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                                                                    EXHIBIT 4(b)

                              INTEGRAL VISION, INC.

                   CERTIFICATE OF DESIGNATION OF PREFERENCES,
                             RIGHTS AND LIMITATIONS
                                       OF
                      SERIES A CONVERTIBLE PREFERRED STOCK

                         PURSUANT TO SECTION 302 OF THE
                        MICHIGAN BUSINESS CORPORATION ACT

   The undersigned, Mark R. Doede and Max A. Coon, do hereby certify that:

      1. They are the President and Secretary, respectively, of Integral Vision,
Inc., a Michigan corporation (the "Corporation").

      2. The Corporation is authorized to issue 400,000 shares of preferred
stock, none of which have been issued.

      3. The following resolutions were duly adopted by the Board of Directors:

      WHEREAS, the Certificate of Incorporation of the Corporation provides for
a class of its authorized stock known as preferred stock, comprised of 400,000
shares, no par value, issuable from time to time in one or more series;

      WHEREAS, the Board of Directors of the Corporation is authorized to fix
the dividend rights, dividend rate, voting rights, conversion rights, rights and
terms of redemption and liquidation preferences of any wholly unissued series of
preferred stock and the number of shares constituting any Series and the
designation thereof, of any of them; and

      WHEREAS, it is the desire of the Board of Directors of the Corporation,
pursuant to its authority as aforesaid, to fix the rights, preferences,
restrictions and other matters relating to a series of the preferred stock,
which shall consist of, except as otherwise set forth in the Purchase Agreement,
up to 7,000 shares of the preferred stock which the corporation has the
authority to issue, as follows:

      NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby
provide for the issuance of a series of preferred stock for cash or exchange of
other securities, rights or property and does hereby fix and determine the
rights, preferences, restrictions and other matters relating to such series of
preferred stock as follows:

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                            TERMS OF PREFERRED STOCK

            Section 1. Definitions. Capitalized terms used and not otherwise
defined herein that are defined in the Purchase Agreement shall have the
meanings given such terms in the Purchase Agreement. For the purposes hereof,
the following terms shall have the following meanings:

            "Alternate Consideration" shall have the meaning set forth in
      Section 7(e).

            "Bankruptcy Event" means any of the following events: (a) the
      Corporation or any Significant Subsidiary (as such term is defined in Rule
      1.02(s) of Regulation S-X) thereof commences a case or other proceeding
      under any bankruptcy, reorganization, arrangement, adjustment of debt,
      relief of debtors, dissolution, insolvency or liquidation or similar law
      of any jurisdiction relating to the Corporation or any Significant
      Subsidiary thereof; (b) there is commenced against the Corporation or any
      Significant Subsidiary thereof any such case or proceeding that is not
      dismissed within 60 days after commencement; (c) the Corporation or any
      Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any
      order of relief or other order approving any such case or proceeding is
      entered; (d) the Corporation or any Significant Subsidiary thereof suffers
      any appointment of any custodian or the like for it or any substantial
      part of its property that is not discharged or stayed within 60 days; (e)
      the Corporation or any Significant Subsidiary thereof makes a general
      assignment for the benefit of creditors; (f) the Corporation or any
      Significant Subsidiary thereof calls a meeting of its creditors with a
      view to arranging a composition, adjustment or restructuring of its debts;
      or (g) the Corporation or any Significant Subsidiary thereof, by any act
      or failure to act, expressly indicates its consent to, approval of or
      acquiescence in any of the foregoing or takes any corporate or other
      action for the purpose of effecting any of the foregoing.

            "Buy-In" shall have the meaning set forth in Section 6(e)(iii).

            "Commission" means the Securities and Exchange Commission.

            "Common Stock" means the Corporation's common stock, no par value
      per share, and stock of any other class of securities into which such
      securities may hereafter have been reclassified or changed into.

            "Common Stock Equivalents" means any securities of the Corporation
      or the Subsidiaries which would entitle the holder thereof to acquire at
      any time Common Stock, including without limitation, any debt, preferred
      stock, rights, options, warrants or other instrument that is at any time
      convertible into or exchangeable for, or otherwise entitles the holder
      thereof to receive, Common Stock.

            "Conversion Amount" means the sum of the Stated Value at issue.

            "Conversion Date" shall have the meaning set forth in Section 6(a).

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            "Conversion Price" shall have the meaning set forth in Section 6(b).

            "Conversion Shares" means, collectively, the shares of Common Stock
      into which the shares of Preferred Stock are convertible in accordance
      with the terms hereof.

            "Conversion Shares Registration Statement" means a registration
      statement that meets the requirements of the Registration Rights Agreement
      and registers the resale of all Conversion Shares by the Holder, who shall
      be named as a "selling stockholder" thereunder, all as provided in the
      Registration Rights Agreement.

            "Effective Date" means the date that the Conversion Shares
      Registration Statement is declared effective by the Commission.

            "Exchange Act" means the Securities Exchange Act of 1934, as
      amended, and the rules and regulations promulgated thereunder.

            "Fundamental Transaction" shall have the meaning set forth in
      Section 7(e).

            "Holder" shall have the meaning given such term in Section 2.

            "Junior Securities" means the Common Stock and all other equity or
      equity equivalent securities of the Corporation other than those
      securities that are (a) outstanding on the Original Issue Date and (b)
      which are explicitly senior or pari passu in rights or liquidation
      preference to the Preferred Stock.

            "Liquidation" shall have the meaning given such term in Section 5.

            "New York Courts" shall have the meaning given such term in Section
      10(d).

            "Original Issue Date" shall mean the date of the first issuance of
      any shares of the Preferred Stock regardless of the number of transfers of
      any particular shares of Preferred Stock and regardless of the number of
      certificates which may be issued to evidence such Preferred Stock.

            "Person" means a corporation, an association, a partnership, an
      organization, a business, an individual, a government or political
      subdivision thereof or a governmental agency.

            "Purchase Agreement" means the Securities Purchase Agreement, dated
      as of the Original Issue Date, to which the Corporation and the original
      Holders are parties, as amended, modified or supplemented from time to
      time in accordance with its terms.

            "Registration Rights Agreement" means the Registration Rights
      Agreement, dated as of the date of the Purchase Agreement, to which the
      Corporation and the original

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      Holder are parties, as amended, modified or supplemented from time to time
      in accordance with its terms.

            "Securities Act" means the Securities Act of 1933, as amended, and
      the rules and regulations promulgated thereunder.

            "Share Delivery Date" shall have the meaning given such term in
      Section 6(e).

            "Shareholder Meeting" shall have the meaning given to such term in
      the Purchase Agreement.

            "Stated Value" shall have the meaning given such term in Section 2.

            "Subscription Amount" shall mean, as to each Purchaser, the amount
      to be paid for the Preferred Stock purchased pursuant to the Purchase
      Agreement as specified below such Purchaser's name on the signature page
      of the Purchase Agreement and next to the heading "Subscription Amount",
      in United States Dollars and in immediately available funds.

            "Subsidiary" shall have the meaning given to such term in the
      Purchase Agreement.

            "Trading Day" means a day on which the Common Stock is traded on a
      Trading Market.

            "Trading Market" means the following markets or exchanges on which
      the Common Stock is listed or quoted for trading on the date in question:
      the OTC Bulletin Board, the Nasdaq SmallCap Market, the American Stock
      Exchange, the New York Stock Exchange or the Nasdaq National Market.

            "Transaction Documents" shall have the meaning set forth in the
      Purchase Agreement.

            "Triggering Event" shall have the meaning set forth in Section 9(a).

            "Triggering Redemption Amount" for each share of Preferred Stock
      means the sum of (i) the greater of (A) 110% of the Stated Value and (B)
      the product of (a) the VWAP on the Trading Day immediately preceding the
      date of the Triggering Event and (b) the Stated Value divided by the then
      Conversion Price and (ii) all liquidated damages and other amounts due in
      respect of the Preferred Stock.

            "Triggering Redemption Payment Date" shall have the meaning set
      forth in Section 9(b).

            "VWAP" means, for any date, the price determined by the first of the
      following clauses that applies: (a) if the Common Stock is then listed or
      quoted on a Trading

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      Market, the daily volume weighted average price of the Common Stock for
      such date (or the nearest preceding date) on the Trading Market on which
      the Common Stock is then listed or quoted as reported by Bloomberg
      Financial L.P. (based on a Trading Day from 9:30 a.m. Eastern Time to 4:02
      p.m. Eastern Time); (b) if the Common Stock is not then listed or quoted
      on a Trading Market and if prices for the Common Stock are then quoted on
      the OTC Bulletin Board, the volume weighted average price of the Common
      Stock for such date (or the nearest preceding date) on the OTC Bulletin
      Board; (c) if the Common Stock is not then listed or quoted on the OTC
      Bulletin Board and if prices for the Common Stock are then reported in the
      "Pink Sheets" published by the Pink Sheets, LLC (or a similar organization
      or agency succeeding to its functions of reporting prices), the most
      recent bid price per share of the Common Stock so reported; or (d) in all
      other cases, the fair market value of a share of Common Stock as
      determined by an independent appraiser selected in good faith by the
      Purchasers and reasonably acceptable to the Corporation.

            Section 2. Designation, Amount and Par Value. The series of
      preferred stock shall be designated as its Series A Convertible Preferred
      Stock (the "Preferred Stock") and the number of shares so designated shall
      be 7,000 (which shall not be subject to increase without the consent of
      all of the holders of the Preferred Stock (each, a "Holder" and
      collectively, the "Holders")). Each share of Preferred Stock shall have no
      par value and a stated value equal to $1,000 (the "Stated Value").
      Capitalized terms not otherwise defined herein shall have the meaning
      given such terms in Section 1 hereof.

            Section 3. Dividends.

            a) So long as any Preferred Stock shall remain outstanding, neither
      the Corporation nor any Subsidiary thereof shall redeem, purchase or
      otherwise acquire directly or indirectly any Junior Securities. So long as
      any Preferred Stock shall remain outstanding, neither the Corporation nor
      any Subsidiary thereof shall directly or indirectly pay or declare any
      dividend or make any distribution (other than a dividend or distribution
      described in Section 6 or dividends due and paid in the ordinary course on
      preferred stock of the Corporation at such times when the Corporation is
      in compliance with its payment and other obligations hereunder) upon, nor
      shall any distribution be made in respect of, any Junior Securities unless
      an equal or greater dividend is paid to the holders of the Preferred Stock
      (on an a converted basis), nor shall any monies be set aside for or
      applied to the purchase or redemption (through a sinking fund or
      otherwise) of any Junior Securities or shares pari passu with the
      Preferred Stock.

            Section 4. Voting Rights. Except as otherwise provided herein and as
otherwise required by law, the Preferred Stock shall have the same voting rights
as a holder of Common Stock having a number of shares of Common Stock equal to
the number of Conversion Shares issuable upon conversion of such Holder's
Preferred Stock in full as to such Holder. In addition, so long as any shares of
Preferred Stock are outstanding, the Corporation shall not, without the
affirmative vote of the Holders of the shares of the Preferred Stock then
outstanding, (a) alter or change adversely the powers, preferences or rights
given to the Preferred Stock or alter or amend this Certificate of Designation,
(b) authorize or create any class of stock ranking

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as to dividends, redemption or distribution of assets upon a Liquidation (as
defined in Section 5) senior to or otherwise pari passu with the Preferred
Stock, (c) amend its certificate of incorporation or other charter documents so
as to affect adversely any rights of the Holders, (d) increase the authorized
number of shares of Preferred Stock, or (e) enter into any agreement with
respect to the foregoing.

            Section 5. Liquidation. Upon any liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary (a
"Liquidation"), the Holders shall be entitled to receive out of the assets of
the Corporation, whether such assets are capital or surplus, for each share of
Preferred Stock an amount equal to the Stated Value per share plus any other
fees or liquidated damages owing thereon before any distribution or payment
shall be made to the holders of any Junior Securities, and if the assets of the
Corporation shall be insufficient to pay in full such amounts, then the entire
assets to be distributed to the Holders shall be distributed among the Holders
ratably in accordance with the respective amounts that would be payable on such
shares if all amounts payable thereon were paid in full. A Fundamental
Transaction or Change of Control Transaction shall not be treated as a
Liquidation. The Corporation shall mail written notice of any such Liquidation,
not less than 45 days prior to the payment date stated therein, to each record
Holder.

            Section 6. Conversion.

            a) Conversions at Option of Holder. All shares of Preferred Stock
      shall automatically be converted into that number of shares of Common
      Stock determined by dividing the Stated Value of such share of Preferred
      Stock by the Conversion Price, on the Trading Day following the date the
      Michigan Secretary of State accepts the Certificate of Amendment of the
      Articles of Incorporation increasing the Corporation's authorized Common
      Stock (the "Conversion Date"). Shares of Preferred Stock converted into
      Common Stock or redeemed in accordance with the terms hereof shall be
      canceled and may not be reissued.

            b) Conversion Price. The conversion price for the Preferred Stock
      shall equal $1.00 (the "Conversion Price"), subject to adjustment herein.

            c)    [RESERVED].

            d)    [RESERVED].

            e)    Mechanics of Conversion

                  i. Delivery of Certificate Upon Conversion. Not later than
            three Trading Days after the Conversion Date (the "Share Delivery
            Date"), the Corporation shall deliver or cause to be delivered to
            the Holder a certificate or certificates which, after the Effective
            Date, shall be free of restrictive legends and trading restrictions
            (other than those required by the Purchase Agreement) representing
            the number of shares of Common Stock being acquired upon the
            conversion of shares of Preferred Stock. After the Effective Date,
            the Corporation

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      shall, upon request of the Holder, deliver any certificate or certificates
      required to be delivered by the Corporation under this Section
      electronically through the Depository Trust Corporation or another
      established clearing corporation performing similar functions. Upon
      receipt of its Conversion Shares, the Holder shall promptly deliver its
      certificate representing the Preferred Stock to the Company for
      cancellation.

            ii. Obligation Absolute; Partial Liquidated Damages. The
      Corporation's obligations to issue and deliver the Conversion Shares upon
      conversion of Preferred Stock in accordance with the terms hereof are
      absolute and unconditional, irrespective of any action or inaction by the
      Holder to enforce the same, any waiver or consent with respect to any
      provision hereof, the recovery of any judgment against any Person or any
      action to enforce the same, or any setoff, counterclaim, recoupment,
      limitation or termination, or any breach or alleged breach by the Holder
      or any other Person of any obligation to the Corporation or any violation
      or alleged violation of law by the Holder or any other person, and
      irrespective of any other circumstance which might otherwise limit such
      obligation of the Corporation to the Holder in connection with the
      issuance of such Conversion Shares. The Corporation may not refuse
      conversion based on any claim that such Holder or any one associated or
      affiliated with the Holder of has been engaged in any violation of law,
      agreement or for any other reason, unless, an injunction from a court, on
      notice, restraining and or enjoining conversion of all or part of this
      Preferred Stock shall have been sought and obtained and the Corporation
      posts a surety bond for the benefit of the Holder in the amount of 150% of
      the Stated Value of Preferred Stock outstanding, which is subject to the
      injunction, which bond shall remain in effect until the completion of
      arbitration/litigation of the dispute and the proceeds of which shall be
      payable to such Holder to the extent it obtains judgment. In the absence
      of an injunction precluding the same, the Corporation shall issue
      Conversion Shares on the Conversion Date. If the Corporation fails to
      deliver to the Holder such certificate or certificates pursuant to Section
      6(e)(i) within four Trading Days of the Share Delivery Date applicable to
      such conversion, the Corporation shall pay to such Holder, in cash, as
      liquidated damages and not as a penalty, for each $5,000 of Stated Value
      of Preferred Stock being converted, $50 per Trading Day (increasing to
      $100 per Trading Day after 3 Trading Days and increasing to $200 per
      Trading Day 6 Trading Days after such damages begin to accrue) for each
      Trading Day after the Share Delivery Date until such certificates are
      delivered. Nothing herein shall limit a Holder's right to pursue actual
      damages for the Corporation's failure to deliver certificates representing
      shares of Common Stock upon conversion within the period specified herein
      and such Holder shall have the right to pursue all remedies available to
      it hereunder, at law or in equity including, without limitation, a decree
      of specific performance and/or injunctive relief.

            iii. Compensation for Buy-In on Failure to Timely Deliver
      Certificates Upon Conversion. If the Corporation fails to deliver to the
      Holder such certificate or certificates pursuant to Section 6(e)(i) by a
      Share Delivery Date, and if after

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      such Share Delivery Date the Holder purchases (in an open market
      transaction or otherwise) Common Stock to deliver in satisfaction of a
      sale by such Holder of the Conversion Shares which the Holder was entitled
      to receive upon the conversion relating to such Share Delivery Date (a
      "Buy-In"), then the Corporation shall pay in cash to the Holder ------ the
      amount by which (x) the Holder's total purchase price (including brokerage
      commissions, if any) for the Common Stock so purchased exceeds (y) the
      product of (1) the aggregate number of shares of Common Stock that such
      Holder was entitled to receive from the conversion at issue multiplied by
      (2) the price at which the sell order giving rise to such purchase
      obligation was executed. For example, if the Holder purchases Common Stock
      having a total purchase price of $11,000 to cover a Buy-In with respect to
      an attempted conversion of shares of Preferred Stock with respect to which
      the aggregate sale price giving rise to such purchase obligation is
      $10,000, under clause (A) of the immediately preceding sentence the
      Corporation shall be required to pay the Holder $1,000. The Holder shall
      provide the Corporation written notice indicating the amounts payable to
      the Holder in respect of the Buy-In, together with applicable
      confirmations and other evidence reasonably requested by the Corporation.
      Nothing herein shall limit a Holder's right to pursue any other remedies
      available to it hereunder, at law or in equity including, without
      limitation, a decree of specific performance and/or injunctive relief with
      respect to the Corporation's failure to timely deliver certificates
      representing shares of Common Stock upon conversion of the shares of
      Preferred Stock as required pursuant to the terms hereof.

            iv. Reservation of Shares Issuable Upon Conversion. The Corporation
      covenants that it will at all times reserve and keep available out of its
      authorized and unissued shares of Common Stock solely for the purpose of
      issuance upon conversion of the Preferred Stock, free from preemptive
      rights or any other actual contingent purchase rights of persons other
      than the Holder (and the other Holders of the Preferred Stock), not less
      than 1,000,000 shares of the Common Stock prior to the date of the
      Shareholder Approval and thereafter a number of shares of Common Stock as
      shall (subject to any additional requirements of the Corporation as to
      reservation of such shares set forth in the Purchase Agreement) be
      issuable (taking into account the adjustments and restrictions of Section
      7) upon the conversion of all outstanding shares of Preferred Stock. The
      Corporation covenants that all shares of Common Stock that shall be so
      issuable shall, upon issue, be duly and validly authorized, issued and
      fully paid, nonassessable and, if the Conversion Shares Registration
      Statement is then effective under the Securities Act, registered for
      public sale in accordance with such Conversion Shares Registration
      Statement.

            v. Fractional Shares. Upon a conversion hereunder, the Corporation
      shall not be required to issue stock certificates representing fractions
      of shares of the Common Stock, but may if otherwise permitted, make a cash
      payment in respect of any final fraction of a share based on the VWAP at
      such time. If the Corporation elects not, or is unable, to make such a
      cash payment, the Holder

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      shall be entitled to receive, in lieu of the final fraction of a share,
      one whole share of Common Stock.

            vi. Transfer Taxes. The issuance of certificates for shares of the
      Common Stock on conversion of this Preferred Stock shall be made without
      charge to the Holder hereof for any documentary stamp or similar taxes
      that may be payable in respect of the issue or delivery of such
      certificate, provided that the Corporation shall not be required to pay
      any tax that may be payable in respect of any transfer involved in the
      issuance and delivery of any such certificate upon conversion in a name
      other than that of the Holder of such shares of Preferred Stock so
      converted and the Corporation shall not be required to issue or deliver
      such certificates unless or until the person or persons requesting the
      issuance thereof shall have paid to the Corporation the amount of such tax
      or shall have established to the satisfaction of the Corporation that such
      tax has been paid.

      Section 7. Certain Adjustments.

      a) Stock Dividends and Stock Splits. If the Corporation, at any time while
this Preferred Stock is outstanding: (A) pays a stock dividend or otherwise make
a distribution or distributions on shares of its Common Stock or any other
equity or equity equivalent securities payable in shares of Common Stock (which,
for avoidance of doubt, shall not include any shares of Common Stock issued by
the Corporation pursuant to this Preferred Sock), (B) subdivides outstanding
shares of Common Stock into a larger number of shares, (C) combines (including
by way of reverse stock split) outstanding shares of Common Stock into a smaller
number of shares, or (D) issues by reclassification of shares of the Common
Stock any shares of capital stock of the Corporation, then the Conversion Price
shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event. Any
adjustment made pursuant to this Section 7(a) 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, combination or re-classification.

      b)    [RESERVED].

      c) Subsequent Rights Offerings. If the Corporation, at any time while the
Preferred Stock is outstanding, shall issue rights, options or warrants to all
holders of Common Stock (and not to Holders) entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than the VWAP at the
record date mentioned below, then the Conversion Price shall be multiplied by a
fraction, of which the denominator shall be the number of shares of the Common
Stock Outstanding on the date of issuance of such rights or warrants plus the
number of additional shares of Common Stock offered for subscription or
purchase, and of which the numerator shall be the number of shares of the Common
Stock Outstanding on the date of issuance of such

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      rights or warrants plus the number of shares which the aggregate offering
      price of the total number of shares so offered (assuming receipt by the
      Corporation in full of all consideration payable upon exercise of such
      rights, options or warrants) would purchase at such VWAP. Such adjustment
      shall be made whenever such rights or warrants are issued, and shall
      become effective immediately after the record date for the determination
      of stockholders entitled to receive such rights, options or warrants.

            d) Pro Rata Distributions. If the Corporation, at any time while
      Preferred Stock is outstanding, shall distribute to all holders of Common
      Stock (and not to Holders) evidences of its indebtedness or assets
      (including cash and cash dividends) or rights or warrants to subscribe for
      or purchase any security, then in each such case the Conversion Price
      shall be adjusted by multiplying such Conversion Price in effect
      immediately prior to the record date fixed for determination of
      stockholders entitled to receive such distribution by a fraction of which
      the denominator shall be the VWAP determined as of the record date
      mentioned above, and of which the numerator shall be such VWAP on such
      record date less the then fair market value at such record date of the
      portion of such assets or evidence of indebtedness so distributed
      applicable to one outstanding share of the Common Stock as determined by
      the Board of Directors in good faith. In either case the adjustments shall
      be described in a statement provided to the Holder of the portion of
      assets or evidences of indebtedness so distributed or such subscription
      rights applicable to one share of Common Stock. Such adjustment shall be
      made whenever any such distribution is made and shall become effective
      immediately after the record date mentioned above.

            e) Fundamental Transaction. If, at any time while this Preferred
      Stock is outstanding, (A) the Corporation effects any merger or
      consolidation of the Corporation with or into another Person, (B) the
      Corporation effects any sale of all or substantially all of its assets in
      one or a series of related transactions, (C) any tender offer or exchange
      offer (whether by the Corporation or another Person) is completed pursuant
      to which holders of Common Stock are permitted to tender or exchange their
      shares for other securities, cash or property, or (D) the Corporation
      effects any reclassification of the Common Stock or any compulsory share
      exchange pursuant to which the Common Stock is effectively converted into
      or exchanged for other securities, cash or property (in any such case, a
      "Fundamental Transaction"), then upon any subsequent conversion of this
      Preferred Stock, the Holder shall have the right to receive, for each
      Conversion Share that would have been issuable upon such conversion
      immediately prior to the occurrence of such Fundamental Transaction, the
      same kind and amount of securities, cash or property as it would have been
      entitled to receive upon the occurrence of such Fundamental Transaction if
      it had been, immediately prior to such Fundamental Transaction, the holder
      of one share of Common Stock (the "Alternate Consideration"). For purposes
      of any such conversion, the determination of the Conversion Price shall be
      appropriately adjusted to apply to such Alternate Consideration based on
      the amount of Alternate Consideration issuable in respect of one share of
      Common Stock in such Fundamental Transaction, and the Corporation shall
      apportion the Conversion Price among the Alternate Consideration in a
      reasonable manner reflecting the relative value of any different
      components of the Alternate Consideration. If holders of Common Stock are

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      given any choice as to the securities, cash or property to be received in
      a Fundamental Transaction, then the Holder shall be given the same choice
      as to the Alternate Consideration it receives upon any conversion of this
      Preferred Stock following such Fundamental Transaction. To the extent
      necessary to effectuate the foregoing provisions, any successor to the
      Corporation or surviving entity in such Fundamental Transaction shall file
      a new Certificate of Designations with the same terms and conditions and
      issue to the Holder new preferred stock consistent with the foregoing
      provisions and evidencing the Holder's right to convert such preferred
      stock into Alternate Consideration. The terms of any agreement pursuant to
      which a Fundamental Transaction is effected shall include terms requiring
      any such successor or surviving entity to comply with the provisions of
      this Section 7(e) and insuring that this Preferred Stock (or any such
      replacement security) will be similarly adjusted upon any subsequent
      transaction analogous to a Fundamental Transaction.

            f) Calculations. All calculations under this Section 7 shall be made
      to the nearest cent or the nearest 1/100th of a share, as the case may be.
      For purposes of this Section 7, the number of shares of Common Stock
      deemed to be issued and outstanding as of a given date shall be the sum of
      the number of shares of Common Stock (excluding treasury shares, if any)
      issued and outstanding.

            g)    Notice to Holders.

                  i. Adjustment to Conversion Price. Whenever the Conversion
            Price is adjusted pursuant to any of this Section 7, the Corporation
            shall promptly mail to each Holder a notice setting forth the
            Conversion Price after such adjustment and setting forth a brief
            statement of the facts requiring such adjustment.

                  ii. Notice to Allow Conversion by Holder. If (A) the
            Corporation shall declare a dividend (or any other distribution) on
            the Common Stock; (B) the Corporation shall declare a special
            nonrecurring cash dividend on or a redemption of the Common Stock;
            (C) the Corporation shall authorize the granting to all holders of
            the Common Stock rights or warrants to subscribe for or purchase any
            shares of capital stock of any class or of any rights; (D) the
            approval of any stockholders of the Corporation shall be required in
            connection with any reclassification of the Common Stock, any
            consolidation or merger to which the Corporation is a party, any
            sale or transfer of all or substantially all of the assets of the
            Corporation, of any compulsory share exchange whereby the Common
            Stock is converted into other securities, cash or property; (E) the
            Corporation shall authorize the voluntary or involuntary
            dissolution, liquidation or winding up of the affairs of the
            Corporation; then, in each case, the Corporation shall cause to be
            filed at each office or agency maintained for the purpose of
            conversion of this Preferred Stock, and shall cause to be mailed to
            the Holder at its last address as its shall appear upon the stock
            books of the Corporation, at least 20 calendar days prior to the
            applicable record or effective date hereinafter specified, a notice
            stating (x) the date on which a record is to be taken for the
            purpose of such dividend, distribution, redemption, rights or
            warrants, or if a record is not to be

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      taken, the date as of which the holders of the Common Stock of record to
      be entitled to such dividend, distributions, redemption, rights or
      warrants are to be determined or (y) the date on which such
      reclassification, consolidation, merger, sale, transfer or share exchange
      is expected to become effective or close, and the date as of which it is
      expected that holders of the Common Stock of record shall be entitled to
      exchange their shares of the Common Stock for securities, cash or other
      property deliverable upon such reclassification, consolidation, merger,
      sale, transfer or share exchange; provided, that the failure to mail such
      notice or any defect therein or in the mailing thereof shall not affect
      the validity of the corporate action required to be specified in such
      notice. The Holder is entitled to convert the Conversion Amount of this
      Preferred Stock (or any part hereof) during the 20-day period commencing
      the date of such notice to the effective date of the event triggering such
      notice.

      Section 8. [RESERVED].

      Section 9. Redemption Upon Triggering Events.

      a) "Triggering Event" means any one or more of the following events
(whatever the reason and whether it shall be voluntary or involuntary or
effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental
body):

            i. the Corporation shall fail to deliver certificates representing
      Conversion Shares issuable upon a conversion hereunder that comply with
      the provisions hereof prior to the 5th Trading Day after such shares are
      required to be delivered hereunder;

            ii. the Corporation shall fail to have available a sufficient number
      of authorized and unreserved shares of Common Stock to issue to such
      Holder upon a conversion hereunder on or before the 6 month anniversary of
      the Original Issue Date;

            iii. any breach of the agreements delivered to the initial Holders
      at the Closing pursuant to Section 2.2(a)(iv) of the Purchase Agreement;
      or

            iv. there shall have occurred a Bankruptcy Event.

      b) Upon the occurrence of a Triggering Event, each Holder shall (in
addition to all other rights it may have hereunder or under applicable law) have
the right, exercisable at the sole option of such Holder, to require the
Corporation to redeem all of the Preferred Stock then held by such Holder for a
redemption price, in cash, equal to the Triggering Redemption Amount. The
Triggering Redemption Amount shall be due and payable or issuable, as the case
may be, within 5 Trading Days of the date on which the notice for the payment
therefor is provided by a Holder (the "Triggering Redemption Payment Date"). If
the Corporation fails to pay the Triggering Redemption Amount

                                       12
<PAGE>

hereunder in full pursuant to this Section on the date such amount is due in
accordance with this Section (the Corporation will pay interest thereon at a
rate of 18% per annum (or such lesser amount permitted by applicable law),
accruing daily from such date until the Triggering Redemption Amount, plus all
such interest thereon, is paid in full. For purposes of this Section, a share of
Preferred Stock is outstanding until such date as the Holder shall have received
Conversion Shares upon a conversion (or attempted conversion) thereof that meets
the requirements hereof or has been paid the Triggering Redemption Amount plus
all accrued but unpaid liquidated damages in cash.

      Section 10. Miscellaneous.

      a) Notices. Any and all notices or other communications or deliveries to
be provided by the Holder hereunder shall be in writing and delivered as set
forth in the Purchase Agreement. Any and all notices or other communications or
deliveries to be provided by the Corporation hereunder shall be in writing and
delivered personally, by facsimile, sent by a nationally recognized overnight
courier service addressed to each Holder at the facsimile telephone number or
address of such Holder appearing on the books of the Corporation, or if no such
facsimile telephone number or address appears, at the principal place of
business of the Holder. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 5:30 p.m. (New
York City time), (ii) the date after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section later than 5:30 p.m. (New York City time) on any date
and earlier than 11:59 p.m. (New York City time) on such date, (iii) the second
Business Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given.

      b) Absolute Obligation. Except as expressly provided herein, no provision
of this Certificate of Designation shall alter or impair the obligation of the
Corporation, which is absolute and unconditional, to pay the liquidated damages
(if any) on, the shares of Preferred Stock at the time, place, and rate, and in
the coin or currency, herein prescribed.

      c) Lost or Mutilated Preferred Stock Certificate. If a Holder's Preferred
Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation
shall execute and deliver, in exchange and substitution for and upon
cancellation of a mutilated certificate, or in lieu of or in substitution for a
lost, stolen or destroyed certificate, a new certificate for the shares of
Preferred Stock so mutilated, lost, stolen or destroyed but only upon receipt of
evidence of such loss, theft or destruction of such certificate, and of the
ownership hereof, and indemnity, if requested, all reasonably satisfactory to
the Corporation.

      d) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Certificate of Designation shall be
governed by and

                                       13
<PAGE>

construed and enforced in accordance with the internal laws of the State of
Michigan, without regard to the principles of conflicts of law thereof.

      e) Waiver. Any waiver by the Corporation or the Holder of a breach of any
provision of this Certificate of Designation shall not operate as or be
construed to be a waiver of any other breach of such provision or of any breach
of any other provision of this Certificate of Designation. The failure of the
Corporation or the Holder to insist upon strict adherence to any term of this
Certificate of Designation on one or more occasions shall not be considered a
waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Certificate of Designation. Any
waiver must be in writing.

      f) Severability. If any provision of this Certificate of Designation is
invalid, illegal or unenforceable, the balance of this Certificate of
Designation shall remain in effect, and if any provision is inapplicable to any
person or circumstance, it shall nevertheless remain applicable to all other
persons and circumstances. If it shall be found that any interest or other
amount deemed interest due hereunder violates applicable laws governing usury,
the applicable rate of interest due hereunder shall automatically be lowered to
equal the maximum permitted rate of interest.

      g) Next Business Day. Whenever any payment or other obligation hereunder
shall be due on a day other than a Business Day, such payment shall be made on
the next succeeding Business Day.

      h) Headings. The headings contained herein are for convenience only, do
not constitute a part of this Certificate of Designation and shall not be deemed
to limit or affect any of the provisions hereof.

                              *********************

                                       14
<PAGE>

RESOLVED, FURTHER, that the Chairman, the president or any vice-president, and
the secretary or any assistant secretary, of the Corporation be and they hereby
are authorized and directed to prepare and file a Certificate of Designation of
Preferences, Rights and Limitations in accordance with the foregoing resolution
and the provisions of the Michigan General Corporation Act.

      IN WITNESS WHEREOF, the undersigned have executed this Certificate this
11th day of April 2005.

_________________________                           _______________________
Name:  Mark R. Doede                                Name:  Max A. Coon
Title: President                                    Title: Secretary

                                       15
<PAGE>

                         MEMORANDUM OF ACTION BY WRITTEN
                        CONSENT OF THE BOARD OF DIRECTORS
                                       OF
                              INTEGRAL VISION, INC.

      The following action is taken by written action of the Members of Board of
Directors of Integral Vision, Inc. pursuant to MCLA 450.1525, effective March
23, 2005.

1.    Bylaws. The By-Laws of the Company shall be deemed amended to include a
      new Article VIII as follows:

                                  Article VIII
                                Other Provisions

      Section 1. The Company shall not be subject to Chapter 7B (relating to
      control share acquisitions) of the Michigan Business Corporation Act, as
      now in effect or later amended.

2.    A copy of this Resolution shall be attached to the By-Laws.

_________________________                       _________________________
Charles J. Drake                                William B. Wallace

_________________________                       _________________________
Max A. Coon                                     Samuel O. Mallory

_________________________
Vincent Shunsky