject to the
following terms and provisions:

        1. DESIGNATION. There is hereby created out of the authorized and
unissued shares of the preferred stock of the Corporation a series of preferred
stock designated as the "Series D 5% Cumulative Convertible Preferred Stock."
The number of shares (the "PREFERRED SHARES") constituting such series shall be
12,500.

        2. DIVIDENDS.

               (a) Cumulative. The holders of the Preferred Shares shall be
entitled to receive cumulative dividends at the per share rate of five percent
(5%) per annum (i.e., two and one-half percent (2 1/2%) semi-annually) of the
Liquidation Value (as defined below) of each outstanding Preferred Share,
accruing daily from the date of issuance and compounded on June 30th and
December 31st 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

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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
purposes of computing any per diem accrual, calculations shall be made using a
360-day year.

               (b) Stock Payment or Cash Payment. The Corporation shall pay the
dividends payable on the outstanding Preferred Shares on each Dividend Payment
Date either in cash or in shares of common stock, par value $0.01, of the
Corporation ("COMMON STOCK"), at the Corporation's option (subject to the terms
hereof), provided that accrued but unpaid dividends on any Preferred Shares
which are redeemed or repurchased hereunder or otherwise shall be paid in cash
concurrently with such redemption or repurchase. Unless the Corporation shall
deliver to all holders of Preferred Shares an irrevocable written notice
("DIVIDEND NOTICE") at least twenty-five (25) Trading Days (as defined below)
prior to any Dividend Payment Date electing to pay dividends on the Preferred
Shares in shares of Common Stock on such Dividend Payment Date, the Corporation
shall pay dividends on the Preferred Shares in cash. If the Corporation timely
elects to so pay dividends in Common Stock, then the number of such shares to be
issued on such Dividend Payment Date shall be the number determined by dividing
(x) the dollar amount of dividends due, by (y) 95% of the average of the closing
bid prices per share of Common Stock over the five (5) consecutive Trading Days
immediately preceding such Dividend Payment Date as reported by the Principal
Market. Such shares shall be issued and delivered within three (3) Trading Days
following the applicable Dividend Payment Date and shall be duly authorized,
validly issued, fully paid, non-assessable and free and clear of all
encumbrances, restrictions and legends. If the Corporation fails to issue such
shares of Common Stock in such manner within such 3-Trading Day period following
the Dividend Payment Date, then the holders of Preferred Shares shall have the
right to elect whether to receive such dividends in cash or Common Stock.

               Notwithstanding anything to the contrary contained herein, the
Corporation may not pay dividends hereunder in shares of Common Stock (and must
deliver cash in respect thereof) if as of the Dividend Payment Date there is no
Effective Registration (as defined in the Purchase Agreement, defined below) or:

                      (1)    the number of shares of Common Stock at the time
                             authorized, unissued and unreserved for all
                             purposes, or held as treasury stock, is
                             insufficient to issue the number of shares issuable
                             upon conversion of all Preferred Shares at the then
                             applicable Conversion Price;


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                      (2)    the Corporation (together with its subsidiaries on
                             a consolidated basis) does not have current assets
                             exceeding its current liabilities (as determined in
                             accordance with generally accepted accounting
                             principles) or is unable to pay all its debts as
                             they become due in the ordinary course of business,
                             or the Corporation is subject to any liquidation,
                             dissolution or winding up of its affairs, or the
                             Corporation or its assets is subject to any
                             bankruptcy, insolvency, reorganization or similar
                             proceeding;

                      (3)    the Corporation shall have failed to pay any
                             dividend payments when due on more than one
                             occasion; or

                      (4)    such issuance would cause the ownership limitations
                             contained in Section 5(j) below to be violated.

Each holder of Preferred Shares agrees that it shall notify the Corporation in
writing within ten (10) Trading Days following any Dividend Notice (or within
ten (10) Trading Days following the existence of such condition, if later) if
the Corporation will be unable to pay dividends in Common Stock in full on the
applicable Dividend Payment Date without violation of the ownership limitations
contained in subsections (A) and (B) of Section 5(j) below. Each such holder
further agrees not to purchase any shares of Common Stock (other than Common
Stock issuable upon conversion, exercise or exchange of Securities (as defined
in the Purchase Agreement)) following such Dividend Notice to the extent any
such purchase could reasonably be expected to prevent payment of dividends in
Common Stock in whole or in part on the applicable Dividend Payment Date without
violation of the ownership limitations contained in subsections (A) and (B) of
Section 5(j) below. In the event the Corporation is unable to pay any dividends
in Common Stock in full on the applicable Dividend Payment Date without
violation of the ownership limitations contained in subsections (A) and (B) of
Section 5(j) below due solely to such holder of Preferred Shares owning shares
of Common Stock purchased on an Approved Market or from a third party (other
than Common Stock received upon conversion, exercise or exchange of Securities),
then the Corporation's obligation to issue such shares of Common Stock as a
dividend which would exceed such limits referred to in such subsections 5(j)(A)
and (B) shall be suspended to the extent necessary until such time as shares of
Common Stock may be issued in compliance with such restrictions, and the
Corporation shall have no obligation to pay such dividends in cash during such
suspension, provided that the number of such shares to be issued shall be
determined as of the applicable Dividend Payment Date, not the date on which the
shares are actually issued.

        3. LIQUIDATION VALUE. 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 all
accrued but unpaid dividends thereon and all liquidated damages


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payable under Section 2(b) of the Registration Rights Agreement which have not
yet been paid (collectively, the "LIQUIDATION VALUE"). The foregoing shall not
affect any rights which holders of Preferred Shares may have with respect to any
requirement that the Corporation repurchase the Preferred Shares or for any
right to monetary damages.

        4. ISSUANCE OF PREFERRED SHARES. The Preferred Shares shall be issued by
the Corporation pursuant to a Purchase Agreement, dated on or about the date
hereof ("PURCHASE AGREEMENT") between the Corporation and the initial subscriber
or subscribers for the Preferred Shares thereunder (collectively, the
"SUBSCRIBER"), and holders of Preferred Shares shall enjoy the benefits of the
Registration Rights Agreement, dated on or about the date hereof ("REGISTRATION
RIGHTS AGREEMENT") between such parties in connection with the Purchase
Agreement.

        5. CONVERSION. Subject to the terms hereof, 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, free and clear of any liens, claims or encumbrances, as is
determined by dividing (i) the Liquidation Value multiplied by the number of
Preferred Shares being converted, by (ii) the applicable Conversion Price (as
defined in Section 5(b) below) determined as hereinafter provided in effect on
the Conversion Date (subject to the limitations set forth in this Section 5).
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 1 of Exhibit A hereto (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"). Within one Trading Day following delivery of
any such Conversion Notice, the holder shall deliver (which also may be
delivered by facsimile transmission) page 2 to Exhibit A hereto indicating the
computation of the number of Common Shares to be received. As soon as possible
after delivery of the Conversion Notice and subject to the book-entry provisions
set forth below, 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 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


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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
reputable overnight delivery service to reach the address designated by such
holder within three (3) Trading Days after the receipt of such Conversion
Notice. 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 or in payment of dividends hereunder, 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 commercially reasonable
best efforts to cause its transfer agent to electronically transmit the Common
Shares issuable upon conversion or dividend payment 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,
and for delivery of Common Stock in payment of dividends hereunder, 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 Corporation's obligation to issue Common Shares upon
conversion of Preferred Shares shall 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 of Designations, the Purchase Agreement, the
Registration Rights Agreement, the Warrants (as defined in the Purchase
Agreement) or otherwise.

                      Book-Entry. Notwithstanding anything to the contrary set
forth herein, upon conversion of any Preferred Shares in accordance with the
terms hereof, the holder thereof shall not be required to physically surrender
such holder's certificates for Preferred Shares to the Corporation unless such
holder is converting all of the Preferred Shares then held by such holder. The
holders of Preferred Shares and the Corporation shall maintain records showing
the number of Preferred Shares so converted hereunder, the number of Common
Shares received upon conversion and the dates of such conversions, or shall use
such other method, reasonably satisfactory to the holders and the Corporation,
so as not to require physical surrender of certificates for Preferred Shares
upon each such conversion. Notwithstanding the foregoing, if any Preferred
Shares are converted as aforesaid, such holder of Preferred Shares may not
transfer its Preferred Shares unless such holder first physically surrenders to
the Corporation all certificates representing any Preferred Shares which have
previously been converted in


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whole or in part, whereupon the Corporation will forthwith issue and deliver
upon the order of such holder new certificate(s) evidencing Preferred Shares,
registered as such holder may request, representing in the aggregate, together
with all other certificates evidencing Preferred Shares held by such holder, the
remaining number of Preferred Shares held by such holder. Each holder of
Preferred Shares (and any successor in interest or assignee), by acceptance of
Preferred Shares, acknowledges that, by reason of the provisions of this
paragraph, following conversion of any Preferred Shares, the number of Preferred
Shares actually owned by such holder may be less than the number of Preferred
Shares set forth on the face of the certificates representing Preferred Shares
and held by such holder.

               (b) Determination of Conversion Price.

                      For purposes of this Certificate of Designations, the
following terms shall have meanings ascribed to them below:

                      "CHANGE IN CONTROL TRANSACTION" will be deemed to exist if
        (i) there occurs any consolidation, merger or other business combination
        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 any of such events the voting stockholders of
        the Corporation prior to such event cease to own 50% or more of the
        voting stock, or corresponding voting equity interests, of the surviving
        corporation after such event (including without limitation any "going
        private" transaction under Rule 13e-3 promulgated pursuant to the
        Exchange Act or tender offer by the Corporation under Rule 13e-4
        promulgated pursuant to the Exchange Act for 20% or more of the
        Corporation's Common Stock), (ii) any person (as defined in Section
        13(d) of the Exchange Act), together with its affiliates and associates
        (as such terms are defined in Rule 405 under 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 immediately prior to any such
        replacement, (iv) in one or a series of related transactions, there is a
        sale or transfer of all or substantially all of the assets of the
        Corporation, determined on a consolidated basis, or (v) the Corporation
        enters into an agreement providing for an event set forth in (i), (ii),
        (iii) or (iv) above, pursuant to which the Common Stock is converted or
        reclassified into other securities, cash or property.

                      "CLOSING PRICE" shall mean the average VWAP over the five
        (5) Trading Days immediately preceding the Closing Date (as defined in
        the Purchase Agreement), as such Closing Price may be adjusted pursuant
        to the terms of this Certificate of Designations.


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                      "CONVERSION PRICE" shall mean 115% of the Closing Price
        ("INITIAL CONVERSION PRICE"), provided, however, that on the one-year
        anniversary of the Closing Date, the Conversion Price hereunder shall be
        automatically adjusted to (and shall thereafter equal, until further
        adjusted) a price equal to the lesser of (A) the Initial Conversion
        Price and (B) the average VWAP during the Pricing Period, provided that
        the Conversion Price shall not be adjusted to a figure that is less than
        the Floor Price, except pursuant to an adjustment required under Section
        5(c) below, and provided, further, that following the occurrence of any
        Interfering Event (as defined in the Registration Rights Agreement) upon
        which the holders of Preferred Shares have a right to sell any or all
        Preferred Shares to the Corporation, the Conversion Price hereunder
        shall equal the lesser of (a) the then applicable Conversion Price, and
        (b) the lowest closing bid price for the Common Stock on the Principal
        Market over the five Trading Days immediately preceding the Conversion
        Date or redemption date; in each case such Conversion Price shall be
        subject to adjustment (or further adjustment, as the case may be) from
        time to time pursuant to the terms of this Certificate of Designations
        (including without limitation pursuant to Section 5(c) below).

                      "CONVERTIBLE SECURITIES" means any convertible securities,
        warrants, options or other rights to subscribe for or to purchase or
        exchange for, shares of Common Stock.

                       "FLOOR PRICE" shall mean 70% of the Closing Price, as
        such figure shall be appropriately and equitably adjusted pursuant to
        any stock splits, stock dividends and similar events.

                      "PRICING PERIOD" shall mean the period of fifteen (15)
        consecutive Trading Days immediately preceding the one-year anniversary
        of the Closing Date.

                      "MFN TRANSACTION" shall mean a transaction in which the
        Corporation issues or sells any securities in a capital raising
        transaction or series of related transactions (the "MFN OFFERING") which
        grants to the investor (the "MFN INVESTOR") the right to receive
        additional securities based upon future capital raising transactions of
        the Corporation on terms more favorable than those granted to the MFN
        Investor in the MFN Offering.

                      "PER SHARE SELLING PRICE" shall include the amount
        actually paid by third parties for each share of Common Stock in a sale
        or issuance by the Corporation. In the event a fee is paid by the
        Corporation in connection with such transaction directly or indirectly
        to such third party or its affiliates, any such fee shall be deducted
        from the selling price pro rata to all shares sold in the transaction to
        arrive at the Per Share Selling Price. A sale of shares of Common Stock
        shall include the sale or issuance of rights, options, warrants or
        convertible, exchangeable or exercisable securities under which the
        Corporation is or may become obligated to issue shares of Common Stock,
        and in such circumstances


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        the Per Share Selling Price of the Common Stock covered thereby shall
        also include the exercise, exchange or conversion price thereof (in
        addition to the consideration received by the Corporation upon such sale
        or issuance less the fee amount as provided above). In case of any such
        security issued in a Variable Rate Transaction or an MFN Transaction,
        the Per Share Selling Price shall be deemed to be the lowest conversion
        or exercise price at which such securities are converted or exercised or
        could be converted or exercised in the case of a Variable Rate
        Transaction, or the lowest adjustment price in the case of an MFN
        Transaction, over the life of such securities. If shares are issued for
        a consideration other than cash, the Per Share Selling Price shall be
        the fair value of such consideration as determined in good faith by
        independent certified public accountants mutually acceptable to the
        Corporation and the Purchaser. In the event the Corporation directly or
        indirectly effectively reduces the conversion, exercise or exchange
        price for any Convertible Securities which are currently outstanding,
        then the Per Share Selling Price shall equal such effectively reduced
        conversion, exercise or exchange price.

                      "PRINCIPAL MARKET" shall mean the NASDAQ National Market
        System or such other principal market or exchange on which the Common
        Stock is then listed for trading.

                       "TRADING DAY" shall mean a day on which there is trading
        on the NASDAQ National Market System or such other market or exchange on
        which the Common Stock is then principally traded.

                      "VARIABLE RATE TRANSACTION" shall mean a transaction in
        which the Corporation issues or sells (a) any debt or equity securities
        that are convertible into, exchangeable or exercisable for, or include
        the right to receive additional shares of Common Stock either (x) at a
        conversion, exercise or exchange rate or other price that is based upon
        and/or varies with the trading prices of or quotations for the Common
        Stock at any time after the initial issuance of such debt or equity
        securities, or (y) with a fixed conversion, exercise or exchange price
        that is subject to being reset at some future date after the initial
        issuance of such debt or equity security or upon the occurrence of
        specified or contingent events directly or indirectly related to the
        business of the Corporation or the market for the Common Stock (but
        excluding standard stock split anti-dilution provisions), or (b) any
        securities of the Corporation pursuant to an "equity line" structure
        which provides for the sale, from time to time, of securities of the
        Corporation which are registered for resale pursuant to the Securities
        Act.

                      "VWAP" shall mean the daily volume-weighted average sale
        price for the Common Stock on the Principal Market on any particular
        Trading Day as reported on Bloomberg's, as such figure may be adjusted
        pursuant hereto.


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               (c) Stock Splits; Dividends; Adjustments.

                      (i) Stock Splits, Dividends, Etc. If the Corporation or
        any of its subsidiaries, 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 other than a stock dividend
        on the Preferred Shares pursuant to Section 2 above, (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 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 Conversion
        Price, (ii) the Floor Price, and (iii) each VWAP occurring on any
        Trading Day included in the period used for determining the Closing
        Price, the Conversion Price or the Floor Price, 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 before the effective date in
        the case of the events referred to in clauses (B) and (C) of this
        subparagraph 5(c)(i).

                      (ii) Distributions. If the Corporation or any of its
        subsidiaries, 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) 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 (without regard to any limitations on
        ownership contained herein).

                      (iii) Common Stock Issuances. In the event that the
        Corporation or any of its subsidiaries (X) issues or sells any Common
        Stock or Convertible Securities or (Y) directly or indirectly
        effectively reduces the conversion, exercise or exchange price for any
        Convertible


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        Securities which are currently outstanding, in any case under clause (X)
        or (Y) at or to an effective Per Share Selling Price which is less than:

                             (A) the closing sale 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"), then
                      in each such case, each Affected Conversion Price in
                      effect immediately prior to such issue or sale or record
                      date, as applicable, shall be automatically reduced
                      effective concurrently with such issue or sale to an
                      amount determined by multiplying each Affected Conversion
                      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 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 Fair Market Price, and (y) the denominator of which
                      shall be the number of shares of Common Stock of the
                      Corporation outstanding immediately after such issue or
                      sale; or

                             (B) the then applicable Conversion Price, then in
                      each such case, the Conversion Price in effect immediately
                      prior to such issue or sale or record date, as applicable,
                      shall be automatically reduced effective concurrently with
                      such issue or sale to an amount equal to such Per Share
                      Selling Price.

               The foregoing provision of this Section 5(c)(iii) shall not apply
        to sales or issuances of shares of Common Stock or rights to purchase or
        acquire Common Stock from the Corporation (1) pursuant to the
        Corporation's employee, officer or director bona fide stock option or
        stock incentive plans and programs duly adopted by the Corporation's
        Board of Directors, (2) to consultants as reasonable compensation for
        services rendered, (3) up to 657,150 shares of Common Stock at a minimum
        purchase price of $7 per share pursuant to the existing agreement
        between the Corporation and VennWorks LLC entered into in January 2001
        (such 657,150 shares and $7 figure subject to appropriate and equitable
        adjustment for stock splits, stock dividends and similar standard
        anti-dilution events), (4) upon exercise of warrants to purchase up to
        56,070 shares of Common Stock issued to a wholly owned subsidiary of
        Safeguard Scientifics, Inc. and VennWorks LLC in September 2000 at an
        exercise price of $12.48 per share (subject to appropriate and equitable
        adjustment for stock splits, stock dividends and similar standard
        anti-


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        dilution events) or (5) pursuant to an underwritten public offering by
        the Corporation (excluding "equity line" transactions or issuances under
        a "shelf" registration statement) resulting in net proceeds to the
        Corporation in excess of $20 million.

               For the purposes of the foregoing adjustments of this Section
        5(c)(iii), in the case of the issuance of any 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.

               For purposes of this Section 5(c)(iii), if an event occurs that
        triggers more than one of the above adjustment provisions, then only one
        adjustment shall be made and the calculation method which yields the
        greatest downward adjustment in the Conversion Price shall be used.

                      (iv) 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.

                      (v) No adjustment in the Conversion Price shall reduce the
        Conversion Price below the then par value of the Common Stock, provided
        that the Corporation shall not increase such par value so long as any
        Preferred Shares are outstanding.

                      (vi) The Corporation from time to time may reduce the
        Conversion Price by any amount for any period of time if the reduction
        is irrevocable during the period. Whenever the Conversion Price is so
        reduced, the Corporation shall mail to the holders of Preferred Shares a
        notice of the reduction. The Corporation shall facsimile and mail, first
        class, postage prepaid, the notice at least 3 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 Sections 5(c)(i) or
        (ii) above.

               (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 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 ten (10)
Trading 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.


                                       11
<PAGE>   12

               (e) Issue Taxes. The Corporation shall pay any and all issue,
documentary, stamp 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, or payment of dividends on, 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 or dividend payment
thereon 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 at least (i) 200%
of the number of shares issuable upon conversion of the Preferred Shares at the
then applicable Conversion Price (without regard to any limitations or
restrictions set forth herein), and (ii) 100% of the number of shares issuable
upon payment of all dividends hereunder in Common Stock for a dividend payment
period of three years after the Closing Date. 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 commercially reasonable best efforts to obtain any
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 shall be aggregated for purposes of determining whether the conversion
would result in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion 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 Securities Exchange Act
of 1934, as amended, 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 unless the holders of a majority of


                                       12
<PAGE>   13

the outstanding Preferred Shares consent to such terms of such new securities
(including any affirmative vote to approve the transaction or adopt the
agreement pursuant to which the transaction is to be effected). 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 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)(ii) above and such Section
shall also apply to such distribution. Nothing contained in this paragraph shall
affect the repurchase rights of holders of Preferred Shares set forth in Section
5(m) below, provided that the rights contained in this paragraph may not be
exercised to the extent that a holder's Preferred Shares have been repurchased
pursuant to Section 5(m) below. Any such distribution shall be taken into
account in determining the economic equivalent position of a holder of Preferred
Shares as provided above (provided that such holder shall be in no worse
position than a stockholder of the Corporation holding the same number of shares
of Common Stock as such holder of Preferred Shares on an as-converted basis).

               (i) Automatic Redemption and Forced Conversion.

                      (1) Automatic Redemption. On the third (3rd) anniversary
        of the Closing Date (as defined in the Purchase Agreement) ("AUTOMATIC
        REDEMPTION DATE"), the Corporation shall redeem all outstanding
        Preferred Shares for cash at a redemption price per share equal to the
        Liquidation Value. Such cash payment shall be made on such Automatic
        Redemption Date or, if not a Trading Day, on the first Trading Day
        thereafter. If such cash payment is not paid in full within three (3)
        Trading Days following the Automatic Redemption Date, then the
        Corporation shall redeem all outstanding Preferred Shares for cash at
        the Premium Redemption Price (as defined in the Registration Rights
        Agreement). In addition, any such cash payments shall accrue interest at
        a rate equal to the lesser of 20% per annum or the highest rate
        permitted by law, until paid.

                      (2) Forced Conversion. Subject to Subsections 5(i)(3) and
        5(i)(4) below, in the event that after the first anniversary of the
        Closing Date (as defined in the Purchase Agreement) the VWAP for at
        least twenty (20) out of thirty (30) consecutive Trading Days occurring
        after such first anniversary equals or exceeds 175% of the Initial
        Conversion Price, the Corporation shall have the right to compel holders
        of Preferred Shares (on a pro rata basis) to convert all or a portion of
        their Preferred Shares at the Conversion Price in effect on the
        conversion date; provided, however, that (1) the Corporation shall
        provide at least twenty-five (25) Trading Days prior written notice
        ("FORCED CONVERSION NOTICE") to all holders of its election hereunder,
        specifying the conversion date ("FORCED CONVERSION DATE") and the number
        of shares to be converted, (2) the VWAP shall equal or exceed the
        Conversion Price at the time of such election notice and on each Trading
        Day thereafter through and including the Forced Conversion Date, (3)
        there shall be Effective Registration at the time such 30-Trading Day
        period commenced and all times thereafter through and including the
        Forced Conversion Date, and (4) holders of Preferred Shares may continue
        to convert any or all of their Preferred Shares after receiving the
        Corporation's


                                       13
<PAGE>   14

        election notice under this Section 5(i)(2) (which conversions shall be
        applied against the number of Preferred Shares required to be converted
        on the Forced Conversion Date). Such forced conversion shall be subject
        to and governed by all the provisions relating to voluntary conversion
        of the Preferred Shares contained herein.

                      (3) Ownership Limitation. Notwithstanding anything
        contained in subsection (2) above, no holder's Preferred Shares shall be
        subject to forced conversion to the extent such conversion would result
        in the holder of Preferred Shares exceeding or violating the limitations
        or provisions contained in Section 5(j) below. In such event, the
        Preferred Shares of such holder shall be converted to the extent such
        limitations are not exceeded or violated, and the Corporation's
        obligation to issue such Common Shares which would exceed such limits
        referred to in such Section 5(j) shall be suspended to the extent
        necessary until such time as shares of Common Stock may be issued in
        compliance with such restrictions, but following satisfaction of the
        condition precedent contained in this Section 5(i)(3), such holder of
        Preferred Shares shall be obligated to convert such Preferred Shares
        regardless of whether the VWAP equals or exceeds the Conversion Price on
        any Trading Day during such suspension or at the time of actual
        conversion following such suspension.

                      (4) Conditions Precedent. Notwithstanding the preceding
        subsection (2), no holder of Preferred Shares shall be obligated to
        convert any Preferred Shares held by such holder on the Forced
        Conversion Date 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 (waivable by any holder with respect to
        such holder's Preferred Shares):

                             (A) There shall be Effective Registration;

                             (B) There shall not have occurred a Change in
                      Control Transaction or the public announcement of a
                      pending Change in Control Transaction which has not been
                      abandoned or terminated; and

                             (C) The total number of Common Shares issuable
                      hereunder (regardless of any limitations contained herein)
                      shall have been duly authorized and reserved for issuance.

               (j) Limitations on Holder's Right to Convert.

                             (A) 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
        (including the Preferred Shares) that have


                                       14
<PAGE>   15
        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 (other than by virtue of the
        ownership of securities or rights to acquire securities that have
        limitations on the right to convert, exercise or purchase similar to the
        limitation set forth herein) 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 9.9% of
        the total issued and outstanding shares of the Common Stock (the
        "RESTRICTED OWNERSHIP PERCENTAGE" ). Each holder shall have the right
        (w) at any time and from time to time to reduce its Restricted Ownership
        Percentage immediately upon notice to the Corporation in the event and
        only to the extent that Section 16 of the Exchange Act or the rules
        promulgated thereunder (or any successor statute or rules) is changed to
        reduce the beneficial ownership percentage limitation thereunder from
        10%, and (x) (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 or any other transaction in which in
        excess of 50% of the Corporation's voting control is transferred in one
        or a series of related transactions (whether by transfer, merger,
        consolidation or otherwise) or there is a replacement of more than 50%
        of the members of the Board of Directors of the Corporation with out the
        prior approval of the incumbent directors.

                             (B) The holder covenants at all times on each day
        (each such day being referred to as a "Covenant Day") as follows: During
        the balance of such Covenant Day and the succeeding sixty-one (61) days
        (the balance of such Covenant Day and the succeeding 61 days being
        referred to as the "Covenant Period") such holder will not acquire
        shares of Common Stock pursuant to any right (including conversion of
        Preferred Shares) existing at the commencement of the Covenant Period to
        the extent the number of shares so acquired by such holder and its
        Aggregation Parties (ignoring all dispositions) would exceed:

                      (x)    the Restricted Ownership Percentage of the total
                             number of shares of Common Stock outstanding at the
                             commencement of the Covenant Period, minus

                      (y)    the number of shares of Common Stock actually owned
                             by such holder and its Aggregation Parties at the
                             commencement of the Covenant Period.

        A new and independent covenant will be deemed to be given by the holder
        as of each moment of each Covenant Day. No covenant will terminate,
        diminish or modify any other covenant. The holder agrees to comply with
        each such covenant. This Section 5(j)(B) controls in the case of any
        conflict with any other provision of the Purchase Agreement or any
        agreement or document entered into in connection therewith.


                                       15
<PAGE>   16

        The Corporation's obligation or right to issue Common Shares which would
        exceed such limits referred to in this Section 5(j) shall be suspended
        to the extent necessary until such time, if any, as shares of Common
        Stock may be issued in compliance with such restrictions.

                             (C) 19.9% Limitation. Notwithstanding anything
        contained herein, without prior stockholder approval, in no event shall
        the Corporation issue shares of Common Stock hereunder to the extent
        that the total number of shares issued or deemed issued to the
        Subscribers under the Purchase Agreement would exceed 19.9% of the
        Corporation's issued and outstanding shares of Common Stock on the date
        of the Purchase Agreement. Only shares acquired pursuant to the Purchase
        Agreement, Preferred Shares and Warrants (as defined in the Purchase
        Agreement) will be included in determining whether the limitations would
        be exceeded for purposes of this paragraph.

                             (D) Each holder of Preferred Shares agrees that,
        following its receipt of any Forced Conversion Notice or Dividend
        Notice, such holder shall use its commercially reasonable best efforts
        to promptly divest itself of shares of Common Stock purchased on an
        Approved Market prior to the applicable Forced Conversion Date or
        Dividend Payment Date, as the case may be, to the extent necessary to
        permit (1) such forced conversion of the number of Preferred Shares
        elected by the Corporation in the Forced Conversion Notice, or (2) such
        dividend payment in Common Stock, as the case may be, without violation
        of the limitations contained in subsections (A) and (B) of this Section
        5(j).

                             (E) Notwithstanding the foregoing, paragraphs (A),
        (B) and (D) of this Section 5(j) shall not apply to any holder which, on
        the date hereof, prior to the acquisition of any Preferred Shares,
        shall, together with any Aggregation Parties of such holder, be the
        beneficial owner of an amount of shares of Common Stock (excluding
        ownership by virtue of securities or rights to acquire securities that
        have limitations on the right to convert, exercise or purchase similar
        to the limitation set forth above) in excess of 10% of the issued and
        outstanding shares of Common Stock for so long as such holder maintains
        such beneficial ownership in excess of 10%.

               (k) 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 and setting forth a brief
statement of the facts requiring such adjustment or readjustment.

               (l) Specific Enforcement. The Corporation agrees that irreparable
damage would occur in the event that any of the provisions of this Certificate
of Designations were not performed in accordance with their specific terms or
were otherwise breached. Each holder of Preferred Shares and each permitted
assignee shall have all rights and remedies set forth in this Certificate and
all rights and remedies which such holders have been granted at any time under
any other agreement or contract and all of the rights


                                       16
<PAGE>   17

which such holders have under any law. Any person having any rights under any
provision of this Certificate shall be entitled to enforce such rights
specifically or pursue other injunctive relief or other equitable remedies
(without posting a bond or other security), to recover damages by reason of any
breach of any provision of this Certificate and to exercise all other rights
granted by law. Each holder of Preferred Shares and each permitted assignee
without prejudice may withdraw, revoke or suspend its pursuit of any remedy at
any time prior to its complete recovery as a result of such remedy.

               (m) Mandatory Repurchase. Each holder shall have the unilateral
option and right to compel the Corporation to repurchase any or all of such
holder's Preferred Shares within 3 days of a written notice requiring such
repurchase, at a price per Preferred Share equal to 120% of the Liquidation
Value then in effect as of the date of such holder's exercise of such repurchase
option if any Change in Control Transaction shall be announced as pending or
planned or any Change in Control Transaction shall otherwise occur, provided
that the Corporation shall not be obligated to pay such repurchase price and so
repurchase such Preferred Shares unless and until the date of consummation of
such Change in Control Transaction occurs.

        6. VOTING RIGHTS. The holders of Preferred Shares shall have the right
to vote, in connection with any matter voted upon by, and as a single class
with, the holders of Common Stock of the Corporation, with each such holder
having one vote for each Common Share into which such holder's Preferred Shares
are then convertible hereunder (for clarification purposes, after applying the
limitations contained in, and without violating the provisions of, Section 5(j)
above). In addition to all other requirements imposed by Delaware law, and all
other voting rights granted under the Corporation's Certificate of
Incorporation, the affirmative vote of a majority of the Corporation's
outstanding Preferred Shares shall be necessary for (i) any amendment,
modification or repeal of this Certificate of Designations (whether by merger,
consolidation, reclassification, reorganization or otherwise), or (ii) any
amendment to the Certificate of Incorporation or by-laws of the Corporation
(whether by merger, consolidation or otherwise) that may amend or change or
adversely affect any of the rights, preferences, obligations or privileges of
the Preferred Shares, provided, however, that (a) holders of Preferred Shares
(other than the Subscribers 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, (b) no
vote shall be required in connection with a merger, the sole purpose of which is
to effect a change of the Corporation's state of incorporation and/or increase
the number of members of the Board of Directors of the Corporation, so long as
such merger or change does not in any way amend or change or adversely affect
any of the rights, preferences, obligations or privileges of the Preferred
Shares, and (c) no vote shall be required in connection with a merger of the
Corporation with or into another entity in connection with an acquisition of the
Corporation by an unrelated third party, unless the holders of more than 50% of
the outstanding shares of the Corporation entitled to vote on the election of
directors of the Corporation immediately before the transaction hold,
immediately after the transaction, more than 50% of the outstanding shares of
the surviving entity entitled to vote on the election of directors of the
Corporation or any successor entity.


                                       17
<PAGE>   18

        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. CERTIFICATES.

               (a) 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. In the event that any holder of Preferred
Shares notifies the Corporation that its certificate(s) therefor have been lost,
stolen or destroyed, the Corporation shall promptly and without charge deliver
replacement certificate(s) to such holder, provided that such holder executes
and delivers to the Corporation an agreement reasonably satisfactory to the
Corporation to indemnify the Corporation from any loss incurred by it in
connection with such lost, stolen or destroyed certificate(s).

               (b) The certificate(s) representing the Preferred Shares and any
shares of Common Stock issued upon conversion of the Preferred Shares which are
not registered under the Securities Act of 1933 at the time of issuance may be
imprinted with a legend in substantially the following form:

        "THIS CERTIFICATE IS NOT REQUIRED TO BE PHYSICALLY SURRENDERED TO THE
        CORPORATION IN THE EVENT THAT THE SECURITIES REPRESENTED BY THIS
        CERTIFICATE ARE CONVERTED OR REDEEMED IN PART. AS A RESULT, FOLLOWING
        ANY CONVERSION OR REDEMPTION OF ANY PORTION OF THE SECURITIES
        REPRESENTED BY THIS CERTIFICATE, THE SECURITIES REPRESENTED BY THIS
        CERTIFICATE MAY BE LESS THAN THE NUMBER OF SHARES INDICATED ON THIS
        CERTIFICATE. IF ANY SECURITIES ARE CONVERTED AS AFORESAID, THE HOLDER OF
        THIS CERTIFICATE MAY NOT TRANSFER ANY SECURITIES REPRESENTED BY THIS
        CERTIFICATE UNLESS AND UNTIL SUCH HOLDER FIRST PHYSICALLY SURRENDERS TO
        THE CORPORATION ALL CERTIFICATES REPRESENTING ANY SUCH SECURITIES WHICH
        HAVE PREVIOUSLY BEEN CONVERTED IN WHOLE OR IN PART, WHEREUPON THE
        CORPORATION WILL FORTHWITH ISSUE AND DELIVER UPON THE ORDER OF SUCH
        HOLDER NEW CERTIFICATE(S) EVIDENCING SUCH SECURITIES THEN HELD BY SUCH
        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.

        11. NO SENIOR SECURITIES. So long as any Preferred Shares remain
outstanding, the Corporation and its subsidiaries shall not, without the
affirmative vote of the holders


                                       18
<PAGE>   19

of at least 75% of the outstanding Preferred Shares, issue any securities
directly or indirectly ranking senior to the Preferred Shares in any manner
(including without limitation with respect to dividends, timing of receipt of
liquidation preference or timing of redemption), except for debt securities
which are not directly or indirectly convertible or exchangeable into or
exercisable for securities which rank senior to the Preferred Shares in any
manner.

        12. SEVERABILITY OF PROVISIONS. If any right, preference or limitation
of the Preferred Shares set forth in this Certificate of Designations (as this
Certificate of Designations may be 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 this
Certificate of Designations, 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.

        13. 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 this Certificate of Designations (as may be amended from time to
time) or otherwise in the Certificate of Incorporation of the Corporation.

                                    * * * * *

                            [SIGNATURE PAGE FOLLOWS]



                                       19
<PAGE>   20

        IN WITNESS WHEREOF, this Certificate of Designations of the Corporation
has been duly executed this 10th day of July, 2001.


                                            CHROMAVISION MEDICAL SYSTEMS, INC.


                                            By:   /s/  KEVIN C. O'BOYLE
                                                --------------------------------
                                                Name:  Kevin C. O'Boyle
                                                Title: Executive Vice President,
                                                       Operations and Chief
                                                       Financial Officer




                                       20
<PAGE>   21

                    EXHIBIT A TO CERTIFICATE OF DESIGNATIONS

                            (To be Executed by Holder
                      in order to Convert Preferred Shares)

                                CONVERSION NOTICE
                                       FOR
               SERIES D 5% CUMULATIVE CONVERTIBLE PREFERRED STOCK

The undersigned, as a holder ("Holder") of shares designated as Series D 5%
Cumulative Convertible Preferred Stock ("Preferred Shares") of CHROMAVISION
MEDICAL SYSTEMS, INC., a Delaware corporation (the "Corporation"), hereby
irrevocably elects to convert _____________ Preferred Shares for shares ("Common
Shares") of common stock, par value $0.01 per share (the "Common Stock"), of the
Corporation according to the terms and conditions of the Certificate of
Designations for the Preferred Shares ("Certificate") as of the date written
below. The undersigned hereby requests that share certificates for the Common
Shares to be issued to the undersigned pursuant to this Conversion Notice be
issued in the name of, and delivered to, the undersigned or its designee as
indicated below. No fee will be charged to the Holder of Preferred Shares for
any conversion. Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed thereto in the Certificate. The undersigned
represents as of the date hereof that, after giving effect to such conversion of
Preferred Shares pursuant to this Conversion Notice, the undersigned will not
exceed the "Restricted Ownership Percentage" contained in Section 5(j)(A) of the
Certificate and will remain in compliance with Section 5(j)(B) of the
Certificate.

Conversion Date:  __________________________

Conversion Information:  NAME OF HOLDER:

                         By:_______________________________
                         Print Name:_______________________
                         Print Title:______________________

                         Print Address of Holder:
                         _______________________________________________________
                         _______________________________________________________

                         Issue Common Stock to:_________________________________
                         at:____________________________________________________
                         _______________________________________________________


If Common Shares are to be issued to a person other than Holder,
Holder's signature must be guaranteed below:

SIGNATURE GUARANTEED BY:


THE COMPUTATION OF NUMBER OF COMMON SHARES TO BE RECEIVED IS SET FORTH ON PAGE 2
OF THE CONVERSION NOTICE.

                           PAGE 1 OF CONVERSION NOTICE



                                       21
<PAGE>   22

PAGE 2 TO CONVERSION NOTICE DATED ___________________ FOR: _____________________
                                   (CONVERSION DATE)         (NAME OF HOLDER)


              COMPUTATION OF NUMBER OF COMMON SHARES TO BE RECEIVED

Number of Preferred Shares being converted:       ________ shares

(1)  Number of Preferred Shares x $1,000:        $________
(2)  Accrued But Unpaid Dividends
     [amount (1) above x (.05/360)
      x number of days elapsed
     since dividends last paid]:                 $________

(3)  Liquidated Damages not yet paid:            $________
                                                                     ----------
AGGREGATE LIQUIDATION VALUE [(1) + (2) + (3)]:                       $
                                                                     ==========

CONVERSION PRICE                                                     $
                                                                     ==========

Total Number of Common Shares = AGGREGATE LIQUIDATION VALUE
                                ---------------------------
                                     CONVERSION PRICE

NUMBER OF COMMON SHARES ISSUED UPON CONVERSION = ________ shares

The Holder hereby represents that, immediately following such conversion, the
balance of the number of Preferred Shares held by such Holder equals __________.

If the conversion is not being settled by DTC, please issue and deliver ____
certificate(s) for Common Shares in the following amount(s):

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

If the Holder is receiving certificate(s) for Preferred Shares upon the
conversion, please issue and deliver _____ certificate(s) for Preferred Shares
in the following amounts:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________