BY AND BETWEEN









                                 NZ CORPORATION,

                            (an Arizona corporation),













                                       and













                              LIPID SCIENCES, INC.,

                            (a Delaware corporation)

{PAGE}   2

                          AGREEMENT AND PLAN OF MERGER



         AGREEMENT AND PLAN OF MERGER dated as of July 9, 2001, by and between

NZ CORPORATION, an Arizona corporation ("NZ"), and LIPID SCIENCES, INC., a

Delaware corporation ("Lipid Sciences").





                                   WITNESSETH:



         WHEREAS, NZ desires to acquire Lipid Sciences, and Lipid Sciences

desires to be acquired by NZ, through the merger of Lipid Sciences with and into

NZ pursuant to the terms hereinafter set forth (the "Merger"); and



         WHEREAS, NZ and Lipid Sciences each intend, for Federal income tax

purposes, that the Merger contemplated thereby constitutes a reorganization

pursuant to Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as

amended (the "Code"); and



         WHEREAS, the Special Committee of the Board of Directors of NZ deems it

advisable and in the best interest of NZ that Lipid Sciences be merged with and

into NZ upon the terms and conditions hereinafter specified; and



         WHEREAS, the Board of Directors of Lipid Sciences deems it advisable

and in the best interest of Lipid Sciences that it be merged with and into NZ

upon the terms and conditions hereinafter specified; and



         WHEREAS, NZ has an authorized capital stock consisting of 30,000,000

shares of common stock, no par value per share (the "NZ Common Stock"), of which

6,816,936 shares are currently issued and outstanding, and 10,000,000 shares of

preferred stock, no par value per share (the "NZ Preferred Stock"), of which no

shares are currently issued or outstanding; and



         WHEREAS, NZ currently also has outstanding common stock purchase

warrants and options entitling the holders thereof to purchase an aggregate of

up to 538,386 shares of the NZ Common Stock, all as further described herein

(collectively, the "NZ Warrants and Options"); and



         WHEREAS, Lipid Sciences has an authorized capital stock consisting of

50,000,000 shares of common stock, $.01 par value per share (the "Lipid Sciences

Common Stock"), of which shares 10,220,901 are currently issued and outstanding;

and 1,000,000 shares of Preferred Stock, no par value per share (the "Lipid

Sciences Preferred Stock"), of which no shares are currently issued or

outstanding; and





                                       1

{PAGE}   3

         WHEREAS, Lipid Sciences currently also has outstanding common stock

purchase warrants and options entitling the holders thereof to purchase an

aggregate of up to 2,560,000 shares of Lipid Sciences Common Stock, all as

further described herein (collectively, the "Lipid Sciences Warrants and

Options"); and



         NOW, THEREFORE, in consideration of the mutual covenants and agreements

hereinafter contained, the parties hereto, intending to be legally bound hereby,

agree as follows:





                                   ARTICLE 1



                    ADOPTION OF AGREEMENT AND PLAN OF MERGER



         1.1  The Merger. At the Effective Time (as defined in Section 1.2

herein), in accordance with this Agreement and the relevant provisions of the

Arizona Business Corporation Act ("ABCA") and the Delaware General Corporation

Law ("DGCL"), Lipid Sciences shall be merged with and into NZ, and NZ will be

the surviving corporation to the Merger (the "Surviving Corporation"), and be

deemed to continue, for all purposes, after the Merger. The existence of Lipid

Sciences shall cease at the Effective Time as a consequence of the Merger.



         1.2  Effective Date of the Merger. This Agreement shall be submitted to

the stockholders of each of Lipid Sciences and NZ as provided in Section 5.4

hereof, for approval as soon as practicable after the Registration Statement (as

defined in Section 5.4 below) has been declared effective by the Securities and

Exchange Commission (the "SEC"). Subject to the terms and conditions hereof,

including, without limitation, NZ's and Lipid Sciences' right to terminate this

Agreement without liability in accordance with Article IX hereof, upon the

authorization, approval and adoption of this Agreement by the stockholders of NZ

as provided in Section 5.4 hereof and the affirmative vote of the holders of not

less than a majority of the outstanding shares of Lipid Sciences Common Stock

pursuant to Section 252 of the DGCL, a copy of the Articles of Amendment and

Merger, substantially in the form annexed hereto as Exhibit A (the "Articles of

Amendment and Merger") shall be executed in accordance with Section 10-1105 of

the ABCA and delivered to the Corporation Commission of the State of Arizona for

filing in accordance with Section 10-1105 of the ABCA and a copy of the

Certificate of Merger substantially in the form annexed hereto as Exhibit B (the

"Certificate of Merger"), shall be executed in accordance with Section 251 of

the DGCL and delivered to the Secretary of State of the State of Delaware (the

time of such filings being the "Effective Time" and the date of such filings

being the "Effective Date"). Within sixty days after the filing of the Articles

of Amendment and Merger, the Surviving Corporation will publish a copy thereof

and file certification with the Corporation Commission of the State of Arizona.



         1.3  Surviving Corporation. Following the Merger, NZ shall continue to

exist under, and be governed by, the laws of the State of Arizona.





                                       2

{PAGE}   4

         1.4  Certificate of Incorporation of the Surviving Corporation. The

Certificate of Incorporation of NZ, as in effect at the Effective Time and

subject to amendment as herein provided, shall continue in full force and effect

as the Certificate of Incorporation of the Surviving Corporation.



         1.5  By-laws of the Surviving Corporation. The By-laws of NZ, as in

effect at the Effective Time, shall continue in full force and effect as the

By-laws of the Surviving Corporation.



         1.6  Plan of Merger. The method of effecting the Merger and the basis

for exchanging and converting (i) the outstanding Lipid Sciences Common Stock

into authorized but unissued shares of Common Stock of NZ (the "Merger Common

Stock"), and (ii) the outstanding Lipid Sciences Warrants and Options into

warrants to purchase shares of NZ Common Stock and options to purchase shares of

NZ Common Stock, as the case may be, shall be as follows:



              (a)  (i)   Each issued and outstanding share of Lipid Sciences

Common Stock shall, at the Effective Time, by virtue of the Merger and without

further action, be deemed canceled and cease to exist and, upon presentation for

surrender of a certificate representing such share by each stockholder of Lipid

Sciences participating in the Merger (collectively, the "Participating

Stockholders"), shall be converted into 1.55902 shares of NZ Common Stock.

Fractional shares of NZ Common Stock issuable to Participating Stockholders will

be rounded up to the next whole share, based on the aggregate number of shares

of NZ Common Stock to be issued in the Merger to each Participating Stockholder.



                   (ii)  At the Effective Time, each issued and outstanding

Lipid Sciences Warrant shall, by virtue of the Merger and without further

action, be deemed to be assumed by NZ and modified so that, in lieu of having

the right to acquire shares of Lipid Sciences Common Stock on exercise, the

holder will have the right to acquire shares of NZ Common Stock on the same

basis as the Lipid Sciences Common Stock was exchanged into Merger Common Stock

at an exercise price adjusted to reflect the exchange so as to maintain the

relative entitlements before and after the Merger, and for an exercise period

which is the same as the exercise period of the particular Lipid Sciences

Warrant (collectively, the "Surviving Warrants"). All the other substantive

terms of the Lipid Sciences Warrant will continue in full force and effect.



                   (iii) At the Effective Time, each issued and outstanding

Lipid Sciences Option shall, by virtue of the Merger and without further action,

be deemed to be assumed by NZ and modified so that, in lieu of having the right

to acquire shares of Lipid Sciences Common Stock on exercise, the holder will

have the right to acquire shares of NZ Common Stock on the same basis as the

Lipid Sciences Common Stock was exchanged into Merger Common Stock at an

exercise price adjusted to reflect the exchange so as to maintain the relative

entitlements before and after the Merger and for an exercise period which is the

same as the exercise period of the particular Lipid





                                       3

{PAGE}   5

Sciences Option (collectively, the "Surviving Options"). All other substantive

terms of the Lipid Sciences Options will continue in full force and effect.



                   (iv)  By the Effective Time, any shares of NZ Common Stock

owned by or to be acquired by Lipid Sciences in connection with the Merger or

pursuant to that certain Stock Purchase Agreement dated of even date herewith by

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