CERTIFICATE OF DESIGNATION
OF
SERIES B PREFERRED STOCK
OF
SCIOS INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
SCIOS INC., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), hereby certifies
that the following resolution was adopted on February 8, 2000 by the vote of the
Board of Directors of the Corporation as required by Section 151 of the General
Corporation Law:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of the Corporation in accordance with the provisions of
its Restated Certificate of Incorporation, the Board of Directors hereby
creates a series of Preferred Stock, par value $.001 per share, of the
Corporation and hereby states the designation and number of shares, and
fixes the relative powers, preferences, rights, qualifications, limitations
and restrictions thereof (in addition to the provisions set forth in the
Restated Certificate of Incorporation of the Corporation, which are
applicable to the Preferred Stock of all classes and series), as follows:
SERIES B Preferred Stock:
Section 1. Designation and Amount. Fifty thousand (50,000) shares
of Preferred Stock, $.001 par value, are designated "Series B
Preferred Stock" with the powers, preferences, rights, qualifications,
limitations and restrictions specified herein (the "Series B Preferred
Stock"). Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall
reduce the
number of shares of Series B Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued
by the Corporation convertible into Series B Preferred Stock.
Section 2. Dividends. No dividends (other than those payable
solely in the Common Stock of the Corporation) shall be paid on any
Common Stock of the Corporation unless a dividend is paid with respect
to all outstanding shares of Series B Preferred Stock in an amount for
each such share of Series B Preferred Stock equal to or greater than
the aggregate amount of such dividends payable upon all shares of
Common Stock into which such share of Series B Preferred Stock could
then be converted.
Section 3. Liquidation. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, after payment or provision for payment of the debts and
other liabilities of the Corporation and the amounts to which the
holders of any senior class of Preferred Stock shall be entitled, the
holders of the Series B Preferred Stock (on an as converted basis) and
the holders of Common Stock shall be entitled to share ratably in the
remaining assets of the Corporation.
Section 4. Voting Rights. The holders of shares of Series B
Preferred Stock shall not have any voting rights, except as required
under the General Corporation Law of Delaware.
Section 5. Conversion.
(A) Each share of Series B Preferred Stock shall be convertible, at
the option of the holder thereof into 100 shares of the Common
Stock of the Corporation (the "Conversion Ratio").
(B) Each share of Series B Preferred Stock shall automatically be
converted into shares of Common Stock at its then effective
Conversion Ratio immediately upon the transfer of ownership by
the holder to a third party which is not an Affiliate or Investor
of such holder. For purposes hereunder, "Affiliate" shall mean a
party that, directly or indirectly, through one or more
intermediaries, controls or is controlled by such holder and
"Investor" shall mean a party as defined in Section 5(f) of the
Preferred Stock Purchase Agreement between the Corporation and
Genentech, Inc. dated December 30, 1994 and as amended November
3, 1999.
(C) Each holder of Series B Preferred Stock who desires to convert
the same into shares of Common Stock pursuant to this Section 5
shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Corporation or any transfer agent
for the Series B Preferred Stock, and shall give written notice
to the Corporation at such office that such holder elects to
convert the same; provided, however, that in the event of an
automatic conversion pursuant to Section 5(B), the outstanding
shares of Series B
Preferred Stock shall be converted automatically without any
further action by the holder of such shares and whether or not
the certificates representing such shares are surrendered to the
Corporation or its transfer agent, and provided further that the
Corporation shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such
automatic conversion unless the certificates evidencing such
shares of Series B Preferred Stock are delivered to the
Corporation or its transfer agent as provided herein. Such notice
shall state the number of shares of Series B Preferred Stock
being converted. Thereupon, the Corporation shall promptly issue
and deliver at such office to such holder a certificate or
certificates for the number of shares of Common Stock to which
such holder is entitled and shall promptly pay in cash or, to the
extent sufficient funds are not then legally available therefor,
in Common Stock (at the Common Stock's fair market value
determined by the Board of Directors as of the date of such
conversion), any declared and unpaid dividends on the shares of
Series B Preferred Stock being converted. Such conversion shall
be deemed to have been made at the close of business on the date
of such surrender of the certificates representing the shares of
Series B Preferred Stock to be converted, or in the case of
automatic conversion on the date of transfer to the new holder,
and the person entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes
as the record holder of such shares of Common Stock on such date.
(D) If the Corporation shall at any time or from time to time after
the date that the first share of Series B Preferred Stock is
issued (the "Original Issue Date") effect a subdivision of the
outstanding Common Stock, the Conversion Ratio in effect
immediately before that subdivision shall be proportionately
increased. Conversely, if the Corporation shall at any time or
from time to time after the Original Issue Date combine the
outstanding shares of Common Stock into a smaller number of
shares, the Series B Conversion Ratio in effect immediately
before the combination shall be proportionately decreased. Any
adjustment under this Section 5(D) shall become effective at the
close of business on the date the subdivision or combination
becomes effective.
(E) If the Corporation at any time or from time to time after the
Original Issue Date makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive, a
dividend or other distribution payable in additional shares of
Common Stock, in each such event the Conversion Ratio that is
then in effect shall be increased as of the time of such issuance
or, in the event such record date is fixed, as of the close of
business on such record date, by multiplying the Conversion Ratio
then in effect by a fraction (1) the numerator of which is the
total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of Common
Stock issuable in payment of such dividend or distribution, and
(2) the denominator of which is the total number of shares of
Common Stock issued and outstanding immediately prior to the time
of such issuance or the close of business on such record date;
provided, however, that if such record date is fixed and such
dividend is not fully paid or if such distribution is not
fully made on the date fixed therefor, the Conversion Ratio shall
be recomputed accordingly as of the close of business on such
record date and thereafter the Conversion Ratio shall be adjusted
pursuant to this Section 5(E) to reflect the actual payment of
such dividend or distribution.
(F) If the Corporation at any time or from time to time after the
Original Issue Date makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive, a
dividend or other distribution payable in securities of the
Corporation other than shares of Common Stock, in each such event
provision shall be made so that the holders of the Series B
Preferred Stock shall receive upon conversion thereof, in
addition to the number of shares of Common Stock receivable
thereupon, the amount of other securities of the Corporation
which they would have received had their Series B Preferred Stock
been converted into Common Stock on the date of such event and
had they thereafter, during the period from the date of such
event to and including the conversion date, retained such
securities receivable by them as aforesaid during such period,
subject to all other adjustments called for during such period
under this Section 5 with respect to the rights of the holders of
the Series B Preferred or with respect to such other securities
by their terms.
(G) If at any time or from time to time after the Original Issue
Date, the Common Stock issuable upon the conversion of the Series
B Preferred Stock is changed into the same or a different number
of shares of any class or classes of stock, whether by
recapitalization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend or a
reorganization, merger, consolidation or sale of assets provided
for elsewhere in this Section 5 or in Section 7), in any such
event each holder of Series B Preferred shall have the right
thereafter to convert such stock into the kind and amount of
stock and other securities and property receivable upon such
recapitalization, reclassification or other change by holders of
the maximum number of shares of Common Stock into which such
shares of Series B Preferred could have been converted
immediately prior to such recapitalization, reclassification or
change, all subject to further adjustment as provided herein or
with respect to such other securities or property by the terms
thereof.
Section 6. Reacquired Shares. Any shares of Series B Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock subject to the
conditions and restrictions on issuance set forth herein, in the
Restated Certificate of Incorporation, or in any other Certificate of
Designation creating a series of Preferred Stock or any similar stock
or as otherwise required by law.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or
any other property, then in any such case the Corporation shall give
each holder of shares of Series B Preferred Stock notice of such
transaction and the details of such exchange at least fifteen days
before the closing of such transaction, and each such holder shall
have the right to convert such shares Series B Preferred Stock into
shares of Common Stock of the Corporation prior to such closing.
IN WITNESS WHEREOF, the undersigned have executed this certificate as
of February 8, 2000.
/s/ Richard B. Brewer
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Richard B. Brewer
President and Chief Executive Officer
/s/ John H. Newman
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John H. Newman
Secretary