EXHIBIT 4.10


                         CERTIFICATE OF THE DESIGNATION,
                   PREFERENCES, RIGHTS AND LIMITATIONS OF THE
                   6% SERIES A CONVERTIBLE PREFERRED STOCK OF
                                HEALTHWATCH, INC.


         HealthWatch, Inc., hereinafter called the "Corporation", a corporation
organized and existing under the Minnesota Business Corporation Act does hereby
certify that, pursuant to authority conferred upon the Board of Directors by the
Articles of Incorporation, as amended, of the Corporation, said Board of
Directors at a meeting duly called and held on May 27, 1998, and at which a
quorum was at all times present, duly adopted a Resolution providing for the
issuance of a series of 1,500,000 shares of 6% Series A Convertible Preferred
Stock, which Resolution is as follows:

         "RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors of this Corporation in accordance with the
provisions of its Articles of Incorporation, as amended, a series of Preferred
Stock of the Corporation be and it hereby is given the distinctive designation
of "6% Series A Convertible Preferred Stock" (hereinafter referred to as the "6%
Series A Preferred Stock"), said Series to consist of One Million Five Hundred
Thousand (1,500,000) shares of the stated value of One Dollar ($1.00) per share.
The preferences and relative, participating, optional or other special rights,
and the qualifications, limitations or restrictions thereof shall be as follows:

         1.       Dividends

         (a)      The holders of shares of 6% Series A Preferred Stock shall be
                  entitled to receive dividends at the rate of $0.06 per share
                  (as adjusted for any stock dividends, combinations or splits
                  with respect to such shares) per annum, payable out of funds
                  legally available therefor. Such dividends shall commence upon
                  issuance and shall be payable when, as and if declared by the
                  Board of Directors, in preference to any dividend to any
                  shares of Common Stock, and shall be cumulative. Dividends
                  shall be paid semi-annually on June 30 and December 31,
                  commencing December 31, 1998, to holders of record as of the
                  close of business five business days before the dividend
                  payment date. Interest shall be paid in cash or, at the option
                  of the Corporation, in shares of the Corporation's Common
                  Stock, the value of such stock for the purpose of such payment
                  to be equal to the average five-day closing bid price for the
                  Common Stock for the five-day period immediately preceding the
                  record date for such payment.

         (b)      No dividends (other than those payable solely in the Common
                  Stock of the Corporation) shall be paid on any shares of
                  Common Stock of the Corporation during any fiscal year of the
                  Corporation until dividends, combinations or splits with
                  respect to such shares) on the 6% Series A

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                  Preferred Stock shall have been paid or declared and set apart
                  during that fiscal year and any prior year in which dividends
                  accumulated but remain unpaid. Following any such payment or
                  declaration, the holders of any shares of Common Stock shall
                  be entitled to receive dividends, payable out of funds legally
                  available therefor, when, as and if declared by the Board of
                  Directors.

         (c)      No right shall accrue to holders of shares of 6% Series A
                  Preferred Stock by reason of the fact that dividends on said
                  shares are not declared in any prior year, nor shall any
                  undeclared or unpaid dividend bear or accrue any interest.

         In the event the Corporation shall declare a distribution payable in
securities of other persons, evidences of indebtedness issued by the Corporation
or other persons, assets (excluding cash dividends) or options or rights to
purchase any such securities or evidences of indebtedness, then, in each such
case the holders of the 6% Series A Preferred Stock shall be entitled to a
proportionate share of any such distribution as though the holders of the 6%
Series A Preferred Stock were the holders of the number of shares of Common
Stock of the Corporation into which their shares of 6% Series A Preferred Stock
were then convertible as of the record date fixed for the determination of the
holders of Common Stock of the Corporation entitled to receive such
distribution.

         2.       Liquidation Preference

         (a)      In the event of any liquidation, dissolution or winding up of
                  the Corporation, whether voluntary or involuntary, the holders
                  of the 6% Series A Preferred Stock shall be entitled to
                  receive, prior and in preference to any distribution of any of
                  the assets or surplus funds of the Corporation to the holders
                  of shares of Common Stock by reason of their ownership
                  thereof, the amount of $1.00 per share (as adjusted for any
                  stock dividends, combinations or splits with respect to such
                  shares), plus all accrued or declared but unpaid dividends on
                  such share for each share of 6% Series A Preferred Stock then
                  held by them. If upon the occurrence of such event, the assets
                  and funds thus distributed among the holders of the 6% Series
                  A Preferred Stock shall be insufficient to permit the payment
                  to such holders of the full aforesaid preferential amount,
                  then the entire assets and funds of the Corporation legally
                  available for distribution shall be distributed ratably among
                  the holders of the 6% Series A Preferred Stock in proportion
                  to the preferential amount each such holder is otherwise
                  entitled to receive.

         (b)      After payment to the holders of the 6% Series A Preferred
                  Stock of the amounts set forth in Section 2(a) above, and the
                  payment to the holders of any other series of Preferred Stock
                  which may hereafter be established by the Board of Directors
                  of any liquidation preferences for such additional


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                  series of Preferred Stock, the entire remaining assets and
                  funds of the Corporation legally available for distribution,
                  if any, shall be distributed among the holders of the Common
                  Stock and any other series of Preferred Stock which may
                  hereafter be established by the Board of Directors in
                  proportion to the shares of Common Stock then held by them.

         (c)      Whenever the distribution provided for in this Section 2 shall
                  be payable in securities or property other than cash, the
                  value of such distribution shall be the fair market value of
                  such securities or other property as determined in good faith
                  by the Board of Directors.

         3.       Voting Rights

         Unless and except to the extent otherwise required by law, the holders
of the 6% Series A Preferred Stock shall have no voting power; provided that if
any dividends on the 6% Series A Preferred Stock declared by the Board of
Directors in accordance with Section 1 hereof have not been paid for a period of
one year or more, the holders of 6% Series A Preferred Stock shall, until such
dividends have been paid, be entitled, with the holders of the Common Stock,
voting as a class, to vote or act by written consent for the election of
directors, with the number of votes per share of 6% Series A Preferred Stock in
such election to be equal to the number of shares of Common Stock then issuable
upon conversion of such 6% Series A Preferred Stock. Unless and except to the
extent otherwise required by law, the holders of the 6% Series A Preferred Stock
shall have no right to vote as a class with respect to any matter. Should the 6%
Series A Preferred Stock be entitled to vote on any matter pursuant to a
requirement of law, each holder of such stock shall be entitled to one vote in
respect to each share of such stock held of record in respect to such matter,
unless some other vote is required by law.

         4.       Conversion of 6% Series A Preferred Stock into Common Stock

         (a)      Subject to the provisions of this Section 4, the holder of
                  record of any share or shares of 6% Series A Preferred Stock
                  shall have the right, at his option, at any time after
                  issuance, to convert each said share or shares of 6% Series A
                  Preferred Stock into fully-paid and non-assessable shares of
                  Common Stock, $.01 par value (herein referred to as "Common
                  Stock), of the Corporation. The conversion price for each
                  share of 6% Series A Preferred Stock in effect on any
                  conversion date shall be the lesser of seventy percent (70%)
                  of (i) the five-day average closing bid price for the
                  Corporation's Common Stock preceding the conversion date or
                  (ii) the five-day average closing bid price thereof preceding
                  the original issue date of the 6% Series A Preferred Stock.
                  The closing bid price for the Corporation's Common Stock shall
                  be as reported by The Nasdaq Small Cap Market, or such other
                  market or exchange on which the Corporation's Common Stock may
                  be listed in the event that it ceases to be listed on the
                  Nasdaq Small Cap Market. The Corporation shall not be required
                  to issue


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                  fractional shares in connection with the conversion of any of
                  the 6% Series A Preferred Stock and shall, in lieu thereof,
                  pay to the holder requesting conversion, an amount equal to
                  the value (determined in accordance with the foregoing) of
                  such fractional share.

         (b)      Any holder of a share or shares of 6% Series A Preferred Stock
                  desiring to convert such 6% Series A Preferred Stock into
                  Common Stock, shall surrender the certificate or certificates
                  representing the share or shares of 6% Series A Preferred
                  Stock so to be converted, duly endorsed (if required by the
                  Corporation) to the Corporation or in blank, at the office of
                  any Transfer Agent for the 6% Series A Preferred Stock (or
                  such other place as may be designated by the Corporation), and
                  shall give written notice to the Corporation at said office
                  that he elects to convert the same as provided above, and
                  setting forth the name or names (with the address or
                  addresses) in which the shares of Common Stock are to be
                  issued.

         (c)      Conversion of 6% Series A Preferred Stock shall be subject to
                  the following additional terms and provisions:

                  (1)      As promptly as practicable after the surrender for
                           conversion of any 6% Series A Preferred Stock, the
                           Corporation shall deliver or cause to be delivered at
                           the principal office of the Transfer Agent for the 6%
                           Series A Preferred Stock (or such other place as may
                           be designated by the Corporation), to or upon the
                           written order of the holder of such 6% Series A
                           Preferred Stock, certificates representing the shares
                           of Common Stock issuable upon such conversion issued
                           in such name or names as such holder may direct.
                           Shares of the 6% Series A Preferred Stock shall be
                           deemed to have been converted as of the close of
                           business on the date of the surrender of the 6%
                           Series A Preferred Stock for conversion, as provided
                           above, and the rights of the holders of such 6%
                           Series A Preferred Stock shall cease at such time,
                           and the person or persons in whose name or names the
                           certificates for such shares are to be issued shall
                           be treated for all purposes as having become the
                           record holder or holders of such Common Stock at such
                           time; provided, however, that any such surrender on
                           any date when the stock transfer books of the
                           Corporation shall be closed shall constitute the
                           person or persons in whose name or names the
                           certificate for such shares are to be issued as the
                           record holder or holders thereof for all purposes at
                           the close of business on the next succeeding day on
                           which such stock transfer books are open.

                  (2)      The Corporation shall make no payment or adjustment
                           on account of any dividends accrued on the shares of
                           6% Series A Preferred Stock surrendered for
                           conversion.


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                  (3)      The Corporation shall at all times reserve and keep
                           available solely for the purpose of issuance upon
                           conversion of 6% Series A Preferred Stock, as herein
                           provided, such number of shares of Common Stock as
                           shall be issuable upon the conversion of all
                           outstanding 6% Series A Preferred Stock.

                  (4)      The holders of 6% Series A Preferred Stock shall not
                           be entitled to convert the 6% Series A Preferred
                           Stock held by such holder to the extent that such
                           conversion would result in such holder beneficially
                           owning (as determined in accordance with Section
                           13(d) of the Securities Exchange Act of 1934 and the
                           Rules thereunder) in excess of 4.999% of the then
                           issued and outstanding shares of the Corporation,
                           including shares issuable upon conversion of the 6%
                           Series A Preferred Stock held by such holder after
                           application of this paragraph 4(c)(4).

         (d)      The issuance of certificates for shares of Common Stock upon
                  conversion of the 6% Series A Preferred Stock shall be made
                  without charge for any tax in respect of such issuance.
                  However, if any certificate is to be issued in a name other
                  than that of the holder of record of the 6% Series A Preferred
                  Stock so converted, the person or persons requesting the
                  issuance thereof shall pay to the Corporation the amount of
                  any tax which may be payable in respect of any transfer
                  involved in such issuance, or shall establish to the
                  satisfaction of the Corporation that such tax has been paid or
                  is not due and payable.

         5.       General

         (a)      Conversion adjustment. In the event that the Corporation shall
                  at any time prior to conversion either (a) subdivide the
                  outstanding shares of Common Stock into a greater number of
                  shares, (b) combine the outstanding shares of Common Stock
                  into a smaller number of shares, (c) change the outstanding
                  shares of Common Stock into the same or a given number of
                  shares of any other class or classes of stock, (d) declare on
                  or in respect of the Common Stock a dividend payable in shares
                  or other securities of the Corporation, then the holders of
                  the 6% Series A Preferred Stock shall be entitled to receive
                  the same number of shares or other securities of the
                  Corporation, or shall be entitled to subscribe for and
                  purchase at the same price that the shares or securities are
                  offered to holders of Common Stock, the number of such shares
                  or the amount of such securities as will represent the same
                  proportion of the outstanding Common Stock prior to such
                  increase or decrease as they would have been entitled to
                  receive or subscribe for, as the case may be, had they been
                  holders of the number of shares of Common Stock into which
                  their shares of 6% Series A Preferred


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                  Stock were convertible on the record date for any such
                  dividend or subscription. The Board of Directors shall
                  determine what adjustments shall be made in the Stated Value
                  and in the market prices for the Corporation's Common Stock in
                  order to appropriately reflect and account for any such
                  change.

         (b)      Merger. In the event the Corporation at any time while any of
                  the shares of 6% Series A Preferred Stock are outstanding
                  shall be consolidated with or merged into any other
                  corporation or corporations, or shall sell or lease all or
                  substantially all of its property and business as an entirety,
                  lawful provision shall be made as part of the terms of such
                  consolidation, merger, sale, or lease so that the holder of
                  any shares of 6% Series A Preferred Stock may thereafter
                  receive in lieu of such shares of Common Stock otherwise
                  issuable to him upon conversion of his shares of 6% Series A
                  Preferred Stock, but at the conversion rate which would
                  otherwise be in effect at the time of conversion as
                  hereinbefore provided, the same kind and amount of securities
                  or assets as may be issuable, distributable, or payable upon
                  such consolidation, merger, sale, or lease, with respect to
                  shares of Common Stock of the Corporation. The Board of
                  Directors shall determine what adjustments shall be made in
                  the Stated Value and in the market prices for the
                  Corporation's Common Stock in order to appropriately reflect
                  and account for any such change.

         (c)      Nothing herein shall be deemed to require the Corporation in
                  the event of any such subdivision, combination,
                  reclassification, recapitalization, consolidation, merger or
                  sale of assets, or liquidation, dissolution or winding up, to
                  issue or distribute fractional interests in shares of capital
                  stock or any other security of the Corporation or another
                  issuer, and the Corporation may make such arrangements as the
                  Board of Directors of the Corporation shall approve with
                  respect to any such event for settlement in lieu of issuance
                  of a fractional interest in a share of capital stock or other
                  security of the Corporation or another issuer to any holder of
                  the 6% Series A Preferred Stock.

         (d)      The shares of 6% Series A Preferred Stock shall not be subject
                  to the operation of a purchase, retirement or sinking fund.

         (e)      The issuance of additional shares of 6% Series A Preferred
                  Stock shall not be subject to any restrictions as to issuance,
                  nor shall the holders of the 6% Series A Preferred Stock be
                  entitled to any restriction with respect to the issuance of
                  shares of any other series of the Corporation's Common Stock
                  or Preferred Stock, or as to the powers, preferences or rights
                  of any such other series; provided that no series of
                  additional shares of Preferred Stock shall have any
                  liquidation or other similar rights in preference to the 6%
                  Series A Preferred Stock."


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         IN WITNESS WHEREOF, I have hereunto subscribed my hand this 9th day of
June, 1998.

                                        HealthWatch, Inc.


                                        By /s/ Daniel J. Kelly
                                           -----------------------------------
                                               Daniel J. Kelly
                                               President