Sample Business Contracts

Service Agreement - Lipid Sciences Inc., Karuba International Pty Ltd. and Bill E. Cham

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                                              SERVICE AGREEMENT


                                        KARUBA INTERNATIONAL PTY LTD

This Agreement is between Lipid Sciences, Inc., a Delaware Corporation, having
an address at 7068 Koll Center Parkway, Suite 401, Pleasanton, California 94566
(hereinafter referred to as "LSI") and KARUBA INTERNATIONAL PTY LTD, an
Australian corporation, having an address at 190 Woodlands Drive, Thornlands
QLD, Australia (hereinafter referred to as "Consultant") and Dr Bill E. Cham,
having an address at 190 Woodlands Drive, Thornlands QLD, Australia,
(hereinafter referred to as the "Nominated Person").

Whereas Aruba International Pty Ltd (hereinafter "Aruba") an Australian Company
having an address at Rocklea Junction, 14/1645 Ipswich Road, Rocklea, Queensland
4106; and LSI are parties under an Intellectual Property Agreement dated
December 29, 2001 (hereinafter "License Agreement").

Whereas Aruba wishes to direct Consultant and hereby does direct Consultant to
satisfy certain of its obligations to LSI under the License Agreement.

Whereas the Parties agree to have the Consultant provide Services to LSI through
the Nominated Person, the Parties agree as follows:

1.       SERVICES

         Aruba hereby directs Karuba International Pty Ltd to provide services
         to LSI, through the Nominated Person, which to satisfy Aruba's
         obligations under Section 2.2 of the License Agreement. Consultant
         shall provide to LSI the Services set out in Schedule 1 (hereinafter
         referred to as "Services") through the Nominated Person.

2.       TERM

         The term of this Agreement shall be for a term of one (1) year
         commencing on the date last subscribed below ("Effective Date"), which
         term will be automatically renewed thereafter. Either party may
         terminate this Agreement, without cause, upon thirty (30) days written
         notice. In the event of such termination by LSI, Consultant shall
         receive the monthly compensation fee agreed to herein for a period of
         four months from the date of termination. The Parties agree that
         sections 4-10 shall survive expiration or termination of this


         In consideration of the Services provided by the Consultant under this
         Agreement, LSI shall pay Consultant the fees provided for in Schedule 2
         ("Fees for Services"). Consultant and Nominated Person understands that
         neither Consultant or Nominated Person, is eligible for and shall not
         be entitled to receive any LSI employee benefits, including medical
         coverage, workers' compensation insurance, disability insurance,
         unemployment benefits, sick leave, long service leave, annual leave or
         other similar benefits or other insurance protection LSI provides to
         its employees. Consultant further acknowledges that Consultant is
         responsible for obtaining any workers' compensation or general
         liability insurance as may be required or appropriate in connection
         with Consultant's status as a business entity. The Consultant will
         effect and maintain

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         insurance indicated in this clause against any liability, loss claim or
         proceeding of any kind arising in connection with statutory worker's
         compensation ("WorkerCover") as required by statute in Australia. LSI
         requires that Consultant promptly provide on an annual basis a
         certificate of currency verifying payment of WorkCover.

         LSI will reimburse Consultant for the out-of-pocket expenses outlined
         below, which are incurred in the performance of Services and for such
         other expenses as otherwise agreed to by the parties in writing. LSI
         will reimburse Consultant for telephone, facsimile, and mobile phone
         calls as well as overnight courier related charges incurred in
         performance of Services. In the event Consultant shall be requested in
         writing to travel on behalf of LSI, LSI shall reimburse Consultant for
         reasonable and necessary travel expenses (excluding travel time) to
         such places as Consultant may travel in the performance of such
         Services. Consultant shall provide an itemized expense statement for
         all such out-of pocket expenses including receipts for each no later
         than the last day of each monthly period. Such itemized expense
         statements shall be forwarded to the attention of the corporate
         controller or his or her designee at the aforementioned address.
         Reimbursement of such expenses shall be in accordance with LSI's policy
         regarding reimbursement of expenses.

         Consultant and Aruba further agree that the fees paid hereunder
         represent all amounts to be paid under Section 2.2 of the License
         Agreement between Aruba International Pty Ltd and LSI.


         Consultant will hold all Confidential Information (as defined below) in
         confidence and will not disclose, use, copy, publish, summarize, or
         remove from the LSI's premises any Confidential Information except (a)
         as necessary to carry out Consultant's specified Services for and on
         behalf of LSI; or (b) with the prior written consent of LSI.

         "Confidential Information" includes but is not limited to mean any LSI
         proprietary information, technical data, trade secrets or know-how,
         including, but not limited to, intellectual property information,
         research, product plans, market assessments, business plans, products,
         services, suppliers, customer lists and customers (including, but not
         limited to, customers of LSI on whom Consultant called or with whom
         Consultant became acquainted during this service relationship),
         software, databases, object codes, programs, developmental and
         experimental work, inventions, innovations, ideas, discoveries,
         processes, formulas, technology, techniques, improvements, research
         data, biological materials, gene sequences, cell lines, assays,
         designs, methods, patterns, compilations, drawings, engineering,
         hardware configuration information, licenses, finances, prices and
         costs, budgets, financial information and forecasts, product plans,
         marketing plans and strategies, business plans, research and
         development plans, or other business information disclosed to
         Consultant by LSI either directly or indirectly in writing, orally or
         by drawings or observation of parts or equipment or discussions or
         created by Consultant during the period of this Agreement, whether or
         not during working hours.

         During and after Consultant's rendering of Services to LSI, Consultant
         will not use or disclose or allow anyone else to use or disclose any
         Confidential Information or knowledge relating to LSI, its employees,
         products, Consultants or customers, except as may be necessary in the
         performance of Consultant's work for LSI or as may be

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         authorized in advance by appropriate officials of LSI. Consultant will
         not disclose directly or indirectly to any third party or parties any
         information or knowledge Consultant may acquire with respect to such
         Confidential Information without LSI's prior written consent.


         All papers, records, data, notes, drawings, files, documentation and
         information, in whatever form, including all copies, relating to LSI's
         business that Consultant possesses or creates as a result of performing
         the Services for LSI, whether or not confidential, are the sole and
         exclusive property of LSI. In the event of expiration or termination of
         the Agreement for any reason, Consultant will promptly deliver all such
         materials, whether in possession, custody or control of the Consultant
         or the Nominated Person, to LSI and will sign and deliver to LSI the
         "Termination Certificate" attached at Schedule 3, and shall make no
         further use thereof.


         Consultant will promptly disclose to LSI in writing all improvements,
         inventions, works of authorship, formulas, ideas, processes,
         techniques, know-how and data, whether or not patentable (collectively,
         "Inventions"), made or conceived, developed, reduced to practice or
         learned by Consultant, either alone or jointly with others, during the
         term of the Agreement. Consultant hereby assigns to LSI any rights
         Consultant may have or acquire in such Inventions, which shall be the
         sole property of LSI and its assigns. Consultant will assist LSI in
         every proper way to obtain and enforce patents, copyrights or other
         rights on said Inventions in any and all countries, and will execute
         all documents reasonably necessary or appropriate for this purpose.
         Consultant also hereby irrevocably designates and appoints LSI and its
         duly authorized officers and agents as its agent and
         attorneys-in-fact-to act for and in his behalf for the purpose of
         executing and filing any such document and doing all acts to accomplish
         the foregoing purposes.


         Consultant represents that Consultant has no other agreements or
         commitments, which would hinder Consultant's performance of obligations
         under this Agreement, and that Consultant will not enter into any such
         agreements during the term hereof.

         Consultant represents that Consultant's performance of all the terms of
         this Agreement will not breach any agreement to keep in confidence
         proprietary information, knowledge or data acquired by Consultant in
         confidence or trust prior or subsequent to the commencement of
         Consultant's service relationship with LSI, and Consultant will not
         disclose to LSI, or induce LSI to use, any inventions, confidential or
         proprietary information or material belonging to any previous employer
         or any other party.


         Consultant hereby agrees that it shall within forty-five days of the
         Effective Date hereof provide to LSI a copy of an agreement between
         Consultant and Nominated Person documenting that the Nominated Person
         accepts substantially the same obligations and makes the
         acknowledgements on substantially the same terms as those of the
         Consultant set out in clauses 4 to 8 (inclusive) of this Agreement.

9.       INDEMNITY

         Consultant agrees to defend, indemnify and hold harmless LSI and its
         directors, officers, agents and employees from and against all claims,
         losses, liabilities, damages, expenses

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         and costs (including reasonable attorney's fees and costs of litigation
         regardless of outcome) which result from any breach by Consultant of
         any provision contained in this Agreement or any failure by Consultant
         to perform the Services required under this Agreement.


         Consultant is a business entity, as such, Consultant understands and
         agrees that Consultant is not an agent or employee of LSI and has no
         authority to bind LSI, by contract or otherwise.


         (a)      ASSIGNMENT. Consultant agrees that Consultant may not assign
                  this Agreement or delegate duties herein without LSI's prior
                  written consent.

         (b)      AMENDMENTS AND WAIVERS. Any term of this Agreement may be
                  amended or waived only with the written consent of the

         (c)      PUBLICATION. Consultant agrees that it shall provide any and
                  all documents, paper, manuscripts, abstracts, or presentation
                  outlines or notes, or other such materials intended by the
                  Consultant for publication (hereinafter "Materials") promptly
                  to LSI. LSI shall have thirty (30) days within in which to
                  review the Materials. LSI reserves the right within this time
                  period to restrict publication of Materials. Consultant agrees
                  that Materials shall not include any Confidential Information
                  in Material unless LSI agrees in writing that such
                  Confidential Information can be included in Material.

         (d)      SOLE AGREEMENT. This Agreement, including the Schedules,
                  together with the License Agreement entered into between Aruba
                  International Pty Ltd and Lipid Sciences Inc. on 30 December
                  1999, constitutes the entire agreement of the Parties and
                  supersedes all oral negotiations and prior writings with
                  respect to the subject matter hereof. The parties acknowledge
                  that the terms and conditions of the License Agreement shall
                  remain in full force and effect during the term hereof and
                  following termination of this Agreement.


         (f)      REPRESENTATIONS AND WARRANTIES. Consultant represents and
                  warrants that he has no other employments, consultancies, or
                  undertakings, which would restrict or impair his performance
                  of this Agreement.

         (g)      INDEMNIFICATION. LSI hereby agrees to indemnify, defend and
                  hold harmless Consultant against: all losses incurred by
                  Consultant; all liabilities incurred by Consultant; and other
                  expenses incurred by Consultant in connection with a demand,
                  action, arbitration or other proceeding (including mediation,
                  compromise, out of court settlement or appeal); arising
                  directly or indirectly as a result of the provision of
                  Services under this Agreement except to the extent that such
                  losses, liabilities or expenses arise from: any willful or
                  negligent act or omission by Consultant or those parties for
                  whose acts Consultant is vicariously liable; any breach by
                  Consultant of this Agreement; or any obligation to pay tax by
                  Consultant or the Nominated Person. LSI shall indemnify
                  Consultant as described above providing Consultant promptly
                  notifies LSI in writing of any such claim of indemnity. Karuba
                  hereby authorizes LSI

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                  to settle or compromise any such demand, action, arbitration
                  or other proceeding (including mediation, compromise, out of
                  court settlement or appeal).

         (h)      COUNTERPARTS. This Agreement may be executed in counterparts,
                  each of which shall be deemed an original, but all of which
                  together will constitute one and the same instrument.

         (i)      SEVERABILITY. If one or more provisions of this Agreement are
                  held to be unenforceable under applicable law, the Parties
                  agree to renegotiate such provision in good faith. In the
                  event that the Parties cannot reach a mutually agreeable and
                  enforceable replacement for such provision, then (i) such
                  provision shall be excluded from this Agreement, (ii) the
                  balance of the Agreement shall be interpreted as if such
                  provision were so excluded and (iii) the balance of the
                  Agreement shall be enforceable in accordance with its terms.

         (j)      CHOICE OF LAW. The laws of the State of California, USA, shall
                  govern the validity, interpretation, construction and
                  performance of this Agreement, without giving effect to the
                  principles of conflict of laws. In the event of any dispute
                  under this Agreement, the Parties consent to the non-exclusive
                  jurisdiction of the Federal or State Court of the State of
                  California, USA.

                              SCHEDULE 1: SERVICES

Consultant will perform the services requested by LSI's Chief Executive Officer
including but not limited to the following:

Consultant is to provide the following services through the personal services of
the Nominated Person: technical assistance, as well as know-how, materials,
trademarks, copyrights and technology, which is useful in or necessary toward
the development, optimization and/or commercialization of any composition of
matter, method or processes defined by the term Licensed Patents as used in the
License Agreement.

Consultant shall provide a written monthly report on Services performed and any
results thereto.

                          SCHEDULE 2: FEES FOR SERVICES

Consultant shall be paid at the rate of Three Hundred Seventy-Five Thousand One
Hundred Sixty and eight cents Australian Dollars (AU $375,160.08) per year gross
for Services performed hereunder, which amount shall be divided and be paid
fortnightly one week in advance and one week in arrears, exclusive of Australian
goods and services tax ("GST"). LSI shall pay GST due and payable. Effective
beginning the pay period following May 1, 2002 the above rate shall be increased
to Three Hundred Eighty-Eight Thousand Seven Hundred Eleven and Fifty-Six Cents
Australian Dollars (AU $388,711.56).

In addition, the hourly rate and time invoiced by Consultant for providing the
above services hereunder, includes monetary coverage for administrative
assistance, which assistance shall be paid for directly by Consultant. Such
administrative assistance shall not be considered out-of-pocket expenses and not
separately reimbursable by LSI under Section 2 of this Agreement.

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Reference is made to that certain Consultant, Service Agreement, dated November
27, 2001 by and among Lipid Sciences, Inc., Karuba International PTY Ltd., and
Bill E. Cham (the "Agreement"). All capitalized terms used herein and not
otherwise defined shall have the meaning given to them in the Agreement.

This is to certify that the undersigned does not have in his or its possession,
nor has the undersigned failed to return, any papers, records, data, notes,
drawings, models, files, documents, samples, devices, products, equipment, and
other materials, including reproductions of any of the aforementioned items,
belonging to, or relating to the business of, Lipid Sciences, Inc., its
subsidiaries, affiliates, successors, or assigns (together, LSI). As well as any
information generated by the undersigned (alone or with others) as a result of
the Services provided by the Consultant to LSI, or from access to Confidential
Information, and shall make no further use thereof.

The undersigned further certifies that the undersigned has complied with all the
terms of the Service Agreement signed by the undersigned, including the
reporting of any inventions and original works of authorship conceived or made
by Consultant, solely or jointly with others, covered by that Agreement.

The undersigned further agrees that, in compliance with the Service Agreement,
the undersigned will hold in confidence and will not disclose, use, copy,
publish, or summarize any Confidential Information of LSI or of any of its
customers, vendors, consultants, and other parties with which it does business.

/s/ Bill E. Cham                             27 November 2001
    Bill E. Cham, Ph.D.                            Date
    Director Karuba International Pty Ltd.

IN WITNESS WHEREOF, the Parties have duly executed this Agreement on the
Effective Date.

Consultant:                                  LSI:
Karuba International, Pty Ltd                Lipid Sciences, Inc.

By: /s/ Bill E. Cham                         By: /s/ / Barry D. Michaels
    ---------------------------------        ---------------------------------
        Bill E. Cham, Ph.D.                            Barry D. Michaels
        Director                                       Chief Financial Officer

Date:   27 November 2001                     Date:     26 November 2001
    ---------------------------------        ---------------------------------


Aruba International, Pty Ltd

By: /s/ Bill E. Cham                         27 November 2001
    ---------------------------------        ---------------------------------
        Bill E. Cham, Ph.D., Director              Date

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