<PAGE>

                             CERTIFICATE OF DESIGNATIONS

                                          of

                         SERIES A CONVERTIBLE PREFERRED STOCK

                                          of

                                    XYTRONYX, INC.

                            Pursuant to Section 151 of the
                   General Corporation Law of the State of Delaware


         XYTRONYX, INC., a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), does hereby certify that, pursuant to
the authority conferred on the Board of Directors of the Corporation by the
Certificate of Incorporation of the Corporation and in accordance with Section
151 of the General Corporation Law of the State of Delaware, the Board of
Directors of the Corporation adopted the following resolution establishing a
series of 78,125 shares of Preferred Stock of the Corporation designated as
"Series A Convertible Preferred Stock":

         RESOLVED, that pursuant to the authority conferred on the Board of
    Directors of this Corporation by the Certificate of Incorporation, as
    amended, a series of Preferred Stock, par value $25.00 per share, of the
    Corporation is hereby established and created, and that the designation and
    number of shares thereof and the voting and other powers, preferences and
    relative, participating, optional or other rights of the shares of such
    series and the qualifications, limitations and restrictions thereof are as
    follows:

                         SERIES A CONVERTIBLE PREFERRED STOCK

         1.   DESIGNATION AND AMOUNT.  There shall be a series of Preferred
Stock designated as "Series A Convertible Preferred Stock" and the number of
shares constituting such series shall be 78,125. Such series is referred to
herein as the "Series A Preferred Stock".  Such number of shares may be
increased prior to the Final Closing Date (as defined below) or decreased by
resolution of the Board of Directors of the Corporation; PROVIDED, HOWEVER, that
no decrease shall reduce the number of shares of Series A Preferred Stock to
less than the number of shares then issued and outstanding.

         2.   DIVIDENDS AND DISTRIBUTIONS.  (a) Subject to the prior and
superior rights of the holders of any shares of any series or class of capital
stock ranking prior and superior to the shares of Series A Preferred Stock with
respect to dividends, the holders of shares of Series A Preferred Stock shall be
entitled to receive, as, when and if declared by the Board of Directors of the
Corporation, out of assets legally available for that purpose, dividends or
distributions in cash, stock or otherwise.

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<PAGE>

              (b)  If and when the Corporation shall declare any dividend or
distribution on any Junior Stock (as defined below), the Corporation shall,
concurrently with the declaration of such dividend or distribution on the Junior
Stock, declare a like dividend or distribution, as the case may be, on the
Series A Preferred Stock in an amount per share equal to (x) the amount of the
dividend or distribution per share of Common Stock multiplied by (y) the number
of shares of Common Stock into which one share of Series A Preferred Stock is
then convertible.

              (c)  No dividend or distribution, as the case may be, may be
declared on any Junior Stock unless a dividend or distribution, as the case may
be, is declared on the Series A Preferred Stock in accordance with Section 2(b)
above.  Notwithstanding the foregoing, the Corporation shall not declare any
dividend or distribution on any Junior Stock unless and until a special dividend
or distribution of $260.00 per share (subject to appropriate adjustment to
reflect any stock split, combination, reclassification or reorganization of the
Series A Preferred Stock) has been declared on the Series A Preferred Stock.

              (d)  Any dividend or distribution payable to the holders of the
Series A Preferred Stock pursuant to this Section 2 shall be paid to such
holders at the same time as the dividend or distribution on the Junior Stock by
which it is measured is paid.

              (e)  All dividends or distributions declared upon the Series A
Preferred Stock shall be declared pro rata per share.

              (f)  Any reference to "distribution" contained in this Section 2
shall not be deemed to include any distribution made in connection with or in
lieu of any Liquidation Event (as defined below).

              (g)  "Junior Stock" shall mean the Common Stock and any shares of
preferred stock of any series or class of the Corporation, whether presently
outstanding or hereafter issued, which are junior to the shares of Series A
Preferred Stock with respect to (i) the distribution of assets on any voluntary
or involuntary liquidation, dissolution or winding up of the Corporation, (ii)
dividends and (iii) voting.

         3.   LIQUIDATION PREFERENCE.  (a)  In the event of a (i) liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
(ii) a sale or other disposition of all or substantially all of the assets of
the Corporation or (iii) any consolidation, merger (other than pursuant  to the
Agreement and Plan of Merger dated as of June 4, 1996, among the Corporation,
XYX Acquisition Corp. and Binary Therapeutics, Inc. (the "BTI Agreement")),
combination, reorganization or other transaction in which the Corporation is not
the surviving entity or the shares of Common Stock constituting in excess of 50%
of the voting power of the Corporation are exchanged for or changed into stock
or securities of another entity, cash and/or any other property (a "Merger
Transaction") (clauses (i), (ii) and (iii) being collectively referred to as a
"Liquidation Event"), after payment or provision for payment of debts and other
liabilities of the Corporation, the holders of the Series A Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the Corporation
available for distribution to its shareholders, whether such assets are capital,
surplus, or earnings, before any payment or declaration and set-

                                      -2-
<PAGE>

ting apart for payment of any amount shall be made in respect of any Junior 
Stock, an amount equal to $260.00 per share plus an amount equal to all 
declared and unpaid dividends thereon; provided, however, in the case of a 
Merger Transaction, such $260.00 per share may be paid in cash, property 
(valued as provided in Section 3(b)) and/or securities (valued as provided in 
Section 3(b)) of the entity surviving such Merger Transaction.  In the case 
of property or in the event that any such securities are restricted, the 
value of such property or securities shall be determined by agreement between 
the Corporation and a majority of the Series A Preferred Stock then 
outstanding.  If upon any Liquidation Event, whether voluntary or 
involuntary, the assets to be distributed to the holders of the Series A 
Preferred Stock shall be insufficient to permit the payment to such 
shareholders of the full preferential amounts aforesaid, then all of the 
assets of the Corporation to be distributed shall be so distributed ratably 
to the holders of the Series A Preferred Stock on the basis of the number of 
shares of Series A Preferred Stock held.  A consolidation or merger of the 
Corporation with or into another corporation, other than in a transaction 
described in Section 3(a) above, shall not be considered a liquidation, 
dissolution or winding up of the Corporation or a sale or other disposition 
of all or substantially all of the assets of the Corporation and accordingly 
the Corporation shall make appropriate provision to ensure that the terms of 
this Certificate of Designations survive any such transaction.  All shares of 
Series A Preferred Stock shall rank as to payment upon the occurrence of any 
Liquidation Event senior to the Common Stock as provided herein and, unless 
the terms of such series shall provide otherwise, senior to all other series 
of the Corporation's preferred stock.

         (b) Any securities or other property to be delivered to the holders of
the Series A Preferred Stock pursuant to Section 3(a) hereof shall be valued as
follows:

         (i) Securities not subject to an investment letter or other similar
         restriction on free marketability:

              (A) If traded on a securities exchange or on Nasdaq (as defined
              below), or if actively traded over-the-counter, the value shall
              be deemed to be the Market Price (as defined below) of the
              securities as of the third day prior to the date of valuation.

              (B) If there is no such active public market for the securities,
              the value shall be the Fair Market Value (as defined below) of
              the securities.

         "Market Price" of a security shall mean the average Closing Bid Price
         of such security, for thirty (30) consecutive trading days, ending
         with the day prior to the date as of which the Market Price is being
         determined.

         "Fair Market Value" of any asset (including any security) means the
         fair market value thereof as mutually determined by the Corporation
         and the holders of a majority (measured in terms of voting power) of
         the outstanding Series A Preferred Stock.

         The "Closing Bid Price" for any security for each trading day shall be
         the reported closing bid price of such security on the national
         securities exchange on which

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<PAGE>

         such security is listed or admitted to trading, or, if such security 
         is not listed or admitted to trading on any national securities 
         exchange, shall mean the reported closing bid price of such security 
         on the Nasdaq SmallCap Market or the Nasdaq National Market System 
         (collectively referred to as, "Nasdaq") or, if such security is not 
         listed or admitted to trading on any national securities exchange or 
         quoted on Nasdaq, shall mean the reported closing bid price of such 
         security on the principal securities exchange on which such security 
         is listed or admitted to trading (based on the aggregate dollar 
         value of all securities listed or admitted to trading) or, if such 
         security is not listed or admitted to trading on a national 
         securities exchange, quoted on Nasdaq or listed or admitted to 
         trading on any other securities exchange, shall mean the closing bid 
         price in the over-the-counter market as furnished by any NASD member 
         firm selected from time to time by the Corporation for that purpose. 


         "Trading day" shall mean a day on which the securities exchange or
         NASDAQ used to determine the Closing Bid Price is open for the
         transaction of business or the reporting of trades or, if the Closing
         Bid Price is not so determined, a day on which such securities
         exchange is open for the transaction of business. 

         (ii) For securities for which there is an active public market but
         which are subject to investment letter or other restrictions on free
         marketability, the value shall be the  Fair Market Value thereof,
         determined by discounting appropriately the Market Price thereof.

         (iii) For all other securities, the value shall be the Fair Market
         Value thereof.  

If the holders of a majority of the Series A Preferred Stock and the Corporation
are unable to reach agreement on any valuation matter, such valuation shall be
submitted to and determined by a nationally recognized independent investment
banking firm selected by the Board of Directors of the Corporation and the
holders of a majority of the Series A Preferred Stock (or, if such selection
cannot be agreed upon promptly, or in any event within ten days, then such
valuation shall be made by a nationally recognized independent investment
banking firm selected by the American Arbitration Association in New York City
in accordance with its rules).

         4.   CONVERSION.

         (a)  RIGHT OF CONVERSION.  The shares of Series A Preferred Stock
shall be convertible, in whole or in part, at the option of the holder thereof
and upon notice to the Corporation as set forth in Section 4(b) below, into
fully paid and nonassessable shares of Common Stock and such other securities
and property as hereinafter provided.  The shares of Series A Preferred Stock
shall be convertible initially at the rate of 208.33333 shares of Common Stock
for each full share of Series A Preferred Stock (the "Conversion Rate") and
shall be subject to adjustment as provided herein.  The initial conversion price
per share of Common Stock is $.96 (the "Conversion Price") and shall be subject
to adjustment as provided herein.  For purposes of this resolution, the
Conversion Rate shall be determined by dividing the then existing Conversion
Price into $200.00.

                                      -4-
<PAGE>

         Subject to adjustment pursuant to the provisions of Section 4(c)
below, in the event that the Conversion Price in effect at the time of each
Interim Closing Date (as defined below) and the Final Closing Date (as defined
below) is greater than 80% of the Market Price (as defined in Section 3(B)) of
the Common Stock as of (x) any interim closing date of the issuance and sale of
the Series A Preferred Stock (each an "Interim Closing Date") or (y) the final
closing date of the issuance and sale of the Series A Preferred Stock (the
"Final Closing Date"), then the Conversion Price shall be adjusted to equal 80%
of the lesser of any such Market Price.  If there is any change in the
Conversion Price as a result of the preceding sentence, then the Conversion Rate
shall be changed accordingly as set forth above.

         The Board of Directors of the Corporation, or a committee designated
by it for such purpose, may specify an initial conversion price applicable to
the shares of Series A Preferred Stock issued at any closing lower than the
initial conversion price that would otherwise obtain pursuant to the preceding
paragraphs and, in the event an initial conversion price is so specified, it
shall be applicable to all shares of the Series A Preferred Stock.  

         The Corporation shall 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 Corporation setting forth the Conversion Rate as of
the Final Closing Date, showing in reasonable detail the facts upon which such
adjusted Conversion Rate is based, and such certificate shall forthwith be filed
with the transfer agent of the Series A Preferred Stock.  A notice stating that
the Conversion Rate has been adjusted pursuant to the second preceding
paragraph, or that no adjustment is necessary, and setting forth the Conversion
Rate in effect as of the Final Closing Date shall be mailed as promptly as
practicable after the Final Closing Date by the Corporation to all record
holders of the Series A Preferred Stock at their last addresses as they shall
appear in the stock transfer books of the Corporation.

         The Conversion Price (subject to adjustments pursuant to the
provisions of Section 4(c) below) in effect immediately prior to the date that
is 12 months after the Final Closing Date of the issuance and sale of the Series
A Preferred Stock (the "Reset Date") shall be adjusted and reset effective as of
the Reset Date if the Market Price as of the Reset Date (the "12-Month Trading
Price") is less than 130% of the then applicable Conversion Price (a "Reset
Event").  Upon the occurrence of a Reset Event, the Conversion Price shall be
reduced to be equal to the greater of (A) the 12-Month Trading Price divided by
1.3, and (B) 50% of the Conversion Price in effect immediately prior to the
Reset Date.  If there is any change in the Conversion Price as a result of the
preceding sentence, then the Conversion Rate shall be changed accordingly as set
forth above.  The Corporation shall prepare a certificate signed by the
principal financial officer of the Corporation setting forth the Conversion Rate
as of the Reset Date, showing in reasonable detail the facts upon which such
Conversion Rate is based, and such certificate shall forthwith be filed with the
transfer agent of the Series A Preferred Stock.  A notice stating that the
Conversion Rate has been adjusted pursuant to this paragraph, or that no
adjustment is necessary, and setting forth the Conversion Rate in effect as of
the Reset Date shall be mailed as promptly as practicable after the Reset Date
by the Corporation to all record holders of the Series A Preferred Stock at
their last addresses as they shall appear in the stock transfer books of the
Corporation.

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<PAGE>

         (b)  CONVERSION PROCEDURES.  Any holder of shares of Series A
Preferred Stock desiring to convert such shares into Common Stock shall
surrender the certificate or certificates evidencing such shares of Series A
Preferred Stock at the office of the transfer agent for the Series A Preferred
Stock, which certificate or certificates, if the Corporation shall so require,
shall be duly endorsed to the Corporation or in blank, or accompanied by proper
instruments of transfer to the Corporation or in blank, accompanied by
irrevocable written notice to the Corporation that the holder elects so to
convert such shares of Series A Preferred Stock and specifying the name or names
(with address) in which a certificate or certificates evidencing shares of
Common Stock are to be issued.  The Corporation need not deem a notice of
conversion to be received unless the holder complies with all the provisions
hereof.  The Corporation will instruct the transfer agent (which may be the
Corporation) to make a notation of the date that a notice of conversion is
received, which date shall be deemed to be the date of receipt for purposes
hereof.

         The Corporation shall, as soon as practicable after such deposit of
certificates evidencing shares of Series A Preferred Stock accompanied by the
written notice and compliance with any other conditions herein contained,
deliver at such office of such transfer agent to the person for whose account
such shares of Series A Preferred Stock were so surrendered, or to the nominee
or nominees of such person, certificates evidencing the number of full shares of
Common Stock to which such person shall be entitled as aforesaid, together with
a cash adjustment of any fraction of a share as hereinafter provided.  Subject
to the following provisions of this paragraph, such conversion shall be deemed
to have been made as of the date of such surrender of the shares of Series A
Preferred Stock to be converted, and the person or persons entitled to receive
the Common Stock deliverable upon conversion of such Series A Preferred Stock
shall be treated for all purposes as the record holder or holders of such Common
Stock on such date; PROVIDED, HOWEVER, that the Corporation shall not be
required to convert any shares of Series A Preferred Stock while the stock
transfer books of the Corporation are closed for any purpose, but the surrender
of Series A Preferred Stock for conversion during any period while such books
are so closed shall become effective for conversion immediately upon the
reopening of such books as if the surrender had been made on the date of such
reopening, and the conversion shall be at the conversion rate in effect on such
date.  No adjustments in respect of any dividends on shares surrendered for
conversion or any dividend on the Common Stock issued upon conversion shall be
made upon the conversion of any shares of Series A Preferred Stock.

         In the event that any holder of Preferred Stock shall surrender such
Preferred Stock for conversion in accordance with the foregoing provisions of
this Section 4(b) and as of the date such conversion is deemed to occur the
Corporation shall have insufficient authorized, unissued and unreserved shares
of Common Stock remaining to permit the issuance to such holder of the full
number of shares of Common Stock otherwise issuable upon such conversion
("Conversion Shares") (including, without limitation, shares of Common Stock
issuable upon conversion of the Series A Preferred Stock in the case of a Reset
Event), the Corporation shall instead deliver to such holder a notice that in
the absence of revocation of such conversion as hereinafter provided such holder
shall receive upon conversion of the Series A Preferred Stock tendered for
conversion (x) a number of Conversion Shares equal to the remaining number of

                                      -6-
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authorized, unissued and unreserved shares of Common Stock and (y) in lieu of
the Conversion Shares in excess of such number (the "Excess Shares"), either (i)
cash in the amount of (A) the Closing Bid Price on the day prior to the date of
conversion multiplied by (B) such number of Excess Shares (the "Cash Equivalent
Conversion Amount") or (ii) if the Company has no cash or cash equivalents, a
secured demand promissory note (each a "Secured Note") of the Corporation in the
principal amount of such Cash Equivalent Conversion Amount bearing interest at a
rate six percentage points in excess of the prime lending rate most recently
announced by Citibank, N.A. prior to the date of issuance of such promissory
note (the actual consideration to be delivered in lieu of such Excess Shares to
be specified in such notice).  Such holder shall have  until the 20th day from
the date of such notice (which shall also be the date of its mailing) to revoke
the conversion of such Series A Preferred Stock, or any portion thereof, by
notice to the Corporation (it being understood that any partial revocation shall
be applied first to the Series A Preferred Stock upon conversion of which such
Excess Shares would have been issuable).  To the extent the Corporation does not
receive notice of such revocation by the end of such 20-day period, the
Corporation shall deliver the consideration specified to such holder in the
aforementioned notice within three business days thereafter.  Prior to the
initial issuance of any such Secured Note, the Corporation shall at its expense
appoint a perfection agent for the purpose of perfecting a blanket security
interest in the Company's assets for the benefit of holders of Secured Notes at
the time a Secured Note is issued.

         Except as set forth in the preceding paragraph, all notices of
conversion shall be irrevocable; PROVIDED, HOWEVER, that if the Corporation has
sent notice of an event pursuant to Section 4(f) hereof, a holder of Series A
Preferred Stock may, at its election, provide in its notice of conversion that
the conversion of its shares of Series A Preferred Stock shall be contingent
upon the occurrence of the record date or effectiveness of such event (as
specified by such holder), provided that such notice of conversion is received
by the Corporation prior to such record date or effective date, as the case may
be.

         (c)  ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES OF COMMON
STOCK.

         (i)  Except as otherwise provided herein, in the event the Corporation
shall, at any time or from time to time after the date hereof, (1) sell or 
issue any shares of Common Stock for a consideration per share less than either
(i) the Conversion Price in effect on the date of such sale or issuance or 
(ii) the Market Price of the Common Stock as of the date of the sale or
issuance, (2) issue any shares of Common Stock as a stock dividend to the
holders of Common Stock, or (3) subdivide or combine the outstanding shares of
Common Stock into a greater or lesser number of shares (any such sale, issuance,
subdivision or combination being herein called a "Change of Shares"), then, and
thereafter upon each further Change of Shares, the Conversion Price in effect
immediately prior to such Change of Shares shall be changed to a price (rounded
to the nearest cent) determined by multiplying the Conversion Price in effect
immediately prior thereto by a fraction, the numerator of which shall be the sum
of the number of shares of Common Stock outstanding immediately prior to the
sale or issuance of such additional shares or such subdivision or combination
and the number of shares of Common Stock which the aggregate consideration
received (determined as provided in Section 4(c)(v)(F) below) for the issuance
of such additional shares would purchase at the greater of (i) the Conversion
Price in effect on the date of such issuance or (ii) the Market Price as of such
date, and the denominator

                                      -7-
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of which shall be the number of shares of Common Stock outstanding 
immediately after the sale or issuance of such additional shares or such 
subdivision or combination.  Such adjustment shall be made successively 
whenever such an issuance is made.

         (ii)  In case of any reclassification, capital reorganization or other
change of outstanding shares of Common Stock, or in case of any consolidation or
merger of the Corporation with or into another corporation (other than a
consolidation or merger in which the Corporation is the continuing corporation
and which does not result in any reclassification, capital reorganization or
other change of outstanding shares of Common Stock other than the number
thereof), or in case of any sale or conveyance to another corporation of the
property of the Corporation as, or substantially as, an entirety (other than a
sale/leaseback, mortgage or other financing transaction), the Corporation shall
cause effective provision to be made so that each holder of a share of Series A
Preferred Stock shall be entitled to receive, upon conversion of such share of
Series A Preferred Stock, the kind and number of shares of stock or other
securities or property (including cash) receivable upon such reclassification,
capital reorganization or other change, consolidation, merger, sale or
conveyance by a holder of the number of shares of Common Stock into which such
share of Series A Preferred Stock was convertible immediately prior to such
reclassification, capital reorganization or other change, consolidation, merger,
sale or conveyance.  Any such provision shall include provision for adjustments
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 4(c).  The Corporation shall not effect any such
consolidation, merger or sale unless prior to or simultaneously with the
consummation thereof the successor (if other than the Corporation) resulting
from such consolidation or merger or the corporation purchasing assets or other
appropriate corporation or entity shall assume, by written instrument executed
and delivered to the transfer agent for the Series A Preferred Stock (the
"Transfer Agent"), the obligation to deliver to the holder of each share of
Series A Preferred Stock such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holders may be entitled to
purchase and the other obligations under this Agreement.  The foregoing
provisions shall similarly apply to successive reclassifications, capital
reorganizations and other changes of outstanding shares of Common Stock and to
successive consolidations, mergers, sales or conveyances.

         (iii)  If, at any time or from time to time, the Corporation shall
issue or distribute to the holders of shares of Common Stock evidence of its
indebtedness, any other securities of the Corporation or any cash, property or
other assets (excluding an issuance or distribution governed by one of the
preceding subsections of this Section 4(c) and also excluding cash dividends or
cash distributions paid out of net profits legally available therefor in the
full amount thereof (any such non-excluded event being herein called a "Special
Dividend")), then in each case the holders of the Series A Preferred Stock shall
be entitled to a proportionate share of any such Special Dividend as though they
were the holders of the number of shares of Common Stock of the Corporation into
which their shares of Series A Preferred Stock are convertible as of the record
date fixed for the determination of the holders of Common Stock of the
Corporation entitled to receive such Special Dividend.

         (iv) After each adjustment of the Conversion Price pursuant to this
Section 4(c), the Corporation 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

                                      -8-
<PAGE>

Corporation setting forth:  (i) the Conversion Price as so adjusted, (ii) the 
Conversion Rate corresponding to such Conversion and (iii) a brief statement 
of the facts accounting for such adjustment.  The Corporation will promptly 
file such certificate with the Transfer Agent and cause a brief summary 
thereof to be sent by ordinary first class mail to Paramount and to each 
registered holder of Series A Preferred Stock at his last address as it shall 
appear on the registry books of the Transfer Agent.  No failure to mail such 
notice nor any defect therein or in the mailing thereof shall affect the 
validity of such adjustment.  The affidavit of an officer of the Transfer 
Agent or the Secretary or an Assistant Secretary of the Corporation that 
such notice has been mailed shall, in the absence of fraud, be prima facie 
evidence of the facts stated therein.  The Transfer Agent may rely on the 
information in the certificate as true and correct and has no duty or 
obligation to independently verify the amounts or calculations set forth 
therein.

         (v)  For purposes of Section 4(c)(i) hereof, the following provisions
(A) to (F) shall also be applicable:

              (A)  The number of shares of Common Stock deemed outstanding at
         any given time shall include all shares of capital stock convertible
         into or exchangeable for Common Stock and all shares of Common Stock
         issuable upon the exercise of any convertible debt, warrants
         outstanding on the date hereof and options outstanding on the date
         hereof.

              (B)  No adjustment of the Conversion Price shall be made unless
         such adjustment would require an increase or decrease of at least $.01
         in such price; provided that any adjustments which by reason of this
         clause (B) are not required to be made shall be carried forward and
         shall be made at the time of and together with the next subsequent
         adjustment which, together with any adjustment(s) so carried forward,
         shall require an increase or decrease of at least $.01 in the
         Conversion Price then in effect hereunder.

              (C)  In case of (1) the sale by the Corporation (including as a
         component of a unit) of any rights or warrants to subscribe for or
         purchase, or any options for the purchase of, Common Stock or any
         securities convertible into or exchangeable for Common Stock (such
         securities convertible, exercisable or exchangeable into Common Stock
         being herein called "Convertible Securities"), or (2) the issuance by
         the Corporation, without the receipt by the Corporation of any
         consideration therefor, of any rights or warrants to subscribe for or
         purchase, or any options for the purchase of, Common Stock or
         Convertible Securities, whether or not such rights, warrants or
         options, or the right to convert or exchange such Convertible
         Securities, are immediately exercisable, and the consideration per
         share for which Common Stock is issuable upon the exercise of such
         rights, warrants or options or upon the conversion or exchange of such
         Convertible Securities (determined by dividing (x) the minimum
         aggregate consideration, as set forth in the instrument relating
         thereto without regard to any antidilution or similar provisions
         contained therein for a subsequent adjustment of such amount, payable
         to the Corporation upon the exercise of such rights, warrants or
         options, plus the consideration received by the Corporation for the
         issuance or sale of such

                                      -9-
<PAGE>

         rights, warrants or options, plus, in the case of such Convertible 
         Securities, the minimum aggregate amount, as set forth in the 
         instrument relating thereto without regard to any antidilution or 
         similar provisions contained therein for a subsequent adjustment of 
         such amount, of additional consideration, if any, other than such 
         Convertible Securities, payable upon the conversion or exchange 
         thereof, by (y) the total maximum number, as set forth in the 
         instrument relating thereto without regard to any antidilution or 
         similar provisions contained therein for a subsequent adjustment of 
         such amount, of shares of Common Stock issuable upon the exercise of 
         such rights, warrants or options or upon the conversion or exchange 
         of such Convertible Securities issuable upon the exercise of such 
         rights, warrants or options) is less than the Conversion Price or 
         the Market Price of the Common Stock as of the date of the issuance 
         or sale of such rights, warrants or options, then such total maximum 
         number of shares of Common Stock issuable upon the exercise of such 
         rights, warrants or options or upon the conversion or exchange of 
         such Convertible Securities (as of the date of the issuance or sale 
         of such rights, warrants or options) shall be deemed to be 
         outstanding shares of Common Stock for purposes of Section 4(c)(i) 
         hereof and shall be deemed to have been sold for an amount equal to 
         such consideration per share and shall cause an adjustment to be 
         made in accordance with Section 4(c)(i).

              (D)  In case of the sale by the Corporation of any Convertible
         Securities, whether or not the right of conversion or exchange
         thereunder is immediately exercisable, and the price per share for
         which Common Stock is issuable upon the conversion or exchange of such
         Convertible Securities (determined by dividing (x) the total amount of
         consideration received by the Corporation for the sale of such
         Convertible Securities, plus the minimum aggregate amount, as set
         forth in the instrument relating thereto without regard to any
         antidilution or similar provisions contained therein for a subsequent
         adjustment of such amount, of additional consideration, if any, other
         than such Convertible Securities, payable upon the conversion or
         exchange thereof, by (y) the total maximum number, as set forth in the
         instrument relating thereto without regard to any antidilution or
         similar provisions contained therein for a subsequent adjustment of
         such amount, of shares of Common Stock issuable upon the conversion or
         exchange of such Convertible Securities) is less than the Conversion
         Price or the Market Price of the Common Stock as of the date of the
         sale of such Convertible Securities, then such total maximum number of
         shares of Common Stock issuable upon the conversion or exchange of
         such Convertible Securities (as of the date of the sale of such
         Convertible Securities) shall be deemed to be "Common Stock" for
         purposes of Section 4(c)(i) hereof and shall be deemed to have been
         sold for an amount equal to such consideration per share and shall
         cause an adjustment to be made in accordance with Section 4(c)(i).

              (E)  In case the Corporation shall modify the rights of
         conversion, exchange or exercise of any of the securities referred to
         in (C) and (D) above or any other securities of the Corporation
         convertible, exchangeable or exercisable for shares of Common Stock,
         for any reason other than an event that would

                                      -10-
<PAGE>

         require adjustment to prevent dilution, so that the consideration 
         per share received by the Corporation after such modification is 
         less than the Conversion Price or the Market Price as of  the date 
         prior to such modification, then such securities, to the extent not 
         theretofore exercised, converted or exchanged, shall be deemed to 
         have expired or terminated immediately prior to the date of such 
         modification and the Corporation shall be deemed for purposes of 
         calculating any adjustments pursuant to this Section 4(c) to have 
         issued such new securities upon such new terms on the date of 
         modification.  Such adjustment shall become effective as of the date 
         upon which such modification shall take effect.  On the expiration 
         or cancellation of any such right, warrant or option or the 
         termination or cancellation of any such right to convert or exchange 
         any such Convertible Securities, (a) the Conversion Price then in 
         effect hereunder shall forthwith be readjusted to such Conversion 
         Price as would have obtained had the adjustments made upon the 
         issuance or sale of such rights, warrants, options or Convertible 
         Securities been made upon the basis of the issuance of only the 
         number of shares of Common Stock theretofore actually delivered (and 
         the total consideration received therefor) upon the exercise of such 
         rights, warrants or options or upon the conversion or exchange of 
         such Convertible Securities and (b) the Conversion Price in effect 
         for all transactions which were affected by any adjustment of the 
         Conversion Price pursuant to the first sentence of this Section 
         4(c)(v)(E) shall be readjusted to such Conversion Price as would 
         have obtained had such adjustment of the Conversion Price been made 
         as described in clause (a) of this Section 4(c)(v)(E).

              (F)  In case of the sale of any shares of Common Stock, any
         Convertible Securities, any rights or warrants to subscribe for or
         purchase, or any options for the purchase of, Common Stock or
         Convertible Securities, the consideration received by the Corporation
         therefor shall be deemed to be the gross sales price therefor without
         deducting therefrom any expense paid or incurred by the Corporation or
         any underwriting discounts or commissions or concessions paid or
         allowed by the Corporation in connection therewith.  In the event that
         any securities shall be issued in connection with any other securities
         of the Corporation, together comprising one integral transaction in
         which no specific consideration is allocated among the securities,
         then each of such securities shall be deemed to have been issued for
         such consideration as the Board of Directors of the Corporation
         determines in good faith; provided, however that if holders of in
         excess of 10% of the then outstanding Series A Preferred Stock
         disagrees with such determination, the Corporation shall retain an
         independent investment banking firm for the purpose of obtaining an
         appraisal.

         (vi) Notwithstanding any other provision hereof,  no adjustment to the 
Conversion Price will be made

              (A)  upon the exercise of any of the options presently
         outstanding under the Corporation's existing stock option plans as
         described in the Annual Report on Form 10-K for the fiscal year ended
         March 31, 1996, filed by the Corporation (collectively, the "Plan");
         or

                                      -11-
<PAGE>

              (B)  upon the issuance or exercise of options which may hereafter
         be granted with the approval of the Board of Directors, or exercised,
         under the Plan or under any other employee benefit plan of the
         Corporation to officers, directors or employees, but only with respect
         to such options as are exercisable at prices no lower than the Closing
         Bid Price (or, if the prices referenced in the definition of Closing
         Bid Price cannot be determined, the Fair Market Value) of the Common
         Stock as of the date of grant thereof; or

              (C)  upon the sale of any shares of Common Stock, warrants to
         purchase Common Stock or Convertible Securities in a firm commitment
         underwritten public offering, including, without limitation, shares
         sold upon the exercise of any overallotment option granted to the
         underwriters in connection with such offering; or

              (D)  upon issuance or exercise of the Placement Warrants or the
         Advisory Options (in each case as defined in the Placement Agency
         Agreement between the Company and Paramount Capital, Inc. dated as of
         September 27, 1996, or the Placement Agency Agreement between the
         Company and Paramount Capital, Inc. dated as of September 11, 1995, as
         the case may be), or upon the issuance, conversion or exercise, as the
         case may be, of the Preferred Stock or Class A Warrants included in
         the Premium Preferred Units of the Company issued (i) on or prior to
         the Final Closing Date (including the Class A Warrants of the Company
         outstanding as of the date of filing of this Certificate of
         Designations) or (ii) pursuant to the exercise of the Placement
         Warrants, the Advisory Warrants or the Advisory Common Stock Warrants,
         or

              (E)  upon the issuance of any shares of Common Stock pursuant to
         the BTI Agreement, or

              (F)  upon the issuance or sale of Common Stock or Convertible
         Securities pursuant to the exercise of any rights, options or warrants
         to receive, subscribe for or purchase, or any options for the purchase
         of, Common Stock or Convertible Securities, whether or not such
         rights, warrants or options were outstanding on the date of the
         original sale of the Series A Preferred Stock or were thereafter
         issued or sold, provided that an adjustment was either made or not
         required to be made in accordance with Section 4(c) (other than this
         subsection 4(c)(vi)) in connection with the issuance or sale of such
         securities or any modification of the terms thereof; or

              (G)  upon the issuance or sale of Common Stock upon conversion or
         exchange of any Convertible Securities, provided that any adjustments
         required to be made upon the issuance or sale of such Convertible
         Securities or any modification of the terms thereof were so made, and
         whether or not such Convertible Securities were outstanding on the
         date of the original sale of the Series A Preferred Stock or were
         thereafter issued or sold;

                                      -12-
<PAGE>

provided that Section 4(c)(v)(E) shall nevertheless apply to any modification of
the rights of conversion, exchange or exercise of any of the securities referred
to in (A) through (D) above. 

         (vii)     As used in this Section 4(c), the term "Common Stock" shall
mean and include the Corporation's Common Stock authorized on the date of the
original issue of the Units and shall also include any capital stock of any
class of the Corporation thereafter authorized which shall not be limited to a
fixed sum or percentage in respect of the rights of the holders thereof to
participate in dividends and in the distribution of assets upon the voluntary
liquidation, dissolution or winding up of the Corporation; provided, however,
that the shares issuable upon conversion of the Series A Preferred Stock shall
include only shares of such class designated in the Corporation's Certificate of
Incorporation as Common Stock on the date of the original issue of the Units or
(i), in the case of any reclassification, change, consolidation, merger, sale or
conveyance of the character referred to in Section 4(c)(ii) hereof, the stock,
securities or property provided for in such section or (ii), in the case of any
reclassification or change in the outstanding shares of Common Stock issuable
upon conversion of the Series A Preferred Stock as a result of a subdivision or
combination or consisting of a change in par value, or from par value to no par
value, or from no par value to par value, such shares of Common Stock as so
reclassified or changed.

         (viii)    Any determination as to whether an adjustment in the
Conversion Price in effect hereunder is required pursuant to Section 4(c), or as
to the amount of any such adjustment, if required, shall be binding upon the
holders of the Series A Preferred Stock and the Corporation if made in good
faith by the Board of Directors of the Corporation.

         (d)  NO FRACTIONAL SHARES.  No fractional shares or scrip representing
fractional shares of Common Stock shall be issued upon conversion of Series A
Preferred Stock.  If more than one certificate evidencing shares of Series A
Preferred Stock shall be surrendered for conversion at one time by the same
holder, the number of full shares issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of Series A Preferred
Stock so surrendered.  Instead of any fractional share of Common Stock which
would otherwise be issuable upon conversion of any shares of Series A Preferred
Stock, the Corporation shall pay a cash adjustment in respect of such fractional
interest in an amount equal to the same fraction of the Market Price as of the
close of business on the day of conversion.

         (e)  RESERVATION OF SHARES; TRANSFER TAXES; ETC.  The Corporation
shall at all times reserve and keep available, out of its authorized and
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the Series A Preferred Stock, such number of shares of its Common
Stock free of preemptive rights as shall be sufficient to effect the conversion
of all shares of Series A Preferred Stock from time to time outstanding
(including, without limitation, shares of Common Stock issuable upon conversion
of the Series A Preferred Stock in the case of a Reset Event).  The Corporation
shall use its best efforts from time to time, in accordance with the laws of the
State of Delaware, to increase the authorized number of shares of Common Stock
if at any time the number of shares of authorized, unissued and unreserved
Common Stock shall not be sufficient to permit the conversion of all the
then-outstanding shares of Series A Preferred Stock.  

                                      -13-
<PAGE>

         The Corporation shall pay any and all issue or other taxes that may be
payable in respect of any issue or delivery of shares of Common Stock on
conversion of the Series A Preferred Stock.  The Corporation shall not, however,
be required to pay any tax which may be payable in respect of any transfer
involved in the issue or delivery of Common Stock (or other securities or
assets) in a name other than that in which the shares of Series A Preferred
Stock so converted were registered, and no such issue or delivery shall be made
unless and until the person requesting such issue has paid to the Corporation
the amount of such tax or has established, to the satisfaction of the
Corporation, that such tax has been paid.  

         (f)  PRIOR NOTICE OF CERTAIN EVENTS.  In case:

              (i)   the Corporation shall declare any dividend (or any other
    distribution); or 

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

             (iii)  of any reclassification of Common Stock (other than a
    subdivision or combination of the outstanding Common Stock, or a change in
    par value, or from par value to no par value, or from no par value to par
    value); or
    
             (iv)   of any consolidation or merger (including, without 
    limitation, a Merger Transaction) to which the Corporation is a party and 
    for which approval of any stockholders of the Corporation shall be 
    required, or of the sale or transfer of all or substantially all of the 
    assets of the Corporation or of any compulsory share exchange whereby the 
    Common Stock is converted into other securities, cash or other property; or

             (v)    of the voluntary or involuntary dissolution, liquidation or
    winding up of the Corporation (including, without limitation, a Liquidation
    Event);

then the Corporation shall cause to be filed with the transfer agent for the
Series A Preferred Stock, and shall cause to be mailed to the holders of record
of the Series A Preferred Stock, at their last addresses as they shall appear
upon the stock transfer books of the Corporation, at least 20 days prior to the
applicable record date hereinafter specified, a notice stating (x) the date on
which a record (if any) is to be taken for the purpose of such dividend,
distribution or granting of rights or warrants or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, rights or warrants are to be determined and a
description of the cash, securities or other property to be received by such
holders upon such dividend, distribution or granting of rights or warrants or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up or other
Liquidation Event is expected to become effective, the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property deliverable upon
such exchange, dissolution, liquidation or winding up or other Liquidation Event
and the consideration,

                                      -14-
<PAGE>

including securities or other property, to be received by such holders upon 
such exchange; PROVIDED, HOWEVER, that no failure to mail such notice or any 
defect therein or in the mailing thereof shall affect the validity of the 
corporate action required to be specified in such notice. 

         (g)  OTHER CHANGES IN CONVERSION RATE.  The Corporation from time to
time may increase the Conversion Rate by any amount for any period of time if
the period is at least 20 days and if the increase is irrevocable during the
period.  Whenever the Conversion Rate is so increased, the Corporation shall
mail to holders of record of the Series A Preferred Stock a notice of the
increase at least 15 days before the date the increased Conversion Rate takes
effect, and such notice shall state the increased Conversion Rate and the period
it will be in effect.

         The Corporation may make such increases in the Conversion Rate, in
addition to those required or allowed by this Section 4, as shall be determined
by it, as evidenced by a resolution of the Board of Directors, to be advisable
in order to avoid or diminish any income tax to holders of Common Stock
resulting from any dividend or distribution of stock or issuance of rights or
warrants to purchase or subscribe for stock or from any event treated as such
for income tax purposes.

         Notwithstanding anything to the contrary herein, in no case shall 
the Conversion Price be adjusted to an amount less than $.02 per share, the 
current par value of the Common Stock into which the Series A Preferred Stock 
is convertible.

         (h)  AMBIGUITIES/ERRORS.  The Board of Directors of the Corporation
shall have the power to resolve any ambiguity or correct any error in the
provisions relating to the convertibility of the Series A Preferred Stock, and
its actions in so doing shall be final and conclusive.

         5.   MANDATORY CONVERSION.   At any time on or after the Reset Date,
the Corporation, at its option, may cause the Series A Preferred Stock to be
converted in whole, or in part, on a PRO RATA basis, into fully paid and
nonassessable shares of Common Stock at the then effective Conversion Rate and
such other securities and property as herein provided if the Closing Bid Price
of the Common Stock (or, if the prices referenced in the definition of Closing
Bid Price cannot be determined, the Fair Market Value (as defined in Section
3(b)) of the Common Stock) shall have exceeded 200% of the then applicable
Conversion Price for at least 20 trading days in any 30 consecutive trading day
period.  Any shares of Series A Preferred Stock so converted shall be treated as
having been surrendered by the holder thereof for conversion pursuant to Section
4 on the date of such mandatory conversion (unless previously converted at the
option of the holder).  The Corporation shall not be entitled to cause any
Series A Preferred Stock to be converted pursuant to this Section 5 if, as a
result of such conversion, the holder of such Series A Preferred Stock would be
entitled to receive cash or a promissory note of the Corporation as provided in
Section 4(b).

         Not more than 60 nor less than 20 days prior to the date of any such
mandatory conversion, notice by first class mail, postage prepaid, shall be
given to the holders of record of the Series A Preferred Stock to be converted,
addressed to such holders at their last addresses as shown on the stock transfer
books of the Corporation.  Each such notice shall specify the date

                                      -15-
<PAGE>

fixed for conversion, the place or places for surrender of shares of Series A 
Preferred Stock, and the then effective Conversion Rate pursuant to Section 4.

       Any notice which is mailed as herein provided shall be conclusively 
presumed to have been duly given by the Corporation on the date deposited in
the mail, whether or not the holder of the Series A Preferred Stock receives 
such notice; and failure properly to give such notice by mail, or any defect 
in such notice, to the holders of the shares to be converted shall not affect 
the validity of the proceedings for the conversion of any other shares of 
Series A Preferred Stock.  On or after the date fixed for conversion as stated 
in such notice, each holder of shares called to be converted shall surrender 
the certificate evidencing such shares to the Corporation at the place 
designated in such notice for conversion.  Notwithstanding that the 
certificates evidencing any shares properly called for conversion shall not 
have been surrendered, the shares shall no longer be deemed outstanding and 
all rights whatsoever with respect to the shares so called for conversion 
(except the right of the holders to convert such shares upon surrender of 
their certificates therefor) shall terminate.

         6.   VOTING RIGHTS.

         (a)  GENERAL.  Except as otherwise provided herein, in the Certificate
of Incorporation or the By-laws, the holders of shares of Series A Preferred
Stock, the holders of shares of Common Stock and the holders of any other class
or series of shares entitled to vote with the Common Stock shall vote together
as one class on all matters submitted to a vote of stockholders of the
Corporation.  In any such vote, each share of Series A Preferred Stock shall
entitle the holder thereof to cast the number of votes equal to the number of
votes which could be cast in such vote by a holder of the Common Stock into
which such share of Series A Preferred Stock is convertible on the record date
for such vote, or if no record date has been established, on the date such vote
is taken.  Any shares of Series A Preferred Stock held by the Corporation or any
entity controlled by the Corporation shall not have voting rights hereunder and
shall not be counted in determining the presence of a quorum.

         (b)  CLASS VOTING RIGHTS. In addition to any vote specified in Section
6(a), so long as 50% of the shares of Series A Preferred Stock (including those
shares of Series A Preferred Stock issued or issuable upon the exercise of the
warrants issued to Paramount Capital, Inc., the placement agent, or its
designees, in connection with the offer and sale of the Series A Preferred
Stock, shall be outstanding, the Corporation shall not, without the affirmative
vote or consent of the holders of at least 66.67% of all outstanding Series A
Preferred Stock voting separately as a class, (i) amend, alter or repeal any
provision of the Certificate of Incorporation, or the Bylaws of the Corporation
so as adversely to affect the relative rights, preferences, qualifications,
limitations or restrictions of the Series A Preferred Stock, (ii) declare or pay
any dividend or distribution on any securities of the Corporation other than the
Series A Preferred Stock pursuant to and accordance with the provisions of this
Certificate of Designations, or authorize the repurchase of any securities of
the Corporation, or (iii) authorize or issue, or increase the authorized amount
of, any security (A) ranking prior to, or on a parity with, the Series A
Preferred Stock (I) upon a Liquidation Event or (II) with respect to the payment
of any dividends or distributions or (B) having any voting rights separate from,
or other than on a share-equivalent basis with, the holders of Common Stock
(other than voting rights analogous to those

                                      -16-
<PAGE>

provided for in this Section 6(b) with respect to any other series of 
preferred stock).  The vote as contemplated herein shall specifically not be 
required for (x) issuances of Common Stock, (y) the authorization, issuance 
or increase in the amount of the Series A Preferred Stock prior to the Final 
Closing Date or (z) any consolidation or merger of the Corporation with or 
into another corporation in which the Corporation is not the surviving 
entity, a sale or transfer of all or part of the Corporation's assets for 
cash, securities or other property, or a compulsory share exchange. 

         7.   OUTSTANDING SHARES.  For purposes of this Certificate of
Designations, all shares of Series A Preferred Stock shall be deemed outstanding
except (i) from the date, or the deemed date, of surrender of certificates
evidencing shares of Series A Preferred Stock, all shares of Series A Preferred
Stock converted into Common Stock, (ii) from the date of registration of
transfer, all shares of Series A Preferred Stock held of record by the
Corporation or any subsidiary of the Corporation and (iii) any and all shares of
Series A Preferred Stock held in escrow prior to delivery of such stock by the
Corporation to the initial beneficial owners thereof.

         8.   STATUS OF ACQUIRED SHARES.  Shares of Series A Preferred Stock
received upon conversion pursuant to Section 4 or Section 5 or otherwise
acquired by the Corporation will be restored to the status of authorized but
unissued shares of Preferred Stock, without designation as to class, and may
thereafter be issued, but not as shares of Series A Preferred Stock.

         9.   PREEMPTIVE RIGHTS.  The Series A Preferred Stock is not entitled
to any preemptive or subscription rights in respect of any securities of the
Corporation.

         10.  NO AMENDMENT OR IMPAIRMENT.  The Corporation shall not amend its
Certificate of Incorporation or participate in any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, for the purpose of avoiding or seeking to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but will at all times in good faith assist in
carrying out all such action as may be reasonably necessary or appropriate in
order to protect the rights of the holders of the Series A Preferred Stock
against impairment.

         11.  SEVERABILITY OF PROVISIONS.  Whenever possible, each provision
hereof shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof.  If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such change as
shall be necessary to render the provision in question effective and valid under
applicable law.

                                      -17-
<PAGE>

       IN WITNESS WHEREOF, Xytronyx, Inc. has caused this certificate to be 
signed on its behalf by Larry O. Bymaster, its Chairman of the Board, 
President and Chief Executive Officer, this 19th day of December, 1996.

                                       XYTRONYX, INC.



                                      By:  /s/ LARRY O. BYMASTER
                                          -------------------------------------
                                      Name:  Larry O. Bymaster
                                      Title:  President and Chief 
                                               Executive Officer



                                      -18-