
<PAGE>
 
                         CERTIFICATE OF DETERMINATION
                                      OF
                           SERIES B PREFERRED STOCK
                                      OF
                     ADVANCED MACHINE VISION CORPORATION,
                           A CALIFORNIA CORPORATION

          William J. Young and Alan R. Steel each certifies that:

          1.  They are the duly elected and acting Chairman of the Board and
Chief Financial Officer, respectively, of Advanced Machine Vision Corporation, a
corporation organized and existing under the General Corporation Law of the
State of California (the "Corporation").

          2.  The number of shares of Series B Preferred Stock is 119,106, none
of which has been issued.

          3.  The Board of Directors duly adopted the following resolution
creating a series of its Preferred Stock designated as Series B Preferred Stock:

          WHEREAS, the Articles of Incorporation of the Corporation authorize
the Preferred Stock of the Corporation to be issued in series and authorize the
Board of Directors to determine the rights, preferences, privileges and
restrictions granted to or imposed upon any wholly unissued series Preferred
Stock and to fix the number of shares and designation of any such series;

          NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does
hereby establish a series of the class of authorized preferred stock, no par
value, of the Corporation ("Preferred Stock"), and that the designation and
amount thereof 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 thereof, are as follows:

          1.  Designation and Amount.  The shares of the series of Preferred
              ----------------------                                        
Stock hereby established shall be designated as "Series B Preferred Stock" and
the number of shares constituting such series shall be 119,106.

          2.  Dividends.  The holders of the Series B Preferred Stock shall have
              ---------                                                         
no right to receive dividends.

          3.  Liquidation Preference.
              ---------------------- 

              (a) In the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of the Series B
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 the Corporation's common stock, no par value ("Common Stock") or
Series A Preferred Stock by reason of their ownership thereof, the amount 

                                       1
<PAGE>
 
of $22.00 per share (as adjusted for any stock dividends, combinations or splits
with respect to such shares) (the "Liquidation Preference"). If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Series B Preferred Stock shall be insufficient to permit the
payment to such holders of the full Liquidation Preference, then the entire
assets and funds of the Corporation legally available for distribution shall be
distributed ratably among the holders of the Series B Preferred Stock in
proportion to the preferential amount each such holder is otherwise entitled to
receive.

              (b) After the payment or distribution to the holders of the Series
B Preferred Stock of the full Liquidation Preference set forth above, the
holders of the Series B Preferred Stock shall receive no further distribution
with respect to such shares.

              (c) For purposes of this Section 3, (i) any acquisition of the
Corporation by means of merger or other form of corporate reorganization in
which outstanding shares of the Corporation are sold or exchanged for securities
or other consideration issued, or caused to be issued, by the acquiring
corporation or its subsidiary (other than a mere reincorporation transaction) or
(ii) a sale of all or substantially all of the assets of the Corporation, shall,
at the option of the holders of a majority of the outstanding shares of Series B
Preferred Stock, be treated as a liquidation, dissolution or winding up of the
Corporation and shall entitle the holders of Series B Preferred Stock to receive
at the closing in cash, securities or other property (valued as provided in
Section 3(d) below) amounts as specified in Section 3(a) above; provided,
                                                                -------- 
however, that, in each such case, the applicable transaction shall not be
-------                                                                  
treated as a liquidation, dissolution or winding up of the Corporation and shall
not entitle the holders of Series B Preferred Stock to receive such amounts
unless the Corporation's shareholders of record as constituted immediately prior
to such acquisition or sale hold less than a majority of the Voting Stock (as
defined below) of the surviving corporation or acquiring entity immediately
after such acquisition or sale.  "Voting Stock" means the capital stock of an
entity that is entitled to vote in the election of the Board of Directors of
such entity.

              (d) Whenever the distribution provided for in this Section 3 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.

          4.  Repurchase at the Option of the Series B Preferred Shareholders.
              --------------------------------------------------------------- 

              Upon the occurrence of a Change of Control (as defined below),
each holder of shares of Series B Preferred Stock shall have the right to
require the Corporation to repurchase all or any part of such holder's shares of
Series B Preferred Stock at a price in cash equal to the greater of (a) $22.00
per share (as adjusted for any stock dividends, combinations or splits with
respect to such shares) or (b) the market value of the shares of Class A Common
Stock issuable upon conversion of such shares of Series B Preferred Stock,
calculated as the average of the closing bid price of the Class A Common Stock
for the forty-five (45) consecutive trading days immediately preceding the date
of repurchase, subject to the Corporation's ability to legally do so under
California General Corporation Law, Chapter 5. The Corporation shall repurchase
such 

                                       2
<PAGE>
 
shares within 30 days of the receipt of notice by the Corporation that such
shareholder has elected to have the Corporation repurchase its shares pursuant
to this Section 4.

              "Change of Control" means the occurrence of any of the following:
(i) the sale, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Corporation, (ii) the adoption of a plan
relating to the liquidation or dissolution of the Corporation, (iii) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any person or entity becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act, except that in calculating the beneficial ownership of any
particular "person," such "person" shall be deemed to have beneficial ownership
of all securities that such person has the right to acquire, whether such right
is currently exercisable or is exercisable only upon the occurrence of a
subsequent condition), directly or indirectly, of more than 37.5% of the Voting
Stock of the Corporation (measured by voting power rather than number of
shares), (iv) the first day on which a majority of the members of the Board of
Directors of the Corporation are not Continuing Directors (as defined below) or
(v) the shareholders of the Corporation approve a consolidation of the
Corporation with, or a merger of the Corporation with or into, any entity, or
the shareholders of the Corporation (if required) or the shareholders of any
entity approve a consolidation of such entity with, or merger of such entity
with or into, the Corporation, other than any such transaction where the
Corporation's shareholders of record immediately prior to such transaction hold
more than 80% of the Voting Stock of the surviving corporation or entity
immediately after giving effect to such issuance. A Change of Control shall not
be deemed to have occurred if any of the above events occur by virtue of
transactions effected by FMC Corporation or its affiliates.

              "Continuing Director" means any member of the Board of Directors
of the Corporation who (i) was a member of such Board of Directors on the date
on which a share of Series B Preferred Stock is first issued (the "Original
Issue Date") or (ii) was nominated for election or elected to such Board of
Directors with the approval of a majority of the Continuing Directors who were
members of such Board at the time of such nomination or election.

          5.  Voting Rights.
              ------------- 

              (a) Each holder of shares of the Series B Preferred Stock shall be
entitled to the number of votes equal to the number of shares of Class A Common
Stock into which such shares of Series B Preferred Stock could then be converted
and shall have voting rights and powers equal to the voting rights and powers of
the Class A Common Stock (except in the election of directors, which shall be
governed by Section 5(c), and except as otherwise expressly provided herein or
as required by law, voting together with the Common Stock as a single class) and
shall be entitled to notice of any shareholders' meeting in accordance with the
By-laws of the Corporation.  Fractional votes shall not, however, be permitted
and any fractional voting rights resulting from the above formula (after
aggregating all shares into which shares of Series B Preferred Stock held by
each holder could be converted) shall be rounded to the nearest whole number
(with one-half being rounded upward).

                                       3
<PAGE>
 
              (b) So long as any shares of Series B Preferred Stock remain
outstanding (or, in the case of (vi) and (vii) below, until October 14, 2002 and
have not been transferred by the original holder of such Series B Preferred
Stock), the Corporation shall not, without the vote or written consent by the
holders of at least a majority of the then outstanding shares of the Series B
Preferred Stock, voting or acting together as a single class, take any of the
following actions:

                  (i) take any action which adversely alters or changes or may
adversely alter or change the rights, preferences or privileges of the Series B
Preferred Stock;

                  (ii) increase or decrease the authorized number of shares of
Series B Preferred Stock;

                  (iii) create (by reclassification or otherwise) any class or
series of shares having rights, preferences or privileges senior to or on a
parity with the Series B Preferred Stock;

                  (iv) redeem or repurchase any shares of capital stock (other
than repurchases from employees upon termination of employment pursuant to
written employment agreements with such employees in effect on the Original
Issue Date);

                  (v) enter into any agreement for the redemption or repurchase
of any shares of capital stock except pursuant to repurchases permitted pursuant
to (iv) above;

                  (vi) merge with or into any other entity or enter into any
other corporate reorganization, recapitalization, sale of control or any
transaction that, directly or indirectly, results in the sale, license, lease,
transfer, conveyance or other disposition of all or substantially all of the
assets or properties of the Corporation;

                  (vii) sell, license, lease, transfer, convey or otherwise
dispose of the Corporation's Intellectual Property, as defined below;

                  (viii) amend or waive any provision of the Corporation's
Articles of Incorporation or By-laws;

                  (ix) purchase, lease or acquire assets or securities of
another person or entity, in one or more related or unrelated transactions, if
the aggregate consideration paid or payable in all such transactions (other than
those in the ordinary course of business) combined exceeds two million dollars
($2,000,000) or any one such transaction exceeds five hundred thousand
($500,000) dollars;

                  (x) issue or distribute any additional equity securities or
any other securities convertible or exchangeable into equity securities (other
than issuance of shares of Class A Common Stock pursuant to employee stock
options or other employee stock plans in effect as of the Original Issue Date
and, with the approval of the Board of Directors, shares of Class A Common Stock
to unrelated third parties, in arms-length transactions, in consideration for
the payment of fair value, that do not exceed 100,000 shares for any fiscal
year); or

                                       4
<PAGE>
 
                  (xi) approves the liquidation, dissolution or winding up of
the Corporation.

              "Intellectual Property" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all reissuances, continuations, continuations-in-
part, revisions, extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names, and corporate names, together
with all translations, adaptations, derivations, and combinations thereof and
including all good-will associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including data and related documentation), (g) all
other proprietary rights, and (h) all copies and tangible embodiments thereof
(in whatever form or medium).

              (c) The holders of Series B Preferred Stock, voting as a separate
class, shall be entitled to elect one (1) member of the Board of Directors.

          6.  Conversion.  The holders of the Series B Preferred Stock shall
              ----------                                                    
have conversion rights as follows (the "Conversion Rights"):

              (a) Right to Convert. Each share of Series B Preferred Stock shall
                  ----------------
be convertible, at the option of the holder thereof, at any time after the date
of issuance of such share at the office of the Corporation or any transfer agent
for such stock, into such number of fully paid and nonassessable shares of the
Corporation's Class A Common Stock, no par value ("Class A Common Stock") as is
determined by dividing $22.00 by the Series B Conversion Price (as defined
below) applicable to such share, determined as hereinafter provided, in effect
on the date the certificate is surrendered for conversion. The "Series B
Conversion Price" shall initially be $2.20 per share of Class A Common Stock.
Such initial Series B Conversion Price shall be adjusted as hereinafter
provided.

              (b) Automatic Conversion.  Each share of Series B Preferred Stock
                  --------------------                                         
shall automatically be converted into shares of Class A Common Stock at the
then-effective Series B Conversion Price, upon the later of (i) the third
anniversary of the date of issuance or (ii) the sixtieth day after the
termination of that certain Representative Agreement between the Corporation and
the initial holder of the Series B Preferred Stock.

              (c) Mechanics of Conversion.
                  ----------------------- 

                  (i) Before any holder of Series B Preferred Stock shall be
entitled to convert the same into shares of Class A Common Stock, such holder
shall surrender the certificate or certificates therefor, duly endorsed, at the
office of the Corporation or of any 

                                       5
<PAGE>
 
transfer agent for such stock, and shall give written notice to the Corporation
at such office that such holder elects to convert the same and shall state
therein the name or names in which such holder wishes the certificate or
certificates for shares of Class A Common Stock to be issued. The Corporation
shall, as soon as practicable thereafter, issue and deliver at such office to
such holder of Series B Preferred Stock, a certificate or certificates for the
number of shares of Class A Common Stock to which such holder shall be entitled
as aforesaid. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of surrender of the shares of Series
B Preferred Stock to be converted, and the person or persons entitled to receive
the shares of Class A Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of Class
A Common Stock on such date.

              (d) Adjustment to Series B Conversion Price for Certain Diluting
                  ------------------------------------------------------------
Issues
------

                  (i) Special Definitions. For purposes of this Section 6(d),
                      -------------------
the following definitions apply:

                      (1) "Options" shall mean rights, options, or warrants to
                           -------
subscribe for, purchase or otherwise acquire Common Stock, Series B Preferred
Stock or Convertible Securities (defined below).

                      (2) "Convertible Securities" shall mean any evidences of
                           ----------------------
indebtedness, shares (other than Common Stock or Series B Preferred Stock) or
other securities convertible into or exchangeable for Common Stock.

                      (3) "Additional Shares of Common Stock" shall mean all
                           ---------------------------------
shares of Common Stock issued (or, pursuant to Section 6(d)(iii), deemed to be
issued) by the Corporation after the Original Issue Date, other than shares of
Common Stock issued or issuable:

                          (A) upon conversion of shares of Series B Preferred
Stock;

                          (B) to officers, directors or employees of, or
consultants to, the Corporation pursuant to stock option or stock purchase plans
or agreements on terms approved by the Board of Directors and shares to
unrelated third parties with approval of the Board of Directors (provided that
the amount of such shares issued does not exceed 100,000 shares of Common Stock
in any fiscal year) (net of any repurchases of such shares, but including all
shares issuable upon exercise of Options), subject to adjustment for all
subdivisions and combinations;

                          (C) as a dividend or distribution on Series B
Preferred Stock; or

                          (D) for which adjustment of the Series B Conversion
Price is made pursuant to Section 6(e).

                                       6
<PAGE>
 
                  (ii) No Adjustment of Series B Conversion Price. Any provision
                       ------------------------------------------
herein to the contrary notwithstanding, no adjustment in the Series B Conversion
Price for Series B Preferred Stock shall be made in respect of the issuance of
Additional Shares of Common Stock unless the consideration per share (determined
pursuant to Section 6(d)(v) hereof) for an Additional Share of Common Stock
issued or deemed to be issued by the Corporation is less than the Series B
Conversion Price in effect on the date of, and immediately prior to such issue.

                  (iii) Deemed Issuance of Additional Shares of Common Stock. In
                        ----------------------------------------------------
the event the Corporation at any time or from time to time after the Original
Issue Date shall issue any Options (excluding the option granted pursuant to the
Series B Preferred Stock Purchase Agreement to FMC Corporation of even date
herewith) or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities then entitled to receive any
such Options or Convertible Securities, then the maximum number of shares (as
set forth in the instrument relating thereto without regard to any provisions
contained therein designed to protect against dilution) of Common Stock issuable
upon the exercise of such Options or, in the case of Convertible Securities and
Options for Convertible Securities or for Series B Preferred Stock, the
conversion or exchange of such Convertible Securities or Series B Preferred
Stock, shall be deemed to be Additional Shares of Common Stock issued as of the
time of such issue or, in case such a record date shall have been fixed, as of
the close of business on such record date, provided further that in any such
case in which Additional Shares of Common Stock are deemed to be issued:

                      (1) no further adjustments in the Series B Conversion
Price shall be made upon the subsequent issue of Convertible Securities, or
Series B Preferred Stock or shares of Common Stock upon the exercise of such
Options or conversion or exchange of such Convertible Securities or Series B
Preferred Stock;

                      (2) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase or
decrease in the consideration payable to the Corporation, or decrease or
increase in the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the Series B Conversion Price computed upon the
original issue thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to reflect such increase
or decrease insofar as it affects such Options or the rights of conversion or
exchange under such Convertible Securities (provided, however, that no such
adjustment of the Series B Conversion Price shall affect Common Stock previously
issued upon conversion of the Series B Preferred Stock);

                      (3) upon the expiration of any such Options or any such
Options or any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Series B Conversion Price
computed upon the original issue thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments based thereon, shall,
upon such expiration, be recomputed as if:

                                       7
<PAGE>
 
                          (A) in the case of Convertible Securities or Options
for Common Stock the only Additional Shares of Common Stock issued were the
shares of Common Stock, if any, actually issued upon the exercise of such
Options or the conversion or exchange of such Convertible Securities and the
consideration received therefor was the consideration actually received by the
Corporation for the issue of all such Options, whether or not exercised, plus
the consideration actually received by the Corporation upon such exercise, or
for the issue of all such Convertible Securities which were actually converted
or exchanged, plus the additional consideration, if any, actually received by
the Corporation upon such conversion or exchange and

                          (B) in the case of Options for Convertible Securities
or Series B Preferred Stock only the Convertible Securities or Series B
Preferred Stock, if any, actually issued upon the exercise thereof were issued
at the time of issue of such Options, and the consideration received by the
Corporation for the Additional Shares of Common Stock deemed to have been then
issued was the consideration actually received by the Corporation for the issue
of all such Options, whether or not exercised, plus the consideration deemed to
have been received by the Corporation (determined pursuant to Section 6(d)(v))
upon the issue of the Convertible Securities or Series B Preferred Stock with
respect to which such Options were actually exercised;

                      (4) no readjustment pursuant to clause (2) or (3) above
shall have the effect of increasing the Series B Conversion Price to an amount
which exceeds the lower of (a) the Series B Conversion Price on the original
adjustment date, or (b) the Series B Conversion Price that would have resulted
from any issuance of Additional Shares of Common Stock between the original
adjustment date and such readjustment date;

                      (5) in the case of any Options which expire by their terms
not more than 30 days after the date of issue thereof, no adjustment of the
Series B Conversion Price shall be made until the expiration or exercise of all
such Options, whereupon such adjustment shall be made in the same manner
provided in clause (3) above.

                  (iv) Adjustment of Series B Conversion Price Upon Issuance of
                       --------------------------------------------------------
Additional Shares of Common Stock.  In the event the Corporation, at any time
---------------------------------                                            
after the Original Issue Date shall issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued pursuant to
Section 6(d)(iii) without consideration or for a consideration per share less
than the Series B Conversion Price as in effect immediately prior to such issue,
then and in such event, the Series B Conversion Price shall be reduced,
concurrently with such issue, to a price (calculated to the nearest cent)
determined by multiplying such Series B Conversion Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issue plus the number of shares of Common Stock which
the aggregate consideration received by the Corporation for the total number of
Additional Shares of Common Stock so issued would purchase at such Series B
Conversion Price in effect immediately prior to such issuance, and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issue plus the number of such Additional Shares of
Common Stock so issued.  For the purpose of the above calculation, the number of
shares of Common Stock outstanding immediately prior to such issue shall be
calculated on a fully diluted basis, as if all shares of Series B Preferred
Stock and all 

                                       8
<PAGE>
 
Convertible Securities had been fully converted into shares of Common Stock
immediately prior to such issuance and any outstanding warrants, options or
other rights for the purchase of shares of stock or convertible securities had
been fully exercised (and the resulting securities fully converted into shares
of Common Stock, if so convertible) as of such date.

                  (v) Determination of Consideration. For purposes of this
                      ------------------------------
Section 6(d), the consideration received by the Corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:

                      (1) Cash and Property:  Such consideration shall:
                          -----------------                            

                          (A) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the Corporation excluding amounts paid or
payable for accrued interest or accrued dividends;

                          (B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board; and

                          (C) in the event Additional Shares of Common stock are
issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Board.

                      (2) Options and Convertible Securities. The consideration
                          ----------------------------------
per share received by the Corporation for Additional Shares of Common Stock
deemed to have been issued pursuant to Section 6(d)(iii), relating to Options
and Convertible Securities shall be determined by dividing:

                          (A) the total amount, if any, received or receivable
by the Corporation as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein designed to protect against dilution) payable to the
Corporation upon the exercise of such Options or the conversion or exchange of
such Convertible Securities, or in the case of Options for Convertible
Securities or Series B Preferred Stock, the exercise of such Options for
Convertible Securities or Series B Preferred Stock and the conversion or
exchange of such Convertible Securities or Series B Preferred Stock by

                          (B) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard to any provision
contained therein designed to protect against the dilution) issuable upon the
exercise of such Options or conversion or exchange of such Convertible
Securities.

              (e) Adjustments to Series B Conversion Price for Stock Dividends
                  ------------------------------------------------------------
and for Combinations or Subdivisions of Common Stock. In the event that the
----------------------------------------------------
Corporation at any time

                                       9
<PAGE>
 
or from time to time after the Original Issue Date shall declare or pay, without
consideration, any dividend on the Common Stock payable in Common Stock or in
any right to acquire Common Stock for no consideration, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by stock split, reclassification or otherwise than by
payment of a dividend in Common Stock or in any right to acquire Common Stock),
or in the event the outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number of shares
of Common Stock, then the Series B Conversion Price in effect immediately prior
to such event shall, concurrently with the effectiveness of such event, be
proportionately decreased or increased, as appropriate. In the event that the
Corporation shall declare or pay, without consideration, any dividend on the
Common Stock payable in any right to acquire Common Stock for no consideration
then the Corporation shall be deemed to have made a dividend payable in Common
Stock in an amount of shares equal to the maximum number of shares issuable upon
exercise of such rights to acquire Common Stock.

              (f) Adjustments for Reclassification and Reorganization. If
                  ---------------------------------------------------
the Class A Common Stock issuable upon conversion of the Series B Preferred
Stock shall be changed into the same or a different number of shares of any
other class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination of shares
provided for in Section 6(e) above or a merger or other reorganization referred
to in Section 3(c) above), the Series B Conversion Price then in effect shall,
concurrently with the effectiveness of such reorganization or reclassification,
be proportionately adjusted so that the Series B Preferred Stock shall be
convertible into, in lieu of the number of shares of Class A Common Stock which
the holders would otherwise have been entitled to receive, a number of shares of
such other class or classes of stock equivalent to the number of shares of Class
A Common Stock that would have been subject to receipt by the holders upon
conversion of Series B Preferred Stock immediately before that change.

              (g) No Impairment. The Corporation will not, by amendment of
                  -------------
its Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 6 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series B Preferred Stock against impairment.

              (h) Certificate as to Adjustment.  Upon the occurrence of each
                  ----------------------------                              
adjustment or readjustment of the Series B Conversion Price pursuant to this
Section 6, the Corporation at its expense shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and prepare and furnish to
each holder of Series B Preferred Stock a certificate executed by the
Corporation's President or Chief Financial Officer setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based.  The Corporation shall, upon the written request at any
time of any holder of Series B Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Series B Conversion Price at the time in effect, and

                                       10
<PAGE>
 
(iii) the number of shares of Class A Common Stock and the amount, if any, of
other property which at the time would be received upon the conversion of the
Series B Preferred Stock.  Notwithstanding anything herein to the contrary, no
adjustment of the conversion price shall be made unless all such adjustments,
cumulatively, would require an in crease or a decrease of at least $.02.

              (i) Notices of Record Date. In the event that the Corporation
                  ----------------------
shall propose at any time: (i) to declare any dividend or distribution upon its
Common Stock, whether in cash, property, stock or other securities, whether or
not a regular cash dividend and whether or not out of earnings or earned
surplus; (ii) to offer the subscription pro rata to the holders of any class or
series of its stock any additional shares of stock of any class or series or
other rights; (iii) to effect any reclassification or recapitalization of its
Common Stock outstanding involving a change in the Common Stock; or (iv) to
merge or consolidate with or into any other corporation, or sell, lease or
convey all or substantially all of its assets, or to liquidate, dissolve or wind
up;

          Then, in connection with each such event, the Corporation shall send
to the holders of Series B Preferred Stock: (1) at least twenty (20) days prior
written notice of the date on which a record shall be taken for such dividend,
distribution or subscription rights (and specifying the date on which the
holders of Class A Common Stock shall be entitled thereto) or for determining
rights to vote, if any, in respect of the matters referred to in (iii) and (iv)
above; and (2) in the case of the matters referred to in (iii) and (iv) above,
at least twenty (20) days prior written notice of the date when the same shall
take place (and specifying the date on which the holders of Common Stock shall
be entitled to exchange their Common Stock for securities or other property
deliverable upon the occurrence of such event).

              (j) Issue Taxes. The Corporation shall pay any and all issue
                  -----------
and other taxes that may be payable in respect of any issue or delivery of
shares of Class A Common Stock on conversion of shares of Series B Preferred
Stock pursuant hereto; provided, however, that the Corporation shall not be
                       --------  -------
obligated to pay any transfer taxes resulting from any transfer requested by any
holder in connection with any such conversion.

              (k) Reservation of Stock Issuable Upon Conversion. The Corporation
                  ---------------------------------------------
shall at all times reserve and keep available out of its authorized but unissued
shares of Class A Common Stock, solely for the purpose of effecting the
conversion of the shares of Series B Preferred Stock, such number of its shares
of Class A Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Series B Preferred Stock; and if at any
time the number of authorized but unissued shares of Class A Common Stock shall
not be sufficient to effect the conversion of all then outstanding shares of
Series B Preferred Stock, the Corporation will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Class A Common Stock to such number of shares as shall be
sufficient for such purpose, including, without limitation, engaging in
reasonable efforts to obtain the requisite shareholder approval of any necessary
amendment to this Certificate.

                                       11
<PAGE>
 
              (l) Fractional Shares. No fractional share shall be issued upon
                  -----------------
the conversion of any share or shares of Series B Preferred Stock. All shares of
Class A Common Stock (including fractions thereof) issuable upon conversion of
more than one share of Series B Preferred Stock by a holder thereof shall be
aggregated for purposes of determining whether the conversion would result in
the issuance of any fractional share. If, after the aforementioned aggregation,
the conversion would result in the issuance of a fraction of a share of Class A
Common Stock, the Corporation shall, in lieu of issuing any fractional share,
pay the holder otherwise entitled to such fraction a sum in cash equal to the
fair market value of such fraction on the date of conversion (as determined in
good faith by the Board of Directors).

              (m) Notices. Any notice required by the provisions of this Section
                  -------
6 to be given to the holders of shares of Series B Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books of the
Corporation.

          7.  No Reissuance of the Series B Preferred Stock. No share or shares
              ---------------------------------------------
of the Series B Preferred Stock acquired by the Corporation by reason of
redemption, purchase, conversion or otherwise shall be reissued.



 

                                       12
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                      VERIFICATION BY WRITTEN DECLARATION

          William J. Young and Alan R. Steel each declares under penalty of
perjury under the laws of the State of California that he has read the foregoing
certificate and knows the contents thereof and that the same is true of his own
knowledge.



Dated:  October 14, 1998                            /s/  William J. Young
                                                ------------------------------
                                                Name:  William J. Young
                                                Title: Chairman of the Board

                                                    /s/  Alan R. Steel
                                                ------------------------------
                                                Name:  Alan R. Steel
                                                Title: Chief Financial Officer
