<PAGE>
 
                                                                     EXHIBIT 4.7
                                                                     -----------
                                            
                                                                         ANNEX G


                 FORM OF STATEMENT OF DESIGNATION ESTABLISHING
                 SERIES B 8% CUMULATIVE CONVERTIBLE REDEEMABLE
                    PREFERRED STOCK OF POSITRON CORPORATION
<PAGE>
 
                     STATEMENT OF DESIGNATION ESTABLISHING
        SERIES B 8% CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED STOCK
                            OF POSITRON CORPORATION


To the Secretary of State of the State of Texas:

        Pursuant to the provisions of Article 2.13 of the Texas Business 
Corporation Act, the undersigned corporation submits the following statement for
the purpose of establishing and designating a series of shares and determining
and fixing the relative rights and preferences thereof:

        A.   The name of the corporation is Positron Corporation (the 
"Company").

        B.   The following resolution, establishing and designating a series of 
shares and determining and fixing the relative rights and preferences thereof, 
was duly adopted by the Board of Directors of the Company on July 9, 1996:

        RESOLVED, that, pursuant to the authority vested in the Board of 
Directors of the Company by its Articles of Incorporation, as amended, there 
hereby is created, out of the 10,000,000 shares of preferred stock authorized in
Article Four of its Articles of Incorporation, as amended, a series of 35,000 
shares of Preferred Stock, par value $1.00 per share (the "Series B Preferred 
Stock"), of the Company, and the designation, amount and stated value of such 
series of Preferred Stock and the voting powers, preferences, and relative, 
participating, optional and other special rights of the shares of such series, 
and the qualifications, limitations or restrictions thereon, are set forth as 
follows:

        1.   Designation and Number of Shares. The designation of said series of
             ---------------------------------
preferred stock authorized by this resolution shall be "Series B 8% Cumulative 
Convertible Redeemable Preferred Stock" (the "Series B Preferred Stock") which 
shall consist of a maximum of 35,000 shares of such Series B Preferred Stock, 
$1.00 par value per share, which shall have the preferences, rights, 
qualifications, limitations, and restrictions set forth below.

        2.   Rank. All shares of the Series B Preferred Stock shall rank, both 
             ----
as to payment of dividends and as to distributions of assets upon liquidation or
winding up of the Company, whether voluntary or involuntary, (x) junior to the 
shares of Series A 8% Cumulative Convertible Redeemable Preferred Stock of the 
Company that may from time to time be outstanding (the "Series A Preferred 
Stock") and (y) prior to (i) all of the Company's now or hereafter issued 
common stock, par value $.01 per share (the "Common Stock"), and (ii) all of the
Company's hereafter issued capital stock ranking junior to the Series B 
Preferred Stock both as to payment of dividends and as to distribution of assets
upon liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, when and if issued (the Common Stock and any other capital stock 
being herein referred to as "Junior Stock").

<PAGE>
 
        3.   Dividends.
             ---------

        (a)  The holders of shares of Series B Preferred Stock shall be entitled
to receive, when, as and if declared by the Board of Directors of the Company, 
cumulative dividends out of funds legally available therefor, at the annual rate
of $4.00 per share (the "Annual Dividend Rate") unless otherwise adjusted 
pursuant to paragraph (b) of this Section 3. Such dividends shall cumulate from 
the date issued and be paid when, as and if declared, quarterly on January 1, 
April 1, July 1, and October 1 each year commencing on October 1, 1996 (each of 
such dates being a "Series B Dividend Payment Date" and each period between such
dates or the date of issue, if earlier, being a "Series B Dividend Period") to 
the shareholders of record of Series B Preferred Stock on the respective date, 
not exceeding 15 days preceding such Series B Dividend Payment Date, as shall be
fixed for this purpose by the Board of Directors of the Company in advance of 
payment of each particular dividend. Dividend payments made with respect to 
shares of Series B Preferred Stock may be made, in the sole discretion of the 
Board of Directors of the Company, in cash or in additional fully paid and 
nonassessable shares of Series B Preferred Stock at a rate of one share of 
Series B Preferred Stock for each $50.00 of such dividend not paid in cash and 
the issuance of such additional shares (notwithstanding the amount of net 
proceeds received with respect to Fractional Series B Preferred Shares (as 
defined in subparagraph (b) described below) shall constitute full payment of 
such dividend. The amount of dividends payable on shares of Series B Preferred 
Stock for each Series B Dividend Period shall be computed by dividing by four 
the annual rate per share set forth in this subparagraph (a). The amount of 
dividends payable for the initial dividend period and any period shorter than a 
90-day Series B Dividend Payment Period shall be computed on the basis of a 
360-day year of twelve 30-day months.

        (b)  All dividends paid in additional shares of Series B Preferred Stock
pursuant to subparagraph (a) shall be paid pro rata to the holders entitled 
thereto. The Company may, in its sole discretion, elect to issue certificates 
representing fractions of a share of Series B Preferred Stock (the "Fractional 
Series B Preferred Shares") on payment of any dividend for any Series B Dividend
Period in additional shares of Series B Preferred Stock. Any such Fractional 
Series B Preferred Shares shall be rounded to the nearest 1/100th of a percent. 
The Company may, in its sole discretion, elect to pay cash in lieu of paying a 
Fractional Series B Preferred Share, such cash payment made in lieu of such 
Shares to be rounded to the nearest cent. All shares of Series B Preferred Stock
which may be issued as a dividend with respect to the Series B Preferred Stock 
will thereupon be duly authorized, validly issued, fully paid and nonassessable.
Each Fractional Series B Preferred Share outstanding shall be entitled to a
ratably proportionate amount of all dividends accruing with respect to each
outstanding share of Series B Preferred Stock pursuant to this Section 3.

        (c)  Dividends on any share of Series B Preferred Stock issued as 
dividends on any share of Series B Preferred Stock shall be fully cumulative and
shall accrue (whether or not declared) from the date of their original 
issuance. Accumulated unpaid dividends for any past Series B Preferred Dividend 
Periods may be declared by the Board of Directors of the Company and paid on any
date fixed by the Board of Directors of the Company, whether or not a regular 
Series B Preferred Dividend Payment Date, to holders of record on the books of 
the Company on such record date as may be fixed by the

                                      -2-

<PAGE>
 
Board of Directors of the Company. Holders of Series B Preferred Stock will not 
be entitled to any dividends, whether payable in cash, property or stock, in 
excess of the full cumulative dividends. No interest or sum of money in lieu of 
interest shall be payable in respect of any accumulated unpaid dividends.

        (b)  No dividends or other distributions shall be declared, paid or set 
apart for payment on shares of Junior Stock or any other capital stock of the 
Company ranking junior as to dividends to the Series B Preferred Stock (the 
Junior Stock and any such other class or series of the Company's capital stock 
being herein referred to as "Junior Dividend Stock"), unless full cumulative 
dividends have been, or contemporaneously are, paid or declared and set apart 
for such payment on the Series B Preferred Stock for all dividend payment 
periods ending on or before the payment date of such dividends on Junior 
Dividend Stock.

        (e)  No payment on account of the purchase, redemption, retirement or 
other acquisition of shares of Junior Dividend Stock or any other class or
series of the Company's capital stock ranking junior to the Series B Preferred
Stock as to distributions of assets upon liquidation, dissolution or winding up
of the Company, whether voluntary or involuntary (the Junior Stock and any other
class or series of the Company's capital stock ranking junior to the Series B
Preferred Stock as to such distributions being herein referred to as "Junior
Liquidation Stock") shall be made for any period unless and until all accrued
and unpaid dividends on the Series B Preferred Stock for all dividend payment
periods ending on or before such payment for such Junior Dividend Stock or
Junior Liquidation Stock (as hereinafter defined) shall have been paid or
declared and set apart for payment.

        (f)  No dividends or other distributions shall be declared, paid or set 
apart for payment on shares of any class or series of the Company's capital 
stock hereafter issued ranking, as to dividends, on a parity with the Series B 
Preferred Stock (any such class or series of the Company's capital stock being 
herein referred to as "Parity Dividend Stock") for any period unless full 
cumulative dividends have been, or contemporaneously are, paid or declared and 
set apart for such payment on the Series B Preferred Stock for all dividend 
payment periods ending on or before the payment date of such dividends on Parity
Dividend Stock. No dividends may be paid on Parity Dividend Stock except on 
dates on which dividends are paid on the Series B Preferred Stock. All dividends
paid or declared and set apart for payment on the Series B Preferred Stock and 
the Parity Dividend Stock shall be paid or declared and set apart for payment 
pro rata so that the amount of dividends paid or declared and set apart for 
payment per share on the Series B Preferred Stock and the Parity Dividend Stock 
on any date shall in all cases bear to each other the same ratio that accrued 
and unpaid dividends to the date of payment of the Series B Preferred Stock and
the Parity Dividend Stock bear to each other.

        (g)  No payment on account of the purchase, redemption, retirement or 
other acquisition of shares of Parity Dividend Stock or any class or series of 
the Company's capital stock ranking on a parity with the Series B Preferred 
Stock as to distributions of assets upon liquidation, dissolution or winding up 
of the Company, whether voluntary or involuntary (any such class or series of 
the Company's capital stock being herein referred to as "Parity Liquidation 
Stock") shall be made, and, other than dividends

                                      -3-
<PAGE>
 
to the extent permitted by the preceding paragraph, no distributions shall be 
declared, paid or set apart for payment on shares of Parity Dividend Stock or 
Parity Liquidation Stock, unless and until all accrued and unpaid dividends on 
the Series B Preferred Stock for all dividend payment periods ending on or 
before such payment for, or the payment date of such distributions on, such 
Parity Dividend Stock or Parity Liquidation Stock shall have been paid or 
declared and set apart for payment; provided, however, that the restrictions set
forth in this sentence shall not apply to the purchase or other acquisition of 
Parity Dividend Stock or Parity Liquidation Stock either (A) pursuant to any 
employee or director incentive or benefit plan or arrangement (including any 
employment, severance or consulting agreement) of the Company or any subsidiary 
of the Company hereafter adopted or (B) in exchange solely for Junior Stock.

        (h)  Any reference to "distribution" contained in this Section 3 shall 
not be deemed to include any distribution made in connection with any
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary.

        4.   Liquidation Preference.
             ----------------------

        (a)  In the event of any liquidation, dissolution or winding up of the 
Company, whether voluntary or involuntary, before any payment or distribution of
the assets of the Company shall be made to or set apart for the holders of 
Junior Stock, the holders of the Series B Preferred Stock shall be entitled to 
receive in immediately available funds $50.00 per share of Series B Preferred 
Stock, plus an amount equal to all dividends (whether or not authorized) 
accumulated and unpaid without interest thereon to the date of final 
distribution to such holders (the "Liquidation Preference"); but such holders 
shall not be entitled to any further payment. If, upon any liquidation, 
dissolution or winding up of the Company, the assets of the Company, or proceeds
thereof, distributable among the holders of the Series B Preferred Stock shall 
be insufficient to pay in full the Liquidation Preference and liquidating 
payments on any other shares of any class or series of Parity Liquidation Stock,
then such assets, or the proceeds thereof, shall be distributed among the 
holders of Series B Preferred Stock and any such other Parity Liquidation Stock 
ratably in accordance with the respective amounts that would be payable on such 
shares of Series B Preferred Stock and any such other shares of Parity 
Liquidation Stock if all amounts payable thereon were paid in full.

        (b)  Subject to the rights of the holders of shares of Parity 
Liquidation Stock, after payment shall have been made in full to the holders of 
the Series B Preferred Stock, as provided in this Section 4, any other series or
class or classes of Junior Stock shall, subject to the respective terms and 
provisions (if any) applying thereto, be entitled to receive any and all assets 
remaining to be paid or distributed, and the holders of the Series B Preferred 
Stock shall not be entitled to share therein.

        (c)  For purposes of this Section 4, neither the voluntary sale, lease, 
conveyance, exchange, or transfer (for cash, shares of stock, securities, or 
other consideration) of all or substantially all of the property or assets of 
the Company, nor the consolidation or merger of the Company with or into one or 
more other corporations, shall be deemed to be a liquidation, dissolution, or 
winding up of the affairs

                                      -4-
<PAGE>
 
of the Company, unless such voluntary sale, lease, conveyance, exchange, or 
transfer shall be in connection with a plan of liquidation, dissolution, or 
winding up of the affairs of the Company.

     5.   Conversion.
          ----------

     (a)  Right of Conversion.  After the initial issuance of the Series B 
          -------------------
Preferred Stock, each share of Series B Preferred Stock shall be convertible at 
the option of the holder thereof, at any time prior to the close of business on 
the fifth business day prior to the date fixed for redemption of such shares as 
herein provided, into fully paid and nonassessable shares of Common Stock, at 
the rate of that number of shares of Common Stock for each full share of Series 
B Preferred Stock that is equal to $50.00 divided by the conversion price 
applicable per share of Common Stock, or into such additional or other 
securities, cash or property and at such other rates as required in accordance 
with the provisions of this Section 5. For purposes of this resolution, the 
"conversion price" applicable per share of Common Stock shall initially be equal
to $2.00 and shall be adjusted from time to time in accordance with the 
provisions of this Section 5. Notwithstanding any provision contained herein to 
the contrary, in no event shall any Series B Preferred Stock be convertible 
prior to the date (the "Conversion Date") that the shareholders of the Company 
have approved an amendment to the Company's Articles of Incorporation which 
increases the amount of authorized shares of Common Stock by at least 2,500,000 
shares.

     (b)  Conversion Procedures.  Any holder of shares of Series B Preferred 
          ---------------------
Stock desiring to convert such shares into Common Stock shall surrender the 
certificate or certificates evidencing such shares of Series B preferred Stock 
at the office of the transfer agent for the Series B Preferred Stock, which 
certificate or certificates, if the Company shall so require, shall be duly 
endorsed to the Company or in blank, or accompanied by proper instruments of 
transfer to the Company or in blank, accompanied by irrevocable written notice 
to the Company that the holder elects so to convert such shares of Series B 
Preferred Stock and specifying the name or names (with address or addresses) in 
which a certificate or certificates evidencing shares of Common Stock are to be 
issued.

          Subject to Section 5(c) hereof, no payments or adjustments in respect 
of accumulated and unpaid dividends on shares of Series B Preferred Stock 
surrendered for conversion or on account of any dividend on the Common Stock 
issued upon conversion shall be made upon the conversion of any shares of Series
B Preferred Stock; provided, however, that to the extent the Board of Directors 
of the Company have declared prior to the date of conversion payment of any 
accumulated and unpaid dividends on shares of Series B Preferred Stock a holder 
of Series B Preferred Stock shall retain the right to receive such declared 
dividends notwithstanding the conversion of any shares of Series B Preferred
Stock.

          The Company shall, as soon as practicable after such deposit of 
certificates evidencing shares of Series B Preferred Stock accompanied by the 
written notice and compliance with any other conditions herein contained, 
deliver at such office of such transfer agent to the person for whose account 
such shares of Series B Preferred Stock were so surrendered, or to the nominee 
or nominees of such

                                      -5-

<PAGE>
 
person, certificates evidencing the number of full shares of Common Stock to 
which such person shall be entitled as aforesaid, together with a cash 
adjustment in respect of any fraction of a share of Common Stock as provided in 
Section 5(d).  Such conversion shall be deemed to have been made as of the date 
of such notice, compliance and surrender of the shares of Series B Preferred 
Stock to be converted, and the person or persons entitled to receive the Common 
Stock deliverable upon conversion of such Series B Preferred Stock shall be 
treated for all purposes as the record holder or holders of such Common Stock 
on such date.

     (c)  Adjustment of Conversion Price.  The conversion price at which a share
          ------------------------------
of Series B Preferred Stock is convertible into Common Stock shall be subject to
adjustment from time to time as follows:

          (i)       If the Company shall (A) pay a dividend or make a
distribution on its stock in Common Stock or any security convertible into or
exchangeable for Common Stock, (B) subdivide its outstanding Common Stock into
a greater number of shares, (C) combine its outstanding Common Stock into a
smaller number of shares or (D) issue any shares of capital stock by
reclassification of its Common Stock, then the conversion price in effect at the
opening of business on the day following the date fixed for the determination of
stockholders entitled to receive such dividend or distribution or at the
opening of business on the business day next following the day on which such
subdivision, combination or reclassification becomes effective, as the case may
be, shall be adjusted so that the holder of any Series B Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the number of
such securities that such holder would have owned or have been entitled to
receive after the happening of any of the events described above as if such
Series B Preferred Stock had been converted immediately prior to the record date
in the case of a dividend or distribution or the effective date in the case of a
subdivision, combination or reclassification. An adjustment made pursuant to
this subparagraph (i) shall become effective immediately after the opening of
business on the business date next following the record date in the case of a
dividend or distribution and shall become effective immediately after the
opening of business on the business date next following the effective date in
the case of a subdivision, combination or reclassification. The provision of
this subparagraph (i) shall not be applicable to any transaction for which an
adjustment is otherwise provided under this Section 5(c).

          (ii)      In case the Company shall pay or make a dividend or other
distribution on its Common Stock consisting exclusively of, or shall otherwise
issue to all holders of its Common Stock, rights or warrants entitling the
holders thereof to subscribe for or purchase shares of Common Stock at a price
per share less than the current market price per share (determined as provided
in subparagraph (vii) of this Section 5(c)) of the Common Stock on the date
fixed for the determination of stockholders entitled to receive such rights or
warrants, the conversion price in effect at the opening of business on the day
following the date fixed for such determination shall be reduced by multiplying
such conversion price by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at such current market price
and the denominator

                                      -6-



















<PAGE>
 
shall be the number of shares of Common Stock outstanding at the close of 
business on the date fixed for such determination plus the number of shares of 
Common Stock so offered for subscription or purchase, such reduction to become 
effective immediately after the opening of business on the day following the 
date fixed for such determination.  For the purposes of this subparagraph (ii), 
the number of shares of Common Stock at any time outstanding shall not include 
shares held in the treasury of the Company.  The Company shall not issue any 
rights or warrants in respect of shares of Common Stock held in the treasury of 
the Company.  In case any rights or warrants referred to in this subparagraph 
(ii) in respect of which an adjustment shall have been made shall expire 
unexercised within 45 days after the same shall have been distributed or issued 
by the Company, the conversion price shall be readjusted at time of such 
expiration to the conversion price that would have been in effect if no 
adjustment had been made on account of the distribution or issuance of such 
expired rights or warrants.

          (iii)     If the Company shall, at any time or from time to time after
the date hereof, issue, or be deemed to have issued pursuant to the provisions 
of this subparagraph (iii), any additional shares of Common Stock at a price per
share, before deduction of any discounts, commissions, fees and other expenses 
of issuance and marketing, which is less than the current market price per share
(determined as provided in subparagraph (vii) of this Section 5(c)) immediately 
prior to such issue, then the conversion price shall immediately be reduced in 
accordance with the following formula:

                             P
                             -
             C/1/ = C x (O + M)
                         -----
                        (  A  )

where:

       C/1/    =    the adjusted conversion price.
       C       =    the current conversion price.
       O       =    the number of shares of Common Stock outstanding immediately
                    prior to the issuance of such additional shares. 
       P       =    the aggregate consideration received for the issuance of
                    such additional shares.
       M       =    the current market price per share of Common Stock on the 
                    date of issuance of such additional shares.
       A       =    the number of shares of Common Stock outstanding immediately
                    after the issuance of such additional shares.

For purposes of this subparagraph (iii), the issuance by the Company of 
warrants, options, or other rights to acquire Common Stock or any securities or 
instruments convertible directly into or exchangeable or exercisable for Common 
Stock (collectively, "Equity Securities"), other than Exempted Securities (as 
herein defined), shall be deemed to involve the immediate issuance by the 
Company of the maximum number of shares of Common Stock issuable upon full 
exercise or conversion of such Equity Securities for a consideration equal to 
the minimum aggregate consideration receivable by the Company upon issuance of 
such Equity Securities and full conversion or exercise

                                      -7-

 

<PAGE>
 
thereof, and the shares of Common Stock deemed to be so issued shall thereafter
be deemed to be outstanding as long as the Equity Securities which provide the
right to acquire such shares remains outstanding. Any direct or indirect
reduction in the exercise or conversion price of outstanding Equity Securities
shall be deemed a new issuance of such Equity Securities to the extent of such
reduction. However, in the event that any Equity Securities have been issued by
the Company which have resulted in an adjustment in the conversion price
pursuant to this subparagraph (iii), and such Equity Securities have not been
exercised prior to the expiration of such Equity Securities, then the conversion
price shall immediately upon such expiration be recomputed and effective
immediately upon such expiration be increased to the price which it would have
been (but reflecting any other adjustments in the conversion price made pursuant
to the provisions of this subparagraph (iii) after the issuance of such Equity
Securities) had the adjustment of the conversion price made upon the issuance of
such Equity Securities been made on the basis of offering for
subscription or purchase only that number of shares of Common Stock actually
purchased upon the exercise of such Equity Securities actually exercised. For
purposes of this subparagraph (iii), if shares are issued for consideration all
or part of which is other than cash, the amount of such non-cash consideration
shall be deemed to be the value thereof (as determined in good faith by the
Board of Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors). The provisions of this subparagraph (iii)
shall not be applicable to any issuance for which an adjustment is otherwise
provided under Section 5(c) or to any issuance of Common Stock upon actual
exercise or actual conversion of any Equity Securities if the conversion price
was fully and properly adjusted at the time such Equity Securities were issued
(or, if no such adjustment was required hereunder). The term "Exempted
Securities" means (A) the Common Stock issuable upon the conversion of the
Series A Preferred Stock that from time to time may be outstanding, including
any Series A Preferred Stock that may be issued after July 8, 1996, (B) the
Common Stock issuable upon the exercise of the Redeemable Common Stock Purchase
Warrants (the "Warrants") offered by the Company in connection with the Series A
Preferred Stock, (C) the Common Stock issuable upon the exercise of the Warrants
issued to Josephthal Lyon & Ross Incorporated pursuant to that certain letter
dated February 23, 1996, (D) the Common Stock issuable upon the exercise of the
warrants issued to Spencer Trask Securities Incorporated pursuant to that
certain Placement Agency Agreement dated February 13, 1996, (E) Series A
Preferred Stock that from time to time may be outstanding, including any Series
A Preferred Stock that may be issued after July 8, 1996, (F) the Common Stock
issuable pursuant to the conversion or exercise of all Equity Securities
outstanding prior to July 8, 1996, (G) the Common stock issuable upon the
exercise of that certain warrant to purchase 67,500 shares of Common Stock to be
issued to Uro-Tech, Ltd. in connection with the modification of the terms and
provisions of its outstanding loan to the Company, (H) the issuance of sale of
Common Stock upon the exercise of options granted pursuant to any of the
Company's stock option plans in effect as of July 8, 1996, whether of not such
options are outstanding as of such date, (I) the Common Stock issuable upon the
conversion of the Series B Preferred Stock that from time to time may be
outstanding, (J) the Series B Preferred Stock issued by the Company pursuant to
Section 3, and (K) the Common Stock Warrant being offered by the Company in
connection with the Series B Preferred Stock and the Common Stock issuable upon
the exercise thereof.

                                      -8-

<PAGE>
 
          (iv)      Subject to the last sentence of this subparagraph (iv), in
case the Company shall, by dividend or otherwise, distribute to all holders of
its Common Stock evidences of its indebtedness, shares of any class or series of
capital stock, cash or assets (including securities, but excluding any rights or
warrants referred to in subparagraph (ii) of this Section 5(c), any dividend or
distribution paid exclusively in cash and any dividend or distribution referred
to in subparagraph (i) of this Section 5(c)), the conversion price shall be
reduced so that the same shall equal the price determined by multiplying the
conversion price in effect immediately prior to the effectiveness of the
conversion price reduction contemplated by this subparagraph (iv) by a fraction
of which the numerator shall be the current market price per share (determined
as provided in subparagraph (vii) for this Section 5(c)) of the Common Stock on
the date fixed for the payment of such distribution (the "Reference Date") less
the fair market value (as determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a resolution of the
Board of Directors), on the Reference Date, of the portion of the evidences of
indebtedness, shares of capital stock, cash and assets so distributed applicable
to one share of Common Stock and the denominator shall be such current market
price per share of the Common Stock, such reduction to become effective
immediately prior to the opening of business on the day following the Reference
Date. If the Board of Directors determines the fair market value of any
distribution for purposes of this subparagraph (iv) by reference to the actual
or when issued trading market for any securities comprising such distribution,
it must in doing so consider the prices in such market over the same period used
in computing the current market price per share of Common Stock pursuant to
subparagraph (vii) of this Section 5(c). For purposes of this subparagraph (iv),
any dividend or distribution that includes shares of Common Stock or rights or
warrants to subscribe for or purchase shares of Common Stock shall be deemed
instead to be (1) a dividend or distribution of the evidences of indebtedness,
cash, assets or shares of capital stock other than such shares of Common Stock
or such rights or warrants (making any conversion price reduction required by
this subparagraph (iv)) immediately followed by (2) a dividend or distribution
of such shares of Common Stock or such rights or warrants (making any further
conversion price reduction required by subparagraph (i) or (ii) of this Section
5(c), except (A) the Reference Date of such dividend or distribution as defined
in this subparagraph (iv) shall be substituted as "the date fixed for the
determination of stockholders entitled to receive such dividend or other
distributing or to exchange such Rights," the date fixed for the determination
of stockholders entitled to receive such rights or warrants" and "the date fixed
for such determination" within the meaning of subparagraphs (i) and (ii) of this
Section 5(c) and (B) any shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of business on the
date fixed for such determination" within the meaning of subparagraph (i) of
this section 5(c)).

          (v)       In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding any such cash
dividend if the amount thereof per share of Common Stock multiplied by four does
not exceed 15% of the current market price per share (determined as provided in 
subparagraph (vii) of this Section (5(c)) of the Common Stock on the Trading Day
(as defined in Section 5(h)) next preceding the date of declaration of such 
dividend), the conversion price shall be reduced so that the same shall equal 
the price determined by multiplying the conversion price in effect immediately 
prior to the effectiveness of the conversion price reduction contemplated

                                      -9-

 








 
     
<PAGE>
 
by this subparagraph (v) by a fraction of which the numerator shall be the
current market price per share (determined as provided in subparagraph (vii) of
this Section 5(c)) of the Common Stock on the date fixed for the payment of such
distribution less the amount of cash so distributed and not excluded as provided
above applicable to one share of Common Stock and the denominator shall be such
current market price per share of the Common Stock, such reduction to become
effective immediately prior to the opening of business on the day following the
date fixed for the payment of such distribution.
                
        (vi)    In case a tender or exchange offer made by the Company or any 
subsidiary of the Company for all or any portion of the Company's Common Stock 
shall expire and such tender or exchange offer shall involve the payment by the 
Company or such subsidiary of consideration per share of Common Stock having a 
fair market value (as determined in good faith by the Board of Directors, whose 
determination shall be conclusive and described in a resolution of the Board of 
Directors) at the last time (the "Expiration Time") tenders or exchanges may be 
made pursuant to such tender or exchange offer (as it shall have been amended) 
that exceeds the current market price per share (determined as provided in 
subparagraph (vii) of this Section 5(c)) of the Common Stock on the Trading Day
(as defined in Section 5(h)) next succeeding the Expiration Time, the conversion
price shall be reduced so that the same shall equal the price determined by
multiplying the conversion price in effect immediately prior to the
effectiveness of the conversion price reduction contemplated by this
subparagraph (vi) by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding (including any tendered or exchanged shares)
at the Expiration Time multiplied by the current market price per share
(determined as provided in subparagraph (vii) of this Section 5(c)) of the
Common Stock on the Trading Day next succeeding the Expiration Time and the
denominator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders based on the
accceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum, being
referred to as the "Purchased Shares") and (y) the product of the number of
shares of Common Stock outstanding (less any Purchased Shares) at the Expiration
Time and the current market price per share (determined as provided in
subparagraph (vii) of this Section 5(c)) of the Common Stock on the Trading Day
next succeeding the Expiration Time, such reduction to become effective
immediately prior to the opening of business on the day following the Expiration
Time.

        (vii)   For the purpose of any computation under subparagraph (ii), 
(iii), (iv) and (v) of this Section 5(c), the current market price per share of 
Common Stock on any date in question shall be deemed to be the average of the 
daily Closing Prices (as defined in Section 5(h)) for the five consecutive
Trading Days prior to and including the date in question; provided, however,
                                                          --------  -------
that (1) if the "ex" date (as hereinafter defined) for any event (other than the
issuance or distribution requiring such computation) that requires an adjustment
to the conversion price pursuant to subparagraph (i), (ii), (iii), (iv), (v) or
(vi) above ("Other Event") occurs after the third Trading Day prior to the day
in question and prior to the "ex" date for the issuance or distribution
requiring such computation (the "Current Event"), the Closing Price for each
Trading Day prior to the "ex" date for such Other Event shall be adjusted by
multiplying such Closing Price by the same fraction by which the conversion
price is so

                                     -10-
<PAGE>
 
required to be adjusted as a result of such Other Event, (2) if the "ex" date 
for any Other Event occurs after the "ex" date for the Current Event and on or 
prior to the date in question, the Closing Price for each Trading Day on and 
after the "ex" date for such Other Event shall be adjusted by multiplying such 
Closing Price by the reciprocal of the fraction by which the conversion price is
so required to be adjusted as a result of such Other Event, (3) if the "ex" date
of any Other Event occurs on the "ex" date for the Current Event, one of those 
events shall be deemed for purposes of clauses (1) and (2) of this proviso to 
have an "ex" date occurring prior to the "ex" date for the other event, and (4) 
if the "ex" date for the Current Event is on or prior to the date in question, 
after taking into account any adjustment required pursuant to clause (2) of this
proviso, the Closing Price for each Trading Day on or after such "ex" date shall
be adjusted by adding thereto the amount of any cash and the fair market value 
on the date in question (as determined in good faith by the Board of Directors 
in a manner consistent with any determination of such value for purposes of 
paragraph (iv) or (v) of this Section 5(c), whose determination shall be 
conclusive and described in a resolution of the Board of Directors) of the 
portion of the rights, warrants, evidences of indebtedness, shares of capital 
stock or assets being distributed applicable to one share of Common Stock. For 
the purpose of any computation under subparagraph (vi) of this Section 5(c), the
current market price per share of Common Stock on any date in question shall be 
deemed to be the average of the daily Closing Prices for such date in question 
and the next two succeeding Trading Days; provided, however, that if the "ex" 
                                          --------  -------
date for any event (other than the tender or exchange offer requiring such 
computation) that requires an adjustment to the conversion price pursuant to 
subparagraph (i), (ii), (iii), (iv), (v) or (vi) above occurs after the 
Expiration Time for the tender or exchange offer requiring such computation and 
or prior to the second Trading Day following the date in question, the Closing 
Price for each Trading Day on and after the "ex" date for such other event shall
be adjusted by multiplying such Closing Price by the reciprocal of the fraction 
by which the conversion price is so required to be adjusted as a result of such 
other event. For purposes of this paragraph, the term "ex" date, (1) when used 
with respect to any issuance or distribution, means the first date on which the 
Common Stock trades regular way on the relevant exchange or in the relevant 
market from which the Closing Price was obtained without the right to receive 
such issuance or distribution, (2) when used with respect to any subdivision or 
combination of shares of Common Stock, means the first date on which the 
Common Stock trades regular way on such exchange or in such market after the 
time at which such subdivision or combination becomes effective, and (3) when 
used with respect to any tender or exchange offer means the first date on which 
the Common Stock trades regular way on such exchange or in such market after the
Expiration Time of such offer.

          (viii) The Company may make such reductions in the conversion price, 
in addition to those required by subparagraphs (i), (ii), (iii), (iv), (v) and 
(vi) of this Section 5(c), as it considers to be advisable to avoid or diminish 
an income tax to holders of Common Stock or rights to purchase Common Stock 
resulting from any dividend or distribution of stock (or rights to acquire 
stock) or from any event treated as such for income tax purposes. The Company 
from time to time may reduce the conversion price by any amount for any period 
of time if the period is at least twenty days, the reduction is irrevocable 
during the period, and the Board of Directors of the Company shall have made a 
determination that such reduction would be in the best interest of the Company, 
which determination shall be conclusive. Whenever the conversion price is 
reduced pursuant to the preceding sentence, the

                                     -11-

<PAGE>
 
Company shall mail to holders of record of the Series B Preferred Stock a notice
of the reduction at least fifteen days prior to the date the reduced conversion 
price takes effect, and such notice shall state the reduced conversion price and
the period it will be in effect.

          (ix)   No adjustment in the conversion price shall be required unless 
such adjustment would require an increase or decrease of at least 1% in the 
conversion price; provided, however, that any adjustments which by reason of 
                  --------  -------
this subparagraph (ix) are not required to be made shall be carried forward and 
taken into account in any subsequent adjustment.

          (x)    Whenever the conversion price is adjusted as herein provided:


                 (1)  the Company shall compute the adjusted conversion price 
and shall prepare a certificate signed by the Company's independent auditors 
setting forth the adjusted conversion price and showing in reasonable detail the
facts upon which such adjustment is based, and such certificate shall forthwith 
be filed with the transfer agent for the Series B Preferred Stock; and

                 (2)  a notice stating the conversion price has been adjusted 
and setting forth the adjusted conversion price shall forthwith be required, and
as soon as practicable after it is required such notice shall be mailed by the 
Company to all record holders of shares of Series B Preferred Stock at their 
last addresses as they shall appear upon the stock transfer books of the 
Company.

     (d)  No Fractional Shares.  No fractional shares of Common Stock shall be 
          --------------------
issued upon conversion of Series B Preferred Stock. If more than one certificate
evidencing shares of Series B Preferred Stock shall be surrendered for 
conversion at one time by the same holder, the number of full shares issuable 
upon conversion thereof shall be computed on the basis of the aggregate number 
of shares of Series B Preferred Stock so surrendered. Instead of any fractional 
share of Common Stock that would otherwise be issuable to a holder upon 
conversion of any shares of Series B Preferred Stock, the Company shall pay a 
cash adjustment in respect of such fractional share in an amount equal to the 
same fraction of the market price per share of Common Stock (as determined by 
the Board of Directors or in any manner prescribed by the Board of Directors, 
which, so long as the Common Stock is quoted on the Nasdaq National Market 
System, shall be the reported last sale price regular way on the Nasdaq National
Market System, or so long as the Common Stock is traded on the over-the-counter
market, shall be the closing bid regular way, at the close of business on the 
day of conversion).

     (e)  Reclassification, Consolidation, Merger or Sale of Assets.  In the 
          ---------------------------------------------------------
event that the Company shall be a party to any transaction (including without 
limitation any recapitalization or reclassification of the Common Stock (other 
than a change in par value, or from par value to no par value, or from no par 
value to par value, or as a result of a subdivision or combination of the Common
Stock), any consolidation of the Company with, or merger of the Company into, 
any other person, any merger of another person into the Company (other than a 
merger which does not result in a reclassification, conversion, exchange or 
cancellation of outstanding shares of Common Stock of the Company), any sale or 
transfer of all of substantially all of the assets of the Company or any 
compulsory share

                                     -12-

<PAGE>
 
exchange) pursuant to which the Common Stock is converted into the right to
receive other securities, cash or other property, then lawful provisions shall
be made as part of the terms of such transaction whereby the holder of each
share of Series B Preferred Stock then outstanding shall have the right
thereafter to convert such share only into the kind and amount of securities,
cash and other property receivable upon such transaction by a holder of the
number of shares of Common Stock of the Company into which such share of Series
B Preferred Stock could have been converted immediately prior to such
transaction. The Company or the person formed by such consolidation or resulting
from such merger or which acquires such assets or which acquires the Company's
shares, as the case may be, shall make provisions in its certificate or
articles of incorporation or other constituent document to establish such right.
Such certificate or articles of incorporation or other constituent document
shall provide for adjustments which, for events subsequent to the effective date
of such certificate or articles of incorporation or other constituent document,
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Section 5. The above provisions shall similarly apply to successive
transactions of the foregoing type.

     (f)  Reservation of Shares: Etc. From and after the Conversion Date, the 
          --------------------------
Company shall at all times reserve and keep available, free from preemptive 
rights out of its authorized and unissued stock, solely for the purpose of 
effecting the conversion of the Series B Preferred Stock, such number of shares 
of its Common Stock as shall from time to time be sufficient to effect the 
conversion of all shares of Series B Preferred Stock from time to time 
outstanding. From and after the Conversion Date, the Company shall from time to 
time, in accordance with the laws of the State of Texas, increase the authorized
number of shares of Common Stock if at any time the number of shares of 
authorized and unissued Common Stock shall not be sufficient to permit the 
conversion of all the then-outstanding shares of Series B Preferred Stock.

     (g)  Prior Notice of Certain Events. In case:
          ------------------------------

          (i)    the Company shall (1) declare any divided (or any other 
distribution) on its Common Stock, other than (A) a dividend payable in shares 
of Common Stock or (B) a dividend payable in cash out of its retained earnings 
other than any special or nonrecurring or other extraordinary dividend or (2) 
declare or authorize a redemption or repurchase of the then-outstanding shares 
of Common Stock; or

          (ii)   the Company shall authorize the granting to all holders of
Common Stock of rights or warrants to subscribe for or purchase any shares of
stock of any class or series or of any other rights or warrants; or

          (iii)  of any reclassification of Common Stock (other than a 
subdivision or combination of the outstanding Common Stock, or a change in par 
value, or from par value to no par value, or from no par value to par value), or
of any consolidation or merger to which the Company is a party and for which 
approval of any stockholders of the Company shall be required, or of the sale or

                                     -13-
<PAGE>
 
transfer of all or substantially all of the assets of the Company or of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or other property; or

          (iv) of the voluntary or involuntary dissolution, liquidation or 
winding up of the Company;

then the Company shall cause to be mailed to the holders of record of the Series
B Preferred Stock, at their last addresses as they shall appear upon the stock
transfer books of the Company, at least fifteen days prior to the later of the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record (if any) is to be taken for the purpose of such
dividend, distribution, redemption, repurchase, rights or warrants or, if a
record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, redemption, rights or
warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer, share
exchange, dissolution, liquidation or winding up (but no failure to mail such
notice or any defect therein or in the mailing thereof shall affect the validity
of the corporate action required to be specified in such notice).

     (h)  Definitions. The following definitions shall apply to terms used in 
          -----------
this Section 5:

          (l)  "Closing Price" of any common stock on any day shall mean the
last reported sale price regular way on such day or, in case no such sale takes 
place on such day, the average of the reported closing bid and asked prices 
regular way of the common stock in each case on the Nasdaq National Market 
System, or, if the common stock is not quoted or admitted to trading on such 
quotation system, on the principal national securities exchange or quotation 
system on which the common stock is listed or admitted to trading or quoted, or,
if not listed or admitted to trading or quoted on any national securities 
exchange or quotation system, the average of the closing bid and asked prices of
the common stock in the over-the-counter market on the day in question as 
reported by the National Quotation Bureau Incorporated, or a similarly generally
accepted reporting services, or, if not so available in such manner, as
furnished by any New York Stock Exchange member firm selected from time to time
by the Board of Directors of the Company for that purpose or, if not so
available in such manner, as otherwise determined in good faith by the Board of 
Directors.

          (2)  "Trading Day" shall mean a day on which securities traded on the 
national securities exchange or quotation system or in the over-the-counter 
market used to determined the Closing Price.

     (i)  Dividend or Interest Reinvestment Plans. Notwithstanding the foregoing
          ---------------------------------------
provisions, the issuance of any shares of Common Stock pursuant to any plan
providing for the reinvestment of dividends or interest payable on securities of
the Company and the investment of additional optional
         
                                     -14-
<PAGE>
 
amounts in shares of Common Stock under any such plan, and the issuance of any 
shares of Common Stock or options or rights to purchase such shares pursuant to
any employee benefit plan or program of the Company or pursuant to any option,
warrant, right or exercisable, exchangeable or convertible security outstanding
as of the date the Series B Preferred Stock was first designated, shall not be
deemed to constitute an issuance of Common Stock or exercisable, exchangeable or
convertible securities by the Company to which any of the adjustment provisions
described above applies. There shall also be no adjustment of the conversion
price in case of the issuance of any stock (or securities convertible into or
exchangeable for stock) of the Company except as specifically described in this
Section 5. If any action would require adjustment of the conversion price
pursuant to more than one of the provisions described above, only one adjustment
shall be made and such adjustment shall be the amount of adjustment which has
the highest absolute value to holders of Series B Preferred Stock.

     (j)  Certain Additional Rights. In case the Company shall, by dividend or
          -------------------------
otherwise, declare or make a distribution on its Common Stock referred to in
Section 5(c)(iv) or 5(c)(v) (including, without limitation, dividends or
distributions referred to in the last sentence of Section 5(c)(iv)), the holder
of each share of Series B Preferred Stock, upon the conversion thereof
subsequent to the close of business on the date fixed for the determination of
stockholders entitled to receive such distribution and prior to the 
effectiveness of the conversion price adjustment in respect of such 
distribution, shall also be entitled to receive for each share of Common Stock 
into which such share of Series B Preferred Stock is converted, the portion of 
the shares of Common Stock, rights, warrants, evidences of indebtedness, shares
of capital stock, cash and assets so distributed applicable to one share of
Common Stock; provided, however, that, at the election of the Company  (whose 
              --------  -------
election shall be evidenced by a resolution of the Board of Directors) with
respect to all holders so converting, the Company may, in lieu of distributing
to such holder any portion of such distribution not consisting of cash or
securities of the Company, pay such holder an amount in cash equal to the fair
market value thereof (as determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a resolution of the
Board of Directors). If any conversion of a share of Series B Preferred Stock
described in the immediately preceding sentence occurs prior to the payment date
for a distribution to holders of Common Stock which the holder of the share of
Series B Preferred Stock so converted is entitled to receive in accordance with
the immediately preceding sentence, the Company may elect (such election to be
evidenced by a resolution of the Board of Directors) to distribute to such
holder a due bill for the shares of Common Stock, rights, warrants, evidences of
indebtedness, shares of capital stock, cash or assets to which such holder is so
entitled, provided that such due bill (i) meets any applicable requirements of
the principal national securities exchange or other market on which the Common
Stock is then traded and (ii) requires payment or delivery of such shares of
Common Stock, rights, warrants, evidences of indebtedness, shares of capital
stock, cash or assets no later than the date of payment or delivery thereof to
holders of shares of Common Stock receiving such distribution.

                                     -15-

<PAGE>
 
     6.   Redemption.
          ----------

     (a)  Optional Redemption. The shares of Series B Preferred Stock may be 
          -------------------
redeemed at the option of the Company, to the extent it has funds legally
available for such redemption, at any time, in whole or in part, subsequent to
the second anniversary of the Final Closing Date, at a redemption price per
share, payable in cash, equal to $50.00 plus an amount equal to all accumulated
and unpaid cash dividends thereon to the date of such redemption (the
"Redemption Price"), whether or not declared. The Company shall, by written
notice mailed at least 30 calendar days after the Final Closing Date, give
notice to each holder of Series B Preferred Stock of the Final Closing Date.

     In the case of redemption of less than all of the then outstanding shares 
of Series B Preferred Stock, the Company shall effect such redemption pro rata. 
Notwithstanding the foregoing, the Company shall not redeem less than all of the
shares of the Series B Preferred Stock at any time outstanding until all 
dividends accumulated and in arrears upon all shares of Series B Preferred Stock
then outstanding for all dividend periods ending prior to the date of redemption
been paid.

     (b)  Redemption Procedure. With respect to any redemption of shares of 
          --------------------
Series B Preferred Stock provided for in this Section 6, a notice of redemption 
of shares of Series B Preferred Stock (the "Redemption Notice") shall be given 
by first-class mail, postage prepaid, mailed at least 30 calendar days prior to 
the specified redemption date to each holder of the shares of Series B Preferred
Stock to be redeemed, at such holder's address as the same appears on the 
register of the Company for the Series B Preferred Stock, provided, however, 
                                                          --------  -------
that such Redemption Notice may only be given if, for the 20 consecutive trading
days preceding the notice, the closing price for the Company's Common Stock (if
then listed on the Nasdaq National Market) or the closing bid for the Common
Stock (if then trading on the over-the-counter market) is in excess of $2.00 per
share, such $2.00 closing price or closing bid price to be proportionately
adjusted if the Conversion Price is adjusted pursuant to Section 5 herein. Each
Redemption Notice shall state and include (i) the Redemption Date, (ii) a
statement either (A) that all of the holder's shares of Series B Preferred Stock
are being redeemed or (B) the number of such shares to be redeemed from the
holder (which number will be calculated based on the holder's pro rata ownership
percentage of then outstanding shares of Series B Preferred Stock), (iii) the
redemption price per share, and (iv) the place or places where certificates for
such shares are to be surrendered for payment of the redemption price.

          (c)  Any Redemption Notice that is mailed as herein provided shall be 
conclusively presumed to have been duly given, whether or not the holder of the 
shares of Series B Preferred Stock receives such notice; and failure to give 
such notice by mail, or any defect in such notice, to the holders of any shares 
designated for redemption shall not affect the validity of the proceedings for 
the redemption of any other shares of Series B Preferred Stock.

          (d)  On or after the Redemption Date as stated in the Redemption 
Notice, the holders of shares of Series B Preferred Stock which have been called
for redemption shall surrender certificates representing such shares to the 
Company at its principal place of business or as otherwise stated in the 

                                     -16-
<PAGE>
 
Redemption Notice, and thereupon the redemption price of such shares shall be
paid by the Company in the manner specified in the Redemption Notice to the
person whose name appears on such certificate or certificates as the owner
thereof. If less than all the shares represented by any such surrendered
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares. The Company may elect not to issue fractional shares or scrip
representing fractions of shares of Series B Preferred Stock upon redemption of
less than all shares of Series B Preferred Stock. Instead of any fractional
interest in a share of Series B Preferred Stock that would otherwise be
deliverable upon the redemption of less than all shares of Series B Preferred
Stock, the Company may elect to pay to the holder of such share an amount in
cash based upon $50.00 plus accumulated dividends.

          (e)  Notice having been given as aforesaid, if, on the date fixed for
redemption, funds necessary for the redemption shall be available therefor and
shall have been deposited with a bank or trust company with irrevocable
instructions and authority to pay the Redemption Price to the holders of the
Series B Preferred Stock, then, notwithstanding that the certificates
representing any shares so called for redemption shall not have been
surrendered, dividends with respect to the shares so called shall cease to
accumulate after the date fixed for redemption, such shares shall no longer be
deemed outstanding, the holders thereof shall cease to be stockholders of the
Company, and all rights whatsoever with respect to the shares so called for
redemption (except the right of the holders to receive the Redemption Price
without interest upon surrender of their certificates therefor) shall terminate.
If funds legally available for such purpose are not sufficient for redemption of
the Series B Preferred Stock which were to be redeemed, then Section 7 shall
apply and the certificates representing shares not redeemed pursuant to Section
7 shall be deemed not to be surrendered, such shares shall remain outstanding,
the right of the holder to receive payment of the Redemption Price for such
shares shall terminate, and the right of holders of Series B Preferred Stock
thereafter shall continue to be only those of a holder of shares of the Series B
Preferred Stock.

     7.   Partial Payments. Upon an optional redemption by the Company, if at
          ----------------
any time the Company does not pay amounts sufficient to redeem all shares of
Series B Preferred Stock, then such funds which are paid shall be applied to
redeem such shares of Series B Preferred Stock pro rata.

     8.   Shares to Be Retired. All shares of Series B Preferred Stock which
          --------------------
shall have been issued and reacquired in any manner by the Company shall be
restored to the status of authorized but unissued shares of preferred stock of
the Company, without designation as to class or series.

     9.   Voting Rights.
          -------------

     (a)  So long as any shares of Series B Preferred Stock are outstanding, in
addition to any other vote or consent of shareholders required by law or by the
articles of incorporation of the Company, the affirmative vote of at least a
majority of the votes entitled to be cast by the holders of the Series B
Preferred Stock (each such share being entitled to one vote), at the time
outstanding, given in person or by proxy, either in writing without a meeting or
by vote at any meeting called for the purpose shall be necessary for effecting
or validating:

                                     -17-

<PAGE>
 
          (i)       Any amendment, alteration or repeal of any of the provisions
of the articles of incorporation or bylaws of the Company or this Statement of
Designation that adversely affects the voting powers, rights or preferences of
the holders of the Series B Preferred Stock; provided, however, that the
                                             --------  -------
amendment of the provisions of the articles of incorporation of the Company so
as to authorize or create or to increase the authorized amount of any Parity
Stock or any Junior Stock, (a) shall not be deemed to adversely affect the
voting powers, rights or preferences of the holders of Series B Preferred Stock
and (b) shall not in any case require a separate vote of the holders of Series B
Preferred Stock; or


          (ii)      A share exchange that affects the Series B Preferred Stock,
a consolidation with or merger of the Corporation into another entity, or a
consolidation with or merger of another entity into the Corporation, or the
voluntary sale, lease, conveyance, exchange, or transfer (for cash, shares of
stock, securities, or other consideration) of all or substantially all of the
property or assets of the Company; or

          (iii)     Except for the Series A Preferred Stock, the authorization
or creation of any shares of any class of any security convertible into shares 
of any class ranking prior to or on parity with the Series B Preferred Stock in 
the distribution of assets on any liquidation, dissolution or winding up of the 
Company or in the payment of dividends;


provided, however, that no such vote of the holders of Series B Preferred Stock 
--------  -------
shall be required if, at or prior to the time when such amendment, alteration or
repeal is to take effect, or when the issuance of any such shares or convertible
security is to be made, as the case may be, provision in made for the redemption
of all shares of Series B Preferred Stock at the time outstanding in accordance 
with the terms hereof.

                                     -18-

<PAGE>
 
     FURTHER RESOLVED, that the form, terms and provisions of the Statement of
Designation Establishing the Series B 8% Cumulative Convertible Redeemable
Preferred Stock of Positron Corporation, in the form reviewed by the directors
together with such changes therein as may be approved by the Chairman,
President, or any Vice President executing and filing with the Secretary of
State of the State of Texas such Designation, such approval to be conclusively
evidenced by the execution thereof by such officer, be and the same hereby is in
all respects approved and adopted, and the Chairman, President or any Vice
President of this Company be, and each of them acting individually, is hereby
authorized to execute and file with the Secretary of State of the State of
Texas, in the name and on behalf of this Company, such Statement of Designation;


                                        POSITRON CORPORATION



Dated: July 10, 1996                    By:_____________________________________
                                        Name:___________________________________
                                        Title:__________________________________

                                     -19-