Document:

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                                                                   EXHIBIT 10.20

                                  LIPOMED, INC.

                            2001 STOCK INCENTIVE PLAN
                            -------------------------

1.   Purpose
     -------

     The purpose of this 2001 Stock Incentive Plan (the "Plan") of LipoMed,
Inc., a Delaware corporation (the "Company"), is to advance the interests of the
Company's stockholders by enhancing the Company's ability to attract, retain and
motivate persons who make (or are expected to make) important contributions to
the Company by providing such persons with equity ownership opportunities and
performance-based incentives and thereby better aligning the interests of such
persons with those of the Company's stockholders. Except where the context
otherwise requires, the term "Company" shall include any of the Company's
present or future parent or subsidiary corporations as defined in Sections
424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder (the "Code") and any other business venture
(including, without limitation, joint venture or limited liability company) in
which the Company has a significant interest, as determined by the Board of
Directors of the Company (the "Board").

2.   Eligibility
     -----------

     All of the Company's employees, officers, directors, consultants and
advisors (and any individuals who have accepted an offer for employment) are
eligible to be granted options, restricted stock awards, or other stock-based
awards (each, an "Award") under the Plan. Each person who has been granted an
Award under the Plan shall be deemed a "Participant."

3.   Administration and Delegation
     -----------------------------

     (a)  Administration by Board of Directors. The Plan will be administered by
          ------------------------------------
the Board. The Board shall have authority to grant Awards and to adopt, amend
and repeal such administrative rules, guidelines and practices relating to the
Plan as it shall deem advisable. The Board may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem expedient to carry the Plan into effect and it
shall be the sole and final judge of such expediency. All decisions by the Board
shall be made in the Board's sole discretion and shall be final and binding on
all persons having or claiming any interest in the Plan or in any Award. No
director or person acting pursuant to the authority delegated by the Board shall
be liable for any action or determination relating to or under the Plan made in
good faith.

     (b)  Appointment of Committees. To the extent permitted by applicable law,
          -------------------------
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). All references in the
Plan to the "Board" shall mean the Board or a Committee of the Board or the
executive officers referred to in Section 3(c), to the extent that the Board's
powers or authority under the Plan have been delegated to such Committee or
executive officers.

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     (c)  Delegation to Executive Officers. To the extent permitted by
          --------------------------------
applicable law, the Board may delegate to one or more executive officers of the
Company the power to grant Awards to employees of the Company or any of its
present or future subsidiary corporations and to exercise such other powers
under the Plan as the Board may determine; provided that the Board shall fix the
terms of the Awards to be granted by such executive officers (including the
exercise price of such Awards, which may include a formula by which the exercise
price will be determined) and the maximum number of shares subject to Awards
that the executive officer may grant; provided further, however, that no
executive officer shall be authorized to grant Awards to any "executive officer"
of the Company (as defined by Rule 3b-7 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")).

4.   Stock Available for Awards
     --------------------------

     (a)  Number of Shares. Subject to adjustment under Section 8, Awards may be
          ----------------
made under the Plan for up to the number of shares of common stock, $0.001 par
value per share, of the Company (the "Common Stock") that is equal to the sum
of:

          (1)  6,000,000 shares of Common Stock; plus

          (2)  such additional number of shares of Common Stock (up to 1,750,000
               shares) as is equal to the sum of (x) the number of shares of
               Common Stock reserved for issuance under the Company's Stock
               Option Plan, as amended (the "Existing Plan") that remain
               available for grant under the Existing Plan immediately prior to
               the closing of the Company's initial public offering and (y) the
               number of shares of Common Stock subject to awards granted under
               the Existing Plan which awards expire, terminate or are otherwise
               surrendered, canceled, forfeited or repurchased by the Company at
               their original issuance price pursuant to a contractual
               repurchase right (subject, however, in the case of Incentive
               Stock Options (as hereinafter defined) to any limitations of the
               Code); plus

          (3)  an annual increase to be added on the first day of each of the
               Company's fiscal years during the period beginning in fiscal year
               2002 and ending on the second day of fiscal year 2011 equal to
               the lesser of (i) 1,250,000 shares of Common Stock, (ii) 5% of
               the outstanding shares on such date, or (iii) an amount
               determined by the Board.

     Notwithstanding clause (3) above, in no event shall the number of shares
available under this Plan be increased as set forth in clause (3) to the extent
such increase, in addition to any other increases proposed by the Board in the
number of shares available for issuance under all other employee or director
stock plans, would result in the total number of shares then available for
issuance under all employee and director stock plans exceeding 30% of the
outstanding shares of the Company on the first day of the applicable fiscal
year.

     If any Award expires or is terminated, surrendered or canceled without
having been fully exercised or is forfeited in whole or in part (including as
the result of shares of Common Stock subject to such Award being repurchased by
the Company at the original issuance price pursuant

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to a contractual repurchase right) or results in any Common Stock not being
issued, the unused Common Stock covered by such Award shall again be available
for the grant of Awards under the Plan, subject, however, in the case of
Incentive Stock Options, to any limitations under the Code. Shares issued under
the Plan may consist in whole or in part of authorized but unissued shares or
treasury shares.

     (b)  Per-Participant Limit. Subject to adjustment under Section 8, for
          ---------------------
Awards granted after the Common Stock is registered under the Exchange Act, the
maximum number of shares of Common Stock with respect to which Awards may be
granted to any Participant under the Plan shall be 350,000 shares per calendar
year. The per-Participant limit described in this Section 4(b) shall be
construed and applied consistently with Section 162(m) of the Code ("Section
162(m)").

5.   Stock Options
     -------------

     (a)  General. The Board may grant options to purchase Common Stock (each,
          -------
an "Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option."

     (b)  Incentive Stock Options. An Option that the Board intends to be an
          -----------------------
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company or any of its
present or future parent or subsidiary corporations and shall be subject to and
shall be construed consistently with the requirements of Section 422 of the
Code. The Company shall have no liability to a Participant, or any other party,
if an Option (or any part thereof) which is intended to be an Incentive Stock
Option is not an Incentive Stock Option.

     (c)  Exercise Price. The Board shall establish the exercise price at the
          --------------
time each Option is granted and specify it in the applicable option agreement.

     (d)  Duration of Options. Each Option shall be exercisable at such times
          -------------------
and subject to such terms and conditions as the Board may specify in the
applicable option agreement.

     (e)  Exercise of Option. Options may be exercised by delivery to the
          ------------------
Company of a written notice of exercise signed by the proper person or by any
other form of notice (including electronic notice) approved by the Board
together with payment in full as specified in Section 5(f) for the number of
shares for which the Option is exercised.

     (f)  Payment Upon Exercise. Common Stock purchased upon the exercise of an
          ----------------------
Option granted under the Plan shall be paid for as follows:

          (1)  in cash or by check, payable to the order of the Company;

          (2)  except as the Board may, in its sole discretion, otherwise
provide in an option agreement, by (i) delivery of an irrevocable and
unconditional undertaking by a

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creditworthy broker to deliver promptly to the Company sufficient funds to
pay the exercise price and any required tax withholding or (ii) delivery by the
Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the Company cash or
a check sufficient to pay the exercise price and any required tax withholding;

     (3)  when the Common Stock is registered under the Exchange Act, by
delivery of shares of Common Stock owned by the Participant valued at their fair
market value as determined by (or in a manner approved by) the Board in good
faith ("Fair Market Value"), provided (i) such method of payment is then
permitted under applicable law and (ii) such Common Stock, if acquired directly
from the Company, was owned by the Participant at least six months prior to such
delivery;

     (4)  to the extent permitted by applicable law and by the Board, in its
sole discretion by (i) delivery of a promissory note of the Participant to the
Company on terms determined by the Board, or (ii) payment of such other lawful
consideration as the Board may determine; or

     (5)  by any combination of the above permitted forms of payment.

     (g)  Substitute Options. In connection with a merger or consolidation of an
entity with the Company or the acquisition by the Company of property or stock
of an entity, the Board may grant Options in substitution for any options or
other stock or stock-based awards granted by such entity or an affiliate
thereof. Substitute Options may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5 or in Section 2.

6.   Restricted Stock
     ----------------

     (a)  Grants. The Board may grant Awards entitling recipients to acquire
          ------
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, a "Restricted Stock Award").

     (b)  Terms and Conditions. The Board shall determine the terms and
          --------------------
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any.

     (c)  Stock Certificates. Any stock certificates issued in respect of a
          ------------------
Restricted Stock Award shall be registered in the name of the Participant and,
unless otherwise determined by the Board, deposited by the Participant, together
with a stock power endorsed in blank, with the Company (or its designee). At the
expiration of the applicable restriction periods, the Company (or such designee)
shall deliver the certificates no longer subject to such restrictions to the
Participant or if the Participant has died, to the beneficiary designated, in a
manner determined by the Board, by a Participant to receive amounts due or
exercise rights of the Participant in the

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event of the Participant's death (the "Designated Beneficiary"). In the
absence of an effective designation by a Participant, Designated Beneficiary
shall mean the Participant's estate.

7.   Other Stock-Based Awards
     ------------------------

     The Board shall have the right to grant other Awards based upon the Common
Stock having such terms and conditions as the Board may determine, including the
grant of shares based upon certain conditions, the grant of securities
convertible into Common Stock and the grant of stock appreciation rights.

8.   Adjustments for Changes in Common Stock and Certain Other Events
     ----------------------------------------------------------------

     (a) Changes in Capitalization. In the event of any stock split, reverse
         -------------------------
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the per-Participant limit set forth in Section 4(b), (iii) the number and
class of securities and exercise price per share subject to each outstanding
Option, (iv) the repurchase price per share subject to each outstanding
Restricted Stock Award, and (v) the terms of each other outstanding Award shall
be appropriately adjusted by the Company (or substituted Awards may be made, if
applicable) to the extent the Board shall determine, in good faith, that such an
adjustment (or substitution) is necessary and appropriate. If this Section 8(a)
applies and Section 8(c) also applies to any event, Section 8(c) shall be
applicable to such event, and this Section 8(a) shall not be applicable.

     (b) Liquidation or Dissolution. In the event of a proposed liquidation or
         --------------------------
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date. The Board may specify the effect of a liquidation or
dissolution on any Restricted Stock Award or other Award granted under the Plan
at the time of the grant of such Award.

     (c) Reorganization and Change in Control Events
         -------------------------------------------

         (1) Definitions
             -----------

             (a) A "Reorganization Event" shall mean:

                 (i)  any merger or consolidation of the Company with or into
                      another entity as a result of which all of the Common
                      Stock of the Company is converted into or exchanged for
                      the right to receive cash, securities or other property;
                      or

                 (ii) any exchange of all of the Common Stock of the Company for
                      cash, securities or other property pursuant to a share
                      exchange transaction.

                                      -5-

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                       (b)  A "Change in Control Event" shall mean:

                            (i)   the acquisition by an individual, entity or
                                  group (within the meaning of Section 13(d)(3)
                                  or 14(d)(2) of the Exchange Act) (a "Person")
                                  of beneficial ownership of any capital stock
                                  of the Company if, after such acquisition,
                                  such Person beneficially owns (within the
                                  meaning of Rule 13d-3 promulgated under the
                                  Exchange Act) 50% or more of either (x) the
                                  then-outstanding shares of common stock of the
                                  Company (the "Outstanding Company Common
                                  Stock") or (y) the combined voting power of
                                  the then-outstanding securities of the Company
                                  entitled to vote generally in the election of
                                  directors (the "Outstanding Company Voting
                                  Securities"); provided, however, that for
                                                --------  -------
                                  purposes of this subsection (i), the following
                                  acquisitions shall not constitute a Change in
                                  Control Event: (A) any acquisition directly
                                  from the Company (excluding an acquisition
                                  pursuant to the exercise, conversion or
                                  exchange of any security exercisable for,
                                  convertible into or exchangeable for common
                                  stock or voting securities of the Company,
                                  unless the Person exercising, converting or
                                  exchanging such security acquired such
                                  security directly from the Company or an
                                  underwriter or agent of the Company), (B) any
                                  acquisition by any employee benefit plan (or
                                  related trust) sponsored or maintained by the
                                  Company or any corporation controlled by the
                                  Company, or (C) any acquisition by any
                                  corporation pursuant to a Business Combination
                                  (as defined below) which complies with clauses
                                  (x) and (y) of subsection (iii) of this
                                  definition; or

                            (ii)  such time as the Continuing Directors (as
                                  defined below) do not constitute a majority of
                                  the Board (or, if applicable, the Board of
                                  Directors of a successor corporation to the
                                  Company), where the term "Continuing Director"
                                  means at any date a member of the Board (x)
                                  who was a member of the Board on the date of
                                  the initial adoption of this Plan by the Board
                                  or (y) who was nominated or elected subsequent
                                  to such date by at least a majority of the
                                  directors who were Continuing Directors at the
                                  time of such nomination or election or whose
                                  election to the Board was recommended or
                                  endorsed by at least a majority of the
                                  directors who were Continuing Directors at the
                                  time of such nomination or election; provided,
                                                                       --------
                                  however, that there shall be excluded from
                                  -------
                                  this clause (y) any individual whose initial
                                  assumption of office occurred as a result of
                                  an actual or threatened election contest with
                                  respect to the election or removal of

                                      -6-

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                                  directors or other actual or threatened
                                  solicitation of proxies or consents, by or on
                                  behalf of a person other than the Board; or

                            (iii) the consummation of a merger, consolidation,
                                  reorganization, recapitalization or share
                                  exchange involving the Company or a sale or
                                  other disposition of all or substantially all
                                  of the assets of the Company (a "Business
                                  Combination"), unless, immediately following
                                  such Business Combination, each of the
                                  following two conditions is satisfied: (x) all
                                  or substantially all of the individuals and
                                  entities who were the beneficial owners of the
                                  Outstanding Company Common Stock and
                                  Outstanding Company Voting Securities
                                  immediately prior to such Business Combination
                                  beneficially own, directly or indirectly, more
                                  than 50% of the then-outstanding shares of
                                  common stock and the combined voting power of
                                  the then-outstanding securities entitled to
                                  vote generally in the election of directors,
                                  respectively, of the resulting or acquiring
                                  corporation in such Business Combination
                                  (which shall include, without limitation, a
                                  corporation which as a result of such
                                  transaction owns the Company or substantially
                                  all of the Company's assets either directly or
                                  through one or more subsidiaries) (such
                                  resulting or acquiring corporation is referred
                                  to herein as the "Acquiring Corporation") in
                                  substantially the same proportions as their
                                  ownership of the Outstanding Company Common
                                  Stock and Outstanding Company Voting
                                  Securities, respectively, immediately prior to
                                  such Business Combination and (y) no Person
                                  (excluding the Acquiring Corporation or any
                                  employee benefit plan (or related trust)
                                  maintained or sponsored by the Company or by
                                  the Acquiring Corporation) beneficially owns,
                                  directly or indirectly, 50% or more of the
                                  then-outstanding shares of common stock of the
                                  Acquiring Corporation, or of the combined
                                  voting power of the then-outstanding
                                  securities of such corporation entitled to
                                  vote generally in the election of directors
                                  (except to the extent that such ownership
                                  existed prior to the Business Combination).

                       (c)  "Good Reason" shall mean any significant diminution
                            in the Participant's title, authority, or
                            responsibilities from and after such Reorganization
                            Event or Change in Control Event, as the case may
                            be, or any reduction in the annual cash compensation
                            payable to the Participant from and after such
                            Reorganization Event or Change in Control Event, as
                            the case may be, or the relocation of

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                            the place of business at which the Participant is
                            principally located to a location that is greater
                            than 50 miles from the current site.

                       (d)  "Cause", as determined by the Board, shall mean any
                            (i) willful failure by the Participant, which
                            failure is not cured within 30 days of written
                            notice to the Participant from the Company, to
                            perform his or her material responsibilities to the
                            Company or (ii) willful misconduct by the
                            Participant which affects the business reputation of
                            the Company.

                  (2)  Effect on Options

                       (a)  Reorganization Event. Upon the occurrence of a
                            --------------------
                            Reorganization Event (regardless of whether such
                            event also constitutes a Change in Control Event),
                            or the execution by the Company of any agreement
                            with respect to a Reorganization Event (regardless
                            of whether such event will result in a Change in
                            Control Event), the Board shall provide that all
                            outstanding Options shall be assumed, or equivalent
                            options shall be substituted, by the acquiring or
                            succeeding corporation (or an affiliate thereof);
                            provided that if such Reorganization Event also
                            -------- ----
                            constitutes a Change in Control Event, except to the
                            extent specifically provided to the contrary in the
                            instrument evidencing any Option or any other
                            agreement between a Participant and the Company,
                            such assumed or substituted options shall become
                            immediately exercisable in full if, on or prior to
                            the eighteen-month anniversary of the date of the
                            consummation of the Reorganization Event, the
                            Participant's employment with the Company or the
                            acquiring or succeeding corporation is terminated
                            for Good Reason by the Participant or is terminated
                            without Cause by the Company or the acquiring or
                            succeeding corporation. For purposes hereof, an
                            Option shall be considered to be assumed if,
                            following consummation of the Reorganization Event,
                            the Option confers the right to purchase, for each
                            share of Common Stock subject to the Option
                            immediately prior to the consummation of the
                            Reorganization Event, the consideration (whether
                            cash, securities or other property) received as a
                            result of the Reorganization Event by holders of
                            Common Stock for each share of Common Stock held
                            immediately prior to the consummation of the
                            Reorganization Event (and if holders were offered a
                            choice of consideration, the type of consideration
                            chosen by the holders of a majority of the
                            outstanding shares of Common Stock); provided,
                            however, that if the consideration received as a
                            result of the Reorganization Event is not solely
                            common stock of the acquiring or succeeding
                            corporation (or an affiliate thereof), the Company
                            may, with the consent of the acquiring or succeeding
                            corporation, provide for the consideration to be
                            received upon the exercise of Options to consist
                            solely of

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                    common stock of the acquiring or succeeding corporation (or
                    an affiliate thereof) equivalent in fair market value to the
                    per share consideration received by holders of outstanding
                    shares of Common Stock as a result of the Reorganization
                    Event.

                         Notwithstanding the foregoing, if the acquiring or
                    succeeding corporation (or an affiliate thereof) does not
                    agree to assume, or substitute for, such Options, then the
                    Board shall, upon written notice to the Participants,
                    provide that all then unexercised Options will become
                    exercisable in full as of a specified time prior to the
                    Reorganization Event and will terminate immediately prior to
                    the consummation of such Reorganization Event, except to the
                    extent exercised by the Participants before the consummation
                    of such Reorganization Event; provided, however, in the
                    event of a Reorganization Event under the terms of which
                    holders of Common Stock will receive upon consummation
                    thereof a cash payment for each share of Common Stock
                    surrendered pursuant to such Reorganization Event (the
                    "Acquisition Price"), then the Board may instead provide
                    that all outstanding Options shall terminate upon
                    consummation of such Reorganization Event and that each
                    Participant shall receive, in exchange therefor, a cash
                    payment equal to the amount (if any) by which (A) the
                    Acquisition Price multiplied by the number of shares of
                    Common Stock subject to such outstanding Options (whether or
                    not then exercisable), exceeds (B) the aggregate exercise
                    price of such Options.

               (b)  Change in Control Event that is not a Reorganization Event.
                    ----------------------------------------------------------
                    Upon the occurrence of a Change in Control Event that does
                    not also constitute a Reorganization Event, except to the
                    extent specifically provided to the contrary in the
                    instrument evidencing any Option or any other agreement
                    between a Participant and the Company, each then-outstanding
                    Option shall continue to become vested in accordance with
                    the original vesting schedule set forth in such Option;
                    provided, however, that each such Option shall become
                    immediately exercisable in full if, on or prior to the
                    eighteen-month anniversary of the date of the consummation
                    of the Change in Control Event, the Participant's employment
                    with the Company or the acquiring or succeeding corporation
                    is terminated for Good Reason by the Participant or is
                    terminated without Cause by the Company or the acquiring or
                    succeeding corporation.

          (3)  Effect on Restricted Stock Awards
               ---------------------------------

               (a)  Reorganization Event that is not a Change in Control Event.
                    ----------------------------------------------------------
                    Upon the occurrence of a Reorganization Event that is not a
                    Change in Control Event, the repurchase and other rights of
                    the Company under each outstanding Restricted Stock Award
                    shall inure to the

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<PAGE>

                    benefit of the Company's successor and shall apply to the
                    cash, securities or other property which the Common Stock
                    was converted into or exchanged for pursuant to such
                    Reorganization Event in the same manner and to the same
                    extent as they applied to the Common Stock subject to such
                    Restricted Stock Award.

               (b)  Change in Control Event. Upon the occurrence of a Change in
                    -----------------------
                    Control Event (regardless of whether such event also
                    constitutes a Reorganization Event), except to the extent
                    specifically provided to the contrary in the instrument
                    evidencing any Restricted Stock Award or any other agreement
                    between a Participant and the Company, each then-outstanding
                    Restricted Stock Award shall continue to become free from
                    conditions or restrictions in accordance with the original
                    schedule set forth in such Restricted Stock Award; provided
                    however, that each such Restricted Stock Award shall
                    immediately become free from all conditions or restrictions
                    if, on or prior to the eighteen-month anniversary of the
                    date of the consummation of the Change in Control Event, the
                    Participant's employment with the Company or the acquiring
                    or succeeding corporation is terminated for Good Reason by
                    the Participant or is terminated without Cause by the
                    Company or the acquiring or succeeding corporation.

          (4)  Effect on Other Awards
               ----------------------

               (a)  Reorganization Event that is not a Change in Control Event.
                    ----------------------------------------------------------
                    The Board shall specify the effect of a Reorganization Event
                    that is not a Change in Control Event on any other Award
                    granted under the Plan at the time of the grant of such
                    Award.

               (b)  Change in Control Event. Upon the occurrence of a Change in
                    -----------------------
                    Control Event (regardless of whether such event also
                    constitutes a Reorganization Event), except to the extent
                    specifically provided to the contrary in the instrument
                    evidencing any other Award or any other agreement between a
                    Participant and the Company, each such then-outstanding
                    Award shall continue to become exercisable, realizable,
                    vested or free from conditions or restrictions in accordance
                    with the original schedule set forth in such Award;
                    provided, however, that each such Award shall immediately
                    become fully exercisable, realizable, vested or free from
                    conditions or restrictions if, on or prior to the
                    eighteen-month anniversary of the date of the consummation
                    of the Change in Control Event, the Participant's employment
                    with the Company or the acquiring or succeeding corporation
                    is terminated for Good Reason by the Participant or is
                    terminated without Cause by the Company or the acquiring or
                    succeeding corporation.

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<PAGE>

9.   General Provisions Applicable to Awards
     ---------------------------------------

     (a)  Transferability of Awards. Except as the Board may otherwise determine
          -------------------------
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable only
by the Participant. References to a Participant, to the extent relevant in the
context, shall include references to authorized transferees.

     (b)  Documentation. Each Award shall be evidenced in such form (written,
          -------------
electronic or otherwise) as the Board shall determine. Each Award may contain
terms and conditions in addition to those set forth in the Plan.

     (c)  Board Discretion. Except as otherwise provided by the Plan, each Award
          ----------------
may be made alone or in addition or in relation to any other Award. The terms of
each Award need not be identical, and the Board need not treat Participants
uniformly.

     (d)  Termination of Status. The Board shall determine the effect on an
          ---------------------
Award of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.

     (e)  Withholding. Each Participant shall pay to the Company, or make
          -----------
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. Except as the Board may otherwise
provide in an Award, when the Common Stock is registered under the Exchange Act,
Participants may satisfy such tax obligations in whole or in part by delivery of
shares of Common Stock, including shares retained from the Award creating the
tax obligation, valued at their Fair Market Value; provided, however, that the
total tax withholding where stock is being used to satisfy such tax obligations
cannot exceed the Company's minimum statutory withholding obligations (based on
minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes, that are applicable to such supplemental taxable
income). The Company may, to the extent permitted by law, deduct any such tax
obligations from any payment of any kind otherwise due to a Participant.

     (f)  Amendment of Award. The Board may amend, modify or terminate any
          ------------------
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.

     (g)  Conditions on Delivery of Stock. The Company will not be obligated to
          -------------------------------
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all

                                      -11-

<PAGE>

other legal matters in connection with the issuance and delivery of such shares
have been satisfied, including any applicable securities laws and any applicable
stock exchange or stock market rules and regulations, and (iii) the Participant
has executed and delivered to the Company such representations or agreements as
the Company may consider appropriate to satisfy the requirements of any
applicable laws, rules or regulations.

     (h)  Acceleration. The Board may at any time provide that any Award shall
          ------------
become immediately exercisable in full or in part, free of some or all
restrictions or conditions, or otherwise realizable in full or in part, as the
case may be.

10.  Miscellaneous
     -------------

     (a)  No Right To Employment or Other Status. No person shall have any claim
          --------------------------------------
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.

     (b)  No Rights As Stockholder. Subject to the provisions of the applicable
          ------------------------
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.

     (c)  Effective Date and Term of Plan. The Plan shall become effective on
          -------------------------------
the date on which the Securities and Exchange Commission declares the
registration statement on Form S-1 for the initial public offering of the
Company's Common Stock effective (the "Effective Date"). No Awards shall be
granted under the Plan after the completion of ten years from the earlier of (i)
the Effective Date or (ii) the effective date of the approval of the Plan by the
Company's stockholders, but Awards previously granted may extend beyond that
date.

     (d)  Amendment of Plan. The Board may amend, suspend or terminate the Plan
          -----------------
or any portion thereof at any time, provided that to the extent required by
Section 162(m), no Award granted to a Participant that is intended to comply
with Section 162(m) after the date of such amendment shall become exercisable,
realizable or vested, as applicable to such Award, unless and until such
amendment shall have been approved by the Company's stockholders as required by
Section 162(m) (including the vote required under Section 162(m)).

     (e)  Authorization of Sub-Plans. The Board may from time to time establish
          --------------------------
one or more sub-plans under the Plan for purposes of satisfying applicable blue
sky, securities or tax

                                      -12-

<PAGE>

laws of various jurisdictions. The Board shall establish such sub-plans by
adopting supplements to this Plan containing (i) such limitations on the Board's
discretion under the Plan as the Board deems necessary or desirable or (ii) such
additional terms and conditions not otherwise inconsistent with the Plan as the
Board shall deem necessary or desirable. All supplements adopted by the Board
shall be deemed to be part of the Plan, but each supplement shall apply only to
Participants within the affected jurisdiction and the Company shall not be
required to provide copies of any supplement to Participants in any jurisdiction
which is not the subject of such supplement.

     (f)  Governing Law. The provisions of the Plan and all Awards made
          -------------
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.

                                   Adopted by the Board of Directors on
                                   September 27, 2001, to be effective as of the
                                   Effective Date (as defined herein)

                                   Approved by the stockholders on
                                   November 15, 2001, to be effective as of the
                                   Effective Date (as defined herein)

                                      -13-<PAGE>

                               SECURITY AGREEMENT

                                                                 October 6, 2000
LipoMed, Inc.
3009 New Bern Avenue
Raleigh, North Carolina 27610
(Hereinafter referred to as the "Debtor")

First Union National Bank
150 Fayetteville Street Mall
Suite 600
Raleigh, North Carolina 27602
(Hereinafter referred to as the "Bank")

For value received and to secure the payment and performance of the Promissory
Note executed by the Debtor dated October 6, 2000, in the original principal
amount of $2,000,000.00, payable to Bank, and any extensions, renewals,
modifications or novations thereof (the "Note"), this Security Agreement and the
other Loan Documents (defined below), and any other obligations of Debtor to
Bank however created, arising or evidenced, whether direct or indirect, absolute
or contingent, now existing or hereafter arising or acquired, including swap
agreements (as defined in 11 U.S.C. (S) 101), future advances, and all costs and
expenses incurred by Bank to obtain, preserve, perfect and enforce the security
interest granted herein and to maintain, preserve and collect the property
subject to the security interest (collectively, "Obligations"), Debtor hereby
grants to Bank a continuing security interest in and lien upon certain of
Debtor's personal property (excluding Debtor Intellectual Property, Oxford
Equipment, and Centura Accounts, each as defined below), including, without
limitation, the following described property, now owned or hereafter acquired,
any additions, accessions, or substitutions thereof and thereto (including but
not limited to investment property and security entitlements), and all cash and
non-cash proceeds and products thereof (collectively, "Collateral"):

.. All accounts, contract rights, leases, and any other rights of Debtor to
payment for goods sold or leased or for services rendered, chattel paper,
instruments, documents, stock and bonds, together with all cash and non-cash
proceeds thereof (including investment property, security entitlements, and
dividends), and all credit insurance, guaranties, letters of credit, and other
security for any of the foregoing;

.. All furniture, furnishings, fixtures, equipment, machinery, accessories,
moveable trade fixtures, goods held for sale or being processed for sale in
Debtor's business, including all raw materials, supplies, and other materials
used or consumed in Debtor's business, goods in process, finished goods, and all
other items customarily classified as inventory (excluding specifically any
equipment, machinery, accessories, and similar items which may now or in the
future be covered under that certain Master Loan and Security Agreement dated
September 27, 2000 between Debtor and Oxford Venture Finance, LLC (such excluded
equipment being the "Oxford Equipment")); building improvement and construction
materials, supplies and equipment (the foregoing fixture Collateral is located
at or affixed to real property known as 3009 New Bern Avenue, Raleigh, North
Carolina;

.. All instruments, documents, chattel paper, goods, moneys, securities, drafts,
and other property of Debtor now in possession of and at any time and from time
to time hereafter delivered to Bank, its agents or affiliates, whether for
safekeeping, pledge, custody, transmission, collection, or otherwise, and all of
Debtor's deposits, demand deposit accounts, checking accounts, time savings
accounts, certificates of deposit, balances, sums, proceeds, and credits with,
and any of its claims against Bank and affiliates of Bank, at any time existing,
together with the increases and profits received therefrom and the proceeds
thereof, including insurance payable because of loss or damage thereto,
excepting specifically from the foregoing certain certificate of deposit
accounts with Centura Bank which serve as collateral under certain equipment
lease agreements between Debtor and Centura Bank (such excepted accounts being
the "Centura Accounts");

.. All general intangibles (including, without limitation, all contract rights,
tax refunds and tax refund claims, choses in action, causes of action, corporate
or other business records, goodwill, claims under guaranties, security interests
or other security held or granted to secure payment of contracts by account
debtors, all rights to indemnification and all other intangible property of
every kind and nature) excepting specifically Debtor's interest in inventions,
computer software programs, applications, and all related documentation,
designs, design rights, know-how, patents,

<PAGE>

patent applications, registered and unregistered trademarks, trade names, trade
secrets, and registered and unregistered copyrights, including amendments,
renewals, extensions, and all licenses or other rights to use the same and all
license fees and royalties from such use (such excepted property being
collectively the "Debtor Intellectual Property");

.. All parts, replacements, substitutions, profits, products and cash and
non-cash proceeds of the foregoing (including insurance and condemnation
proceeds payable by reason of condemnation of or loss or damage thereto and
excluding any such proceeds and products of Debtor Intellectual Property, Oxford
Equipment, and Centura Accounts) in any form and wherever located; and

.. All books and records relating to any of the foregoing.

Debtor hereby represents and agrees that:

OWNERSHIP. Except as disclosed on Schedule A attached hereto, Debtor owns the
                                  ----------
Collateral. Except as disclosed on Schedule A attached hereto, the Collateral is
                                   ----------
free and clear of all liens, security interests, and claims, and Debtor will
keep the Collateral free and clear from all liens, security interests and
claims, other than those granted to Bank except as is specifically disclosed to
Bank on Schedule A attached hereto.
        ----------

NAME AND OFFICES. There has been no change in the name of Debtor, or the name
under which Debtor conducts business, within the 5 years preceding the date of
execution of this Security Agreement and Debtor has not moved its executive
offices or residence within the 5 years preceding the date of execution of this
Security Agreement except as previously reported in writing to Bank. The
taxpayer identification number of Debtor as provided herein is correct.

TITLE/TAXES. Debtor has (except as disclosed on Schedule A) good and marketable
title to the Collateral and will warrant and defend same against all claims.
Debtor will not transfer, sell, or lease the Collateral (except in the ordinary
course of business). Debtor agrees to pay promptly all taxes and assessments
upon or for the use of the Collateral and on this Security Agreement. At its
option, Bank may discharge taxes, liens, security interests or other
encumbrances at any time levied or placed on Collateral. Debtor agrees to
reimburse Bank, on demand, for any such payment made by Bank. Any amounts so
paid shall be added to the Obligations.

WAIVERS. Except as otherwise provided herein or in the other Loan Documents,
Debtor waives presentment, demand, protest, notice of dishonor, notice of
default, demand for payment, notice of intention to accelerate, and notice of
acceleration of maturity. Debtor further agrees not to assert against Bank as a
defense (legal or equitable), as a set-off, as a counterclaim, or otherwise, any
claims Debtor may have against any seller or lessor that provided personal
property or services relating to any part of the Collateral. Except as otherwise
provided herein or in the other Loan Documents, Debtor waives all exemptions and
homestead rights with regard to the Collateral. Except as otherwise provided
herein or in the other Loan Documents, Debtor waives any and all rights to
notice or to hearing prior to Bank's taking immediate possession or control of
any Collateral, and to any bond or security which might be required by
applicable law prior to the exercise of any of Bank's remedies against any
Collateral.

                                       2

<PAGE>

EXTENSIONS, RELEASES. Debtor agrees that Bank may extend, renew or modify any of
the Obligations and grant any releases, compromises or indulgences with respect
to any security for the Obligations, or with respect to any party liable for the
Obligations, all without notice to or consent of Debtor and without affecting
the liability of Debtor or the enforceability of this Security Agreement.

NOTIFICATIONS OF CHANGE. Debtor will notify Bank in writing at least 30 days
prior to any change in: (i) Debtor's chief place of business; (ii) Debtor's name
or identity; or (iii) Debtor's corporate/organizational structure. Debtor will
keep Collateral at the location(s) previously provided to Bank until such time
as Bank provides written advance consent to a change of location. Debtor will
bear the cost of preparing and filing any documents necessary to protect Bank's
liens.

COLLATERAL CONDITION AND LAWFUL USE. Debtor represents that Collateral is in
good repair and condition (ordinary wear and tear excepted)and that Debtor shall
use reasonable care to prevent Collateral from being damaged or depreciating.
Debtor shall immediately notify Bank of any material loss or damage to
Collateral. Debtor shall not permit any item of equipment to become a fixture to
real estate or an accession to other personal property. Debtor represents it is
in compliance in all material respects with all federal, state and local laws,
rules and regulations applicable to its properties, Collateral, operations,
business, and finances, including, without limitation, all applicable federal,
state and local laws and regulations intended to protect the environment, the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), if
applicable, and/or any commercial crimes.

RISK OF LOSS AND INSURANCE. Debtor shall bear all risk of loss with respect to
the Collateral. The injury to or loss of Collateral, either partial or total,
shall not release Debtor from payment or other performance hereof. Debtor agrees
to obtain and keep in force casualty and hazard insurance on Collateral naming
Bank as loss payee. Such insurance is to be in form and amounts satisfactory to
Bank. All such policies shall provide to Bank a minimum of 30 days written
notice of cancellation. Debtor shall furnish to Bank such policies, or other
evidence of such policies satisfactory to Bank. Bank is authorized, but not
obligated, to purchase any or all insurance or "Single Interest Insurance"
protecting such interest as Bank deems appropriate against such risks and for
such coverage and for such amounts, including either the loan amount or value of
the Collateral, all at its discretion, and at Debtor's expense. In such event,
Debtor agrees to reimburse Bank for the cost of such insurance and Bank may add
such cost to the Obligations. Debtor shall bear the risk of loss to the extent
of any deficiency in the effective insurance coverage with respect to loss or
damage to any of the Collateral. Debtor hereby assigns to Bank the proceeds of
all such insurance and directs any insurer to make payments directly to Bank.
Debtor hereby appoints Bank its attorney-in-fact, which appointment shall be
irrevocable and coupled with an interest for so long as the Obligations are
unpaid, to file proof of loss and/or any other forms required to collect from
any insurer any amount due from any damage or destruction of Collateral, to
agree to and bind Debtor as to the amount of said recovery, to designate
payee(s) of such recovery, to grant releases to insurer, to grant subrogation
rights to any insurer, and to endorse any settlement check or draft. Debtor
agrees not to exercise any of the foregoing powers granted to Bank without the
Bank's prior written consent.

                                       3

<PAGE>

ADDITIONAL COLLATERAL. If at any time Collateral is unsatisfactory to Bank, as
determined by Bank in its reasonable, good faith judgment, then on demand of
Bank, Debtor shall immediately furnish such additional Collateral satisfactory
to Bank to be held by Bank as if originally pledged hereunder and shall execute
such additional security agreements and financing statements as requested by
Bank.

FINANCING STATEMENTS. No financing statement (other than any filed by Bank or
disclosed on Schedule A referred to above) covering any of Collateral or
             ----------
proceeds thereof is on file in any public filing office. This Security
Agreement, or a copy thereof, or any financing statement executed hereunder may
be recorded. On request of Bank, Debtor will execute one or more financing
statements in form satisfactory to Bank and will pay all costs and expenses of
filing the same or of filing this Security Agreement in all public filing
offices, where filing is deemed by Bank to be desirable. Bank is authorized to
file financing statements relating to Collateral without Debtor's signature
where authorized by law. Debtor appoints Bank as its attorney-in-fact to execute
such documents necessary to accomplish perfection of Bank's security interest.
The appointment is coupled with an interest and shall be irrevocable as long as
any Obligations remain outstanding. Debtor further agrees to take such other
actions as might be requested for the perfection, continuation and assignment,
in whole or in part, of the security interests granted herein. If certificates
are issued or outstanding as to any of the Collateral, Debtor will cause the
security interests of Bank to be properly protected, including perfection of
notation thereon.

LANDLORD/MORTGAGEE WAIVERS. Debtor shall cause each mortgagee of real property
owned by Debtor and each landlord of real property leased by Debtor to execute
and deliver instruments satisfactory in form and substance to Bank by which such
mortgagee or landlord waives its rights, if any, in the Collateral.

STOCK, DIVIDENDS. If, with respect to any security pledged hereunder, a stock
dividend is declared, any stock split made or right to subscribe is issued, all
the certificates for the shares representing such stock dividend, stock split or
right to subscribe will be immediately delivered, duly endorsed, to the Bank as
additional collateral, and any cash or non-cash proceeds and products thereof,
including investment property and security entitlements will be immediately
delivered to Bank. If Debtor has granted to Bank a security interest in
securities, Debtor acknowledges that such grant includes all investment property
and security entitlements, now existing or hereafter arising, relating to such
securities. In addition, Debtor agrees to execute such notices and instructions
to securities intermediaries as Bank may reasonably request.

CONTRACTS, CHATTEL PAPER, ACCOUNTS, GENERAL INTANGIBLES. Debtor warrants that
Collateral consisting of contract rights, chattel paper, accounts, or general
intangibles is (i) genuine and enforceable in accordance with its terms except
as limited by law; (ii) not subject to any defense, set-off, claim or
counterclaim of a material nature against Debtor; and (iii) not subject to any
other circumstances that would impair the validity, enforceability, value, or
amount of such Collateral. Debtor shall not amend, modify or supplement any
lease, contract or agreement contained in Collateral or waive any provision
therein, without prior written consent of Bank except such amendments, waivers,
modifications, or supplements as are

                                       4

<PAGE>

not material or are entered into in the ordinary course of business. Bank's
consent shall not be unreasonably withheld.

ACCOUNT INFORMATION. Debtor shall provide Bank with such account information as
is required by the applicable provisions on the Loan Agreement between Debtor
and Bank dated October 6, 2000, as may be amended from time to time.

ACCOUNT AND CONTRACT DEBTORS. After a Default occurs and only during the
continuation of such Default, Bank shall have the right to notify the account
and contract debtors obligated on any or all of the Collateral to make payment
thereof directly to Bank and Bank may take control of all proceeds of any such
Collateral, which rights Bank may exercise at any time. The cost of such
collection and enforcement, including reasonable attorneys' fees and expenses,
shall be borne solely by Debtor whether the same is incurred by Bank or Debtor.
After a Default occurs and only during the continuation of such Default, upon
demand of Bank, Debtor will, upon receipt of all checks, drafts, cash and other
remittances in payment on Collateral, deposit the same in a special bank account
maintained with Bank, over which Bank also has the power of withdrawal.

If a Default occurs and only during the continuation of such Default, no
discount, credit, or allowance shall be granted by Debtor to any account or
contract debtor and no return of merchandise shall be accepted by Debtor without
Bank's consent. Bank may, after Default and only during the continuation of such
Default, settle or adjust disputes and claims directly with account contract
debtors for amounts and upon terms that Bank considers advisable, and in such
cases, Bank will credit the Obligations with the net amounts received by Bank,
after deducting all of the expenses incurred by Bank. Debtor agrees to indemnify
and defend Bank and hold it harmless with respect to any claim or proceeding
arising out of any matter related to collection of Collateral.

GOVERNMENT CONTRACTS. If any Collateral covered hereby arises from obligations
due to Debtor from any governmental unit or organization, Debtor shall
immediately notify Bank in writing and execute all documents and take all
actions demanded by Bank to ensure recognition by such governmental unit or
organization of the rights of Bank in the Collateral.

INVENTORY. So long as no Default has occurred, Debtor shall have the right in
the regular course of business, to process and sell Debtor's inventory. Upon
demand of Bank in the event of Default and only during the continuation of such
Default, Debtor will, upon receipt of all checks, drafts, cash and other
remittances, in payment of Collateral sold, deposit the same in a special bank
account maintained with Bank, over which Bank also has the power of withdrawal.
Debtor shall comply with all federal, state, and local laws, regulations,
rulings, and orders applicable to Debtor or its assets or business, in all
respects. Without limiting the generality of the previous sentence, Debtor shall
comply with all requirements of the federal Fair Labor Standards Act in the
conduct of its business and the production of inventory. Debtor shall notify
Bank immediately of any violation by Debtor of the Fair Labor Standards Act, and
a failure of Debtor to so notify Bank shall constitute a continuing
representation that all inventory then existing has been produced in compliance
with the Fair Labor Standards Act.

                                       5

<PAGE>

INSTRUMENTS, CHATTEL PAPER. Any Collateral that is instruments, chattel paper
and negotiable documents will be properly assigned to, deposited with and held
by Bank, unless Bank shall hereafter otherwise direct or consent in writing.
Bank may, without notice, before or after maturity of the Obligations, exercise
any or all rights of collection, conversion, or exchange and other similar
rights, privileges and options pertaining to Collateral, but shall have no duty
to do so.

COLLATERAL DUTIES. Bank shall have no custodial or ministerial duties to perform
with respect to Collateral pledged except as set forth herein; and by way of
explanation and not by way of limitation, Bank shall incur no liability for any
of the following: (i) loss or depreciation of Collateral (unless caused by its
gross negligence or willful misconduct), (ii) its failure to present any paper
for payment or protest, to protest or give notice of nonpayment, or any other
notice with respect to any paper or Collateral, or (iii) its failure to present
or surrender for redemption, conversion or exchange any bond, stock, paper or
other security whether in connection with any merger, consolidation,
recapitalization, or reorganization, arising out of the refunding of the
original security, or for any other reason, or its failure to notify any party
hereto that Collateral should be so presented or surrendered.

TRANSFER OF COLLATERAL. The Bank may assign its rights in the Collateral or any
part thereof to any assignee who shall thereupon become vested with all the
powers and rights herein given to the Bank with respect to the property so
transferred and delivered, and the Bank shall thereafter be forever relieved and
fully discharged from any liability with respect to such property so
transferred, but with respect to any property not so transferred the Bank shall
retain all rights and powers hereby given. Bank agrees to notify Borrower
promptly following any such assignment.

SUBSTITUTE COLLATERAL. With prior written consent of Bank, other Collateral may
be substituted for the original Collateral herein in which event all rights,
duties, obligations, remedies and security interests provided for, created or
granted shall apply fully to such substitute Collateral.

INSPECTION, BOOKS AND RECORDS. Debtor will at all times keep accurate and
complete records covering each item of Collateral, including the proceeds
therefrom. Bank, or any of its agents, shall have the right, at intervals to be
determined by Bank and without hindrance or delay, to inspect, audit, and
examine the Collateral and to make extracts from the books, records, journals,
orders, receipts, correspondence and other data relating to Collateral, Debtor's
business or any other transaction between the parties hereto. Debtor will at its
expense furnish Bank copies thereof upon request.

ATTORNEYS' FEES AND OTHER COSTS OF COLLECTION. Debtor shall pay all of Bank's
reasonable expenses incurred in enforcing this Security Agreement and in
preserving and liquidating Collateral, including but not limited to, reasonable
arbitration, paralegals', attorneys' and experts' fees and expenses, whether
incurred without the commencement of a suit, in any trial, arbitration, or
administrative proceeding, or in any appellate or bankruptcy proceeding.

                                       6

<PAGE>

DEFAULT. If any of the following occurs, a default ("Default") under this
Security Agreement shall exist: (i) The failure of timely payment or performance
of any of the Obligations or a default under any Loan Document; (ii) Any breach
of any representation or agreement contained or referred to in this Security
Agreement or other Loan Document which remains uncured for more than 30 days
after receipt of written notice thereof; (iii) Any loss, theft, substantial
damage, or destruction of Collateral not fully covered by insurance, or as to
which insurance proceeds are not remitted to Bank within 30 days of the loss;
any sale (except the sale of inventory in the ordinary course of business),
lease, or encumbrance of any of Collateral without prior written consent of
Bank; or the making of any levy, seizure, or attachment on or of Collateral
which is not removed within 20 days; or (iv) The dissolution of, termination of
existence of, loss of good standing status by (which remains uncured for more
than 60 days), or appointment of a receiver for, assignment for the benefit of
creditors of, or commencement of any bankruptcy or insolvency proceeding by or
against Debtor, its Subsidiaries or Affiliates which is not dismissed or stayed
within 60 days ("Affiliate" shall have the meaning as defined in 11 U.S.C. ss.
101; and "Subsidiary" shall mean any corporation of which more than 50% of the
issued and outstanding voting stock is owned directly or indirectly by Debtor),
if any, or any general partner of or the holder(s) of the majority ownership
interests in Debtor or any party to the Loan Documents.

REMEDIES ON DEFAULT (INCLUDING POWER OF SALE). If a Default occurs, all of the
Obligations shall be immediately due and payable, without notice, and, during
the continuance of a Default, Bank shall have all the rights and remedies of a
secured party under the Uniform Commercial Code. Without limitation thereto,
Bank shall have the following rights and remedies: (i) to take immediate
possession of Collateral, without notice or resort to legal process, and for
such purpose, to enter upon any premises on which Collateral or any part thereof
may be situated and to remove the same therefrom, or, at its option, to render
the Collateral unusable or dispose of said Collateral on Debtor's premises; (ii)
to require Debtor to assemble the Collateral and make it available to Bank at a
place to be designated by Bank; (iii) to exercise its right of set-off or bank
lien as to any monies of Debtor deposited in demand, checking, time, savings,
certificate of deposit or other accounts of any nature maintained by Debtor with
Bank or Affiliates of Bank, without advance notice, regardless of whether such
accounts are general or special; (iv) to dispose of Collateral, as a unit or in
parcels, separately or with any real property interests also securing the
Obligations, in any county or place to be selected by Bank, at either private or
public sale (at which public sale Bank may be the purchaser) with or without
having the Collateral physically present at said sale. Any notice of sale,
disposition or other action by Bank required by law and sent to Debtor at
Debtor's address shown above, or at such other address of Debtor as may from
time to time be shown on the records of Bank, at least 5 days prior to such
action, shall constitute reasonable notice to Debtor. Notice shall be deemed
given or sent when mailed postage prepaid to Debtor's address as provided
herein. Bank shall be entitled to apply the proceeds of any sale or other
disposition of the Collateral, and the payments received by Bank with respect to
any of the Collateral, to the Obligations in such order and manner as Bank may
determine. Collateral that is subject to rapid declines in value and is
customarily sold in recognized markets may be disposed of by Bank in a
recognized market for such collateral without providing notice of sale.

REMEDIES ARE CUMULATIVE. No failure on the part of Bank to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any

                                       7

<PAGE>

single or partial exercise by Bank or any right, power or remedy hereunder
preclude any other or further exercise thereof or the exercise of any right,
power or remedy. The remedies herein provided are cumulative and are not
exclusive of any remedies provided by law, in equity, or in other Loan
Documents.

MISCELLANEOUS. (i) Amendments and Waivers. Except for waivers provided by the
Bank, no waiver, amendment or modification of any provision of this Security
Agreement shall be valid unless in writing and signed by an officer of both
parties. No waiver by Bank of any Default shall operate as a waiver of any other
Default or of the same Default on a future occasion. Neither the failure of, nor
any delay by, Bank in exercising any right, power or privilege granted pursuant
to this Security Agreement shall operate as a waiver thereof, nor shall a single
or partial exercise thereof preclude any other or further exercise of any other
right, power or privilege.(ii) Assignment. All rights of Bank hereunder are
freely assignable, in whole or in part, and shall inure to the benefit of and be
enforceable by Bank, its successors, assigns and affiliates. Bank agrees to
notify Borrower promptly following any such assignment. Debtor shall not assign
its rights and interest hereunder without the prior written consent of Bank, and
any attempt by Debtor to assign without Bank's prior written consent is null and
void. Any assignment shall not release Debtor from the Obligations. This
Security Agreement shall be binding upon Debtor, and the successors and assigns
of Debtor. (iii) Applicable Law; Conflict Between Documents. This Security
Agreement shall be governed by and construed under the law of the State of North
Carolina without regard to that state's conflict of laws principles. If any
terms of this Security Agreement conflict with the terms of any commitment
letter or loan proposal, the terms of this Security Agreement shall control.
(iv) Jurisdiction. Debtor irrevocably agrees to non-exclusive personal
jurisdiction in the State of North Carolina. (v) Severability. If any provisio
of this Security Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective but only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Security Agreement. (vi) Notices. Any
notices to Debtor shall be sufficiently given, if in writing and mailed or
delivered personally or via overnight courier to the address of Debtor shown
above or such other address as provided hereunder; and to Bank, if in writing
and mailed or delivered personally or via overnight courier to Bank's office
address shown above or such other address as Bank may specify in writing from
time to time. In the event that the Debtor changes Debtor's mailing address at
any time prior to the date the Obligations are paid in full, Debtor agrees to
promptly give written notice of said change of address by registered or
certified mail, return receipt requested, all charges prepaid. (vii) Captions.
The captions contained herein are inserted for convenience only and shall not
affect the meaning or interpretation of this Security Agreement or any provision
hereof. The use of the plural shall also mean the singular, and vice versa.
(viii) Loan Documents. The term "Loan Documents" refers to all documents,
whether now or hereafter existing, executed in connection with the Obligations
and may include, without limitation and whether executed by Borrower, Debtor or
others, commitment letters, loan agreements, guaranty agreements, other security
agreements, letters of credit, instruments, financing statements, mortgages,
deeds of trust, deeds to secure debt, and any amendments or supplements
(excluding swap agreements as defined in 11 U.S.C. (S)101). (ix) Binding
Contract. Debtor by execution and Bank by acceptance of this Security Agreement,
agree that each party is bound by all terms and provisions of this Security
Agreement.

                                       8

<PAGE>

IN WITNESS WHEREOF, Debtor, on the day and year first written above, has caused
this Security Agreement to be executed.

                           LipoMed, Inc.

                           By: /s/ Richard Franco
                               -------------------------------------
                               Richard A. Franco, President

                                       9

<PAGE>
                                   SCHEDULE A
                     TO SECURITY AGREEMENT / LOAN AGREEMENT

Existing Liens, Encumbrances:

1. Certain equipment used in connection with the Debtor's business and located
(or to be located) at the Debtor's facility will be subject to a security
agreement and lien in favor of Oxford Venture Finance, LLC ("Oxford") and GE
Capital Corporation pursuant to the terms of a Master Loan and Security
Agreement dated September 27, 2000 between Debtor and Oxford (the "Master Loan
Agreement"). The equipment financed under the Master Loan Agreement will be
owned by Debtor and subject to a first priority lien in favor of Oxford. Debtor
is currently finalizing its initial advance under the Master Loan Agreement; it
is anticipated that up to $2,000,000 of equipment will be financed under this
facility. UCC financings statements will be filed in connection with each
equipment loan advance.

2. Pursuant to the terms of a Financial Assistance Agreement dated December 1,
1998 between Debtor and the North Carolina Biotechnology Center ("NCBC") and a
Promissory Note in favor of NCBC in the principal amount of $99,298, NCBC is
entitled to secure the obligations owed to it through a first lien (and the
filing of appropriate UCC financing statements) on real or personal property
purchased with funds received by Debtor from NCBC.

3. Debtor has pledged Certificate of Deposit Accounts maintained at Centura Bank
in the aggregate amount of $135,000 as collateral to secure Debtor's obligations
under [Equipment] Lease Agreements dated April 8, 1998, July 16, 1998 and March
29, 1999, respectively, between Debtor and Centura Bank. Centura Bank has filed
UCC financing statements on the equipment leased under these agreements.

4. Debtor has entered into several equipment lease agreements for office and
related equipment used in its business, pursuant to which the Lessors have filed
UCC financing statements covering the leased equipment.

5. Debtor has issued Convertible Promissory Notes dated June 30, 1997, August
20, 1997 and September 26, 1997, respectively, in the aggregate principal amount
of $300,000.00 to each of John W. Otvos, Michael A. Harpold, Charles A. Sanders,
Daniel C. Arnold, Stephen K. Markham and Richard A. Franco (the "Lenders"),
which are secured pursuant to a Security Agreement, dated as of June 30, 1997,
as amended, executed by Debtor. The collateral securing the loans includes
certain equipment, inventory, patent rights, copyrights, licensing rights and
accounts of Debtor. The Lenders have filed UCC financing statements covering
such collateral. Each of the Lenders has agreed to subordinate his rights under
the Note and the Security Agreement to the rights of First Union pursuant to a
Subordination Agreement dated as of October 6, 2000 by and among the Debtor,
First Union National Bank and the Lenders.

                                       10

<PAGE>

                      FIRST AMENDMENT TO SECURITY AGREEMENT

         THIS FIRST AMENDMENT TO SECURITY AGREEMENT (the "First Amendment") is
entered into as of the 19 day of December, 2001 by and between LIPOMED, INC., a
North Carolina corporation ("Debtor") and FIRST UNION NATIONAL BANK, N. A., a
national banking association ("Bank").

                               W I T N E S S E T H
                               -------------------

         WHEREAS, Debtor and Bank entered into a Security Agreement dated as of
October 6, 2000, (the "Security Agreement"); and

         WHEREAS, the parties now desire to amend the Security Agreement
effective as of the date hereof;

         NOW THERFORE, in consideration of mutual promises between the parties
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree to the following amendments to
the Security Agreement:

1.       References to the "Loan Documents" in the Security Agreement are hereby
         modified to include that Promissory Note from Borrower to Bank in the
         principal amount of $2,000,000.00 dated October 6, 2001, as modified by
         the Renewal Agreement dated July 17, 2001 (the "Renewal Agreement") and
         Modification and Estoppel Agreement dated of even date herewith (the
         "Note") and that Loan Agreement between Debtor and Bank dated October
         6, 2000, as modified by the Renewal Agreement and amended by First
         Amendment to Loan Agreement dated of even date herewith, and as they
         may be modified, extended or renewed from time to time.

2.       The Security Agreement is modified to provide that the security
         interest granted therein shall secure all obligations of Borrower under
         the Note and Loan Agreement, as amended, and the other Loan Documents,
         as amended, as well as all obligations of Borrower in connection with
         any letters of credit issued by Bank for the account of Borrower under
         the terms of the Loan Agreement, as amended.

3.       Except as modified by this First Amendment, all terms and conditions of
         the Security Agreement remain in full force and effect. The Security
         Agreement as modified by this First Amendment, and all documents
         executed in connection therewith are ratified and confirmed by the
         parties, with those of said documents executed therewith applying to
         the Security Agreement now applying with full force and effect to the
         Security Agreement, as modified by this First Amendment.

4.       This First Amendment may be executed in multiple counterparts which,
         taken together, shall be deemed one original.

<PAGE>

         IN WITNESS WHEREOF, the parties have caused this First Amendment to be
executed by their duly authorized officers as of the date first above written.

                                   BORROWER:

                                   LIPOMED, INC.

                                   By:   /s/ F. Ronald Stanton
                                      ------------------------------------------
                                   Print Name:  F. Ronald Stanton
                                              ----------------------------------
                                   Title: President and CEO
                                         ---------------------------------------

                                   (AFFIX CORPORATE SEAL)

                                   BANK:

                                   FIRST UNION NATIONAL BANK, N.A.

                                   By:   /s/ C. Douglass Riddle
                                      ------------------------------------------
                                   Print Name:   C. Douglass Riddle
                                              ----------------------------------
                                   Title: Senior Vice President
                                         ---------------------------------------

                                       2

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