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                                                                  EXHIBIT 10.16

                              LIPID SCIENCES, INC.
                             2000 STOCK OPTION PLAN
                         (AS AMENDED ON MARCH 31, 2001)

SECTION 1.        PURPOSE

                  The purpose of the Lipid Sciences, Inc. 2000 Stock Option Plan
(the "Plan") is to promote the best interests of Lipid Sciences, Inc. (the
"Company"), its subsidiaries and its stockholders by providing for the
acquisition of an equity interest in the Company by officers, directors,
employees, and consultants who perform valuable services for the Company and to
enable the Company to attract and retain the services of such individuals upon
whose judgment, interest, skills, and special effort the successful conduct of
its operation is largely dependent.

SECTION 2.        EFFECTIVE DATE

                  The Plan is effective as of May 19, 2000, subject to approval
by the stockholders of the Company within twelve (12) months after the date of
adoption of the Plan by the Board of Directors of the Company (the "Board").

SECTION 3.        ADMINISTRATION

                  The Plan will be administered and interpreted by a committee
selected by the Board, which will consist of not less than two members of the
Board (the "Committee"). If at any time the Committee will not be in existence,
the Board will administer the Plan and all references to the Committee herein
will include the Board. The Board may, in its discretion, delegate to another
committee of the Board or to one or more senior officers of the Company any or
all of the authority and responsibility of the Committee, except to the extent
prohibited by any applicable law or rules. Any such allocation or delegation may
be revoked by the Board at any time. If the Board has delegated to any other
committee or one or more officers the authority and responsibility of the
Committee, all references to the Committee herein will include the other
committee or one or more officers.

                  Subject to the provisions of the Plan and applicable law, the
Committee will have complete power and authority to (a) interpret and administer
the Plan and any instrument or agreement relating to, or made under, the Plan;
(b) make factual determinations; (c) establish, amend, suspend, or waive such
rules and regulations and appoint such agents as it will deem appropriate for
the proper administration of the Plan; (d) select those individuals who will
receive awards under the Plan; (e) determine the terms, conditions, restrictions
and other provisions of awards; and (f) make any other determination and take
any other action that the Committee deems necessary or desirable for the
administration of the Plan. The Committee's decisions and determinations under
the Plan need not be uniform and may be made selectively among participants,
whether or not they are similarly situated. Any determination of the Committee
under the Plan may be made without notice or meeting of the Committee by a
writing signed by a majority of the Committee members. The Committee's
determinations on the matters referred to in this paragraph will be conclusive.
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SECTION 4.        ELIGIBILITY AND PARTICIPATION

                  Participants in the Plan will be selected by the Committee
from among those officers, employees and directors of the Company and its
subsidiaries, as the Committee may designate from time to time. The Committee
will consider such factors as it deems appropriate in selecting participants and
in determining the type and amount of their respective awards. The Committee's
designation of a participant in any year will not require the Committee to
designate such person to receive an award in any other year.

SECTION 5.        STOCK SUBJECT TO PLAN

         5.1      Number.

                  (a)      Subject to adjustment as provided in Section 5.3, the
         total number of shares of Common Stock, $.01 par value, of the Company
         ("Stock"), which may be issued under the Plan will be 2,000,000. The
         shares to be delivered under the Plan may consist, in whole or in part,
         of authorized but unissued Stock or treasury Stock.

                  (b)      If required by Rule 260.140.45 of the California
         Corporate Securities Law of 1968, at no time will the total number of
         shares issuable upon exercise of all outstanding options and the total
         number of shares provided for under any stock bonus or similar plan of
         the Company, if any, exceed 30% of the then outstanding shares of the
         Company (including convertible preferred stock on an as-if converted
         basis, if any), unless a higher percentage is approved by at least
         two-thirds of the outstanding shares entitled to vote.

         5.2      Unused Stock; Unexercised Rights. If, after the effective date
of the Plan, any shares of Stock subject to an award granted under the Plan are
forfeited or if an award otherwise terminates, expires or is canceled prior to
the delivery of all of the shares of Stock or of other consideration issuable or
payable pursuant to such award, then the number of shares of Stock counted
against the number of shares available under the Plan in connection with the
grant of such award, will again be available for the granting of additional
awards under the Plan to the extent determined to be appropriate by the
Committee.

         5.3      Adjustment in Capitalization. In the event that the Committee
will determine that any dividend or other distribution (whether in the form of
cash, Stock, other securities or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Stock or other securities of the Company,
issuance of warrants or other rights to purchase Stock or other securities of
the Company, or other similar corporate transaction or event affects the Stock
such that an adjustment is determined by the Committee to be appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Committee may, in such
manner as it may deem equitable, adjust any or all of: (a) the number and type
of shares of Stock subject to the Plan and which thereafter may be made the
subject of awards under the Plan; (b) the number and type of shares of Stock
subject to outstanding awards; and (c) the grant, purchase or exercise price
with respect to any award; or, if

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deemed appropriate, make provision for a cash payment to the holder of an
outstanding award; provided, however, in each case, that with respect to awards
of incentive stock options no such adjustment will be authorized to the extent
that such authority would cause such options to cease to be treated as incentive
stock options; and provided further, however, that the number of shares of Stock
subject to any award payable or denominated in Stock will always be a whole
number.

SECTION 6.        TERM OF THE PLAN

                  No award will be made under the Plan after May 19, 2010 (the
"Termination Date"). However, unless otherwise expressly provided in the Plan or
in an applicable award agreement, any award granted before the Termination Date
may extend beyond the Termination Date and, to the extent set forth in the Plan,
the authority of the Committee to amend, alter, adjust, suspend, discontinue or
terminate any such award, or to waive any conditions or restrictions with
respect to any such award, and the authority of the Board to amend the Plan,
will extend beyond the Termination Date.

SECTION 7.        STOCK OPTIONS

         7.1      Grant of Options. Options may be granted to participants at
any time and from time to time as will be determined by the Committee. The
Committee will have complete discretion in determining the number, terms and
conditions of options granted to a participant. The Committee also will
determine whether an option is to be an incentive stock option within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or a nonqualified stock option. If an option fails at any time to meet
the requirements for an incentive stock option under Section 422 of the Code,
such option, to the extent the requirements of Section 422 of the Code are not
met, will be treated as a nonqualified stock option for Federal income tax
purposes automatically without further action by the Committee, effective as of
the first date on which any such requirement was not met. Only individuals who
are employees of the Company or one of its subsidiaries at the time of grant may
receive grants of incentive stock options.

         7.2      Exercise Price. The exercise price of each option granted
under the Plan will be established by the Committee or will be determined by a
method established by the Committee at the time the option is granted; except
that, unless otherwise determined by the Committee, the exercise price will not
be less than one hundred percent (100%) of the fair market value of a share of
Stock as of the Pricing Date (as defined below), as determined under Section 7.5
(the "Fair Market Value"), and provided further, that, if an option is granted
to a California resident who is a 10% Stockholder (as defined below), the
exercise price will not be less than 110% of the Fair Market Value of a share of
Stock as of the Pricing Date. For purposes of the preceding sentence, the
"Pricing Date" will be the date on which the option is granted, except that the
Committee may provide that: (a) the Pricing Date is the date on which the
recipient is hired or promoted (or similar event) if the grant of the option
occurs not more than 90 days after the date of such hiring, promotion or other
event; and (b) if an option is granted in tandem with, or in substitution for,
an outstanding award, the Pricing Date is the date of grant of such outstanding
award. In the case of the grant of an incentive stock option, the exercise price
will equal one hundred percent (100%) of the Fair Market Value of a share of
Stock on the date of grant;

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provided, however, that if an incentive stock option is granted to any employee
who, at the time of grant, owns shares of Company stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company (a "10% Stockholder"), the exercise price per share will not be less
than 110% of the Fair Market Value of a share of Stock on the date of grant.

         7.3      Term and Exercise of Options.

                  (a)      Incentive Stock Options. Incentive stock options will
         be exercisable over not more than ten (10) years after the date of
         grant (or five (5) years in the case of a 10% Stockholder) and will
         terminate not later than three (3) months after termination of
         employment for any reason other than death or disability, as determined
         by the Committee, except as otherwise provided by the Committee. If the
         participant should die while employed or within three (3) months after
         termination of employment, then the right of the participant's
         successor in interest to exercise an incentive stock option will
         terminate not later than twelve (12) months after the date of death,
         except as otherwise provided by the Committee. In all other respects,
         the terms of any incentive stock option granted under the Plan will
         comply with the provisions of Section 422 of the Code (or any successor
         provision thereto) and any regulations promulgated thereunder.

                  (b)      Nonqualified Stock Options. Nonqualified stock
         options will be exercisable as determined by the Committee and will
         terminate at such time as the Committee will determine and specify in
         the option agreement.

                  (c)      California Residents. With respect to options granted
         to participants who are residents of California and are not officers,
         directors, or consultants:

                           (1)      Options will become exercisable at a rate of
                                    at least 20% per year over five (5) years
                                    from the date the option is granted, subject
                                    to reasonable conditions such as continued
                                    employment with the Company.

                           (2)      Unless employment is terminated for cause as
                                    defined by applicable law or the terms of
                                    the Plan or option agreement or a contract
                                    of employment, the right to exercise in the
                                    event of termination of employment, to the
                                    extent that the participant is otherwise
                                    entitled to exercise on the date employment
                                    terminates, will be (A) at least six (6)
                                    months from the date of termination if
                                    termination was caused by death or
                                    disability, and (B) at least thirty (30)
                                    days from the date of termination if
                                    termination was caused by some reason other
                                    than death or disability.

                           (3)      An exercise period of not more than 120
                                    months from the date the option is granted.

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This Section 7.3 (c) is intended to comply with Rule 260.190.41(f) promulgated
under the California Corporate Securities Law of 1968 (the "California
Securities Laws"), and that if Rule is repealed, this Section 7.3(c) will be of
no more effect.

         7.4      Option Agreement. Each option will be evidenced by an option
agreement that will specify the type of option granted, the date of grant, the
exercise price, the duration of the option, the number of shares of Stock to
which the option pertains and such other conditions and provisions as the
Committee will determine.

         7.5      Fair Market Value. The Fair Market Value of a share of Stock
will be as reasonably determined by the Committee pursuant to such methods or
procedures as will be established from time to time by the Committee.

         7.6      Payment. Subject to the following provisions of this Section
7.6, the full exercise price for shares of Stock purchased upon the exercise of
any option will be paid at the time of such exercise. The Committee will
determine the methods and the forms for payment of the exercise price of
options, including by effective receipt of cash or, to the extent permitted by
the Committee, other mature shares of the Company (as defined by U.S. Generally
Accepted Accounting Principles) having a then Fair Market Value equal to the
exercise price of such shares, or any combination thereof. Upon receipt of the
payment of the entire exercise price for the shares so purchased, certificates
for such shares will be delivered to the participant.

         7.7      Limits on Incentive Stock Options. Each incentive stock option
will provide that to the extent the aggregate fair market value of the Stock on
the date of grant with respect to which incentive stock options are exercisable
by a participant for the first time during any calendar year under the Plan or
any other plan of the Company exceeds $100,000, then such option as to the
excess will be treated as a nonqualified stock option.

         7.8      Certain Replacement Options. Without in any way limiting the
authority of the Committee to make grants of options to participants hereunder,
and in order to induce participants to retain ownership of the Stock acquired
upon the exercise of options, the Committee will have the authority (but not an
obligation) to include within any agreement setting forth the terms of any
options (or any amendment thereto) a provision entitling a participant to
further options ("Replacement Options") in the event the participant exercises
any options (including a Replacement Option) under the Plan, in whole or in
part, by surrendering previously acquired shares of Stock. Any such Replacement
Options will (a) be nonqualified stock options, exercisable at a purchase price,
unless otherwise determined by the Committee, of one hundred percent (100%) of
the Fair Market Value of the shares of Stock on the date the Replacement Options
are granted; (b) be for a number of shares of Stock equal to the number of
shares surrendered; (c) only become exercisable on the terms specified by the
Committee in the event the participant holds, for a minimum period of time
prescribed by the Committee, the shares of Stock the participant acquired upon
the exercise in connection with which the Replacement Options were issued; and
(d) be subject to such other terms and conditions as the Committee may
determine.

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         7.9      Delivery of Financial Statements. To the extent required by
the California Securities Laws or other applicable laws, the Company will
deliver annually to each participant financial statements of the Company;
provided, however, that the Company will not be required to deliver financial
statements to participants whose duties in connection with the Company assure
them access to equivalent information, but may do so in its sole discretion.

SECTION 8.        OTHER AWARDS

         8.1      Other Stock-Based Awards. Other awards, valued in whole or in
part by reference to, or otherwise based on, shares of Stock, may be granted
either alone or in addition to or in conjunction with any awards described in
this Plan for such consideration, if any, and in such amounts and having such
terms and conditions as the Board may determine.

         8.2      Other Benefits. The Board will have the right to provide types
of benefits under the Plan in addition to those specifically listed, if the
Board believes that such benefits would further the purposes for which the Plan
was established.

SECTION 9.        TRANSFERABILITY

                  Each award granted under the Plan will be exercised only by
the participant during his lifetime and will not be transferable other than by
will or the laws of descent and distribution, except that a participant may, to
the extent allowed by the Committee, subject to compliance with applicable
securities laws, and only to the extent permitted by applicable securities laws,
(a) designate in writing a beneficiary to exercise the award after the
participant's death; or (b) transfer an award. An incentive stock option will
not, in any case, be transferable other than by will or the laws of descent and
distribution.

SECTION 10.       RIGHTS OF PARTICIPANTS

                  Nothing in the Plan will interfere with or limit in any way
the right of the Company to terminate any participant's employment or service at
any time nor confer upon any participant any right to continue in the employ or
service of the Company or its subsidiaries.

SECTION 11.       CHANGE OF CONTROL

         11.1     Definition. "Change of Control" means (i) a reorganization,
merger, share exchange or consolidation of the Company with one or more other
corporations or other entities as a result of which the holders of the Shares as
a group receive less than 50% of the voting power of the capital stock or other
interests of the surviving or resulting corporation or entity; (ii) the sale of
all or substantially all of the assets of the Company; or (iii) the liquidation
or dissolution of the Company.

         11.2     General. In the event of a Change of Control, the Committee in
its discretion may take one or more of the following actions: (a) adjust the
award as provided in Section 5.3, (b) cause the award to be assumed, or a new
right substituted therefore, by another entity; or (c) make such other provision
as the Committee may consider equitable and in the best interests of the
Company.

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                  Notwithstanding anything contained in this Section 11.2, the
Committee may, in its sole and absolute discretion, amend, modify or rescind the
provisions of Section 11.2 if it determines that the operation of this Section
11.2 may prevent a transaction in which the Company or any affiliate is a party
from being accounted for on a pooling-of-interests basis, or prevent the Change
of Control from receiving desired tax treatment, including without limitation
requiring that each participant will receive a replacement or substitute award
issued by the surviving or acquiring corporation.

         11.3     Vesting. Effective upon a Change of Control, the vesting of
each award shall accelerate by the number of months such award has previously
vested.

SECTION 12.       AMENDMENT, MODIFICATION AND TERMINATION OF PLAN

         12.1     Amendments and Termination. The Board may, at any time, amend,
alter, suspend, discontinue or terminate the Plan; provided, however, that
stockholder approval of any amendment of the Plan will be obtained if otherwise
required by the Code or any rules promulgated thereunder (in order to allow for
incentive stock options to be granted under the Plan). To the extent permitted
by applicable law, and subject to such stockholder approval as may otherwise be
required, the Committee may also amend the Plan, provided that any such
amendments will be reported to the Board. Termination of the Plan will not
affect the rights of participants with respect to awards previously granted to
them, and all unexpired awards will continue in force and effect after
termination of the Plan except as they may lapse or be terminated by their own
terms and conditions. The Committee, subject to the same stockholder approval
requirements set forth above, may amend an award agreement at any time; provided
that no amendment may, in the absence of written consent to the change by the
affected participant (or, if the participant is not then living, the affected
beneficiary), adversely affect the rights of any participant or beneficiary
under any award granted under the Plan prior to the date such amendment is
adopted.

         12.2     Waiver of Conditions. The Committee may, in whole or in part,
waive any conditions or other restrictions with respect to any award granted
under the Plan.

SECTION 13.       TAXES

                  No later than the date as of which an amount first becomes
includable in the gross income of a participant for federal income tax purposes
with respect to any award under the Plan, the participant will pay to the
Company, or make arrangements satisfactory to the Company regarding the payment
of, any federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount. If approved by the Committee, withholding
obligations arising with respect to awards granted to participants under the
Plan may be settled with shares of Stock previously owned by the participant;
provided, however, that the participant may not settle such obligations with
Stock that is received upon exercise of the option that gives rise to the
withholding requirement. The obligations of the Company under the Plan will be
conditioned on such payment or arrangements, and the Company and any subsidiary
will, to the extent permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the

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participant. The Committee may establish such procedures as it deems appropriate
for the settling of withholding obligations with shares of Stock.

SECTION 14.       MISCELLANEOUS

         14.1     Stock Transfer Restrictions.

                  (a)      Shares of Stock purchased under the Plan may not be
         sold or otherwise disposed of except (i) pursuant to an effective
         registration statement under the Securities Act of 1933, as amended
         (the "Act"), or in a transaction which, in the opinion of counsel for
         the Company, is exempt from registration under the Act; and (ii) in
         compliance with state securities laws. Further, as a condition to
         issuance of shares of Stock purchased under the Plan, the participant
         or his heirs, legatees or legal representatives, as the case may be,
         will execute and deliver to the Company a restrictive stock transfer
         agreement in such form, and subject to such terms and conditions, as
         will be reasonably determined or approved by the Board, which
         agreement, among other things, may impose certain restrictions on the
         sale or other disposition of any shares of Stock acquired under the
         Plan. The Board may waive the foregoing restrictions, in whole or in
         part, in any particular case or cases or may terminate such
         restrictions whenever the Board determines that such restrictions
         afford no substantial benefit to the Company.

                  (b)      All certificates for shares delivered under the Plan
         pursuant to any award or the exercise thereof will be subject to such
         stock transfer orders and other restrictions as the Committee may deem
         advisable under the Plan and any applicable federal or state securities
         laws, and the Committee may cause a legend or legends to be put on any
         such certificates to make appropriate references to such restrictions.

         14.2     Other Provisions. The grant of any award under the Plan may
also be subject to other provisions (whether or not applicable to the benefit
awarded to any other participant) as the Committee determines appropriate,
including, without limitation, provisions for (a) the participant's agreement to
abide by any nondisclosure or noncompete requirements or other restrictions as
specified in the participant's award agreement; (b) one or more means to enable
participants to defer recognition of taxable income relating to awards or cash
payments derived therefrom; (c) the purchase of Stock under options in
installments; or (d) the financing of the purchase of Stock under the options in
the form of a promissory note issued to the Company by a participant on such
terms and conditions as the Committee determines.

         14.3     Award Agreement. No person will have any rights under any
award granted under the Plan unless and until the Company and the participant to
whom the award was granted will have executed an award agreement in such form as
will have been approved by the Committee.

         14.4     No Fractional Shares. No fractional shares or other securities
will be issued or delivered pursuant to the Plan, and the Committee will
determine (except as otherwise provided in the Plan) whether cash, other
securities or other property will be paid or transferred in lieu of any
fractional shares or other securities, or whether such fractional shares or
other securities or any rights thereto will be canceled, terminated or otherwise
eliminated.

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SECTION 15.       LEGAL CONSTRUCTION

         15.1     Requirements of Law. The granting of awards under the Plan and
the issuance of shares of Stock in connection with an award, will be subject to
all applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

         15.2     Governing. The Plan, and all agreements hereunder, will be
construed in accordance with and governed by the laws of the State of Delaware.

         15.3     Severability. If any provision of the Plan or any award
agreement or any award (a) is or becomes or is deemed to be invalid, illegal or
unenforceable in any jurisdiction, or as to any person or option, or (b) would
disqualify the Plan, any award agreement or any award under any law deemed
applicable by the Committee, then such provision will be construed or deemed
amended to conform to applicable laws, or if it cannot be so construed or deemed
amended without, in the determination of the Committee, materially altering the
intent of the Plan, any award agreement or the award, then such provision will
be stricken as to such jurisdiction, person or award, and the remainder of the
Plan, any such award agreement and any such award will remain in full force and
effect.

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                                                                   EXHIBIT 10.18

                              LIPID SCIENCES, INC.

                      NON-QUALIFIED STOCK OPTION AGREEMENT

                                   (Employees)

         THIS AGREEMENT is between Lipid Sciences, Inc., a Delaware corporation
(the "Company"), and the person whose signature is set forth on the signature
page hereof ("Participant").

                                    RECITALS

         WHEREAS, the Company has adopted the Lipid Sciences, Inc. 2000 Stock
Option Plan (the "Plan") which provides for the grant of options to officers,
employees and directors;

         WHEREAS, Participant is an officer, employee or director and is in a
position to contribute materially to the continued growth and development and
the future financial success of the Company;

         WHEREAS, the Company wishes to grant to Participant an option to
purchase common stock of the Company on the terms and conditions specified
herein to provide a means for the Participant to participate in the future
growth of the Company and to increase the Participant's incentive and personal
interest in the continued success and growth of the Company.

                                    AGREEMENT

         NOW, THEREFORE, the parties agree as follows (any capitalized terms
used herein but not defined herein shall have the respective meanings given in
the Plan):

         1. Option.

                  a. Grant. Subject to the terms and conditions of this
Agreement and the Plan, the Company hereby grants to Participant a Non-Qualified
Stock Option to purchase all or any part of the Shares set forth on the
signature page hereof, at the exercise price set forth on the signature page
hereof.

                  b. Term. The term of the Option shall expire at 11:59 p.m. on
the date immediately preceding the fifth anniversary of the date of grant of the
Option.

                  c. Vesting. The Option shall vest as set forth in the
following table:
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<TABLE>
<CAPTION>
             Number of Optional Shares Vested                       Vesting Date
             --------------------------------                       ------------
<S>                                                                 <C>
</TABLE>

         2. Exercise. The Option may not be exercised prior to the date it is
vested or after the expiration date. Participant may, subject to the limitations
of this Agreement and the Plan, exercise all or any portion of the Option that
has vested pursuant to Section 1 hereof by providing written notice of exercise
to the Company specifying the number of Shares with respect to which the Option
is being exercised and accompanied by payment of the exercise price for such
Shares. The exercise price shall be paid in cash, by the surrender of a whole
number of Shares (free of all adverse claims and duly endorsed in blank by
Participant or accompanied by stock powers duly endorsed in blank) having a Fair
Market Value on the date of exercise equal to the exercise price, or by the
surrender of the unexercised, vested portion of the Option as to which the
Spread (as hereinafter defined) is equal to the exercise price, or any
combination of the foregoing. "Spread" means the Fair Market Value on the date
of exercise of the underlying Shares less the exercise price. No portion of the
Option may be exercised after it has expired pursuant to Section 1 hereof.

         3. Termination of Employment.

                  a. If the employment of Participant terminates by reason of
disability, Participant (or his or her legal representative) may exercise any
portion of the Option which has vested pursuant to Section 1 hereof for a period
of one year after the date of such termination of employment and not thereafter;
provided, however, that no Option or portion thereof shall be exercisable after
it has expired pursuant to Section 1 hereof. For purposes of this Agreement, the
term "disability" shall mean a total and permanent disability as determined by
the Board of Directors in its sole discretion.

                  b. If the employment of Participant terminates by reason of
death, any unvested portion of the Option shall vest in full upon Participant's
death, and Participant's Beneficiary (as hereinafter defined) may exercise the
Option for a period of one year after the date of death and not thereafter;
provided, however, that no Option or portion thereof shall be exercisable after
it has expired pursuant to Section 1 hereof.

                  c. If the employment of Participant is terminated by the
Company without Cause (as hereinafter defined) or is terminated by Participant
for any reason other than death or disability, Participant (or his or her legal
representative) may exercise any portion of the Option which has vested pursuant
to Section 1 hereof for a period of three months after the date of such
termination of employment and not thereafter; provided,

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however, that no Option or portion thereof shall be exercisable after it has
expired pursuant to Section 1 hereof.

                  d. If the employment of the Participant terminates for Cause,
the entire Option (whether vested or non-vested) shall immediately be forfeited
and become null and void. For purposes hereof, "Cause" shall mean material
nonfeasance, material malfeasance or material misfeasance on the part of the
Participant which, if susceptible of cure, shall continue after notice of the
default and a reasonable opportunity to cure.

                  e. For purposes of this Section 3, termination of employment
of Participant shall include termination of the engagement as a consultant to
the Company of Participant or of a business entity of which Participant is a
principal.

         4. Change of Control. In the event of a Change of Control, any unvested
portion of the Option shall vest in full. Change of Control means: (i) the
adoption of a plan of reorganization, merger, share exchange or consolidation of
the Company with one or more other corporations or other entities as a result of
which the holders of the Shares as a group would receive less than fifty percent
(50%) of the voting power of the capital stock or other interests of the
surviving or resulting corporation or entity (unless such plan is subsequently
abandoned); (ii) the adoption by the Company's shareholders of a plan of
liquidation or the approval of the dissolution of the Company (unless such
liquidation or dissolution is subsequently abandoned); (iii) the approval by the
Company's shareholders of an agreement providing for the sale of all or
substantially the assets of the Company unless such sale is subsequently
abandoned); or (iv) the acquisition of more than thirty percent (30%) of the
outstanding Shares by any person within the meaning of Rule 13(d)(3) under the
Securities Exchange Act of 1934 if such acquisition is not preceded by a prior
expression of approval by the Board; or (v) one-third or more of the Company's
Board of Directors are not Continuing Directors (a "Continuing Director" means
any member of the Board of Directors who was a member on May 19, 1999, and any
Director who was recommended for election, or is elected to fill a vacancy, as a
director by a majority of the Continuing Directors then on such Board).

         5. Withholding. The Company may deduct and withhold from any cash
payable to Participant such amount as may be required for the purpose of
satisfying the Company's obligation to withhold federal, state or local taxes in
connection with any exercise of this Option. The Participant may elect to
satisfy such withholding obligation, in whole or in part, (a) by causing the
Company to withhold Shares otherwise issuable pursuant to the exercise of the
Option or (b) by delivering to the Company Shares already owned by the
Participant. The Shares so delivered or withheld shall be a whole number, have a
Fair Market Value equal to such withholding obligation as of the date that the
amount of tax to be withheld is to be determined, shall be free of all adverse
claims, and

                                       3
<PAGE>   4
shall be duly endorsed in blank by Participant or accompanied by stock powers
duly endorsed in blank.

         6. Nontransferability. Participant shall have no rights to sell,
assign, transfer, pledge, assign or otherwise alienate the Option under this
Agreement, except by will or by the laws of descent and distribution or pursuant
to a qualified domestic relations order as defined by the Code or Title I of
ERISA, or the rules thereunder, and any such attempted sale, assignment,
transfer, pledge or other conveyance shall be null and void. The Option shall be
exercisable during the Participant's lifetime only by the Participant (or his or
her legal representative).

         7. Beneficiary. The person whose name appears on the signature page
hereof after the caption "Beneficiary" or any successor designated by
Participant in accordance herewith (the person who is Participant's Beneficiary
at the time of his or her death is referred to as the "Beneficiary") shall be
entitled to exercise the Option, to the extent it is exercisable, after the
death of Participant. Participant may from time to time revoke or change his or
her Beneficiary designation without the consent of any prior Beneficiary by
filing a new designation with the Board of Directors. The last such designation
received by the Board of Directors shall be controlling; provided, however, that
no designation, or change or revocation thereof, shall be effective unless
received by the Board of Directors prior to Participant's death, and in no event
shall any designation be effective as of a date prior to such receipt. If no
Beneficiary designation is in effect at the time of Participant's death, or if
no designated Beneficiary survives Participant or if such designation conflicts
with law, Participant's estate shall be entitled to exercise the Option, to the
extent it is exercisable after the death of Optionee. If the Board of Directors
is in doubt as to the right of any person to exercise the Option, the Company
may refuse to recognize such exercise, without liability for any interest or
dividends on the underlying Shares, until the Board of Directors determines the
person entitled to exercise the Option, or the Company may apply to any court of
appropriate jurisdiction and such application shall be a complete discharge of
the liability of the Company therefor.

         8. Securities Law Restrictions. Participant acknowledges that he is
acquiring the Option and the Shares purchasable pursuant to the Option for
investment purposes only and not with a view to resale or other distribution
thereof to the public in violation of the Securities Act of 1933, as amended
(the "Act"). Participant agrees and acknowledges with respect to any Shares that
have not been registered under the Act, that (i) Participant will not sell or
otherwise dispose of such Shares except pursuant to an effective registration
statement under the Act and any applicable state securities laws, or in a
transaction which in the opinion of counsel for the Company, is exempt from such
registration, and (ii) a legend will be placed on the certificates for the
Shares to such effect. As a further condition to the issuance of the Shares, the
Participant agrees for himself, and his heirs, legatees and legal
representatives, prior to such issuance to execute and deliver to the Company
such investment representations and warranties, and to take

                                       4
<PAGE>   5
such other actions, as counsel for the Company determines may be necessary or
appropriate for compliance with the Act and any applicable securities laws.

         Unless otherwise determined by the Board, the Participant agrees that
any certificate representing shares of Stock acquired upon exercise of the
Option shall bear the following legend:

         The shares of Stock represented by this certificate are restricted
         securities as that term is defined under Rule 144 promulgated under the
         Securities Act of 1933, as amended (the "Act"). These shares may not be
         sold, transferred or disposed of unless they are registered under the
         Act, or sold in a transaction that is exempt from registration under
         the Act and any applicable state securities laws.

         9. Limited Interest.

                  a. The grant of the Option shall not be construed as giving
Participant any interest other than as provided in this Agreement.

                  b. Participant shall have no rights as a stockholder as a
result of the grant of the Option, until the Option is exercised, the exercise
price is paid, and the Shares issued thereunder.

                  c. The grant of the Option shall not confer on Participant any
right to continue as an employee, nor interfere in any way with the right of the
Company to terminate the Participant at any time.

                  d. The grant of the Option shall not affect in any way the
right or power of the Company to make or authorize any or all adjustments,
recapitalizations, reorganizations, or other changes in the Company's capital
structure or its business, or any merger, consolidation or business combination
of the Company, or any issuance or modification of any term, condition, or
covenant of any bond, debenture, debt, preferred stock or other instrument ahead
of or affecting the Shares or the rights of the holders thereof, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business or any other Company act or proceeding, whether
of a similar character or otherwise.

         10. Incorporation by Reference. The terms of the Plan to the extent not
stated herein are expressly incorporated herein by reference and in the event of
any conflict between this Agreement and the Plan, the Plan shall govern.

         11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.

                                       5
<PAGE>   6
         12. Amendment. This Agreement may not be amended, modified, terminated
or otherwise altered except by the written consent of the parties thereto.

         13. Counterparts. This Non-Qualified Stock Option Agreement may be
executed in one or more counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the same instrument.

                     [REMAINDER OF PAGE INTENTIONALLY BLANK]

                                       6
<PAGE>   7
         IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officer and its corporate seal hereunto affixed,
and the Participant has hereunto affixed his or her hand, all on the day and
year set forth below.

                                           LIPID SCIENCES, INC.

                                   By:__________________________________
                                   Its:_________________________________

                                                ("Company")

                                   _____________________________________
                                   Name:________________________________

                                              ("Participant")

<TABLE>
<S>                                          <C>
No. of Shares:                               Grant Date:

Exercise Price Per Share:                    Initial Exercise Date:

                                             Option Expiration Date:

Date of Agreement:  _________, __            Date of First Service:

Beneficiary:_______________________          Address of Beneficiary:
                                             ___________________________________
Beneficiary Tax Identification No.:          ___________________________________
___________________________________
</TABLE>

                                       7

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