POSITRON CORP, POS AM, 1996-06-12

POSITRON CORP
POS AM, 1996-06-12
SURGICAL & MEDICAL INSTRUMENTS & APPARATUS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 12, 1996
REGISTRATION NO. 33-68722
- --------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------------

FORM S-3

----------------

POST-EFFECTIVE
AMENDMENT NO. 2
TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

----------------

POSITRON CORPORATION
(Exact name of registrant as specified in its charter)

----------------

16350 PARK TEN PLACE
HOUSTON, TEXAS 77084
(713) 492-7100

(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

DR. WERNER J. HAAS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
POSITRON CORPORATION
16350 PARK TEN PLACE
HOUSTON, TEXAS 77084
(713) 492-7100

(Name, address, including zip code, and telephone number,
including area code, of agent for service)

----------------

Copy to:

Copies of communications to:

A. WINSTON OXLEY, ESQ.
VINSON & ELKINS L.L.P.
3700 TRAMMELL CROW CENTER
2001 ROSS AVENUE
DALLAS, TEXAS 75201-2975
(214) 220-7700

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the effective date of this Post-Effective Amendment to the Registration
Statement.
<PAGE> 2
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [x]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
=====================================================================================================================
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to be Offering Price Aggregate Amount of
Securities to be Registered Registered per Unit Offering Price Registration Fee
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value per share(1) . . . 2,012,500 shares $8.25 $16,603,125 $5,725.26
- ---------------------------------------------------------------------------------------------------------------------
Redeemable Warrants, to
purchase Common Stock(2) 2,012,500 warrants $.25 $503,125 (6)
- ---------------------------------------------------------------------------------------------------------------------
Common Stock $.01 par value
per share (3)(7) . . . . 3,018,750 shares $8.25 $24,904,688 $8,587.88
- ---------------------------------------------------------------------------------------------------------------------
Redeemable Warrants, to
purchase Common
Stock(4)(7) . . . . . . 175,000 warrants $.3625 $63,437 (6)
- ---------------------------------------------------------------------------------------------------------------------
Common Stock $.01 par value
per share (4)(7) . . . . 175,000 shares $11.9625 $2,093,438 $721.88
- ---------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.01
per share (5)(7) . . . . 262,500 shares $8.25 $2,165,625 $746.77
- ---------------------------------------------------------------------------------------------------------------------
Total Registration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15,781.79(8)
=====================================================================================================================
</TABLE>

(1) Includes 262,500 shares the Underwriter has the option to purchase to
cover over-allotments, if any.
(2) Includes 262,500 warrants the Underwriter has the option to purchase to
cover over-allotments, if any. Each
Redeemable Warrant initially entitled the registered holder to purchase
two shares of Common Stock. On April 4, 1994, the terms of the Redeemable
Warrants were amended and restated so as to double the number of
Redeemable Warrants and reduce the number of shares of Common Stock for
which each Redeemable Warrant is exercisable from two to one.
(3) Issuable upon exercise of the Redeemable Warrants.
(4) Issuable upon exercise of the Underwriter's Warrants.
(5) Issuable upon exercise of Redeemable Warrants issuable upon exercise of
the Underwriter's Warrants.
(6) No separate fee pursuant to Rule 457(g) under the Securities Act of 1933.
(7) Also included is an indeterminate number of (a) additional shares of
Common Stock which may be issued as provided in the Redeemable Warrants,
the Underwriter's Warrants, and the Redeemable Warrants issuable upon
exercise of the Underwriter's Warrants and (b) additional Redeemable
Warrants issuable upon exercise of the Underwriter's Warrants, in the
event any such securities become exercisable for additional shares of
Common Stock or Redeemable Warrants as applicable.
(8) Of such amount $15,781.79 has been previously paid.

------------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.

<PAGE> 3
EXPLANATORY NOTES

The registrant is filing this Post Effective Amendment No. 2 to convert
the registrant's Registration Statement on Form SB-2 (file no. 33-68722) to a
Registration Statement on Form S-3. Among the securities covered by this
Registration Statement are 3,018,750 shares of the Company's Common Stock, $.01
par value per share (the "Common Stock") issuable upon the exercise of the
Company's outstanding Redeemable Warrants that were issued as a part of the
Company's initial public offering. As a part of the Company's initial public
offering, the Company issued 1,946,775 Redeemable Warrants. As originally
issued, each Redeemable Warrant entitled the holder to purchase two shares of
Common Stock at a price of $8.25 per share, with the outstanding Redeemable
Warrants being exercisable in the aggregate for 3,893,550 shares of Common
Stock. On April 4, 1994, the terms of the Redeemable Warrants were amended and
restated so as to affect a split of the Redeemable Warrants pursuant to which
the number of outstanding Redeemable Warrants was increased from 1,946,775 to
3,893,550 and the number of shares of Common Stock for which each redeemable
Warrant is exercisable was reduced from two to one. As amended and restated,
each Redeemable Warrant entitles the holder to purchase one share of Common
stock at a price of $8.25 per share. As of the date of this Registration
Statement, as a result of the anti-dilution provisions contained in the
Redeemable Warrants, the Redeemable Warrants are currently exercisable for an
aggregate of 5,916,017 shares of Common Stock at an exercise price of $5.83 per
share.

The registrant has, contemporaneously with the filing of this Post
Effective Amendment No. 2, also filed a second Registration Statement on Form
S-3 (file no. 333- ) which relates to 2,897,267 shares of Common
Stock issuable upon the exercise of the Redeemable Warrants (the "Additional
Registration Statement"). Pursuant to Rule 429, the Prospectus contained in
the Additional Registration Statement relates to the shares of Common Stock
issuable upon the exercise of the Redeemable Warrants as such are registered by
this Registration Statement and the Additional Registration Statement.
<PAGE> 4

***************************************************************************
* *
* Information contained herein is subject to completion or amendment. A *
* registration statement relating to these securities has been filed *
* with the Securities and Exchange Commission. These securities may not *
* be sold nor may offers to buy be accepted prior to the time the *
* registration statement becomes effective. This prospectus shall not *
* constitute an offer to sell or the solicitation of an offer to buy *
* nor shall there be any sale of these securities in any State in which *
* such offer, solicitation or sale would be unlawful prior to *
* registration or qualification under the securities laws of any such *
* State. *
* *
***************************************************************************

SUBJECT TO COMPLETION DATED JUNE 12, 1996

PROSPECTUS

POSITRON CORPORATION
3,018,750 Shares of Common Stock

------------------

This Prospectus relates to 3,018,750 shares of Common Stock, $.01 par
value per share (the "Common Stock") of Positron Corporation (the "Company")
issuable upon exercise of the Company's outstanding redeemable warrants (the
"Redeemable Warrants"). In December of 1993, the Company as a part of its
initial public offering issued 1,946,775 Redeemable Warrants pursuant to a
Warrant Agreement dated December 3, 1993. As originally issued each Redeemable
Warrant entitled the holder to purchase two shares of Common Stock at a price
of $8.25 per share. On April 4, 1994, the terms of the Warrant Agreement and
the Redeemable Warrants were amended and restated so as to affect a split of
the Redeemable Warrants pursuant to which the number of outstanding Redeemable
Warrants was increased from 1,946,775 to 3,893,550 and the number of shares of
Common Stock for which each Redeemable Warrant is exercisable was reduced from
two to one. As amended and restated, each Redeemable Warrant entitles the
holder to purchase one share of Common Stock at a price of $8.25 per share and
is exercisable commencing December 3, 1994 until December 3, 1998, and is
redeemable by the Company at a redemption price of $.125 per Redeemable Warrant
at any time after March 3, 1995 on 30 days prior written notice, provided that
the market price of the Common Stock equals or exceeds $13.20, for the 20
consecutive trading days ending within 10 days prior to the notice of
redemption. The Redeemable Warrants are entitled to the benefit of adjustments
in exercise price and in the number of shares of Common Stock issuable upon the
exercise thereof in the event of certain dilutive transactions. As of the date
of this Prospectus, as a result of the anti-dilution provisions contained in
the Redeemable Warrants, the Redeemable Warrants are currently exercisable for
an aggregate of 5,916,017 shares of Common Stock at an exercise price of $5.83
per share.

The Company's Common Stock and the Redeemable Warrants are currently
listed on the NASDAQ National Market System under the symbols "POSI" and
"POSIW," respectively.

------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Proceeds to
Price to Public Commissions(1) Company(2)(3)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share $8.25 $.4125 $7.8375
- --------------------------------------------------------------------------------------------------------
Total(3) $1,245,234 $23,659,453
- --------------------------------------------------------------------------------------------------------
</TABLE>

(1) Represents the compensation that would be payable to Josephthal Lyon &
Ross Incorporated ("JL&R") should JL&R solicit the exercise of the
Redeemable Warrants. See "Plan of Distribution" for information
concerning compensation payable to JL&R.

(2) Before deducting estimated expenses of $35,000 payable by the Company.
<PAGE> 5
(3) It is not known how many shares of Common Stock, if any, will be
purchased pursuant to exercises of the Redeemable Warrants; therefore,
such amounts have been estimated assuming exercise of all of the
Redeemable Warrants.

------------------

June 12, 1996

2
<PAGE> 6
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON
REQUEST FROM POSITRON CORPORATION, 16350 PARK TEN PLACE, HOUSTON, TEXAS 77084,
ATTENTION: DAVID O. RODRIGUE, VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND
SECRETARY (TELEPHONE: (713) 492-7100). IN ORDER TO INSURE TIMELY DELIVERY OF
THE DOCUMENTS, POTENTIAL INVESTORS SHOULD ALLOW FIVE BUSINESS DAYS FOR
DELIVERY. SEE "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE."

AVAILABLE INFORMATION

No person has been authorized to give any information or to make any
representations in connection with this offering other than those contained in
this Prospectus. If given or made, such representations must not be relied
upon as having been authorized by the Company. This Prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities law of any such State.

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy and information statements and other
information with the Securities and Exchange Commission (the "Commission").
Reports, proxy statements and other information filed by the Company can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices at Seven World Trade Center, 13th Floor, New
York, New York 10048 and CitiCorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can be obtained by mail
from the Public Reference Branch of the Commission at 450 West Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. In addition, the Common
Stock is listed on the Nasdaq National Market System and certain of such
materials may be inspected at the offices of the National Association of
Securities Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006.

The Company has filed a Registration Statement on Form S-3 (file no.
33-68722) under the Securities Act of 1933, as amended (the "Securities Act"),
with the Commission with respect to certain of the securities offered hereby
(the "Prior Registration Statement"). In addition, the Company has filed an
additional Registration Statement on Form S-3 (file no. )
under the Securities Act, with respect to certain other of the securities
offered hereby (the "Additional Registration Statement"). Pursuant to Rule
429, the Prospectus contained in the Additional Registration Statement (the
"Additional Prospectus") relates to the securities covered by both the Prior
Registration Statement and the Additional Registration Statement (collectively,
the "Registration Statements"). As permitted by the rules and regulations of
the Commission, the Additional Prospectus and this Prospectus, as supplemented,
omits certain of the information contained in the Registration Statements and
the exhibits thereto. For further information with respect to the Company and
the securities being offered pursuant to the Additional Prospectus, reference
is hereby made to the Registration Statements, including the exhibits filed as
part thereof or incorporated by reference therein. Statements contained in the
Additional Prospectus and this Prospectus, as supplemented, concerning the
provisions of certain documents filed with, or incorporated by reference in,
either of the Registration Statements are not necessarily complete, each such
statement being qualified in all respects by such reference. Copies of all or
any part of the Registration Statements, including the documents incorporated
by reference therein or exhibits thereto, may be obtained upon payment of the
prescribed rates at the offices of the Commission.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The following documents filed by the Company with the Commission are
incorporated herein by reference:

(i) Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1995;

(ii) Quarterly Report on Form 10-QSB for the fiscal quarter ended
March 31, 1996; and

3
<PAGE> 7

(iii) The description of the Company's capital stock contained in
the Company's registration statements filed under Section 12
of the Exchange Act, including any amendment or report filed
for the purpose of updating such description filed with the
Commission pursuant to Section 13 of the Exchange Act.

All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the securities offered hereby shall
be deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of such
person, a copy of any or all of the documents which are incorporated by
reference herein, other than exhibits to such documents (unless such exhibits
are specifically incorporated by reference into such documents). Requests
should be directed to David O. Rodrigue, Vice President, Chief Financial
Officer and Secretary, at the Company's principal executive offices.

4
<PAGE> 8
THE COMPANY

Positron Corporation designs, manufactures, markets and services its
POSICAM(TM) systems, advanced medical imaging devices, which utilize positron
emission tomography ("PET") technology. Unlike other currently available
imaging technologies, PET technology permits the measurement of the biological
processes of organs and tissues as well as producing anatomical and structural
images. POSICAM(TM) systems incorporate patented and proprietary technology,
enabling physicians to diagnose and treat patients in the areas of cardiology,
neurology and oncology. The United States Food and Drug Administration
approved the initial POSICAM(TM) system for marketing in 1985, and as of the
date of this Prospectus, the Company has sold 19 POSICAM(TM) systems, of which
15 are currently operational in leading medical facilities in the United
States, two are installed in the international medical institutions and two are
no longer operational. The Company presently markets its POSICAM(TM) systems
at prices ranging from $1.0 million to $1.8 million depending upon the
configuration and equipment options of the particular system.

PET technology is an advanced imaging technique which permits the
measurement of the biological processes of organs and tissues as well as
producing anatomical and structural images. Other advanced imaging techniques,
such as magnetic resonance imaging ("MRI") and computerized axial tomography
("CAT scans"), produce anatomical and structural images, but do not image or
measure biological processes. The ability to measure biological abnormalities
in tissues and organs allows physicians to detect disease at an early stage and
provides physicians with information, which would otherwise be unavailable, to
diagnose and manage the treatment of disease.

Commercial utilization of PET technology commenced in the mid-1980s
and the Company is one of three major commercial manufacturers of PET imaging
systems in the United States. Although the other two major manufacturers are
substantially larger companies, the Company believes that its POSICAM(TM)
systems have proprietary operational and performance characteristics which give
it certain performance advantages over other commercially available PET
systems. Such performance advantages include the POSICAM(TM) systems' high
count rate sensitivity which results in faster and more accurate imaging, an
enhanced ability to use certain types of radiopharmaceuticals and minimize
patient exposure to radiation and its ability to minimize false positive and
false negative diagnoses of disease. Based on industry information, the
Company estimates that 67 PET systems have been commercially installed in the
United States. The Company estimates 65 of these systems are currently being
used in medical institutions. Of the 67 PET systems, the Company has sold and
installed 17 PET systems (15 of which are currently operational), and the
Company believes that the other two major manufacturers of commercial PET
systems have together sold and installed 36 PET systems.

The Company's primary focus to date has been on the clinical
cardiology market, where its POSICAM(TM) systems have been used to assess the
effect of arterial blockages and heart damage due to heart attacks. In 1994
and 1995, the Company made technological advances which allowed it to market
its products to the neurological and oncological markets as well. Neurological
applications of POSICAM(TM) systems include diagnoses of certain brain
disorders, such as epileptic seizures, dementia, stroke, Alzheimer's disease,
Pick's disease and Parkinson's disease. In oncology, POSICAM(TM) is used in
the diagnosis and evaluation of tumors of the bone and various organs and
tissues such as the brain, colon and breast.

The Company was incorporated under Texas law on December 20, 1983, and
commenced commercial operations in 1986. The Company's executive officers are
located at 16350 Park Ten Place, Houston, Texas 77084, and its telephone number
is (713) 492-7100.

RISK FACTORS

THE OFFERED SECURITIES INVOLVE A HIGH DEGREE OF RISK. PROSPECTIVE
PURCHASERS SHOULD CAREFULLY CONSIDER, AMONG OTHER THINGS, THE RISK FACTORS SET
FORTH IN ITEM 1 "DESCRIPTION OF BUSINESS--RISK ASSOCIATED WITH BUSINESS
ACTIVITIES" CONTAINED IN THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1995.

5
<PAGE> 9
FORWARD LOOKING STATEMENTS

As identified therein, certain of the documents incorporated herein by
reference do and will contain statements that are forward looking statements
that involve risks and uncertainties. Accordingly, as described therein, no
assurances can be given that the actual events and results will not be
materially different from the anticipated events and results described in the
forward looking statements.

USE OF PROCEEDS

All net proceeds received by the Company from the exercise of the
Redeemable Warrants will be considered uncommitted funds that will be used by
the Company for general corporate purposes or for acquisitions.

6
<PAGE> 10
DESCRIPTION OF CAPITAL STOCK AND OPTIONS AND WARRANTS

The Company is incorporated under the laws of the State of Texas.
Under its Articles of Incorporation, the Company is authorized to issue
10,000,000 shares of Preferred Stock, par value $1.00 per share (the "Preferred
Stock"), and 15,000,000 shares of Common Stock, par value $.01 per share. As
of the date of this Prospectus, there are 3,637,320 shares of Common Stock and
2,691,992 shares of Series A 8% Cumulative Convertible Redeemable Preferred
Stock, par value $1.00 per share (the "Series A Preferred Stock") issued and
outstanding. Except for the issued and outstanding Series A Preferred Stock,
as of the date of this Prospectus, there are no other shares of Preferred Stock
issued and outstanding. In addition, 6,956,787 shares of Common Stock are
issuable pursuant to outstanding options and warrants discussed below.

COMMON STOCK

The holders of Common Stock are entitled to one vote for each share
held of record on each matter submitted to a vote of shareholders. Holders of
Common Stock may not cumulate their votes in the election of directors, which
means the holders of a majority of the outstanding Common Stock entitled to
vote in any election of directors may elect all of the directors then being
elected.

Holders of shares of Common Stock are entitled to receive such
dividends, if any, as may be declared in the discretion of the Board of
Directors from sources legally available therefore, subject to any limitations
which may be imposed by the terms of any outstanding series of Preferred Stock.
At this time, the Company does not anticipate paying any cash dividends for the
foreseeable future.

Upon any dissolution of the Company, holders of Common Stock would be
entitled to share pro rata in the assets after payment of corporate debts and
expenses and all other priority claims, including the claims of holders of
shares of Preferred Stock that may be issued and outstanding, including the
Series A Preferred Stock.

The Common Stock has no pre-emptive, subscription, redemption or
conversion rights. The rights, preferences and privileges of holders of Common
Stock are subject to, and may be adversely affected by, the rights of holders
of the existing Series A Preferred Stock and holders of any other shares of any
series of Preferred Stock that the Company may designate and issue in the
future.

The shares of Common Stock currently outstanding are, and when issued,
the shares of Common Stock issuable upon exercise of the Redeemable Warrants
will be, fully paid and non-assessable.

PREFERRED STOCK

The Company's Articles of Incorporation authorize the Board of
Directors to issue 10,000,000 shares of Preferred Stock from time to time in
one or more series. The Board of Directors is authorized to determine, prior
to issuing any such series of Preferred Stock and without any vote or action by
the shareholders, the rights, preferences, privileges and restrictions of the
shares of such series, including dividend rights, voting rights, terms of
redemption, the provisions of any purchase, retirement or sinking fund to be
provided for the shares of any series, conversion and exchange rights, the
preferences upon any distribution of the assets of the Company, including in
the event of voluntary or involuntary liquidation, dissolution or winding up of
the Company, and the preferences and relative rights among each series of
Preferred Stock.

The ability of the Board of Directors of the Company to issue
Preferred Stock, while providing flexibility in connection with acquisitions
and corporate purposes, could have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from acquiring, a
majority of the outstanding voting stock of the Company. Except for the Series
A Preferred Stock, there is currently no other outstanding Preferred Stock.

7
<PAGE> 11
Before the Company's initial public offering in December 1993, the
Company had issued shares of Series I Preferred Stock, Series IA Preferred
Stock and Series E Convertible Preferred Stock (the "Series E Preferred
Stock"). All of those shares of preferred stock were converted into shares of
Common Stock in connection with the Company's initial public offering. The
Company granted the holders of the shares of Common Stock, into which such
previously outstanding shares of preferred stock were converted, certain
registration rights with respect to such shares.

Series A Preferred Stock

The Company has currently issued and outstanding 2,691,992 shares of
Series A Preferred Stock. Each share of the Series A Preferred Stock is
immediately convertible into one share of Common Stock, unless previously
redeemed, at the option of the holders thereof at any time, subject to
adjustment pursuant to customary anti-dilution provisions. The Company has the
right at any time subsequent to March 5, 1998 to redeem the Series A Preferred
Stock, in whole or in part, for a redemption price of $1.46 per share plus
accrued and unpaid dividends, if any, by written notice mailed at least 30 days
prior to the specified redemption date to each holder of Series A Preferred
Stock at his address as it appears on the books of the Company, provided,
however, that such 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 trading on the over-the-counter market) is in excess of $2.00 per share.

With respect to matters submitted to a vote of holders of Common
Stock, the holders of Series A Preferred Stock are entitled to a number of
votes equal to the number of shares of Common Stock (including fractional
shares) into which such shares of Series A Preferred Stock are convertible from
time to time. In such case, the holders of Common Stock and Series A Preferred
Stock shall vote together as a class.

Holders of Series A Preferred Stock are entitled to receive cumulative
dividends at the annual rate of 8% of the stated value ($1.33 per share) of the
Series A Preferred Stock. Such dividends are payable semi-annually at the
Company's option, either in cash or in shares of Series A Preferred Stock,
commencing on July 1, 1996.

With respect to the payment of dividends and amounts upon liquidation,
the Series A Preferred Stock will rank senior to the Common Stock, any
additional class of Common Stock and any other series of preferred stock. In
connection with the 1996 Private Offering, the Company agreed not to create or
issue any new class or series of stock of any other securities convertible into
Common Stock which is senior to the Series A Preferred Stock with respect to
voting, dividends or redemption or upon liquidation, dissolution or winding up
of the Company.

The Company also granted the holders of the Series A Preferred Stock
certain registration rights with respect to the Common Stock for which the
Series A Preferred Stock are convertible.

COMMON STOCK WARRANTS

The Company has currently issued and outstanding 1,346,930 Redeemable
Common Stock Purchase Warrants (the "Common Stock Warrants"). The outstanding
Common Stock Warrants are currently exercisable for an aggregate of 1,346,030
shares of Common Stock at an exercise price of $2.00 per share. The Common
Stock Warrants are entitled to the benefit of adjustments in the exercise price
and in the number of shares of Common Stock or other securities deliverable
upon the exercise thereof in the event of a stock dividend, stock split,
reclassification, reorganization, consolidation, merger, sale of all or
substantially all of the property of the Company, or other dilutive
transactions. The Company has the right to reduce the exercise price or
increase the number of shares of Common Stock issuable upon the exercise of the
Common Stock Warrants.

Each Common Stock Warrant expires on February 13, 2001 (the
"Expiration Date"), unless previously redeemed by the Company. The Common
Stock Warrants may be redeemed, in whole or in part, at a price of $.10 per
warrant, by written notice mailed at least 30 days prior to the specified
redemption date, to each holder of Common Stock Warrants at his address as it
appears on the books of the Company. The Company, however, may only give such
notice if, for the 20 consecutive trading days preceding the notice, the
closing price for the Company's

8
<PAGE> 12
Common Stock (if then listed on the Nasdaq National Market) or the closing bid
for the Common Stock (if then traded on the over-the-counter market) is in
excess of $3.50 per share.

The Company also granted the holders of the Common Stock Warrants
certain registration rights with respect to the Common Stock for which the
Common Stock Warrants are exercisable.

1993 WARRANTS

Prior to the Company's initial public offering, the Company issued
warrants to the purchasers of the Series E Preferred Stock (the "1993
Warrants"), which as originally issued were exercisable for an aggregate of
353,531 shares of Common Stock at an exercise price of $9.90 per share. As of
the date of this Prospectus, as a result of the anti-dilution provisions
contained in the 1993 Warrants, the 1993 Warrants are currently exercisable for
an aggregate of 498,321 shares of Common Stock at an exercise price of $5.83
per share. The 1993 Warrants are exercisable at any time until November 30,
1998. The 1993 Warrants are entitled to the benefit of adjustments in the
exercise price and in the number of shares of Common Stock or other securities
deliverable upon the exercise thereof in the event of a stock dividend, stock
split, reclassification, reorganization, consolidation, merger, sale of all or
substantially all of the property of the Company, or other dilutive
transactions.

The 1993 Warrants are redeemable at the option of the Company at a
price equal to $.10 per share of the Common Stock covered by the 1993 Warrant,
on 30 days written notice, provided that the market price of the Common Stock
equals or exceeds $12.544 for the 20 consecutive trading days ending within 10
days prior to the notice of redemption.

The Company also granted the holders of the 1993 Warrants certain
registration rights with respect to the 1993 Warrants and the Common Stock for
which the 1993 Warrants are exercisable.

REDEEMABLE WARRANTS

The Redeemable Warrants have been issued pursuant to the Warrant
Agreement, dated December 3, 1993, as amended and restated on April 4, 1994,
between the Company and Continental Stock Transfer and Trust Company, the
warrant agent, and are evidenced by warrant certificates in registered form.

Each Redeemable Warrant entitles the registered holder initially to
purchase one share of Common Stock at an exercise price of $8.25 per share,
(the "Exercise Price") subject to adjustment under certain circumstances. Each
Redeemable Warrant may only be exercised in whole and may not be exercised in
part or for fractional shares of Common Stock. The Redeemable Warrants are
entitled to the benefit of adjustments in exercise price and in the number of
shares of Common Stock issuable upon the exercise thereof in the event of
certain dilutive transactions. As of the date of this Prospectus, as a result
of the anti-dilution provisions contained in the Redeemable Warrants, the
Redeemable Warrants are currently exercisable for an aggregate of 5,916,017
shares of Common Stock at an exercise price of $5.83 per share. The Redeemable
Warrants are exercisable from December 3, 1994 through December 3, 1998. The
Company has the right to reduce the Exercise Price or increase the number of
shares of Common Stock issuable upon the exercise of the Redeemable Warrants.

Each Redeemable Warrant expires on December 3, 1998 (the "Expiration
Date"), subject to extension. The Company may at any time extend the
Expiration Date of all outstanding Redeemable Warrants for such increased
period of time as it may determine.

The Company has the right at any time after March 3, 1995 to redeem
the Redeemable Warrants in whole or in part for cancellation at a price of
$.125 each, by written notice mailed at least 30 days prior to the redemption
date, to each Redeemable Warrant holder at his address as it appears on the
books of the warrant agent. Such notice may only be given within 10 days
following any period of 20 consecutive trading days during which the average
closing bid for the Common Stock (if then trading on the over-the-counter
market) or the average closing price of the

9
<PAGE> 13
Common Stock (if then listed on NASDAQ/NMS) equals or exceeds $13.20 per share,
subject to adjustment for stock dividends, splits and similar events. If the
Redeemable Warrants are called for cancellation, they must be exercised prior
to the close of business on the date of any such redemption and cancellation or
the right to purchase the applicable shares of Common Stock is forfeited.

No holder, as such, of Redeemable Warrants will be entitled to vote or
receive dividends or be deemed the holder of shares of Common Stock for any
purpose whatsoever until such Redeemable Warrants have been duly exercised, and
the Exercise Price has been paid in full.

EMPLOYEE STOCK OPTIONS AND OTHER OPTIONS AND WARRANTS

The Company may grant officers, directors and key employees stock
options with respect to the Company's Common Stock under the Company's Amended
and Restated 1987 Stock Option Plan (the "1987 Stock Option Plan). The number
of shares of Common Stock that may be issued under the 1987 Stock Option Plan
is 188,522 shares. As of the date of this Prospectus, the Company has granted
options under the 1987 Stock Option Plan for 171,091 shares of Common Stock at
an exercise price of $2.625 per share. The options granted pursuant to the 1987
Stock Option Plan are exercisable at any time until June, 2005. Options granted
under the 1987 Stock Option Plan are entitled to the benefit of adjustments in
the exercise price and in the number of shares of Common Stock or other
securities deliverable upon the exercise thereof in the event of a stock
dividend, stock split, reclassification, reorganization, consolidation, merger,
sale of all or substantially all of the property of the Company, or other
dilutive transactions.

The Company may grant officers, directors, key employees and
non-employees stock options with respect to the Company's Common Stock under
the Company's 1994 Incentive and Non-Statutory Option Plan (the "1994 Stock
Option Plan"). Subject to adjustment as set forth in the 1994 Stock Option
Plan, 441,833 shares of Common Stock may be the subject of awards to directors,
officers and employees of the Company. The 1994 Stock Option Plan also provides
that 160,000 additional options may be granted to non-employee directors at the
discretion of the Company. As of the date of this Prospectus, the Company has
granted employee options for 399,390 shares at exercise prices between $2.00
and $3.75 per share. As of the date of this Prospectus, non-employee directors
held options for 138,724 shares of Common Stock under the 1994 Stock Option
Plan at exercise prices between $2.625 and $4.125 per share.

Options granted under the 1994 Stock Option Plan are entitled to the
benefit of adjustments in the exercise price and in the number of shares of
Common Stock or other securities deliverable upon the exercise thereof in the
event of a stock dividend, stock split, reclassification, reorganization,
consolidation, merger, sale of all or substantially all of the property of the
Company, or other dilutive transactions.

In September 1995, the Board of Directors authorized the issuance of
options not under the 1987 Stock Option Plan or the 1994 Stock Option Plan for
up to 80,929 shares for Common Stock to key employees at an exercise price of
$3.75 per share, the actual granting of such options are contingent upon the
Company consummating certain transactions. As of the date of this Prospectus,
the contingency has not been satisfied and these options have not been issued.

At various times since its formation, the Company has also issued
warrants exercisable for Common Stock to certain individuals for various
services rendered to the Company. As of the date of this Prospectus, 245,061
of the following additional warrants were issued and outstanding:

<TABLE>
<CAPTION>
NUMBER OF OPTIONS EXERCISE PRICE
----------------- --------------
<S> <C>
13,679 25.59
43,882 8.25
25,000 3.875
50,000 2.625
67,500 2.00
</TABLE>

10
<PAGE> 14
<TABLE>
<CAPTION>
NUMBER OF OPTIONS EXERCISE PRICE
----------------- --------------
<S> <C>
45,000 2.00
</TABLE>

Of the 245,061 warrants issued, no warrants have been exercised as of
the date of this Prospectus. Each warrant expires at various time between 1997
and 2006.

TRANSFER AGENT

The transfer agent for the Company's Common Stock and Redeemable
Warrants is Continental Stock Transfer and Trust Company, 2 Broadway, New York,
New York 10004.

PLAN OF DISTRIBUTION

All of the Common Stock offered hereby will be sold, if at all, by the
Company directly to the holders of the Redeemable Warrants.

Pursuant to the terms of the Redeemable Warrants, the Company has the
right to reduce the Exercise Price or increase the number of shares of Common
Stock issuable upon the exercise of the Redeemable Warrants. The Company may
engage JL&R or another registered broker dealer for purposes of soliciting the
exercise of the Redeemable Warrants.

In connection with the Company's initial public offering, the Company
entered into an agreement with JL&R, who served as the underwriter of such
offering which provides that upon the exercise of any Redeemable Warrants, to
the extent not inconsistent with the guidelines of the NASD and the Rules and
Regulations of the Commission, the Company will pay JL&R a commission equal to
five percent of the aggregate exercise price of such Redeemable Warrants.
Unless granted an exemption by the Commission from its Rule 10b-6 under the
Securities Exchange Act of 1934, as amended, JL&R will be prohibited from
engaging in any market-making activities with regard to the Company's
securities for the period from nine business days (or other such applicable
period as Rule 10b-6 may provide) prior to any solicitation of the exercise of
the Redeemable Warrants until the later of the termination of such solicitation
activity or the termination (by waiver or otherwise) of any right that JL&R may
have to receive a fee. As a result, JL&R may be unable to continue to provide
a market for the Company's securities during certain periods while the
Redeemable Warrants are exercisable.

LEGAL MATTERS

The validity of the securities offered hereby has been passed upon for
the Company by Vinson & Elkins L.L.P., 3700 Trammell Crow Center, 2001 Ross
Avenue, Dallas, Texas 75201-2975.

EXPERTS

The balance sheets as of December 31, 1994 and 1995, and the
statements of operations, shareholders' equity (deficit) and cash flows for the
years ended December 31, 1994 and 1995 incorporated by reference in this
Prospectus from the Company's Annual Report on Form 10-KSB, to the extent and
for the periods indicated in their report, have been audited by Coopers &
Lybrand L.L.P., independent public accountants, as indicated in their report
with respect thereto, and have been so incorporated in reliance upon the
authority of said firm as experts in accounting and auditing.

11
<PAGE> 15
================================================================================

No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made by this Prospectus and, if given
or made, such information or representations must not be relied upon as having
been authorized by the Company. Neither the delivery of this Prospectus nor any
sale made hereunder shall under any circumstances create an implication that
there has been no change in the affairs of the Company since the date hereof.
This Prospectus does not constitute an offer or solicitation by anyone in any
state in which such offer or solicitation is not authorized or in which the
person making such offer or solicitation is not qualified to do so to anyone to
whom it is unlawful to make such offer or solicitation.

---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information . . . . . . . . . . . . . 2
Incorporation of Certain Information
by Reference . . . . . . . . . . . . . . . . 2
The Company . . . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . 5
Forward Looking Statements . . . . . . . . . . 5
Selling Shareholders . . . . . . . . . . . . . 5
Plan of Distribution . . . . . . . . . . . . . 7
Description of Capital Stock and
Options and Warrants . . . . . . . . . . . . 8
Legal Matters . . . . . . . . . . . . . . . . . 13
Experts . . . . . . . . . . . . . . . . . . . . 13

</TABLE>

================================================================================

POSITRON CORPORATION

3,018,750 SHARES
OF COMMON STOCK

------------

Prospectus

------------

June 12, 1996

================================================================================

12
<PAGE> 16
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The expenses, all of which will be paid by the Registrant, in
connection with the registration of the Common Stock offered hereby, other than
commissions, are as follows:

<TABLE>
<S> <C>
SEC Registration Fee . . . . . . . . . . . . . . . . . . . . . . . $ - 0 -
NASD Filing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . - 0 -
NASDAQ Filing Fee . . . . . . . . . . . . . . . . . . . . . . . . . - 0 -
Printing and Engraving Expenses* . . . . . . . . . . . . . . . . . 5,000
Legal Fees and Expenses* . . . . . . . . . . . . . . . . . . . . . 10,000
Accounting Fees and Expenses* . . . . . . . . . . . . . . . . . . . 5,000
"Blue Sky" Fees and Expenses* . . . . . . . . . . . . . . . . . . . 10,000
Transfer Agent and Registrar Fees* . . . . . . . . . . . . . . . . - 0 -
Miscellaneous* . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
======
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,000

</TABLE>

- ----------------

* Estimated

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Articles of Incorporation of Positron Corporation (the
"Registrant") provides that directors and former directors of the Registrant
shall not be liable to the Registrant or its shareholders for monetary damages
for breach of fiduciary duty as a director except (i) for any breach of the
director's duty of loyalty to the Registrant or its shareholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) in respect of certain unlawful dividend
payments or stock redemptions or repurchases or (iv) for any transaction from
which the director derived an improper benefit.

The Registrant's By-laws grant mandatory indemnification to directors
and officers of the Registrant to the fullest extent authorized under the Texas
Business Corporation Act. In general, a Texas corporation may indemnify an
officer or director who was, is or is threatened to be made a named defendant
or respondent in a proceeding by virtue of his position in the corporation if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, in the case of criminal
proceedings, had no reasonable cause to believe his conduct was unlawful. A
Texas corporation may indemnify an officer or director in an action brought by
or in the right of the corporation only if such officer or director was not
found liable to the corporation, unless or only to the extent that a court
finds him to be fairly and reasonably entitled to indemnity for such expenses
as the court deems proper.

The Registrant has entered into separate indemnification agreements
with each of its directors pursuant to which the Registrant has agreed to
indemnify each director to the extent permitted under The Texas Business
Corporation Act.

The form of Underwriting Agreement included as Exhibit 1 provides for
indemnification of the Registrant and certain controlling persons under certain
circumstances, including indemnification for liabilities under the Securities
Act of 1933, as amended (the "Act").

II-1
<PAGE> 17
ITEM 16. EXHIBITS

1. -- Form of Underwriting Agreement.(1)
3.1 -- Articles of Incorporation of the Registrant.(1)
4.1 -- Specimen Stock Certificate.(1)
4.2 -- Amended Specimen Stock Certificate.(2)
4.3 -- Form of Redeemable Warrant (included as a part of Exhibit 4.6).
4.4 -- Amended Form of Redeemable Warrant.(2)
4.5 -- Amended and Restated Warrant Agreement dated as of
April 14, 1994, by and between Positron Corporation and
Continental Stock Transfer and Trust Company.(2)
4.6 -- Warrant Agreement dated as of December 2, 1993, by and between
Positron Corporation and Continental Stock Transfer and Trust
Company (including form of Warrant Certificate).(1)
5.1 -- Opinion of Vinson & Elkins L.L.P.(2)
23.1 -- Consent of Coopers & Lybrand L.L.P.(2)
23.3 -- Consent of Vinson & Elkins L.L.P. (included as a part of
Exhibit 5)
24. -- Power of Attorney (included on the signature page of Part II of
this Registration Statement).

- ----------------

(1) The item listed is incorporated by reference herein to the Company's
Registration Statement on Form SB-2 (file no. 3368722) as declared
effective December 3, 1993.

(2) Filed herewith.

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes:

(1) That it will file, during any period in which it offers or
sells securities, a post-effective amendment to this registration
statement to:

(i) Include any prospectus required by section
10(a)(3) of the Securities Act;

(ii) Reflect in the prospectus any facts or events
which, individually or together, represent a fundamental
change in the information in the registration statement; and

(iii) Include any additional or changed material
information on the plan of distribution.

Provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the registrant pursuant to the Exchange Act that are incorporated
by reference in the registration statement.

(2) That for determining liability under the Securities Act,
it will treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the
securities at that time to be the initial bona fide offer.

(3) To file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of
the offering.

Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been

II-2
<PAGE> 18
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

II-3
<PAGE> 19
SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form S-3 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the city of
Houston, State of Texas on the 12th day of June, 1996.

POSITRON CORPORATION

By: /s/ WERNER J. HAAS
--------------------------------------
Werner J. Haas, Ph.D.
President and Chief Executive Officer

In accordance with the requirements of the Securities Act of 1933,
this Registration Statement was signed by the following persons in the
capacities and on the dates stated. Each person whose signature appears below
authorizes and appoints each of Gary B. Wood, Ph.D., and David O. Rodrigue, and
each of them severally, acting alone and without the other, as his
attorney-in-fact to sign on his behalf individually and in the capacity stated
below all amendments and post-effective amendments to this Registration
Statement as either such attorney-in-fact may deem necessary or appropriate.

<TABLE>
<CAPTION>
Signatures Capacity Date
---------- -------- ----
<S> <C> <C>
/s/ WERNER J. HAAS President, Chief Executive Officer (Principal
------------------------------------------- Executive Officer); Director
Werner J. Haas, Ph.D. June 12, 1996

/s/ DAVID O. RODRIQUE Chief Financial Officer and Secretary
------------------------------------------- (Principal Financial and Accounting Officer)
David O. Rodrigue June 12, 1996

/s/ GARY B. WOOD Chairman of the Board and Director
-------------------------------------------
Gary B. Wood, Ph. D. June 12, 1996

/s/ ROBERT M. GUEZURAGA Director
-------------------------------------------
Robert M. Guezuraga June 12, 1996

/S/ K. LANCE GOULD Director
-------------------------------------------
K. Lance Gould, M.D. June 12, 1996

/s/ F. DAVID ROLLO Director
-------------------------------------------
F. David Rollo, M.D. Ph.D.,FACNP June 12, 1996

/s/ JOHN H. LARAGH Director
-------------------------------------------
John H. Laragh, M.D. June 12, 1996

/s/ RONALD B. SCHILLING Director
-------------------------------------------
Ronald B. Schilling, Ph.D. June 12, 1996

/s/ WILLIAM S. KISER Director
-------------------------------------------
William S. Kiser, M.D. June 12, 1996
</TABLE>

II-4
<PAGE> 20
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
1. -- Form of Underwriting Agreement.(1)
3.1 -- Articles of Incorporation of the Registrant.(1)
4.1 -- Specimen Stock Certificate.(1)
4.2 -- Amended Specimen Stock Certificate.(2)
4.3 -- Form of Redeemable Warrant (included as a part of Exhibit 4.6).
4.4 -- Amended Form of Redeemable Warrant.(2)
4.5 -- Amended and Restated Warrant Agreement dated as of
April 14, 1994, by and between Positron Corporation and
Continental Stock Transfer and Trust Company.(2)
4.6 -- Warrant Agreement dated as of December 2, 1993, by and between
Positron Corporation and Continental Stock Transfer and Trust
Company (including form of Warrant Certificate).(1)
5.1 -- Opinion of Vinson & Elkins L.L.P.(2)
23.1 -- Consent of Coopers & Lybrand L.L.P.(2)
23.3 -- Consent of Vinson & Elkins L.L.P. (included as a part of
Exhibit 5)
24. -- Power of Attorney (included on the signature page of Part II of
this Registration Statement).
</TABLE>

- ----------------

(1) The item listed is incorporated by reference herein to the Company's
Registration Statement on Form SB-2 (file no. 3368722) as declared
effective December 3, 1993.

(2) Filed herewith.

<PAGE> 1
Exhibit 4.2

[POSITRON CORPORATION LOGO]

INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS

NUMBER SHARES
P 1970 SPECIMEN

COMMON STOCK SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP 737397 10 9

- --------------------------------------------------------------------------------
THIS

CERTIFIES

that

SPECIMEN

is the owner of
- --------------------------------------------------------------------------------

FULLY PAID AND NON-ASSESSABLE SHARES OF THE $.01 PA VALUE COMMON STOCK OF
POSITRON CORPORATION
transferable only on the books of the corporation by the holder hereof in peron
or by a duly authorized attorney upon surrender of this certificate properly
endorsed. This Certificate is not valid until countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the corporation has caused this certificate to be
signed by the facsimile signatures of its duly authorized officers and to be
sealed with the facsimile seal of the corporation.

Dated:

/s/ DAVID RODRIGUEZ /s/ R. M. GUEZEURZA

Secretary President

[POSITRON CORPORATION TEXAS SEAL]

CONTERSIGNED:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
(JERSEY CITY, N.J.) TRANSFER AGENT
BY:

SPECIMEN

AUTHORIZED OFFICER

<PAGE> 2
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint survivorship and not as tenants in common

UNIF GIFT MIN ACT -- ______________________ Custodian __________________
(Cust) (Minor)
under Uniform Gifts to Minors Act __________________
(State)

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED_____________________________HEREBY SELL, ASSIGN AND
TRANSFER UNTO
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________
|________________________|

________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE)
________________________________________________________________________________

________________________________________________________________________________

__________________________________________________________________________Shares
of the common stock represented by the within Certificate and do hereby
irrevocably constitute and appoint

________________________________________________________________________Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.

Dated ____________________________________

_________________________________________________
NOTICE: The Signature to this assignment
must correspond with the name as written upon
the face of the Certificate in every particular,
without alteration or enlargement, or any
change whatever.

A STATEMENT DENYING THE PREEMPTIVE RIGHTS OF SHAREHOLDERS TO ACQUIRE UNISSUED
OR TREASURY SHARES OF THE COMPANY IS SET FORTH IN THE ARTICLES OF
INCORPORATION ON FILE IN THE OFFICE OF THE SECRETARY OF STATE OF TEXAS. THE
COMPANY WILL FURNISH A COPY OF SUCH STATEMENT TO THE RECORD HOLDER OF THIS
CERTIFICATE WITHOUT CHARGE ON REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF
BUSINESS OR REGISTERED OFFICE.

THE COMPANY IS AUTHORIZED TO ISSUE SHARES OF MORE THAN ONE CLASS AND TO ISSUE
PREFERRED SHARES IN SERIES. A STATEMENT OF THE DESIGNATIONS, PREFERENCES,
LIMITATIONS, AND RELATIVE RIGHTS OF THE SHARES OF EACH CLASS AUTHORIZED TO BE
ISSUED BY THE COMPANY AND THE AUTHORITY OF THE BOARD OF DIRECTORS OF THE
COMPANY TO FIX AND DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF ANY SERIES
OF PREFERRED SHARES IS SET FORTH IN THE ARTICLES OF INCORPORATION OF THE
COMPANY ON FILE IN THE OFFICE OF THE SECRETARY OF STATE OF TEXAS. THE COMPANY
WILL FURNISH A COPY OF SUCH STATEMENT, AS WELL AS A STATEMENT OF THE VARIATIONS
IN THE RELATIVE RIGHTS AND PREFERENCES OF THE PREFERRED SHARES OF EACH SERIES
TO THE EXTENT THEY HAVE BEEN FIXED AND DETERMINED AS OF SUCH DATE, TO THE
RECORD HOLDER OF THIS CERTIFICATE WITHOUT CHARGE ON WRITTEN REQUEST TO THE
COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE.

<PAGE> 3
EXHIBIT A

No. PWX ________
VOID AFTER DECEMBER 3, 1998

WARRANTS

REDEEMABLE WARRANT CERTIFICATE TO

PURCHASE ONE SHARE OF COMMON STOCK

POSITRON CORPORATION

CUSIP ________

THIS CERTIFIES THAT, FOR VALUE RECEIVED

or registered assigns (the "Registered Holder") is the owner of the number of
Redeemable Warrants (the "Warrants") specified above. Each Warrant initially
entitles the Registered Holder to purchase, subject to the terms and conditions
set forth in this Certificate and the Warrant Agreement (as hereinafter
defined), one fully paid and nonassessable share of Common Stock $.01 par value
(the "Common Stock"), of Positron Corporation, a Texas corporation (the
"Company"), at any time between December 3, 1994 (the "Initial Warrant Exercise
Date"), and the Expiration Date (as hereinafter defined) upon the presentation
and surrender of this Warrant Certificate with the Subscription Form on the
reverse hereof duly executed, at the corporate office of Continental Stock
Transfer & Trust Company, as Warrant Agent, or its successor (the "Warrant
Agent"), accompanied by payment of $8.25 per share subject to adjustment (the
"Purchase Price"), in lawful money of the United States of America in cash or
by check made payable to the Warrant Agent for the account of the Company.

This Warrant Certificate and each Warrant represented hereby are
issued pursuant to and are subject in all respects to the terms and conditions
set forth in the Amended and Restated Warrant Agreement (the "Warrant
Agreement"), dated as of April 4, 1994, by and between the Company and the
Warrant Agent.

In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.

Each Warrant represented hereby is exercisable (a) at the option of
the Registered Holder, (b) in whole but not in part and no fractional interests
will be issued. In the case of the exercise of less than all the Warrants
represented hereby, the Company shall cancel this Warrant Certificate upon the
surrender hereof and shall execute and deliver a new Warrant Certificate or
Warrant Certificates of like tenor, which the Warrant Agent shall countersign,
for the balance of such Warrants.
<PAGE> 4
The term "Expiration Date" shall mean 5:00 p.m. (New York time) on the
date which is forty-eight (48) months after the Initial Warrant Exercise Date.
If each such date shall in the State of New York be a holiday or a day on which
the banks are authorized to close, then the Expiration Date shall mean 5:00
p.m. (New York time) the next following day which in the State of New York is
not a holiday or a day on which banks are authorized to close.

The Company shall not be obligated to deliver any securities pursuant
to the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to such securities
is effective or an exemption thereunder is available. The Company has
covenanted and agreed that it will file a registration statement under the
Federal securities laws, use its best efforts to cause the same to become
effective, use its best efforts to keep such registration statement current, if
required under the Act, while any of the Warrants are outstanding, and deliver
a prospectus which complies with Section 10(a)(3) of the Act to the Registered
Holder exercising this Warrant; provided, however, that the Company is not
obligated solely by virtue of the preceding clauses to file such registration
statement under Federal securities laws before seventy-five days prior to the
Initial Warrant Exercise Date, unless otherwise required by applicable law.
This Warrant shall not be exercisable by a Registered Holder in any state where
such exercise would be unlawful.

This Warrant Certificate is exchangeable, upon the surrender hereof by
the Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to
represent such number of Warrants as shall be designated by such Registered
Holder at the time of such surrender. Upon due presentment and payment of any
tax or other charge imposed in connection therewith or incident thereto, for
registration of transfer of this Warrant Certificate at such office, a new
Warrant Certificate or Warrant Certificates representing an equal aggregate
number of Warrants will be issued to the transferee in exchange therefor,
subject to the limitations provided in the Warrant Agreement.

Prior to the exercise of any Warrant represented hereby, the
Registered Holder shall not be entitled to any rights of a shareholder of the
Company, including, without limitation, the right to vote or to receive
dividends or other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided in the Warrant
Agreement.

Subject to the provisions of the Warrant Agreement, this Warrant may
be redeemed at the option of the Company, at a redemption price of $.125 per
Warrant, at any time commencing after the Initial Warrant Redemption Date,
provided that (i) the average closing bid price for the Common Stock as
reported by the National Association of Securities Dealers Automated Quotation
System ("NASDAQ"), if the Common Stock is then traded in the over-the-counter
market or (ii) the average closing sale price, if the Common Stock is then
traded on NASDAQ/NMS or a national securities exchange, shall have equaled or
exceeded $13.20 per share for twenty (20) consecutive trading days ending
within ten (10) days prior to the Notice of Redemption, as defined below,
(subject to adjustment in the event of any stock splits or other similar
events). Notice of redemption (the "Notice of Redemption") shall be given not
later than the thirtieth day before the date fixed for redemption, all as
provided in the Warrant Agreement. On and after the date fixed for redemption,

A-2
<PAGE> 5
the Registered Holder shall have no rights with respect to the Warrants except
to receive the $.125 per Warrant upon surrender of this Warrant Certificate.
All amounts payable to the Registered Holder upon redemption shall be rounded
up to the nearest whole cent.

Under certain circumstances, Josephthal Lyon & Ross Incorporated shall
be entitled to receive an aggregate of five percent (5%) of the Purchase Price
of the Warrants represented hereby.

Prior to due presentment for registration of transfer hereof, the
Company and the Warrant Agent may deem and treat the Registered Holder as the
absolute owner hereof and of each Warrant represented hereby (notwithstanding
any notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary, except as provided in the
Warrant Agreement.

This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to
conflicts of laws.

This Warrant Certificate is not valid unless countersigned by the Warrant Agent.

A-3
<PAGE> 6
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or in facsimile by two of its officers hereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.

Dated:

POSITRON CORPORATION

[SEAL]

By:
-----------------------------------
Name:
Title:

By:
------------------------------------
David O. Rodrigue
Secretary

COUNTERSIGNED:

CONTINENTAL STOCK TRANSFER & TRUST COMPANY,
as Warrant Agent

By:____________________________________________________________________

Authorized Officer

A-4
<PAGE> 7
SUBSCRIPTION FORM

To Be Executed by the Registered Holder

in Order to Exercise Warrants

The undersigned Registered Holder hereby irrevocably elects to
exercise __________________ Warrants represented by this Warrant Certificate,
and to purchase the securities issuable upon the exercise of such Warrants, and
requests that certificates for such securities shall be issued in name of

PLEASE INSERT SOCIAL SECURITY

OR OTHER IDENTIFYING NUMBER

__________________________________

(please print or type name and address)

and be delivered to

__________________________________

(please print or type name and address)

and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.

A-5
<PAGE> 8
IMPORTANT: PLEASE COMPLETE THE FOLLOWING:

1. The exercise of this Warrant was
solicited by Josephthal Lyon & Ross
Incorporated [ ]

2. The exercise of this Warrant was solicited by

___________________________. [ ]

3. The exercise of this Warrant was not
solicited. [ ]

Dated:___________________ X
----------------------------

-----------------------------

-----------------------------
Address

-----------------------------
Social Security or Taxpayer
Identification Number

-----------------------------
Signature Guaranteed

-----------------------------

A-6
<PAGE> 9
ASSIGNMENT

To Be Executed by the Registered Holder

in Order to Assign Warrants

FOR VALUE RECEIVED, ____________________________, hereby sells,
assigns and transfer unto

PLEASE INSERT SOCIAL SECURITY OR

OTHER IDENTIFYING NUMBER

________________________________

(please print or type name and address)

___________________________ of the Warrants represented by this Warrant
Certificate, and hereby irrevocably constitutes and appoints
___________________________________ Attorney to transfer this Warrant
Certificate on the books of the Company, with full power of substitution in the
premises.

Dated:_____________________ X_______________________________________
Signature Guaranteed

________________________________________

[APPROPRIATE LEGEND RE SIGNATURE GUARANTEE]

A-7

<PAGE> 1
EXHIBIT 4.4

No. PWX
------ VOID AFTER DECEMBER 3, 1998

WARRANTS

REDEEMABLE WARRANT CERTIFICATE TO
PURCHASE ONE SHARE OF COMMON STOCK

POSITRON CORPORATION

CUSIP
--------

THIS CERTIFIES THAT, FOR VALUE RECEIVED

Each Warrant represented hereby is exercisable (a) at the option of
the Registered Holder, (b) in whole but not in part and no fractional interests
will be issued. In the case of the exercise of less than all the Warrants
represented hereby, the Company shall cancel this Warrant Certificate upon the
surrender hereof and shall execute and deliver a new Warrant Certificate or
Warrant Certificates of like tenor, which the Warrant Agent shall countersign,
for the balance of such Warrants.
<PAGE> 2
The term "Expiration Date" shall mean 5:00 p.m. (New York time) on the
date which is forty-eight (48) months after the Initial Warrant Exercise Date.
If each such date shall in the State of New York be a holiday or a day on which
the banks are authorized to close, then the Expiration Date shall mean 5:00
p.m. (New York time) the next following day which in the State of New York is
not a holiday or a day on which banks are authorized to close.

The Company shall not be obligated to deliver any securities pursuant
to the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to such securities
is effective or an exemption thereunder is available. The Company has
covenanted and agreed that it will file a registration statement under the
Federal securities laws, use its best efforts to cause the same to become
effective, use its best efforts to keep such registration statement current, if
required under the Act, while any of the Warrants are outstanding, and deliver
a prospectus which complies with Section 10(a)(3) of the Act to the Registered
Holder exercising this Warrant; provided. however, that the Company is not
obligated solely by virtue of the preceding clauses to file such registration
statement under federal securities laws before seventy-five days prior to the
Initial Warrant Exercise Date, unless otherwise required by applicable law.
This Warrant shall not be exercisable by a Registered Holder in any state where
such exercise would be unlawful.

A-2
<PAGE> 3
or other similar events). Notice of redemption (the "Notice of Redemption")
shall be given not later than the thirtieth day before the date fixed for
redemption, all as provided in the Warrant Agreement. On and after the date
fixed for redemption, the Registered Holder shall have no rights with respect
to the Warrants except to receive the $.125 per Warrant upon surrender of this
Warrant Certificate. All amounts payable to the Registered Holder upon
redemption shall be rounded up to the nearest whole cent.

Under certain circumstances, Josephthal Lyon & Ross Incorporated shall
be entitled to receive an aggregate of five percent (5%) of the Purchase Price
of the Warrants represented hereby.

This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to
conflicts of laws.

This Warrant Certificate is not valid unless countersigned by the
Warrant Agent.

A-3
<PAGE> 4
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or in facsimile by two of its officers thereunto
duly authorized and a facsimile of its corporate seal to be imprinted hereon.

Dated:

POSITRON CORPORATION

[SEAL]

By:
------------------------------
Name:
Title:

By:
------------------------------
David O. Rodrigue
Secretary

COUNTERSIGNED:

CONTINENTAL STOCK TRANSFER & TRUST COMPANY,
as Warrant Agent

By:
------------------------------
Authorized Officer

A-4
<PAGE> 5
SUBSCRIPTION FORM

To Be Executed by the Registered Holder
in Order to Exercise Warrants

The undersigned Registered Holder hereby irrevocably elects to exercise
___________________ Warrants represented by this Warrant Certificate, and to

purchase the securities issuable upon the exercise of such Warrants, and
requests that certificates for such securities shall be issued in name of

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER

----------------------------------

----------------------------------
(please print or type name and address)

and be delivered to

----------------------------------

----------------------------------
(please print or type name and address)

A-5
<PAGE> 6
IMPORTANT: PLEASE COMPLETE THE FOLLOWING:

1. The exercise of this Warrant was

solicited by Josephthal Lyon & Ross

Incorporated [ ]

2. The exercise of this Warrant was solicited by

___________________________. [ ]

3. The exercise of this Warrant was not

solicited. [ ]

Dated:
-------------------------

X
-----------------------------

------------------------------

------------------------------
Address

------------------------------
Social Security or Taxpayer
Identification Number

------------------------------
Signature Guaranteed

------------------------------

A-6
<PAGE> 7
ASSIGNMENT
To Be Executed by the Registered Holder
in Order to Assign Warrants

FOR VALUE RECEIVED, ____________________________, hereby sells,
assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER

--------------------------------

--------------------------------
(please print or type name and address)

Dated: X
-------------------- ------------------------------
Signature Guaranteed

------------------------------

[APPROPRIATE LEGEND RE SIGNATURE GUARANTEE]

A-7

<PAGE> 1
EXHIBIT 4.5

================================================================================

POSITRON CORPORATION

AND

CONTINENTAL STOCK TRANSFER & TRUST COMPANY

------------------------

AMENDED AND RESTATED
WARRANT AGREEMENT

DATED AS OF APRIL 4, 1994

================================================================================
<PAGE> 2
AGREEMENT, dated as of the 4th day of April, 1994, between POSITRON
CORPORATION, a Texas corporation (the "Company"), and CONTINENTAL STOCK
TRANSFER & TRUST COMPANY, as Warrant Agent (the "Warrant Agent").

W I T N E S S E T H:

WHEREAS, pursuant to a Registration Statement on Form SB-2 (File No.
33-68722) filed with the Securities and Exchange Commission by the Company, the
Company sold to the public (i) 1,750,000 shares of the Company's common stock,
$.01 par value per share (the "Common Stock"); (ii) 1,750,000 redeemable
warrants (the "Warrants") each to purchase two additional shares of Common
Stock; and (iii) an additional 196,775 Warrants pursuant to an over-allotment
option, (the "Over-Allotment Option"); and

WHEREAS, the Company sold to Josephthal Lyon & Ross Incorporated, its
successors and assigns (collectively, "Josephthal" or "Underwriter") warrants
(the "Underwriter's Warrants") to purchase up to 175,000 shares of Common Stock
and 350,000 Warrants; and

WHEREAS, the Company entered into that certain Warrant Agreement,
dated December 3, 1993, with the Warrant Agent (the "Prior Agreement"), to
provide for the issuance of certificates representing the Warrants, and whereby
the Warrant Agent agreed to act on behalf of the Company, in connection with
the issuance, registration, transfer and exchange of certificates representing
the Warrants and the exercise of the Warrants; and

WHEREAS, the Company and the Warrant Agent desire to amend the Prior
Agreement to double the number of outstanding Warrants and to decrease from two
to one the number of shares of Common Stock for which each Warrant is
exercisable as provided herein.

-1-
<PAGE> 3
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Warrants and the certificates representing the Warrants and
the respective rights and obligations thereunder of the Company, Josephthal,
the holders of certificates representing the Warrants and the Warrant Agent,
the parties hereto agree as follows:

SECTION 1. Definitions. As used herein, the following terms shall
have the following meanings, unless the context shall otherwise require:

(a) "Common Stock" shall mean stock of the Company of any class,
whether now or hereafter authorized, which has the right to participate in the
voting and in the distribution of earnings and assets of the Company without
limit as to amount or percentage.

(b) "Corporate Office" shall mean the office of the Warrant Agent
(or its successor) at which at any particular time its principal business in
New York, New York, shall be administered, which office is located on the date
hereof at 2 Broadway, New York, New York 10004.

(c) "Exercise Date" shall mean, subject to the provisions of
Section 5(b) hereof, as to any Warrant, the date on which the Warrant Agent
shall have received both (i) the Warrant Certificate representing such Warrant,
with the exercise form thereon duly executed by the Registered Holder hereof or
his attorney duly authorized in writing, and (ii) payment in cash or by check
made payable to the Warrant Agent for the account of the Company, or the amount
in lawful money of the United States of America equal to the applicable
Purchase Price in good funds.

(d) "Initial Warrant Exercise Date" shall mean December 3, 1994.

(e) "Initial Warrant Redemption Date" shall mean March 3, 1995.

-2-
<PAGE> 4
(f) "Purchase Price" shall mean, subject to modification and
adjustment as provided in Section 8, $8.25 and further subject to Company's
right, in its sole discretion, to decrease the Purchase Price for a period of
not less than 30 days on not less than 30 days prior written notice to the
Registered Holders and Josephthal.

(g) "Registered Holder" shall mean the person in whose name any
certificate representing the Warrants shall be registered on the books
maintained by the Warrant Agent pursuant to Section 6.

(h) "Subsidiary" or "Subsidiaries" shall mean any corporation or
corporations, as the case may be, of which stock having ordinary power to elect
a majority of the Board of Directors of such corporation (regardless of whether
or not at the time stock of any other class or classes of such corporation
shall have or may have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned by the Company or by
one or more Subsidiaries, or by the Company and one or more Subsidiaries.

(i) "Transfer Agent" shall mean Continental Stock Transfer & Trust
Company, or its authorized successor.

(j) "Underwriting Agreement" shall mean the underwriting agreement
dated December 3, 1993 between the Company and Josephthal relating to the
purchase for resale to the public of the 1,750,000 shares of Common Stock and
1,750,000 Warrants.

(k) "Underwriter's Warrant Agreement" shall mean the Amended and
Restated Underwriter's Warrant Agreement dated as of April 4, 1994 between the
Company and Josephthal relating to and governing the terms and provisions of
the Underwriter's Warrants.

-3-
<PAGE> 5
(l) "Warrant Certificate" shall mean a certificate representing
each of the Warrants substantially in the form annexed hereto as Exhibit A.

(m) "Warrant Expiration Date" shall mean, unless the Warrants are
redeemed as provided in Section 9 hereof prior to such date, 5:00 p.m. (New
York time), on the date which is forty-eight (48) months after the Initial
Warrant Exercise Date, or, if such date shall in the State of New York be a
holiday or a day on which banks are authorized to close, then 5:00 p.m. (New
York time) on the next following day which in the State of New York is not a
holiday or a day on which banks are authorized to close, subject to the
Company's right, prior to the Warrant Expiration Date, in its sole discretion,
to extend such Warrant Expiration Date on five business days prior written
notice to the Registered Holders.

(n) "Warrant Agent" shall mean Continental Stock Transfer & Trust
Company, or its authorized successor.

SECTION 2. Warrants and Issuance of Warrant Certificates.

(a) As of the close of business on April 18, 1994 (the "Effective
Date"), each outstanding Warrant shall automatically be amended so as to
represent two Warrants, with the result being that 3,893,550 Warrants shall be
outstanding on the Effective Date.

(b) Subject to modification and adjustment as provided in Section
8, from and after the Effective Date, one Warrant shall initially entitle the
Registered Holder of the Warrant Certificate representing such Warrant, upon
exercise thereof, to purchase one share of Common Stock at a per share price
equal to the Purchase Price from the Initial Warrant Exercise Date until the
Warrant Expiration Date. Each Warrant shall be exercisable in whole but not in
part.

-4-
<PAGE> 6
(c) Promptly after the Effective Date, the Company shall deliver
to the Warrant Agent appropriate stickers, to be affixed to the existing
Warrant Certificates, which stickers shall describe the changes to the existing
Warrant Certificates affected by this Agreement. After receipt thereof, the
Warrant Agent shall promptly deliver the stickers to each Warrant Certificate
holder. Upon request by a Warrant Certificate holder, and upon surrender of the
existing Warrant Certificate, the Warrant Agent shall promptly deliver to such
holder a new Warrant Certificate substantially in the form annexed hereto as
Exhibit A and reflecting the changes effected by this Agreement.

(d) Subject to a request from a Warrant Certificate holder for a
new Warrant Certificate pursuant to Section 2(c) above, from and after the
Effective date, each existing Warrant Certificate shall represent twice the
number of Warrants indicated on such existing Warrant Certificate, as provided
in the stickers to be delivered pursuant to Section 2(c) above, regardless
whether such stickers are affixed to such existing Warrant Certificate.

(e) Upon exercise of the Underwriter's Warrants as provided
therein, Warrant Certificates representing all or a portion of 350,000 Warrants
to purchase up to an aggregate of 350,000 shares of Common Stock (subject to
modification and adjustment as provided in Section 8 hereof and in the
Underwriter's Warrant Agreement), shall be countersigned, issued and delivered
by the Warrant Agent upon written order of the Company signed by its Chairman
of the Section 7 hereof,Board, President or a Vice President and by its
Treasurer or an Assistant Treasurer or its Secretary or an Assistant Secretary.

(f) From time to time, up to the Warrant Expiration Date, as the
case may be, the Warrant Agent shall countersign and deliver Warrant
Certificates in required denominations of one or whole number multiples thereof
to the person entitled thereto in connection with any transfer or exchange
permitted under this Agreement. Except as provided in Section 7 hereof, no
Warrant Certificates

-5-
<PAGE> 7
shall be issued except (i) Warrant Certificates initially issued hereunder,
(ii) Warrant Certificates issued upon any transfer or exchange of Warrants,
(iii) Warrant Certificates issued in replacement of lost, stolen, destroyed or
mutilated Warrant Certificates pursuant to Section 7, (iv) Warrant Certificates
issued pursuant to the Underwriter's Warrant Agreement (including Warrants in
excess of the Underwriter's Warrants to purchase 175,000 shares of Common Stock
and 350,000 Warrants issued as a result of the anti-dilution provisions
contained in the Underwriter's Warrant Agreement), and (v) at the option of the
Company, Warrant Certificates in such form as may be approved by its Board of
Directors, to reflect any adjustment or change in the Purchase Price, the
number of shares of Common Stock purchasable upon exercise of the Warrants or
the Redemption Price therefor made pursuant to Section 8 hereof.

SECTION 3. Form and Execution of Warrant Certificates.

(a) The Warrant Certificates issued from and after the Effective
Date shall be substantially in the form annexed hereto as Exhibit A (the
provisions of which are hereby incorporated herein) and may have such letters,
numbers or other marks of identification or designation and such legends,
summaries or endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any law or with any rule
or regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Warrants may be listed, or to conform to usage. The
Warrant Certificates shall be dated the date of issuance thereof (whether upon
initial issuance, transfer, exchange or in lieu of mutilated, lost, stolen or
destroyed Warrant Certificates).

-6-
<PAGE> 8
(b) Warrant Certificates shall be executed on behalf of the
Company by its Chairman of the Board, President or any Vice President and by
its Treasurer or an Assistant Treasurer or its Secretary or an Assistant
Secretary, by manual signatures or by facsimile signatures printed thereon, and
shall have imprinted thereon a facsimile of the Company's seal. Warrant
Certificates shall be manually countersigned by the Warrant Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Warrant Certificates shall cease to be
such officer of the Company before the date of issuance of the Warrant
Certificates or before countersignature by the Warrant Agent and issue and
delivery thereof, such Warrant Certificates, nevertheless, may be countersigned
by the Warrant Agent, issued and delivered with the same force and effect as
though the person who signed such Warrant Certificates had not ceased to be
such officer of the Company.

SECTION 4. Exercise.

(a) Warrants in denominations of one or whole number multiples
thereof may be exercised commencing at any time on or after the Initial Warrant
Exercise Date, but not after the Warrant Expiration Date, upon the terms and
subject to the conditions set forth herein (including the provisions set forth
in Sections 2, 5 and 9 hereof) and in the applicable Warrant Certificate. A
Warrant shall be deemed to have been exercised immediately prior to the close
of business on the Exercise Date, provided that the Warrant Certificate
representing such Warrant, with the exercise form thereon duly executed by the
Registered Holder thereof or his attorney duly authorized in writing, together
with payment in cash or by check made payable to the Warrant Agent for the
account of the Company, of an amount in lawful money of the United States of
America equal to the applicable Purchase Price has been received in good funds
by the Warrant Agent. The person entitled

-7-
<PAGE> 9
to receive the securities deliverable upon such exercise shall be treated for
all purposes as the holder of such securities as of the close of business on
the Exercise Date. As soon as practicable on or after the Exercise Date and in
any event within five business days after such date, if one or more Warrants
have been exercised, the Warrant Agent on behalf of the Company shall cause to
be issued to the person or persons entitled to receive the same a Common Stock
certificate or certificates for the shares of Common Stock deliverable upon
such exercise, and the Warrant Agent shall deliver the same to the person or
persons entitled thereto. Upon the exercise of any one or more Warrants, the
Warrant Agent shall promptly notify the Company in writing of such fact and of
the number of securities delivered upon such exercise and, subject to
subsection (b) below, shall cause all payments of an amount in cash or by check
made payable to the order of the Company, equal to the Purchase Price, to be
deposited promptly in the Company's bank account.

(b) At any time upon the exercise of any Warrants after one year
and one day from the date hereof, the Warrant Agent shall, on a daily basis,
within two business days after such exercise, notify Josephthal, its successors
or assigns of the exercise of any such Warrants and shall, on a weekly basis
(subject to collection of funds constituting the tendered Purchase Price, but
in no event later than five business days after the last day of the calendar
week in which such funds were tendered), remit to Josephthal an amount equal to
five percent (5%) of the Purchase Price of such Warrants being then exercised
unless Josephthal shall have notified the Warrant Agent that the payment of
such amount with respect to such Warrant is violative of the General Rules and
Regulations promulgated under the Securities Exchange Act of 1934, as amended,
(the "Exchange Act"), or the rules and regulations of the National Association
of Securities Dealers, Inc. ("NASD") or applicable state securities or "blue
sky" laws, or the Warrants are those underlying the

-8-
<PAGE> 10
Underwriter's Warrants in which event, the Warrant Agent shall have to pay such
amount to the Company; provided, that, the Warrant Agent shall not be obligated
to pay any amounts pursuant to this Section 4(b) during any week that such
amounts payable are less than $1,000 and the Warrant Agent's obligation to make
such payments shall be suspended until the amount payable aggregates $1,000,
and provided further, that, in any event, any such payment (regardless of
amount) shall be made not less frequently than monthly.

(c) The Company shall not be obligated to issue any fractional
share interests or fractional warrant interests upon the exercise of any
Warrant or Warrants, nor shall it be obligated to issue scrip or pay cash in
lieu of fractional interests. Any fraction equal to or greater than one-half
shall be rounded up to the next full share or Warrant, as the case may be, any
fraction less than one-half shall be eliminated.

SECTION 5. Reservation of Shares; Listing, Payment of Taxes; etc.

(a) The Company covenants that it will at all times reserve and
keep available out of its authorized Common Stock, solely for the purpose of
issue upon exercise of Warrants, such number of shares of Common Stock as shall
then be issuable upon the exercise of all outstanding Warrants. The Company
covenants that all shares of Common Stock which shall be issuable upon exercise
of the Warrants shall, at the time of delivery thereof, be duly and validly
issued and fully paid and nonassessable and free from all preemptive or similar
rights, taxes, liens and charges with respect to the issue thereof, and that
upon issuance such shares shall be listed on each securities exchange, if any,
on which the other shares of outstanding Common Stock of the Company are then
listed.

(b) The Company covenants that if any securities to be reserved
for the purpose of exercise of Warrants hereunder require registration with, or
approval of, any governmental authority

-9-
<PAGE> 11
under any federal securities law before such securities may be validly issued
or delivered upon such exercise, then the Company will file a registration
statement under the federal securities laws or a post effective amendment, use
its best efforts to cause the same to become effective and use its best efforts
to keep such registration statement current while any of the Warrants are
outstanding and deliver a prospectus which complies with Section 10(a)(3) of
the Securities Act of 1933, as amended, (the "Act"), to the Registered Holder
exercising the Warrant (except, if in the opinion of counsel to the Company,
such registration is not required under the federal securities law or if the
Company receives a letter from the staff of the Securities and Exchange
Commission (the "Commission") stating that it would not take any enforcement
action if such registration is not effected); provided, however, that the
Company shall not be obligated solely by virtue of the preceding clauses to
file such registration statement under federal securities laws before
seventy-five days prior to the Initial Warrant Exercise Date, unless otherwise
required by applicable law. The Company will use best efforts to obtain
appropriate approvals or registrations under state "blue sky" securities laws.
With respect to any such securities, however, Warrants may not be exercised by,
or shares of Common Stock issued to, any Registered Holder in any state in
which such exercise would be unlawful.

(c) The Company shall pay all documentary, stamp or similar taxes
and other governmental charges that may be imposed with respect to the issuance
of Warrants, or the issuance or delivery of any shares of Common Stock upon
exercise of the Warrants; provided, however, that if shares of Common Stock are
to be delivered in a name other than the name of the Registered Holder of the
Warrant Certificate representing any Warrant being exercised, then no such
delivery shall be made unless the person requesting the same has paid to the
Warrant Agent the amount of transfer taxes or charges incident thereto, if any.

-10-
<PAGE> 12
(d) The Warrant Agent is hereby irrevocably authorized as the
Transfer Agent to requisition from time to time certificates representing
shares of Common Stock or other securities required upon exercise of the
Warrants, and the Company will comply with all such requisitions.

SECTION 6. Exchange and Registration of Transfer.

(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants or may be
transferred in whole or in part. Warrant Certificates to be so exchanged shall
be surrendered to the Warrant Agent at its Corporate Office, and the Company
shall execute and the Warrant's Agent shall countersign, issue and deliver in
exchange therefor the Warrant Certificate or Certificates which the Registered
Holder making the exchange shall be entitled to receive.

(b) The Warrant Agent shall keep, at such office, books in which,
subject to such reasonable regulations as it may prescribe, it shall register
Warrant Certificates and the transfer thereof. Upon due presentment for
registration of transfer of any Warrant Certificate at such office, the Company
shall execute and the Warrant Agent shall issue and deliver to the transferee
or transferees a new Warrant Certificate or Certificates representing an equal
aggregate number of Warrants.

(c) With respect to any Warrant Certificates presented for
registration of transfer, or for exchange or exercise, the subscription or
exercise form, as the case may be, on the reverse thereof shall be duly
endorsed or be accompanied by a written instrument or instruments of transfer
and subscription, in form satisfactory to the Company and the Warrant Agent,
duly executed by the Registered Holder thereof or his attorney duly authorized
in writing.

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<PAGE> 13
(d) No service charge shall be made for any exchange or
registration of transfer of Warrant Certificates. However, the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.

(e) All Warrant Certificates surrendered for exercise or for
exchange shall be promptly canceled by the Warrant Agent.

(f) Prior to due presentment for registration or transfer thereof,
the Company and the Warrant Agent may deem and treat the Registered Holder of
any Warrant Certificate as the absolute owner thereof of each Warrant
represented thereby (notwithstanding any notations of ownership or writing
thereon made by anyone other than the Company or the Warrant Agent) for all
purposes and shall not be affected by any notice to the contrary.

SECTION 7. Loss or Mutilation. Upon receipt by the Company and the
Warrant Agent of evidence satisfactory to them of the ownership of and the
loss, theft, destruction or mutilation of any Warrant Certificate and (in the
case of loss, theft or destruction) of indemnity satisfactory to them, and (in
case of mutilation) upon surrender and cancellation thereof, the Company shall
execute and the Warrant Agent shall countersign and deliver in lieu thereof a
new Warrant Certificate representing an equal aggregate number of Warrants.
Applicants for a substitute Warrant Certificate shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Warrant Agent may prescribe.

SECTION 8. Adjustment of Purchase Price and Number of Shares of Common
Stock Deliverable.

(a) (i) Except as hereinafter provided, in the event the Company
shall, at any time or from time to time after the date hereof, issue any shares
of Common Stock for a consideration per share

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<PAGE> 14
less than the Purchase Price or issue any shares of Common Stock as a stock
dividend to the holders of Common Stock, or subdivide or combine the
outstanding shares of Common Stock into a greater or lesser number of shares
(any such issuance, subdivision or combination being herein called a "Change of
Shares"), then, and thereafter upon each further Change of Shares, the Purchase
Price for the Warrants (whether or not the same shall be issued and
outstanding) in effect immediately prior to such Change of Shares shall be
changed to a price (including any applicable fraction of a cent to the nearest
cent) determined by dividing (i) the sum of (a) the total number of shares of
Common Stock outstanding immediately prior to such Change of Shares, multiplied
by the Purchase Price in effect immediately prior to such Change of Shares and
(b) the consideration, if any, received by the Company upon such sale,
issuance, subdivision or combination, by (ii) the total number of shares of
Common Stock outstanding immediately after such Change of Shares; provided,
however, that in no event shall the Purchase Price be adjusted pursuant to this
computation to an amount in excess of the Purchase Price in effect immediately
prior to such computation, except in the case of a combination of outstanding
shares of Common Stock.

For the purposes of any adjustment to be made in accordance with this
Section 8(a), the following provisions shall be applicable:

(A) In case of the issuance or sale of shares of Common
Stock (or of other securities deemed hereunder to involve the issuance or sale
of shares of Common Stock) for a consideration part or all of which shall be
cash, the amount of the cash portion of the consideration therefor deemed to
have been received by the Company shall be (i) the subscription price, if
shares of Common Stock are offered by the Company for subscription, or (ii) the
public offering price (before deducting therefrom any compensation paid or
discount allowed in the sale, underwriting

-13-
<PAGE> 15
or purchase thereof by underwriters or dealers or others performing similar
services, or any expenses incurred in connection therewith), if such securities
are sold to underwriters or dealers for public offering without a subscription
offering, or (iii) the gross amount of cash actually received by the Company
for such securities, in any other case.

(B) In case of the issuance or sale (otherwise than as a
dividend or other distribution on any stock of the Company, and otherwise than
on the exercise of options, rights or warrants or the conversion or exchange of
convertible or exchangeable securities) of shares of Common Stock (or of other
securities deemed hereunder to involve the issuance or sale of shares of Common
Stock) for a consideration part or all of which shall be other than cash, the
amount of the consideration therefor other than cash deemed to have been
received by the Company shall be the value of such consideration as determined
in good faith by the Board of Directors of the Company on the basis of a record
of values of similar property or services.

(C) Shares of Common Stock issuable by way of dividend or
other distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the day following the
record date for the determination of shareholders entitled to receive such
dividend or other distribution and shall be deemed to have been issued without
consideration.

(D) The reclassification of securities of the Company
other than shares of Common Stock into securities including shares of Common
Stock shall be deemed to involve the issuance of such shares of Common Stock
for a consideration other than cash immediately prior to the close of business
on the date fixed for the determination of security holders entitled to receive

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<PAGE> 16
such shares, and the value of the consideration allocable to such shares of
Common Stock shall be determined as provided in subsection (B) of this Section
8(a).

(E) The number of shares of Common Stock at any one time
outstanding shall be deemed to include the aggregate maximum number of shares
issuable (subject to readjustment upon the actual issuance thereof) upon the
exercise of options, rights or warrants and upon the conversion or exchange of
convertible or exchangeable securities.

(b) Upon each adjustment of the Purchase Price pursuant to this
Section 8, the number of shares of Common Stock purchasable upon the exercise
of each Warrant shall be the number derived by multiplying the number of shares
of Common Stock purchasable upon the exercise of each Warrant immediately prior
to such adjustment by the Purchase Price in effect prior to such adjustment and
dividing the product so obtained by the applicable adjusted Purchase Price.

(c) In case the Company shall at any time after the date hereof
issue options, rights or warrants to subscribe for shares of Common Stock, or
issue any securities convertible into or exchangeable for shares of Common
Stock, for a consideration per share (determined as provided in Section 8(a)
and as provided below) less than the Purchase Price in effect immediately prior
to the issuance of such options, rights or warrants, or such convertible or
exchangeable securities, or without consideration (including the issuance of
any such securities by way of dividend or other distribution), the Purchase
Price for the Warrants (whether or not the same shall be issued and
outstanding) in effect immediately prior to the issuance of such options,
rights or warrants, or such convertible or exchangeable securities, as the case
may be, shall be reduced to a price determined by making the computation in
accordance with the provisions of Section 8(a) hereof, provided that:

-15-
<PAGE> 17

(A) The aggregate maximum number of shares of Common
Stock, as the case may be, issuable or that may become issuable under such
options, rights or warrants (assuming exercise in full even if not then
currently exercisable or currently exercisable in full) shall be deemed to be
issued and outstanding at the time such options, rights or warrants were
issued, for a consideration equal to the minimum purchase price per share
provided for in such options, rights or warrants at the time of issuance, plus
the consideration, if any, received by the Company for such options, rights or
warrants; provided, however, that upon the expiration or other termination of
such options, rights or warrants, if any thereof shall not have been exercised,
the number of shares of Common Stock deemed to be issued and outstanding
pursuant to this subsection (A) (and for the purposes of subsection (E) of
Section 8(a) hereof) shall be reduced by the number of shares as to which
options, warrants and/or rights shall have expired, and such number of shares
shall no longer be deemed to be issued and outstanding, and the Purchase Price
then in effect shall forthwith be readjusted and thereafter be the price that
it would have been had adjustment been made on the basis of the issuance only
of the shares actually issued plus the shares remaining issuable upon the
exercise of those options, rights or warrants as to which the exercise rights
shall not have expired or terminated unexercised.

(B) The aggregate maximum number of shares of Common
Stock issuable or that may become issuable upon conversion or exchange of any
convertible or exchangeable securities (assuming conversion or exchange in full
even if not then currently convertible or exchangeable in full) shall be deemed
to be issued and outstanding at the time of issuance of such securities, for a
consideration equal to the consideration received by the Company for such
securities, plus the minimum consideration, if any, receivable by the Company
upon the conversion or exchange

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<PAGE> 18
thereof; provided, however, that upon the termination of the right to convert
or exchange such convertible or exchangeable securities (whether by reason of
redemption or otherwise), the number of shares of Common Stock deemed to be
issued and outstanding pursuant to this subsection (B) (and for the purposes of
subsection (E) of Section 8(a) hereof) shall be reduced by the number of shares
as to which the conversion or exchange rights shall have expired or terminated
unexercised, and such number of shares shall no longer be deemed to be issued
and outstanding, and the Purchase Price then in effect shall forthwith be
readjusted and thereafter be the price that it would have been had adjustment
been made on the basis of the issuance only of the shares actually issued plus
the shares remaining issuable upon conversion or exchange of those convertible
or exchangeable securities as to which the conversion or exchange rights shall
not have expired or terminated unexercised.

(C) If any change shall occur in the price per share
provided for in any of the options, rights or warrants referred to in
subsection (A) of this Section 8(c), or in the price per share or ratio at
which the securities referred to in subsection (B) of this Section 8(c) are
convertible or exchangeable, such options, rights or warrants or conversion or
exchange rights, as the case may be, to the extent not theretofore exercised,
shall be deemed to have expired or terminated on the date when such price
change became effective in respect of shares not theretofore issued pursuant to
the exercise or conversion or exchange thereof, and the Company shall be deemed
to have issued upon such date new options, rights or warrants or convertible or
exchangeable securities.

(d) In case of any reclassification or change of outstanding
shares of Common Stock issuable upon exercise of the Warrants (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), or in case

-17-
<PAGE> 19
of any consolidation or merger of the Company with or into another corporation
(other than a mergerwith a Subsidiary in which merger the Company is the
continuing corporation and which does not result in any reclassification or
change of the then outstanding shares of Common Stock or other capital stock
issuable upon exercise of the Warrants (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 subdivision or combination) or in case of any sale or conveyance to
another corporation of the property of the Company as an entirety or
substantially as an entirety, then, as a condition of such reclassification,
change, consolidation, merger, sale or conveyance, the Company, or such
successor or purchasing corporation, as the case may be, shall make lawful and
adequate provision whereby the Registered Holder of each Warrant then
outstanding shall have the right thereafter to receive on exercise of such
Warrant the kind and amount of securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of securities issuable upon exercise of such Warrant immediately
prior to such reclassification, change, consolidation, merger, sale or
conveyance and shall forthwith file at the Corporate Office of the Warrant
Agent a statement signed by its President or a Vice President and by its
Treasurer or an Assistant Treasurer or its Secretary or an Assistant Secretary
evidencing such provision. Such provisions shall include provision for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in Section 8(a) and (c) the above provisions of this
Section 8(d) shall similarly apply to successive reclassifications and changes
of shares of Common Stock and to successive consolidations, mergers, sales or
conveyances.

(e) Irrespective of any adjustments or changes in the Purchase
Price or the number of shares of Common Stock purchasable upon exercise of the
Warrants, the Warrant Certificates

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<PAGE> 20
theretofore and thereafter issued shall, unless the Company shall exercise its
option to issue new Warrant Certificates pursuant to Section 2(f) hereof,
continue to express the Purchase Price per share and the number of shares
purchasable thereunder as the Purchase Price per share and the number of shares
purchasable thereunder were expressed in the Warrant Certificates when the same
were originally issued.

(f) After each adjustment of the Purchase Price pursuant to this
Section 8, the Company will promptly prepare a certificate signed by the
Chairman or President, and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, of the Company setting forth: (i) the
Purchase Price as so adjusted, (ii) the number of shares of Common Stock
purchasable upon exercise of each Warrant, after such adjustment, and (iii) a
brief statement of the facts accounting for such adjustment. The Company will
promptly file such certificate with the Warrant Agent and cause a brief summary
thereof to be sent by ordinary first class mail to each Registered Holder at
his last address as it shall appear on the registry books of the Warrant Agent.
No failure to mail such notice nor any defect therein or in the mailing thereof
shall affect the validity thereof except as to the holder to whom the Company
failed to mail such notice, or except as to the holder whose notice was
defective. The affidavit of an officer of the Warrant Agent or the Secretary or
an Assistant Secretary of the Company that such notice has been mailed shall,
in the absence of fraud, be prima facie evidence of the facts stated therein.

(g) No adjustment of the Purchase Price shall be made as a result
of or in connection with (A) the issuance or sale of shares of Common Stock
pursuant to options, warrants, stock purchase agreements and convertible or
exchangeable securities outstanding or in effect on the date hereof, (B) the
issuance or sale of shares of Common Stock upon the exercise of options granted
pursuant

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<PAGE> 21
to any of the Company's stock option plans in effect on the date hereof,
whether or not options thereunder were outstanding on the date hereof, and the
issuance of 60,000 non-qualified options as described in the Underwriting
Agreement and upon issuance of Common Stock upon the exercise of the
60,000options so granted, or (C) the issuance or sale of shares of Common Stock
if the amount of said adjustment shall be less than $.10, provided, however,
that in such case, any adjustment that would otherwise be required then to be
made shall be carried forward and shall be made at the time of and together
with the next subsequent adjustment that shall amount, together with any
adjustment so carried forward, to at least $.10. In addition, Registered
Holders shall not be entitled to cash dividends paid by the Company prior to
the exercise of any Warrant or Warrants held by them.

SECTION 9. Redemption.

(a) Commencing on the Initial Warrant Redemption Date, the Company
may, on 30 days' prior written notice redeem all the Warrants at $.125 per
Warrant, provided, however, that before any such call for redemption of
Warrants can take place, the (A) average closing bid price for the Common Stock
as reported by the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), if the Common Stock is then traded in the
over-the-counter market or (B) the average closing sale price, if the Common
Stock is then traded on NASDAQ/National Market System or on a national
securities exchange, shall have equaled or exceeded $13.20 per share for twenty
(20) consecutive trading days ending within ten (10) days prior to the date on
which the notice contemplated by (b) and (c) below is given (subject to
adjustment in the event of any stock splits or other similar events as provided
in Section 8 hereof). Notwithstanding the foregoing, the Warrants underlying
the Underwriter's Warrants are not subject to redemption.

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<PAGE> 22
(b) In case the Company shall exercise its right to redeem all of
the Warrants, it shall give or cause to be given notice to the Registered
Holders of the Warrants, by mailing to such Registered Holders a notice of
redemption, first class, postage prepaid, at their last address as shall appear
on the records of the Warrant Agent. Any notice mailed in the manner provided
herein shall be conclusively presumed to have been duly given whether or not
the Registered Holder receives such notice. Not less than five business days
prior to the mailing to the Registered Holders of the Warrants of the notice of
redemption, the Company shall deliver or cause to be delivered to Josephthal a
similar notice telephonically and confirmed in writing together with a list of
the Registered Holders (including their respective addresses and number of
Warrants beneficially owned) to whom such notice of redemption has been or will
be given.

(c) The notice of redemption shall specify (i) the redemption
price, (ii) the date fixed for redemption, which shall in no event be less than
thirty (30) days after the date of mailing of such notice, (iii) the place
where the Warrant Certificate shall be delivered and the redemption price shall
be paid, (iv) that Josephthal is the Company's exclusive warrant solicitation
agent and shall receive the commission contemplated by Section 4(b) hereof, and
(v) that the right to exercise the Warrant shall terminate at 5:00 p.m. (New
York time) on the business day immediately preceding the date fixed for
redemption. The date fixed for the redemption of the Warrants shall be the
Redemption Date. No failure to mail such notice nor any defect therein or in
the mailing thereof shall affect the validity of the proceedings for such
redemption except as to a holder (a) to whom notice was not mailed or (b) whose
notice was defective. An affidavit of the Warrant Agent or the Secretary or
Assistant Secretary of the Company that notice of redemption has been mailed
shall, in the absence of fraud, be prima facie evidence of the facts stated
therein.

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<PAGE> 23
(d) Any right to exercise a Warrant shall terminate at 5:00 p.m.
(New York time) on the business day immediately preceding the Redemption Date.
The redemption price payable to the Registered Holders shall be mailed to such
persons at their addresses of record.

(e) All amounts payable to the Registered Holders of the Warrants
upon redemption shall be rounded up to the nearest whole cent.

(f) The Company shall indemnify Josephthal and each person, if
any, who controls Josephthal within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act against all loss, claim, damage, expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which any of them may
become subject under the Act, the Exchange Act or otherwise, arising from the
registration statement or prospectus referred to in Section 5(b) hereof to the
same extent and with the same effect (including the provisions regarding
contribution) as the provisions pursuant to which the Company has agreed to
indemnify Josephthal contained in Section 7 of the Underwriting Agreement.

(g) Five business days prior to the Redemption Date, the Company
shall furnish to Josephthal (i) an opinion of counsel to the Company, dated
such date and addressed to Josephthal, and (ii) a "cold comfort" letter dated
such date addressed to Josephthal, signed by the independent public accountants
who have issued a report on the Company's financial statements included in the
registration statement relating to the securities issuable upon exercise of the
Warrants, in each case covering substantially the same matters with respect to
such registration statement (and the prospectus included therein) and, in the
case of such accountants letter, if permissible under then current applicable
accounting standards, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants'

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<PAGE> 24
letters delivered to underwriters in underwritten public offerings of
securities, including, without limitation, those matters covered in Sections
6(d) and (j) of the Underwriting Agreement.

(h) The Company shall as soon as practicable after the Redemption
Date, and in any event within 15 months thereafter, make "generally available
to its security holders" (within the meaning of Rule 158 under the Act) an
earnings statement (which need not be audited) complying with Section 11(a) of
the Act and covering a period of at least 12 consecutive months beginning after
the Redemption Date.

(i) The Company shall deliver within five business days prior to
the Redemption Date copies of all correspondence between the Commission and the
Company, its counsel or auditors and all memoranda relating to discussions with
the Commission or its staff with respect to such registration statement and
permit Josephthal to do such investigation, upon reasonable advance notice,
with respect to information contained in or omitted from the registration
statement as it deems reasonably necessary to comply with applicable securities
laws or rules of the NASD. Such investigation shall include access to books,
records and properties and opportunities to discuss the business of the Company
with its officers and independent auditors, all to such reasonable extent and
at such reasonable times and as often as Josephthal shall reasonably request.

SECTION 10. Concerning the Warrant Agent.

(a) The Warrant Agent acts hereunder as agent and in a ministerial
capacity for the Company and Josephthal, and its duties shall be determined
solely by the provisions hereof. The Warrant Agent shall not, by issuing and
delivering Warrant Certificates or by any other act hereunder, be deemed to
make any representations as to the validity or value or authorization of the
Warrant Certificates or the Warrants represented thereby or of any securities
or other property

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<PAGE> 25
delivered upon exercise of any Warrant or whether any stock issued upon
exercise of any Warrant is fully paid and nonassessable.

(b) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be
made any adjustment of the Purchase Price provided in this Agreement, or to
determine whether any fact exists which may require any such adjustment, or
with respect to the nature or extent of any such adjustment, when made, or with
respect to the method employed in making the same. It shall not (i) be liable
for any recital or statement of fact contained herein or for any action taken,
suffered or omitted by it in reliance on any Warrant Certificate or other
document or instrument believed by it in good faith to be genuine and to have
been signed or presented by the proper party or parties, (ii) be responsible
for any failure on the part of the Company to comply with any of its covenants
and obligations contained in this Agreement or in any Warrant Certificate, or
(iii) be liable for any act or omission in connection with this Agreement
except for its own gross negligence or willful misconduct.

(c) The Warrant Agent may at any time consult with counsel
satisfactory to it (who may be counsel for the Company) and shall incur no
liability or responsibility for any action taken, suffered or omitted by it in
good faith in accordance with the opinion or advice of such counsel.

(d) Any notice, statement, instruction, request, direction, order
or demand of the Company shall be sufficiently evidenced by an instrument
signed by the Chairman of the Board of Directors, President or any Vice
President (unless other evidence in respect thereof is herein specifically
prescribed). The Warrant Agent shall not be liable for any action taken,
suffered or omitted by it in accordance with such notice, statement,
instruction, request, direction, order or demand.

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<PAGE> 26
(e) The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse it for its reasonable
expenses hereunder; the Company further agrees to indemnify the Warrant Agent
and save it harmless against any and all losses, expenses and liabilities,
including judgments, costs and counsel fees, for anything done or omitted by
the Warrant Agent in the execution of its duties and powers hereunder except
losses, expenses and liabilities arising as a result of the Warrant Agent's
gross negligence or willful misconduct.

(f) The Warrant Agent may resign its duties and be discharged from
all further duties and liabilities hereunder (except liabilities arising as a
result of the Warrant Agent's own gross negligence or willful misconduct),
after giving 30 days' prior written notice to the Company. At least 15 days
prior to the date such resignation is to become effective, the Warrant Agent
shall cause a copy of such notice of resignation to be mailed to the Registered
Holder of each Warrant Certificate at the Company's expense. Upon such
resignation the Company shall appoint in writing a new warrant agent. If the
Company shall fail to make such appointment within a period of 30 days after it
has been notified in writing of such resignation by the resigning Warrant
Agent, then the Registered Holder of any Warrant Certificate may apply to any
court of competent jurisdiction for the appointment of a new warrant agent. Any
new warrant agent, whether appointed by the Company or by such a court, shall
be a bank or trust company having a capital and surplus, as shown by its last
published report to its stockholders, of not less than $10,000,000 or a stock
transfer company doing business in New York, New York. After acceptance in
writing of such appointment by the new warrant agent is received by the
Company, such new warrant agent shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named herein as the
warrant agent, without any further assurance, conveyance, act or deed; but if
for any reason it shall be

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<PAGE> 27
necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning
Warrant Agent. Not later than the effective date of any such appointment the
Company shall file notice thereof with the resigning Warrant Agent and shall
forthwith cause a copy of such notice to be mailed to the Registered Holder of
each Warrant Certificate.

(g) Any corporation into which the Warrant Agent or any new
warrant agent may be converted or merged, any corporation resulting from any
consolidation to which the Warrant Agent or any new warrant agent shall be a
party, or any corporation succeeding to the corporate trust business of the
Warrant Agent or any new warrant agent shall be a successor warrant agent under
this Agreement without any further act, provided that such corporation is
eligible for appointment as successor to the Warrant Agent under the provisions
of the preceding paragraph. Any such successor warrant agent shall promptly
cause notice of its succession as warrant agent to be mailed to the Company and
to the Registered Holders of each Warrant Certificate.

(h) The Warrant Agent, its subsidiaries and affiliates, and any of
its or their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same
manner and to the same extent and with like effect as though it were not
Warrant Agent. Nothing herein shall preclude the Warrant Agent from acting in
any other capacity for the Company or for any other legal entity.

(i) The Warrant Agent shall retain for a period of two years from
the date of exercise any Warrant Certificate received by it upon such exercise.

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<PAGE> 28
SECTION 11. Modification of Agreement.

The Warrant Agent and the Company may by supplemental agreement make
any changes or corrections in this Agreement (i) that they shall deem
appropriate to cure any ambiguity or to correct any defective or inconsistent
provision or manifest mistake or error herein contained; or (ii) that they may
deem necessary or desirable and which shall not adversely affect the interests
of the holders of Warrant Certificates; provided, however, that this Agreement
shall not otherwise be modified, supplemented or altered in any respect except
with the consent in writing of the Registered Holders representing not less
than 66-2/3% of the Warrants then outstanding. In addition, this Agreement may
not be modified, amended or supplemented without the prior written consent of
Josephthal, other than to cure any ambiguity or to correct any provision which
is inconsistent with any other provision of this Agreement or to make any such
change that is necessary or desirable and which shall not adversely affect the
interests of Josephthal and except as may be required by law.

SECTION 12. Notices.

All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made when delivered or
mailed first-class postage prepaid, or delivered to a telegraph office for
transmission if to the Registered Holder of a Warrant Certificate, at the
address of such holder as shown on the registry books maintained by the Warrant
Agent; if to the Company at 16350 Park Ten Place, Houston, Texas 77084,
Attention: Robert M. Guezuraga, President and Chief Executive Officer, or at
such other address as may have been furnished to the Warrant Agent in writing
by the Company; and if to the Warrant Agent, at its Corporate Office. Copies of
any notice delivered pursuant to this Agreement shall be delivered to
Josephthal Lyon & Ross Incorporated, 200 Park Avenue, 24th Floor, New York, New
York 10166, Attention: Scott

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<PAGE> 29
Weisman, Director of Investment Banking, or at such other address as may have
been furnished to the Company and the Warrant Agent in writing.

SECTION 13. Governing Law.

This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without giving effect to conflicts of laws.

SECTION 14. Binding Effect.

This Agreement shall be binding upon and inure to the benefit of the
Company, the Warrant Agent and their respective successors and assigns and the
holders from time to time of Warrant Certificates or any of them. Except as
hereinafter stated, nothing in this Agreement is intended or shall be construed
to confer upon any other person any right, remedy or claim or to impose upon
any other person any duty, liability or obligation. Josephthal is, and shall at
all times irrevocably be deemed to be, a third-party beneficiary of this
Agreement, with full power, authority and standing to enforce the rights
granted to it hereunder.

SECTION 15. Counterparts.

This Agreement may be executed in several counterparts, which taken
together shall constitute a single document.

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<PAGE> 30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the first date first above written.

[SEAL]

POSITRON CORPORATION CONTINENTAL STOCK TRANSFER &
TRUST COMPANY,
As Warrant Agent

By: By:
------------------------------- ----------------------------------
Name: Name: Mr. Steven G. Nelson
Title: Title: Chairman

By:
-------------------------------
David O. Rodrigue
Secretary

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<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the first date first above written.

[SEAL]

POSITRON CORPORATION CONTINENTAL STOCK TRANSFER &
TRUST COMPANY,
As Warrant Agent

By: By:
------------------------------- ----------------------------------
Name: Name: Mr. Steven G. Nelson
Title: Title: Chairman

By:
-------------------------------
David O. Rodrigue
Secretary

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<PAGE> 1
EXHIBIT 5.1

[VINSON & ELKINS LETTERHEAD]

June 12, 1996

Positron Corporation
16350 Park Ten Place
Houston, Texas 77084

Ladies and Gentlemen:

This firm has acted as counsel for Positron Corporation, a Texas
corporation (the "Company"), in connection with filing of the Company's
Post-Effective Amendment No. 2 to Registration Statement S-3 (File No.
33-68722) (the "Amendment") under the Securities Act of 1933, as amended (the
"Securities Act"), pertaining to 3,018,750 shares (the "Shares") of common
stock, par value $.01 per share (the "Common Stock"), of the Company underlying
a portion of the outstanding Redeemable Warrants of the Company.

In reaching the opinions set forth herein, this firm has examined and
is familiar with originals or copies, certified or otherwise, of such documents
and records of the Company and such statutes, regulations and other instruments
as we have deemed necessary or advisable for purposes of this opinion,
including (i) the Amendment, (ii) the Articles of Incorporation of the Company,
as filed with the Secretary of State of the State of Texas, (iii) the By-Laws
of the Company, and (iv) the Amended and Restated Warrant Agreement dated as of
April 14, 1994, by and between the Company and Continental Stock Transfer &
Trust Company, which governs the Redeemable Warrants.

This firm has assumed that (i) all information contained in all
documents reviewed by this firm is true, correct and complete, (ii) all
signatures on all documents reviewed by this firm are genuine, (iii) all
documents submitted to this firm as originals are true and complete, (iv) all
documents submitted to this firm as copies are true and complete copies of the
originals thereof, and (v) all persons executing and delivering originals or
copies of documents examined by this firm were competent to execute and deliver
such documents.
<PAGE> 2
Positron Corporation
June 12, 1996
Page 2

Based on the foregoing and having due regard for the legal
considerations this firm deems relevant, this firm is of the opinion that each
of the Shares when issued, upon exercise of the Redeemable Warrants in
accordance with the terms thereof, will be validly issued, fully paid and
non-assessable.

This opinion is limited in all respects to the laws of the State of
Texas and the federal laws of the United States of America.

This opinion letter may be filed as an exhibit to the Registration
Statement. Consent is also given to the reference to this firm under the
caption "Legal Matters" in the Registration Statement, and in the Prospectus
included in the Registration Statement, as having passed on the validity of the
Shares. In giving this consent, this firm does not thereby admit that it comes
within the category of persons whose consent is required under Section 7 of the
Securities Act or the rules and regulations of the Commission promulgated
thereunder.

Very truly yours,

/s/ Vinson & Elkins L.L.P.

<PAGE> 1
EXHIBIT 23.1

[COOPERS & LYBRAND L.L.P. LETTERHEAD]

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in this Post-Effective Amendment
No. 2 to Form SB-2 (File No. 33-68722) of our report dated March 25, 1996, on
our audits of the financial statements of Positron Corporation as of December
31, 1994 and 1995, and for the years ended December 31, 1994 and 1995. We also
consent to the reference to our firm under the caption "Experts".

COOPERS & LYBRAND L.L.P.

Houston, Texas
June 12, 1996