Document:

Exhibit 10.4  

2001 PERFORMANCE EQUITY PLAN

INCENTIVE STOCK OPTION AGREEMENT  

        THIS AGREEMENT made and entered into as of the
[    ]th day of [                        ]
200[    ] (the "Grant Date"), by Lipid Sciences, Inc., a Delaware corporation (the "Company"), and
[                        ] (the "Participant") whose signature is set forth on the signature page hereof. 

RECITALS  

        WHEREAS, the Company has adopted the Lipid Sciences, Inc. 2001 Performance Equity Plan (the "Plan"), which
provides for the grant of incentive stock options to Employees and other eligible individuals; 

        WHEREAS, Participant is an Employee 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 incentive stock option to purchase common stock of the Company (the "Common Stock")
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; and 

AGREEMENT  

        NOW, THEREFORE, the parties agree as follows (any capitalized terms used herein but not defined herein will 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 an
Incentive 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. The Option is intended to be an
"incentive stock option" as defined in Section 422 of the Code; provided, however, that to the extent that the aggregate Fair Market Value
(measured on the grant dates) of Common Stock, with respect to which the Option and all other incentive stock options of the Participant under the Plan and all other plans of the Company and its
parent and subsidiary corporations is exercisable for the first time by the Participant during any calendar year, exceeds $100,000, the Option shall be a Nonqualified Stock Option. The incentive stock
options or portions of stock options to be reclassified as Nonqualified Stock Options are those with the highest option prices. 

        (b)   Term.    The
term of the Option will expire at 11:59 p.m. on the date which is 10 years following the date of grant
of the Option. 

        (c)   Vesting.    Options
will vest as to [            ] shares following the
first [            ] continuous months of service with the Company and the remainder over
[            ] years at the rate of [            ] per
[            ] of the total [            ] shares. 

2

 

        (d)   [Change
of Control.    Notwithstanding the vesting schedule set forth in Subsection 1(c), effective upon a Change of
Control (defined below), the Option shall become immediately exercisable, and the Participant shall fully vest in the right to exercise the Option, with respect to 100% of the shares subject to the
Option. For purposes of this Subsection 1(d), a "Change of Control" means: 

        (i)    the
acquisition by any individual, entity or group of "beneficial ownership" (within the meaning of Rule 13d-3 promulgated under the Exchange Act of
1934) of 30% or more of the then
outstanding voting securities of the Corporation entitled to vote generally in the election of directors or of equity securities having a value equal to 30% or more of the total value of all equity
securities of the Corporation, provided, however, that the following acquisitions of shares or other securities shall not constitute a Change of Control: (A) any acquisition directly from the
Corporation of newly issued equity securities, (B) any acquisition by the Corporation or (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the
Corporation or any of its Affiliates (as defined in Regulation D under the Securities Act of 1933); 

        (ii)   individuals
who as of the effective date of the relevant option agreement constitute the Corporation's Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Corporation's Board, except that any director whose election or nomination for election was approved by the vote of at least a majority of directors then comprising the
Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding for this purpose any individual whose initial assumption of office occurs as the
result of either an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Corporation's Board; 

        (iii)  there
occurs a reorganization, merger, consolidation, share exchange or other corporate transaction involving the Corporation or an Affiliate (a "Transaction"), in
each case with respect to which the persons who have beneficial ownership, directly or indirectly, of all of the combined voting power of the Corporation immediately prior to such Transaction do not,
immediately after the Transaction, have beneficial ownership, directly or indirectly, of more than 50% of the combined voting power of the Corporation or other corporation resulting from such
Transaction; 

        (iv)  assets
having a value of more than 50% of the value of all of the Corporation's assets, taken as a whole, are sold, liquidated or distributed in one or more
transactions; 

        (v)   the
liquidation or dissolution of the Corporation; or 

        (vi)  the
occurrence of any other transaction or event that the Committee specifies, either before or after the occurrence of such transaction or event, constitutes a "Change
of Control".] 

        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 will be paid in cash, by
certified check or cashier's check payable to the Company, or by the surrender of a whole number of previously owned 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 through a broker assisted cashless exercise
program 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. 

3

 

"Spread"
means the Fair Market Value on the date of exercise of the underlying shares less the exercise price. Participant will also be required to submit a completed exercise agreement on a form
approved by the Company. No portion of the Option may be exercised after it has expired pursuant to Section 1 hereof. 

        3.     Withholding.    If
any part of this Option is not permitted to be an Incentive Stock Option under the Code, then the Participant
agrees to pay to the Company such amount as is requested by the Company for the purpose of satisfying the Company's obligation to withhold federal, state or local taxes in connection with any exercise
of any non-qualified portion 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 will be a whole
number, have a Fair Market Value that shall not exceed the amount determined by the applicable minimum statutory withholding rates as of the date that the amount of tax to be withheld is to be
determined, will be free of all adverse claims, and will be duly endorsed in blank by Participant or accompanied by stock powers duly endorsed in blank. 

        4.     Non-transferability.    Participant
will have no rights to sell, assign, transfer, pledge, or otherwise alienate the
Option under this Agreement, except by will or by the laws of descent, and any such attempted sale, assignment, transfer, pledge or other conveyance will be null and void. The Option will be
exercisable during the Participant's lifetime only by the Participant (or his or her legal representative). 

        5.     Adjustments
upon Changes in Capitalization.    The number, kind and class of shares of Common Stock subject to this Option and the
Exercise Price shall be equitably adjusted, substituted or converted in the event of a stock split, stock dividend, recapitalization, reorganization, merger, consolidation, extraordinary dividend,
split-off, spin-off, combination, exchange of shares or other similar corporate event affecting the Common Stock, in any case, in order to preserve the benefits or potential
benefits intended to be made available to the Participant hereunder. The foregoing adjustments shall be made by the Committee, the determination of which as to whether and which adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive on all parties affected thereby. 

        6.     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") will 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 will be controlling; provided,
however, that no designation, or change or revocation thereof, will be effective unless received by the Board of Directors prior to Participant's death, and in no event will
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 will be entitled to exercise the Option, to the extent it is exercisable after the death of Participant. 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 file an interpleader action with any court of appropriate jurisdiction and such application will be a complete
discharge of the liability of the Company therefore. 

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        7.     Limited
Interest. 

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

        (b)   Participant
will have no rights as a shareholder as a result of the grant of the Option, until the Option is exercised, the exercise price is paid, and the shares are
issued thereunder. 

        (c)   The
grant of the Option will 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's employment at any time. 

        (d)   The
grant of the Option will 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. 

        8.     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 will govern. 

        9.     Entire
Agreement.    This Agreement and the Plan constitute the entire contract between the parties hereto with regard to the
subject matter hereof. They supersede all other agreements, representations or understandings (whether oral or written and whether express or implied) that relate to the subject hereof. 

        10.   Notices.    Any
notice required by the terms of this Agreement shall be given in writing and shall be deemed effective upon
personal delivery or upon deposit with the United States Postal Service, by registered or certified mail, with postage and fees prepaid. Notice shall be addressed to the Company at its principal
executive office and to the Participant at the address that he or she most recently provided to the Company. 

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

        12.   Amendment.    This
Agreement may not be amended, modified, terminated or otherwise altered except by the written consent of the
parties hereto. 

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

        14.   Successors
and Assigns.    Except to the extent otherwise provided in Section 4 hereof, the provisions of this Agreement
shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and the Participant, the Participant's assigns and the legal representatives, heirs and legatees of the
Participant's estate. 

        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. 

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	 	 	LIPID SCIENCES, INC.
	

Date:             	
 	

By:	
 	

 S. Lewis Meyer Ph.D.

President/CEO

("Company")
	

Date:             	
 	

 	
 	

 [Participant Name]

("Participant")

	No. of Shares: [            ]	 	Grant Date: [            ]
	

Exercise Price Per Share: $[            ]	
 	

Initial Exercise Date: [            ]
	

Beneficiary: [            ]	
 	

Option Expiration Date: [            ]
	

Beneficiary Tax Identification No.:	
 	

Address of Beneficiary:
	

[                              ]	
 	

[                              
	

 	
 	

                              ]

6Exhibit 10.5  

2001 PERFORMANCE EQUITY PLAN NONQUALIFIED STOCK OPTION AGREEMENT

(Non-Employees)  

        THIS AGREEMENT made and entered into as of the [    ]th day
of [                        ] 200[    ] (the "Grant Date"), by Lipid Sciences, Inc., a
Delaware corporation (the "Company"), and [                        ] (the "Participant") whose signature is set forth on
the signature page hereof. 

RECITALS  

        WHEREAS, the Company has adopted the Lipid Sciences, Inc. 2001 Performance Equity Plan (the "Plan"), which
provides for the grant of options to non-employee members of the Board of Directors of the Company (the "Board") and consultants of the Company. 

        WHEREAS, the Participant is a non-employee member of the Board or consultant of the Company and is in a position to contribute
materially to the continued growth and development and the future financial success of the Company; and 

        WHEREAS, the Company wishes to grant to the Participant an option to purchase common stock of the Company (the "Common Stock") 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 will 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 the Participant a
Non-Qualified Stock Option (the "Option") to purchase all or any part of the shares of Common Stock subject to the Option, as set forth on the signature page hereof, at the exercise price
(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
[tenth/fifth] anniversary of the Grant Date. 

        (c)   Vesting.    This
Option shall vest over [            ] years at the rate
of [            ] per [            ] of the total
[            ] shares, such that the Option shall be fully vested on
[                        ]. 

        (d)   [Change
of Control.    Notwithstanding the vesting schedule set forth in Subsection 1(c), effective upon a Change of
Control (defined below), the Option shall become immediately exercisable, and the Participant shall fully vest in the right to exercise the Option, with respect to 100% of the shares subject to the
Option. For purposes of this Subsection 1(d), a "Change of Control" means: 

        (i)    the
acquisition by any individual, entity or group of "beneficial ownership" (within the meaning of Rule 13d-3 promulgated under the Exchange Act of
1934) of 30% or more of 

1

 

the
then outstanding voting securities of the Corporation entitled to vote generally in the election of directors or of equity securities having a value equal to 30% or more of the total value of all
equity securities of the Corporation, provided, however, that the following acquisitions of shares or other securities shall not constitute a Change of Control: (A) any acquisition directly
from the Corporation of newly issued equity securities, (B) any acquisition by the Corporation or (C) any acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Corporation or any of its Affiliates (as defined in Regulation D under the Securities Act of 1933); 

        (ii)   individuals
who as of the effective date of the relevant option agreement constitute the Corporation's Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Corporation's Board, except that any director whose election or nomination for election was approved by the vote of at least a majority of directors then comprising the
Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding for this purpose any individual whose initial assumption of office occurs as the
result of either an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Corporation's Board; 

        (iii)  there
occurs a reorganization, merger, consolidation, share exchange or other corporate transaction involving the Corporation or an Affiliate (a "Transaction"), in
each case with respect to which the persons who have beneficial ownership, directly or indirectly, of all of the combined voting power of the Corporation immediately prior to such Transaction do not,
immediately after the Transaction, have beneficial ownership, directly or indirectly, of more than 50% of the combined voting power of the Corporation or other corporation resulting from such
Transaction; 

        (iv)  assets
having a value of more than 50% of the value of all of the Corporation's assets, taken as a whole, are sold, liquidated or distributed in one or more
transactions; 

        (v)   the
liquidation or dissolution of the Corporation; or 

        (vi)  the
occurrence of any other transaction or event that the Committee specifies, either before or after the occurrence of such transaction or event, constitutes a "Change
of Control".] 

        2.     Exercise.    No
Option shall be exercisable prior to the date it is vested or after the expiration date. The Participant may,
subject to the limitations of this Agreement, 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
certified check or cashier's check payable to the Company, or by the surrender of a whole number of shares (free of all adverse claims and duly endorsed in blank by the 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 through a broker assisted cashless exercise program 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. In order to exercise the Option, the Participant shall also submit a completed exercise agreement on a form approved by the
Company. No portion of the Option shall be exercisable after it has expired pursuant to Section 1 hereof. 

        3.     Withholding.    The
Company may deduct and withhold from any cash payable to the 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 

2

 

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 that shall not exceed the amount determined by
the applicable minimum statutory withholding rates as of the date that the amount of tax to be withheld is to be determined, shall be free of all adverse claims, and shall be duly endorsed in blank by
the Participant or accompanied by stock powers duly endorsed in blank. 

        4.     Non-transferability.    The
Participant shall have no rights to sell, assign, transfer, pledge, assign or otherwise
alienate this Option, 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 the Employee Retirement Income
Security Act of 1974, as amended, 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). 

        5.     Legality
of Issuance.    Anything in this Agreement or otherwise to the contrary notwithstanding, no shares shall be issued upon
the exercise of this Option unless and until the Company has determined that: 

        (a)   The
Company and the Participant have taken all actions required to register the shares under the Securities Act or to perfect an exemption from the registration
requirements thereof; 

        (b)   All
applicable listing requirements of any stock exchange or other securities market on which the Common Stock is listed has been satisfied; and 

        (c)   Any
other applicable provision of state or federal law has been satisfied. 

        6.     Adjustments
upon Changes in Capitalization.    The number, kind and class of shares of Common Stock subject to this Option and the
Exercise Price shall be equitably adjusted, substituted or converted in the event of a stock split, stock dividend, recapitalization, reorganization, merger, consolidation, extraordinary dividend,
split-off, spin-off, combination, exchange of shares or other similar corporate event affecting the Common Stock, in any case, in order to preserve the benefits or potential
benefits intended to be made available to the Participant hereunder. The foregoing adjustments shall be made by the Committee, the determination of which as to whether and which adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive on all parties affected thereby. 

        7.     Beneficiary.    The
person whose name appears on the signature page hereof after the caption "Beneficiary" or any successor
designated by the Participant in accordance herewith (the person who is the 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 the Participant. The 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 shall be controlling; provided,
however, that no designation, or change or revocation thereof, shall be effective unless received by the Board prior to the 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 the Participant's death, or if no designated Beneficiary survives the Participant
or if such designation conflicts with law, the Participant's estate shall be entitled to exercise the Option, to the extent it is exercisable after the death of the Participant. If the Board 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
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 therefore. 

3

 

        8.     Limited
Interest. 

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

        (b)   The
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 this Option shall not confer on the Participant any right to continue as an employee, nor interfere in any way with the right of the Company to terminate
the Participant's employment or other service relationship with the Company 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. 

        9.     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. 

        10.   Entire
Agreement.    This Agreement and the Plan constitute the entire contract between the parties hereto with regard to the
subject matter hereof. They supersede all other agreements, representations or understandings (whether oral or written and whether express or implied) that relate to the subject hereof. 

        11.   Notices.    Any
notice required by the terms of this Agreement shall be given in writing and shall be deemed effective upon
personal delivery or upon deposit with the United States Postal Service, by registered or certified mail, with postage and fees prepaid. Notice shall be addressed to the Company at its principal
executive office and to the Participant at the address that he or she most recently provided to the Company. 

        12.   Governing
Law.    This Agreement shall be governed by and construed in accordance with the laws of the State of California,
without regard to the choice of law provisions thereof. 

        13.   Amendment.    This
Agreement shall not be amended, modified, terminated or otherwise altered except by the written consent of the
parties thereto. 

        14.   Counterparts.    This
Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but
all of which together shall constitute one and the same instrument. 

        15.   Successors
and Assigns.    Except to the extent otherwise provided in Section 4 hereof, the provisions of this Agreement
shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and the Participant, the Participant's assigns and the legal representatives, heirs and legatees of the
Participant's estate. 

        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. 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

4

 

	 	 	LIPID SCIENCES, INC.
	

Date:             	
 	

By:	
 	

 
	 	 	 	 	
 S. Lewis Meyer Ph.D.

President/CEO

("Company")
	

Date:             	
 	

 	
 	

 
	 	 	 	 	
 [Participant Name]

("Participant")

	

 	
 	

 
	No. of Shares: [            ]	 	Grant Date: [            ]
	

Exercise Price Per Share: $[            ]	
 	

Initial Exercise Date: [            ]
	

Beneficiary: [            ]	
 	

Option Expiration Date: [            ]
	

Beneficiary Tax Identification No.:	
 	

Address of Beneficiary:
	

[                              ]	
 	

[                              
	

 	
 	

                              ]

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