Document:

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                                                                   Exhibit 4.4.4
                                                                   -------------

                                 PROMISSORY NOTE
                                 ---------------

$7,132,000.00                                              San Diego, California
                                                                January 25, 2002

     PROMISE TO PAY. SYNBIOTICS CORPORATION, a California corporation,
("Borrower") promises to pay to COMERICA BANK-CALIFORNIA ("Lender"), or order,
in lawful money of the United States of America, the principal amount of Seven
Million One Hundred Thirty-Two Thousand Dollars ($7,132,000.00) together with
interest accrued on the outstanding principal balance of this Promissory Note
(this "Note") from the date of this Note at the rate specified below.

     PRINCIPAL PAYMENT. Borrower will pay the principal amount of this Note as
follows:

          (a)  Payments of One Hundred Thousand Dollars ($100,000.00) each due
               on the 1/st/ day of each month commencing February 1, 2002 and
               continuing to January 1, 2003.

          (b)  Payments of One Hundred Twenty Five Thousand Dollars
               ($125,000.00) each due on the 1/st/ day of each month commencing
               on February 1, 2003 and continuing to January 1, 2004.

          (c)  All unpaid principal and interest shall be due and payable in
               full on January 25, 2004.

     PAYMENT OF INTEREST. Borrower will pay regular monthly payments of all
accrued and unpaid interest beginning February 1, 2002, and all subsequent
interest payments are due on the same day of each month after that. The annual
interest rate for this Note is computed on a 365/360 basis; that is, by applying
the ratio of the annual interest rate over a year of 360 days, multiplied by the
outstanding principal balance, multiplied by the actual number of days the
principal balance is outstanding. Borrower will pay Lender at Lender's address
shown below or at such other place as Lender may designate in writing. Unless
otherwise agreed or required by applicable law, payments will be applied first
to any unpaid collection costs and any late charges, then to any unpaid
interest, and any remaining amount to principal.

     VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is the Comerica
Bank-California Prime Rate (the "Index"). The Prime Rate is the rate announced
by Lender as its Prime Rate of interest

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from time to time. Lender will tell Borrower the current Index rate upon
Borrower's request. Borrower understands that Lender may make loans based on
other rates as well. The interest rate change will not occur more often than
each day. The Index currently is 4.75%. The interest rate to be applied to the
unpaid principal balance of this Note will be at a rate of 2.0 percentage points
over the Index, resulting in an initial rate of 6.75%. NOTICE: Under no
circumstances will the interest rate on this Note be more than the maximum rate
allowed by applicable law.

     PREPAYMENT.

     A.  Optional Prepayment. Borrower may pay without penalty all or a portion
         --------------------
of the amount owed earlier than it is due.

     B.  Mandatory Prepayment. Borrower shall make such mandatory prepayments as
         ---------------------
shall be required under the Credit Agreement dated as of April 12, 2000, as
amended from time to time ("Credit Agreement"), including the payments specified
in Sections 1.01(b) and 4.16 of the Credit Agreement, as modified by the Third
Amendment to Credit Agreement and Loan Documents and Waiver of Defaults dated as
of January 25, 2002.

     C.  Application of Prepayments. Optional and Mandatory prepayments will
         ---------------------------
not, unless agreed to by Lender in writing, relieve Borrower of Borrower's
obligation to continue to make payments of accrued unpaid interest. Rather, all
prepayments will reduce the principal payments required under this Note in the
inverse order that such payments are due hereunder.

     LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled payment.

     DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due; and/or (b) An Event of Default
occurs or is existing under the Credit Agreement.

     LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid
principal balance on this Note and all accrued unpaid interest immediately due,
without notice, and then Borrower will immediately pay that amount. Upon
Borrower's failure to pay all amounts declared due pursuant to this section,
Lender may (a) increase the variable interest rate on this Note to 7.00
percentage points over the Index, and (b) add any unpaid accrued interest to
principal and such sum will bear interest therefrom until paid at the rate
provided in this Note (including any increased rate). Lender may hire or pay
someone else to help collect this Note if Borrower does not pay. Borrower also
will pay Lender that amount. This includes, subject to any limits under
applicable law, Lender's attorneys' fees and Lender's legal expenses whether or
not there is a lawsuit, including attorneys' fees and legal expenses for
bankruptcy proceedings (including efforts to modify or vacate any automatic stay
or injunction), appeals, and any anticipated post-judgment collection services,
and further including the allocated cost of Lender's in-house counsel. Borrower
also will pay any court costs, in addition to all other sums provided by law.
This Note has been delivered to Lender and accepted by Lender in the State of
California. If there is a lawsuit, Borrower agrees upon Lender's request to
submit to the jurisdiction of the courts of San Diego County, the State of
California. This Note shall be governed by and construed in accordance with the
laws of the State of California.

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     DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $25.00 if
Borrower makes a payment on this Note and the check or preauthorized charge with
which Borrower pays is later dishonored.

     RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest
in, and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
Borrower's right, title and interest in and to, Borrower's accounts with Lender
(whether checking, savings, or some other account), including without limitation
all accounts held jointly with someone else and all accounts Borrower may open
in the future, excluding however all IRA and Keogh accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on this Note against any and all such accounts.

     GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights
or remedies under this Note without losing them. Borrower and any other person
who signs, guarantees or endorses this Note, to the extent allowed by law, waive
any applicable statute of limitations, presentment, demand for payment, protest
and notice of dishonor. Upon any change in the terms of this Note, and unless
otherwise expressly stated in writing, no party who signs this Note, whether as
maker, guarantor, accommodation maker or endorser, shall be released from
liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan, or release any party or guarantor or
collateral; or impair, fail to realize upon or perfect Lender's security
interest in the collateral; and take any other action deemed necessary by Lender
without the consent of or notice to anyone. All such parties also agree that
Lender may modify this loan without the consent of or notice to anyone other
than the party with whom the modification is made.

     JURY TRIAL WAIVER. LENDER AND BORROWER EACH ACKNOWLEDGE THAT THE RIGHT TO
TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH OF THEM,
AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT, WITH COUNSEL OF THEIR
CHOICE, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT ANY OF THEM
MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF

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THIS NOTE OR ANY RELATED INSTRUMENT OR LOAN DOCUMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS NOTE OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER
ORAL OR WRITTEN), OR ACTION OF ANY OF THEM. THESE PROVISIONS SHALL NOT BE DEEMED
TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY LENDER OR BORROWER,
EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM.

     PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISION. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.

                                Synbiotics Corporation, a California corporation

                                By: /s/ Paul A. Rosinack
                                    --------------------
                                    Paul A. Rosinack
                                    President and Chief Executive Officer

Borrower's Address:
11011 Via Frontera
San Diego, CA 92127

Lender's Address:
Comerica Bank - California
9920 South La Cienega Blvd. Suite 623
Inglewood, CA 90301

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                                                                     Exhibit 4.5
                                                                     -----------

                          CERTIFICATE OF DETERMINATION
                                OF PREFERENCES OF
                            SERIES B PREFERRED STOCK
                            OF SYNBIOTICS CORPORATION
                            a California corporation

     Paul A. Rosinack and Michael K. Green hereby certify that:

     A.   They are the President and Secretary, respectively, of Synbiotics
Corporation, a California corporation (the "Corporation").

     B.   Pursuant to the authority given by the Corporation's Articles of
Incorporation, as amended to date, the Board of Directors of the Corporation has
duly adopted the resolution attached as Exhibit "A."

     C.   The authorized number of shares of Preferred Stock of the Corporation
is 25,000,000, none of which has been issued. The authorized number of shares of
Series B Preferred Stock of the Corporation is 4,000, none of which has been
issued.

     IN WITNESS WHEREOF, the undersigned certify under penalty of perjury that
they have read the foregoing Certificate of Determination and know the contents
thereof, and that the statements therein are true and correct of their own
knowledge.

     Executed in San Diego, California on January 3, 2002.

                                                 /s/ Paul A. Rosinack
                                                 --------------------
                                                 Paul A. Rosinack
                                                 President

                                                 /s/ Michael K. Green
                                                 --------------------
                                                 Michael K. Green
                                                 Secretary

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                                    Exhibit A
                                    ---------

     NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby
provide for the issue of a series of Preferred Stock of the Corporation
consisting of Four Thousand (4,000) shares designated as "Series B Preferred
Stock," and does hereby fix the rights, preferences, privileges, and
restrictions and other matters relating to said Series B Preferred Stock as
follows:

                            Series B Preferred Stock
                            ------------------------

Article 1.  Number of Shares; Designation

     The series of Preferred Stock established hereby shall be designated the
"Series B Preferred Stock" and the authorized number of shares of Series B
Preferred Stock shall be 4,000.

Article 2.  Dividends
            ---------

     Section 2.1   The holders of the shares of the Series B Preferred Stock
shall be entitled to receive, out of the assets of the Corporation legally
available therefor and as and when declared by the Board of Directors, cash
dividends at the rate of $75.00 per share per year (subject to appropriate
adjustments in the event of any stock dividend, stock split, combination or
other similar recapitalization affecting such shares), payable quarterly on the
last day of the months of January, April, July and October in each year. Such
dividends shall accrue and be cumulative (whether or not in any quarterly
dividends period there shall be funds of the Corporation legally available for
the payment of such dividends), from the date of the last quarterly dividend
date to which dividends were declared and paid on the Series B Preferred Stock
of the Corporation. Each such dividend shall be paid to the holders of record of
shares of Series B Preferred Stock as they appear on the stock register of the
Corporation on the 15th day of the month next preceding the payment date
thereof. Dividends on account of arrears for any past dividend periods may be
declared and paid at any time, without reference to any regular dividend payment
date, to holders on such date, not exceeding 45 days preceding the payment date
thereof, as may be fixed by the Board of Directors.

     Section 2.2 Dividends payable on the Series B Preferred Stock for each full
quarterly dividends period shall be computed by dividing the annual rate by
four. Dividends payable on the Series B Preferred Stock for any period less than
a full quarterly dividend period and for the initial dividend period, shall be
computed on the basis of a 360-day year of four 90-day quarters and the actual
number of days elapsed on the period for which payable, including the date of
payment.

Article 3.  Liquidation, Dissolution or Winding Up
            --------------------------------------

     Section 3.1   In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series B
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its shareholders, after and
subject to the payment in full of all amounts required to be distributed to the
holders of any other class or series of stock of the Corporation ranking on
liquidation prior

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and in preference to the Series B Preferred Stock, but before any payment shall
be made to the holders of any other class or series of stock of the Corporation
ranking junior on liquidation to the Series B Preferred Stock by reason of their
ownership thereof, an amount equal to $1,000 per share of Series B Preferred
Stock plus any accrued but unpaid dividends (whether or not declared), and no
more. If upon any such liquidation, dissolution or winding up of the Corporation
the remaining assets of the Corporation available for distribution to its
shareholders shall be insufficient to pay the holders of shares of Series B
Preferred Stock the full amount to which they shall be entitled, the holders of
shares of Series B Preferred Stock and any class or series of stock ranking on
liquidation on a parity with the Series B Preferred Stock shall share ratably in
any distribution of the remaining assets and funds of the Corporation in
proportion to the respective amounts which would otherwise be payable in respect
of the shares held by them upon such distribution if all amounts payable on or
with respect to such shares were paid in full.

     Section 3.2   The merger or consolidation of the Corporation into or with
another corporation which results in the exchange of outstanding shares of the
Corporation for securities or other consideration issued or paid or caused to be
issued or paid by such other corporation or an affiliate thereof (except if such
merger or consolidation does not result in the transfer of more than 50 percent
of the voting securities of the Corporation), or the sale of all or
substantially all the assets of the Corporation, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation for purposes of this
Article 3, unless the holders of sixty-six and two-thirds percent of the Series
B Preferred Stock then outstanding vote otherwise. The amount deemed distributed
to the holders of Series B Preferred Stock upon any such merger or consolidation
shall be the cash or the value of the property, rights and/or securities
distributed to such holders by the acquiring person, firm or other entity. The
value of such property, rights or other securities shall be determined in good
faith by the Board of Directors of the Corporation.

Article 4.   Voting
             ------

     Section 4.1   Each holder of outstanding shares of Series B Preferred Stock
shall be entitled to the number of votes equal to the number of whole shares of
Common Stock into which the shares of Series B Preferred Stock held by such
holder are convertible (as adjusted from time to time pursuant to Article 5
below), at each meeting of shareholders of the Corporation (and written actions
of shareholders in lieu of meetings) with respect to any and all matters
presented to the shareholders of the Corporation for their action or
consideration. The voting rights granted in the immediately preceding sentence
to the holders of Series B Preferred Stock shall apply even if, at the record
date, meeting date and/or effective date of such action, the Corporation does
not have sufficient authorized but unissued shares of Common Stock to permit the
conversion in full, as of any such date, of the Series B Preferred Stock into
Common Stock (as provided in Article 5 below). Except as provided by law, with
respect to votes to be taken exclusively by the holders of Series B Preferred
Stock as provided herein, by the provisions of Section 4.1, Section 4.2 or
Section 4.3 below, or by the provisions establishing any other series of
Preferred Stock, holders of Series B Preferred Stock and of any other
outstanding series of Preferred Stock shall vote together with the holders of
Common Stock as a single class.

     Section 4.2   The Corporation shall not amend, alter or repeal preferences,
rights, powers or other terms of the Series B Preferred Stock so as to affect
adversely the Series B Preferred Stock, without the written consent or
affirmative vote of the holders of at least sixty-six

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and two-thirds percent of the then outstanding shares of Series B Preferred
Stock, given in writing or by vote at a meeting, consenting or voting (as the
case may be) separately as a class. For this purpose, without limiting the
generality of the foregoing, the authorization or issuance of any series of
Preferred Stock which is on a parity with or has preference or priority over the
Series B Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or winding up of the Corporation
shall be deemed to affect adversely the Series B Preferred Stock.

     Section 4.3  Unless the consent of the holders of not less than sixty-six
and two-thirds percent of the outstanding Series B Preferred Stock, voting
separately as a single class, in person or by proxy, either in writing without a
meeting or at a special or annual meeting of shareholders called for the
purpose, is obtained:

            (A)   the Corporation shall not sell all or substantially all of the
Corporation's assets or effect a merger or consolidation or any other
transaction resulting in the acquisition of a majority of the then outstanding
voting stock of the Corporation by another corporation or entity;

            (B)   except as set forth in Article 6, neither the Corporation nor
any of its subsidiaries or affiliates shall declare, agree to declare, pay or
agree to pay dividends or make any other distribution on (other than 100% to the
Corporation), or redeem, any shares of any class or series of its equity
securities other than with respect to the Series B Preferred Stock, unless all
dividends accrued on shares of the Series B Preferred Stock shall have been
declared and paid;

            (C)   no amendment to the terms of the Series B Preferred Stock as
set forth herein shall be effected; and

            (D)   the Corporation shall not, by amendment of its Articles of
Incorporation or Bylaws or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, take any action which adversely affects (directly or
indirectly) the rights of the holders of the Series B Preferred Stock.

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

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

     Section 5.1 Each share of Series B Preferred Stock shall be convertible, at
the option of the holder thereof, at any time after the Common Increase Date (as
defined below) and from time to time thereafter, into such number of fully paid
and nonassessable shares of Common Stock as is determined by dividing $1,000.00
by the Conversion Price (as defined below) in effect at the time of conversion.
The Conversion Price at which shares of Common Stock shall be deliverable upon
conversion of Series B Preferred Stock without the payment of additional
consideration by the holder thereof (the "Conversion Price") shall initially be
$0.139. Such initial Conversion Price, and the rate at which shares of Series B
Preferred Stock may be converted into shares of Common Stock, shall be subject
to adjustment as provided below.

     The "Common Increase Date" is the day the Corporation's Articles of
Incorporation are amended to increase the authorized number of shares of Common
Stock to at least 70,000,000.

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The Corporation covenants to use its best efforts to cause the Common Increase
Date to occur by no later than July 31, 2002.

     In the event of a liquidation of the Corporation, the Conversion Rights
shall terminate at the close of business on the first full day preceding the
date fixed for the payment of any amounts distributable on liquidation to the
holders of Series B Preferred Stock.

     Section 5.2  No fractional shares of Common Stock shall be issued upon
conversion of the Series B Preferred Stock. In lieu of fractional shares, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price.

     Section 5.3  Mechanics of Conversion.
                  -----------------------

          (A)     In order to convert shares of Series B Preferred Stock into
     shares of Common Stock after the Common Increase Date, the holder shall
     surrender the certificate or certificates for such shares of Series B
     Preferred Stock at the office of the transfer agent (or at the principal
     office of the Corporation if the Corporation serves as its own transfer
     agent), together with written notice that such holder elects to convert all
     or any number of the shares represented by such certificate or
     certificates. Such notice shall state such holder's name or the names of
     the nominees in which such holder wishes the certificate or certificates
     for shares of Common Stock to be issued. If required by the Corporation,
     certificates surrendered for conversion shall be endorsed or accompanied by
     a written instrument or instruments of transfer, in form satisfactory to
     the Corporation, duly executed by the registered holder or his or its
     attorney duly authorized in writing. The date of receipt of such
     certificates and notice by the transfer agent or the Corporation shall be
     the conversion date ("Conversion Date"). The Corporation shall, as soon as
     practicable after the Conversion Date, issue and deliver at such office to
     such holder, or to his nominees, a certificate or certificates for the
     number of shares of Common Stock to which such holder shall be entitled,
     together with cash in lieu of any fraction of a share.

          (B)     The Corporation shall at all times after the Common Increase
     Date during which the Series B Preferred Stock shall be outstanding,
     reserve and keep available out of its authorized but unissued stock, for
     the purpose of effecting the conversion of the Series B Preferred Stock,
     such number of its duly authorized shares of Common Stock as shall from
     time to time be sufficient to effect the conversion of all outstanding
     Series B Preferred Stock.

          (C)     Upon any such conversion, no adjustment to the Conversion
     Price shall be made for any accrued and unpaid dividends on the Series B
     Preferred Stock surrendered for conversion or on the Common Stock delivered
     upon conversion. All accrued but unpaid dividends through the Conversion
     Date will be paid by the Corporation to the holder at the same time that
     certificates representing the Common Stock are delivered upon conversion.

          (D)     All shares of Series B Preferred Stock, which shall have been
     surrendered for conversion as herein provided shall no longer be deemed to
     be outstanding and all rights with respect to such shares, including the
     rights, if any, to receive dividends

                                      -5-

<PAGE>

     (except for accrued but unpaid dividends through the Conversion Date),
     notices and to vote, shall immediately cease and terminate on the
     Conversion Date, except only the right of the holders thereof to receive
     shares of Common Stock in exchange therefor and accrued but unpaid
     dividends through the Conversion Date. Any shares of Series B Preferred
     Stock so converted shall be retired and cancelled and shall not be
     reissued, and the Corporation may from time to time take such appropriate
     action as may be necessary to reduce the number of shares of authorized
     Series B Preferred Stock accordingly.

          (E)    If the conversion is in connection with an underwritten offer
     of securities registered pursuant to the Securities Act of 1933, the
     conversion may, at the option of any holder tendering Series B Preferred
     Stock for conversion, be conditioned upon the closing with the underwriter
     of the sale of securities pursuant to such offering, in which event the
     person(s) entitled to receive the Common Stock issuable upon such
     conversion of the Series B Preferred Stock shall not be deemed to have
     converted such Series B Preferred Stock until immediately prior to the
     closing of the sale of securities.

     Section 5.4 Adjustments to Conversion Price.
                 -------------------------------

          (A)    Special Definitions. For purposes of this Section 5.4, the
     following definitions shall apply:

                 (1)  "Option" shall mean rights, options or warrants to
          subscribe for, purchase or otherwise acquire Common Stock or
          Convertible Securities, excluding rights or options granted to
          employees, directors or consultants of the Corporation pursuant to an
          option plan adopted by the Board of Directors to acquire up to that
          number of shares of Common Stock as is equal to ten (10%) percent of
          the Common Stock outstanding (provided that, for purposes of this
          Section 5.4(A)(1), all shares of Common Stock issuable upon (1)
          exercise of options granted or available for grant under plans
          approved by the Board of Directors or (2) conversion of shares of
          Preferred Stock shall be deemed to be outstanding).

                 (2)  "Original Issue Date" shall mean the date on which the
          first share of Series B Preferred Stock is first issued.

                 (3)  "Convertible Securities" shall mean any evidences of
          indebtedness, shares or other securities directly or indirectly
          convertible into or exchangeable for Common Stock.

                 (4)  "Additional Shares of Common Stock" shall mean all shares
          of Common Stock issued (or, pursuant to Section 5.4(C) below, deemed
          to be issued) by the Corporation after the Original Issue Date and
          other than shares of Common Stock issued or issuable:

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

                      (ii) by reason of a dividend, stock split, split-up or
                 other distribution on shares of Common Stock, subject to
                 Section Section 5.5 or

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          Section 5.6 or excluded from the definition of Additional Shares of
          Common Stock by the foregoing clause (i);

               (iii)  upon the exercise of options excluded from the definition
          of "Option" in Section 5.4(A)(1);

               (iv)   upon exercise of Options which were outstanding on the
          Original Issue Date, the conversion of Convertible Securities which
          were outstanding on the Original Issue Date, or in lieu of cash stay
          bonuses which were granted before 2001;

               (v)    in connection with equipment leases, loans, acquisitions
          of businesses, strategic alliances, or licenses or acquisitions of
          technology or marketing rights; or

               (vi)   upon conversion of shares of Preferred Stock.

          (5)  "Rights to Acquire Common Stock" (or "Rights") shall mean all
     rights issued by the Corporation to acquire common stock whatever by
     exercise of a warrant, option or similar call or conversion of any existing
     instruments, in either case for consideration fixed, in amount or by
     formula, as of the date of issuance.

     (B)  No Adjustment of Conversion Price. No adjustment in the number of
          ---------------------------------
shares of Common Stock into which the Series B Preferred Stock is convertible
shall be made, by adjustment in the applicable Conversion Price thereof: (a)
unless the consideration per share (determined pursuant to Section 5.4(E)) below
for an Additional Share of Common Stock issued or deemed to be issued by the
Corporation is less than the applicable Conversion Price in effect on the date
of, and immediately prior to, the issue of such additional shares, or (b) if
prior to such issuance, the Corporation receives written notice from the holders
of at least sixty-six and two-thirds percent of the then outstanding shares of
Series B Preferred Stock agreeing that no such adjustment shall be made as the
result of the issuance of Additional Shares of Common Stock.

     (C)  Issue of Securities Deemed Issue of Additional Shares of Common Stock.
          ---------------------------------------------------------------------
If the Corporation at any time or from time to time after the Original Issue
Date shall issue any Options or Convertible Securities or other Rights to
Acquire Common Stock, then the maximum number of shares of Common Stock (as set
forth in the instrument relating thereto without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options, Rights or, in the case of Convertible Securities, the
conversion or exchange of such Convertible Securities, shall be deemed to be
Additional Shares of Common Stock issued as of the time of such issue, provided
that Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to Section 5.4(E)
hereof) of such Additional Shares of Common Stock would be less than the
applicable Conversion Price in effect on the date of and immediately prior to
such

                                      -7-

<PAGE>

     issue, or such record date, as the case may be, and provided further that
     in any such case in which Additional Shares of Common Stock are deemed to
     be issued:

               (1)  No further adjustment in the Conversion Price shall be made
          upon the subsequent issue of shares of Common Stock upon the exercise
          of such Options or Rights or conversion or exchange of such
          Convertible Securities;

               (2)  Upon the expiration or termination of any unexercised Option
          or Right, the Conversion Price shall be readjusted as if such Option
          or Right had never been issued; and

               (3)  In the event of any change in the number of shares of Common
          Stock issuable upon the exercise, conversion or exchange of any
          Option, Right or Convertible Security, including, but not limited to,
          a change resulting from the anti-dilution provisions thereof, the
          Conversion Price then in effect shall forthwith be readjusted to such
          Conversion Price as would have obtained had the adjustment that was
          made upon the issuance of such Option, Right or Convertible Security
          not exercised or converted prior to such change been made upon the
          basis of such change, but no further adjustment shall be made for the
          actual issuance of Common Stock upon the exercise or conversion of any
          such Option, Right or Convertible Security.

          (D)  Adjustment of Conversion Price upon Issuance of Additional Shares
               -----------------------------------------------------------------
     of Common Stock. If the Corporation shall at any time after the Original
     ---------------
     Issue Date issue Additional Shares of Common Stock (including Additional
     Shares of Common Stock deemed to be issued pursuant to Section 5.4(C), but
     excluding shares issued as a dividend or distribution as provided in
     Section 5.6 or upon a stock split or combination as provided in Section
     5.5), without consideration or for a consideration per share less than the
     applicable Conversion Price in effect on the date of and immediately prior
     to such issue, then and in such event, such Conversion Price shall be
     reduced, concurrently with such issue to a price (calculated to the nearest
     cent) determined by multiplying such Conversion Price by a fraction, (a)
     the numerator of which shall be (1) the number of shares of Common Stock
     outstanding immediately prior to such issue plus (2) the number of shares
     of Common Stock which the aggregate consideration received by the
     Corporation for the total number of Additional Shares of Common Stock so
     issued would purchase at such Conversion Price; and (b) the denominator of
     which shall be (1) the number of shares of Common Stock outstanding
     immediately prior to such issue plus (2) the number of such Additional
     Shares of Common Stock so issued. Notwithstanding the foregoing, the
     applicable Conversion Price shall not be reduced if the amount of such
     reduction would be an amount less than $.005, but any such amount shall be
     carried forward and reduction with respect thereto made at the time of and
     together with any subsequent reduction which, together with such amount and
     any other amount or amounts so carried forward, shall aggregate $.005 or
     more. For purposes of this Section 5.4(D), all shares of Common Stock
     issuable upon conversion of Preferred Stock shall be deemed to be
     outstanding.

                                      -8-

<PAGE>

               (E)  Determination of Consideration. For purposes of this
                    ------------------------------
     Section 5.4, the consideration received by the Corporation for the issue of
     any Additional Shares of Common Stock shall be computed as follows:

                    (1)  Cash and Property: Such consideration shall:

                         (i)   insofar as it consists of cash, be computed at
                    the aggregate of cash received by the Corporation, without
                    reduction for amounts paid or payable for accrued interest
                    or accrued dividends;

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

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

                    (2)  Options, Rights and Convertible Securities. The
                         ------------------------------------------
               consideration per share received by the Corporation for
               Additional Shares of Common Stock deemed to have been issued
               pursuant to Section 5.4(C), relating to Options, Rights and
               Convertible Securities, shall be determined by dividing

                         (i)  the total amount, if any, received or receivable
                    by the Corporation as consideration for the issue of such
                    Options, Rights or Convertible Securities, plus the minimum
                    aggregate amount of additional consideration (as set forth
                    in the instruments relating thereto, without regard to any
                    provision contained therein for a subsequent adjustment of
                    such consideration) payable to the Corporation upon the
                    exercise of such Options or Rights or the conversion or
                    exchange of such Convertible Securities, by

                         (ii) the maximum number of shares of Common Stock (as
                    set forth in the instruments relating thereto, without
                    regard to any provision contained therein for a subsequent
                    adjustment of such number) issuable upon the exercise of
                    such Options or Rights or the conversion or exchange of such
                    Convertible Securities.

     Section 5.5    Adjustment for Stock Splits and Combinations. If the
                    --------------------------------------------
Corporation shall at any time or from time to time after the Original Issue Date
effect a subdivision of the outstanding Common Stock, the Conversion Price then
in effect immediately before that subdivision shall be proportionately
decreased. If the Corporation shall at any time or from time to time after the
Original Issue Date combine the outstanding shares of Common Stock, the
Conversion Price then in effect immediately before the combination shall be
proportionately increased. Any adjustment under this paragraph shall become
effective at the close of business on the record date for the subdivision or
combination.

                                      -9-

<PAGE>

     Section 5.6  Adjustment for Certain Dividends and Distributions. In the
                  --------------------------------------------------
event the Corporation at any time, or from time to time after the Original Issue
Date shall make or issue, a dividend or other distribution payable in Additional
Shares of Common Stock, then and in each such event the Conversion Price shall
be decreased as of the time of such issuance, by multiplying the Conversion
Price by a fraction:

          (A)     the numerator of which shall be the total number of shares of
     Common Stock issued and outstanding immediately prior to the time of such
     issuance, and

          (B)     the denominator of which shall be the total number of shares
     of Common Stock issued and outstanding immediately prior to the time of
     such issuance plus the number of shares of Common Stock issuable in payment
     of such dividend or distribution.

     Section 5.7  Adjustments for Other Dividends and Distributions. In the
                  -------------------------------------------------
event the Corporation at any time or from time to time after the Original Issue
Date shall make or issue a dividend or other distribution payable in securities
of the Corporation other than shares of Common Stock, then and in each such
event provision shall be made so that the holders of shares 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 securities of the
Corporation that they would have received had their Series B Preferred Stock
been converted into Common Stock on the date of such event and had 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 giving application to all adjustments called for during such period,
under this paragraph with respect to the rights of the holders of the Series B
Preferred Stock.

     Section 5.8  Adjustment for Reclassification, Exchange, or Substitution. If
                  ----------------------------------------------------------
the Common Stock issuable upon the conversion of the Series B Preferred Stock
shall be changed into the same or a different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification, or
otherwise (other than a subdivision or combination of shares or stock dividend
provided for above, or a reorganization, merger, consolidation, or sale of
assets provided for below), then and in each such event the holder of each share
of Series B Preferred Stock shall have the right thereafter to convert such
share into the kind and amount of shares of stock and other securities and
property receivable upon such reorganization, reclassification, or other change,
by holders of the number of shares of Common Stock into which such shares of
Series B Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to further adjustment
as provided herein.

     Section 5.9  Adjustment for Merger or Reorganization, etc. In case of any
                  --------------------------------------------
consolidation or merger of the Corporation (except mergers not involving any
change in or any issuance of securities of the Corporation) with or into another
corporation or the sale of all or substantially all of the assets of the
Corporation to another corporation (other than a consolidation, merger or sale
which is treated as a liquidation pursuant to Article 3),

          (A)     if the surviving entity shall consent in writing to the
     following provisions, then each share of Series B Preferred Stock shall
     thereafter be convertible into the kind and amount of shares of stock or
     other securities or property to which a holder of the number of shares of
     Common Stock of the Corporation deliverable upon conversion of

                                      -10-

<PAGE>

     such Series B Preferred Stock would have been entitled upon such
     consolidation, merger or sale; and, in such case, appropriate adjustment
     (as determined in good faith by the Board of Directors) shall be made in
     the application of the provisions in this Article 5 set forth with respect
     to the rights and interest thereafter of the holders of the Series B
     Preferred Stock, to the end that the provisions set forth in this Article 5
     (including provisions with respect to changes in and other adjustments of
     the Conversion Price) shall thereafter be applicable, as nearly as
     reasonably may be, in relation to any shares of stock or other property
     thereafter deliverable upon the conversion of the Series B Preferred Stock;
     or

          (B)      if the surviving entity shall not so consent, then each
     holder of Series B Preferred Stock may, after receipt of notice specified
     in Section 5.12, elect to convert such Stock into Common Stock as provided
     in this Article 5 or to accept the distributions to which he would have
     been entitled under Article 3 if such consolidation, merger or sale had
     been treated as a liquidation pursuant to such Article 3.

     Section 5.10  No Impairment. The Corporation will not, by amendment of its
                   -------------
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Article 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series B Preferred Stock against impairment.

     Section 5.11  Certificate as to Adjustments. Upon the occurrence of each
                   -----------------------------
adjustment or readjustment of the Conversion Price pursuant to this Article 5,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder, if
any, of Series B Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based and shall file a copy of such certificate with its
corporate records. The Corporation shall, upon the written request at any time
of any holder of Series B Preferred Stock, furnish or cause to be furnished to
such holder a similar certificate setting forth (1) such adjustments and
readjustments, (2) the Conversion Price then in effect, and (3) the number of
shares of Common Stock and the amount, if any, of other property which then
would be received upon the conversion of Series B Preferred Stock. Despite such
adjustment or readjustment, the form of each or all Series B Preferred Stock
Certificates, if the same shall reflect the initial or any subsequent conversion
price, need not be changed in order for the adjustments or readjustments to be
valued in accordance with the provisions hereof, which shall control.

     Section 5.12  Notice of Record Date. In the event:
                   ---------------------

          (A)      that the Corporation declares a dividend (or any other
     distribution) on its Common Stock payable in Common Stock or other
     securities of the Corporation;

          (B)      that the Corporation subdivides or combines its outstanding
     shares of Common Stock;

                                      -11-

<PAGE>

            (C)  of any reclassification of the Common Stock of the Corporation
     (other than a subdivision or combination of its outstanding shares of
     Common Stock or a stock dividend or stock distribution thereon), or of any
     consolidation or merger of the Corporation into or with another corporation
     (except mergers not involving any change in or any issuance of securities
     of the Corporation), or of the sale of all or substantially all of the
     assets of the Corporation; or

            (D)  of the involuntary or voluntary dissolution, liquidation or
     winding up of the Corporation;

then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Series B Preferred Stock, and shall cause to
be mailed to the holders of the Series B Preferred Stock at their last addresses
as shown on the records of the Corporation or such transfer agent, at least ten
days prior to the record date specified in (1) below or twenty days before the
date specified in (2) below, a notice stating:

                 (1)   the record date of such dividend, distribution,
            subdivision or combination, 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, subdivision or
            combination are to be determined, or

                 (2)   the date on which such reclassification, consolidation,
            merger, sale, dissolution, liquidation or winding up is expected to
            become effective, and the date as of which it is expected that
            holders of Common Stock of record shall be entitled to exchange
            their shares of Common Stock for securities or other property
            deliverable upon such reclassification, consolidation, merger, sale,
            dissolution or winding up.

Article 6.  Repurchase of Shares.
            --------------------

     Each holder of any outstanding shares of Series B Preferred Stock shall be
deemed to have consented, for purposes of Sections 502, 503 and 506 of the
California Corporations Code, to distributions made by the Corporation in
connection with the repurchase of shares of Common Stock issued to or held by
the employees, officers, directors, consultants or other persons performing
services for the Corporation upon termination of their employment or services
pursuant to agreements between the Corporation and such persons providing for
the Corporation's right of such repurchase.

                                      -12-

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