8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  April 17, 2007

LIPID SCIENCES, INC.

(Exact name of registrant as specified in its charter)

Delaware	0-497	43-0433090
(State or other jurisdiction of	(Commission File Number)	(I.R.S Employer Identification No.)
incorporation)
7068 Koll Center Parkway, Suite 401, Pleasanton, California		94566
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:  (925) 249-4000

(Former name or former address, if changed since last report.)  N/A

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On April 17, 2007, Lipid Sciences, Inc. (the “Company”) entered into amended and restated employment agreements with S. Lewis Meyer, Ph.D., President and Chief Executive Officer, Sandra Gardiner, Chief Financial Officer, and Dale Richardson, Vice President of Business Development.  The amended and restated agreements reflect the current salaries of the officers and clarify provisions of the previous agreements, including those relating to severance and survival of the severance and confidentiality obligations beyond the expiration of the term of the agreements.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit 10.1	Amended and Restated Employment Agreement, by and between Lipid Sciences, Inc. and S. Lewis Meyer, Ph.D.
Exhibit 10.2	Second Amended and Restated Employment Agreement, by and between Lipid Sciences, Inc. and Sandra Gardiner.
Exhibit 10.3	Second Amended and Restated Employment Agreement, by and between Lipid Sciences, Inc. and Dale Richardson.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Lipid Sciences, Inc.
Date: April 20, 2007	By:	/s/ Sandra Gardiner
		Sandra Gardiner
		Chief Financial Officer

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EX-10.1

EXHIBIT 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is effective as of the first day of March 2007 (“Effective Date”) by and between LIPID SCIENCES, INC., a Delaware corporation (the “Company”), and S. LEWIS MEYER, Ph.D., an individual (the “Employee”) and amends and restates in its entirety that certain Employment Agreement of April 14, 2006 by and between the Company and Employee.  The Company and the Employee are each sometimes referred to as a “Party” and together as the “Parties.”

WITNESSETH:

WHEREAS, the Parties previously entered into an Employment Agreement dated as of April 14, 2006 pursuant to which the Company agreed to employ Employee and Employee agreed to be employed by the Company pursuant to certain terms and conditions; and

WHEREAS, the Company desires to continue to employ the Employee in the manner hereinafter specified and to make provision for payment of reasonable compensation to the Employee for such services, and the Employee is willing to be employed by the Company to perform the duties incident to such employment upon the terms and conditions hereinafter set forth; and

WHEREAS, the Parties desire to enter into this Agreement as of the Effective Date setting forth the terms and conditions of the continued employment relationship of the Employee with the Company during the Term (as hereinafter defined).

NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants, terms and conditions set forth herein, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.EMPLOYMENT AND DUTIES

(a)General.  Effective as of the Effective Date, the Company hereby continues to employ the Employee as Chief Executive Officer and President of the Company and the Employee agrees upon the terms and conditions herein set forth to continue to be employed by the Company.  The Employee shall diligently perform all of the duties normally accorded to such position and shall report directly to the Board of Directors of the Company (the “Board”).

(b)Services.  During the Term, the Employee shall well and faithfully serve the Company, and shall devote substantially all of his business time and attention to the performance of the duties of such employment and the advancement of the best interests of the Company and shall not, directly or indirectly, render services to any other person or organization for which he receives compensation without the prior written approval of the Board.  No such

approval shall be required in connection with services the Employee performs with respect to other persons and entities, including, but not limited, to Lexrite Labs and the Ambient Capital Group, provided that the aggregate amount of time spent on these services does not exceed a maximum of eight hours per week and that such services do not contravene the provisions of Section 5 hereof.  The Employee hereby agrees to refrain from engaging in any activity that does, shall or could reasonably be deemed to conflict with the best interests of the Company.

(c)Location of Employment.  The Employee’s place of employment shall be at the office of the Company located in Pleasanton, California, but the Employee shall travel to the extent and to the places necessary for the performance of his duties to the Company.

2.TERM OF EMPLOYMENT

The term of the Employee’s employment under this Agreement shall begin as of the Effective Date written above and continue until April 14, 2008 (the “Term”).

3.COMPENSATION AND OTHER BENEFITS

Subject to the provisions of this Agreement including without limitation the termination provisions contained in Section 4, the Company shall pay and provide the following compensation and other benefits to the Employee during the Term as compensation for all services rendered hereunder:

(a)Salary.  The Company shall continue to pay to the Employee a salary (the “Salary”) at a rate of $290,000 per annum, payable to the Employee in accordance with the normal payroll practices of the Company as are in effect from time to time.  The amount of the Salary shall be reviewed annually by the Compensation Committee of the Board and may be increased on the basis of the review.

(b)Annual Performance Bonus.  The Employee shall be eligible to earn an annual discretionary cash bonus (the “Annual Bonus”) in an amount and subject to such other terms and conditions, including performance objectives, as are determined, by the Board.

(c)Expenses.  The Company shall pay or reimburse the Employee for all reasonable out-of-pocket expenses incurred by the Employee in connection with his employment hereunder upon submission of appropriate documentation or receipts in accordance with the policies and procedures of the Company as are in effect from time to time.  No expense payment or reimbursement under this Section 3(d) shall be “grossed up” or increased to take into account any tax liability incurred by the Employee as a result of such payment or reimbursement.

(d)Retirement, Welfare and Fringe Benefits.  The Employee shall be eligible to participate in the retirement, medical, disability and life insurance plans applicable to senior officers of the Company generally in accordance with the terms of such plans as in effect from time to time.  The foregoing shall not be construed to limit the ability of the Company or any of its affiliates to amend, modify or terminate any such benefit plans, policies or programs at any time and from time to time.

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(e)Vacation.  The Employee shall be entitled to annual vacation in accordance with the Company’s policies applicable to senior officers of the Company generally as are in effect from time to time.

4.TERMINATION OF EMPLOYMENT

Subject to the notice and other provisions of this Section 4, the Company shall have the right to terminate the Employee’s employment hereunder, and the Employee shall have the right to resign, at any time for any reason or for no stated reason.

(a)Termination for Cause or Resignation.  (i) If, prior to the expiration of the Term, the Employee’s employment is terminated by the Company for “Cause” (as hereinafter defined) or if the Employee resigns from his employment hereunder, the Employee shall be entitled to payment of (A) his Salary accrued up to and including the date of termination or resignation, and (B) any unreimbursed expenses.  Except to the extent required by the terms of the benefits provided under Section 3(e) or applicable law, the Employee shall have no right under this Agreement or otherwise to receive any other compensation or to participate in any other plan, program or arrangement after such termination or resignation of employment with respect to the year of such termination or resignation and later years.

(ii)Termination for “Cause” shall mean a termination of the Employee’s employment with the Company because of (A) a plea of guilty or nolo contendere to, or conviction for, the commission of a felony offense by the Employee; (B) the involvement by the Employee as a party to any litigation or regulatory proceeding or in any other circumstance known to the general public that, in the good faith determination of the Board, is reasonably certain to subject the Employee, the Company or its affiliates to disrepute, ridicule, contempt or scandal or that is reasonably certain to reflect unfavorably upon the reputation of the Employee, the Company or its affiliates or the Company’s products or technologies; (C) the willful and continued failure to perform in any material respect the Employee’s duties; (D) an intentional act of fraud, embezzlement, theft or a material and dishonest act against the Company or its affiliates; or (E) a material breach by the Employee of the terms and provisions of the Agreement.

(iii)Termination of the Employee’s employment for Cause shall be communicated by delivery to the Employee of a written notice from the Company stating that the Employee will be terminated for Cause, specifying the particulars thereof and the effective date of such termination.  In the cases of Sections 4(a)(ii)(B), 4(a)(ii)(C) and 4(a)(ii)(E), the Employee shall have thirty (30) business days from the date of receipt of such notice to effect a cure of the actions constituting Cause, or to effect a cure of the adverse effect such actions.  Upon cure or correction thereof by the Employee to the reasonable satisfaction of the Company, the action shall no longer constitute Cause for purposes of this Agreement.  The date of a resignation by the Employee shall be the date specified in a written notice of resignation from the Employee to the Company.  The Employee shall provide at least 90 days’ advance written notice of his resignation.

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(b)Termination without Cause.

(i)If, prior to or at any time following the expiration of the Term, the Company terminates the Employee’s employment for any reason other than Disability or Cause (such termination or resignation being hereinafter referred to as a “Termination without Cause”), the Employee shall be entitled to (A) payment of his Salary accrued up to and including the date of such Termination without Cause, (B) payment of any unreimbursed expenses, and (C) severance, subject to the Employee’s execution and delivery of a release in the form then deemed appropriate by the Company and in exchange for consulting services of the Employee, consisting of (1) continuation of his Salary, at the rate in effect on the date of the Termination without Cause, for 12 months commencing on the date next following the date of the Termination without Cause (the “Severance Period”) and (2) continued participation on the same terms and conditions as are in effect immediately prior to the Termination without Cause in the Company’s health and medical plans provided to the Employee pursuant to Section 3(e) above at the time of such Termination without Cause through the expiration of the Severance Period, or until the Employee becomes eligible to participate in a subsequent employer’s benefit plan, whichever occurs first.  For the avoidance of doubt, Employee is entitled to the benefits of subsections (A), (B) and (C) herein if Employee’s employment is terminated without Cause at any time on or after the Effective Date.  Anything herein to the contrary notwithstanding, the Company shall have no obligation to continue to maintain during the Severance Period any plan, program or level of benefits solely as a result of the provisions of this Agreement, but this provision shall apply with respect to any substitute or replacement plan.

(ii)The date of termination of employment without Cause shall be the date specified in a written notice of termination to the Employee. For the avoidance of doubt, Employee’s employment will continue until the date specified in the written notice of termination to the Employee.

(c)Termination Due to Disability.  In the event of the Employee’s Disability, the Company shall be entitled to terminate his employment.  In the case that the Company terminates the Employee’s employment due to Disability, the Employee shall be entitled to his Salary up to and including the date of termination as well as any unpaid expense reimbursements.  As used in this Section 4(c), the term “Disability” shall mean the Company’s determination that due to physical or mental illness or incapacity, whether total or partial, the Employee is substantially unable to perform his duties hereunder for a period of 90 consecutive days or shorter periods aggregating 90 days during any period of 180 consecutive days.

(d)Death.  Except as provided in this Section 4(d), no Salary or benefits shall be payable under this Agreement following the date of the Employee’s death.  In the event of the Employee’s death, any Salary earned by the Employee up to the date of death, as well as any unreimbursed expenses, shall be paid to the Employee’s estate or Employee’s named beneficiary within a reasonable period following his death.

5.PROTECTION OF THE COMPANY’S INTEREST

(a)Employee Confidential Information and Invention Agreement.  The Employee hereby acknowledges that he has previously executed and delivered to the Company

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the Company’s Employee Confidential Information and Invention Agreement (the “Confidentiality Agreement”), which is attached hereto as Annex A.  The Employee hereby acknowledges and understands that the provisions of the Confidentiality Agreement are incorporated into this Agreement.

(b)Protection of Trade Secrets; Non-Solicitation.

(i)The Employee acknowledges that in the course of his employment with the Company, he has and will in the course of his continued employment with the Company become familiar with the trade secrets of the Company and its affiliates and with other Confidential Information (as defined in the Confidentiality Agreement) concerning the business of the Company and its affiliates and that his services have been and will be of special, and unique and extraordinary value to the Company and its affiliates.  Because of the foregoing and in further consideration of the compensation and other benefits to be provided to the Employee hereunder, the Employee hereby agrees that, during the Term, and at any time thereafter, he shall not, directly or indirectly, use trade secrets (as such term is defined in Section 3426(1)(d) of the Uniform Trade Secrets Act) of the Company or its affiliates or Confidential Information or otherwise engage in unfair competition against the Company or any of its affiliates.

(ii)During the Term, and continuing through the first anniversary of the termination date of the Employee’s employment for any reason (the “Restricted Period”), the Employee shall not directly or indirectly through another person or entity induce or attempt to induce any customer, supplier, licensee, licensor, franchisee or other business relation of the Company or any such affiliate that is within any geographical area in which the Company or its affiliates engage or plan to engage in such businesses to cease doing business with the Company or such affiliate or in any way interfere with the relationship between any such customer, supplier, licensee or business relation and the Company or any such affiliate.

(c)Extension of Time of Restrictions.  The Restricted Period shall be extended by the length of any period during which the Employee is in breach of the restrictions set forth in Section 5(b).

(d)Non-Disparagement.  The Employee agrees that at any time during his employment with the Company or at any time thereafter, the Employee shall not make, or cause or assist any other person to make, any statement or other communication which impugns or attacks, or is otherwise critical of, the reputation, business or character of the Company, any subsidiary or any of their respective officers, directors, employees, products or services.

(e)Enforcement.  The Employee hereby acknowledges that he has carefully reviewed the provisions of this Agreement and agrees that the provisions are fair and equitable, and that they are necessary and reasonable in order to protect the Company and its affiliates in the conduct of their business.  However, in light of the possibility of differing interpretations of law and change in circumstances, the parties hereto agree that if any one or more of the provisions of this Section 5 (including any provision contained in the Confidentiality Agreement) is determined by a court or other tribunal of competent jurisdiction to be invalid, void or unenforceable under circumstances then existing, the parties hereto agree that the maximum

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period, scope or geographical area reasonable or enforceable under such circumstances shall be substituted for the stated period, scope or area.

(f)Remedies.  The Employee acknowledges that the Company has a compelling business interest in preventing unfair competition stemming from the intentional or inadvertent use or disclosure of the Company’s confidential and proprietary information, including trade secrets of the Company.  The Employee further acknowledges and agrees that damages for a breach or threatened breach of any of the covenants set forth in this Section 5 (including any provision contained in the Confidentiality Agreement) will be difficult to determine and will not afford a full and adequate remedy, and therefore agrees that the Company, in addition to seeking actual damages in connection therewith and the termination of the Company’s obligations in Section 4(b), may seek specific enforcement of any such covenant in any court of competent jurisdiction, including, without limitation, by the issuance of a temporary or permanent injunction without the necessity of showing any actual damages or posting any bond or furnishing any other security, and that the specific enforcement of the provisions of this Agreement will not diminish the Employee’s ability to earn a livelihood or create or impose upon the Employee any undue hardship. The Employee also agrees that any request for such relief by the Company shall be in addition to, and without prejudice to, any claim for monetary damages that the Company may elect to assert.

6.GENERAL PROVISIONS

(a)No Other Severance Benefits.  Except as specifically set forth in this Agreement, the Employee covenants and agrees that he shall not be entitled to any other form of severance benefits from the Company, including, without limitation, benefits otherwise payable under the Company’s regular severance policies, if any, in the event his employment hereunder ends for any reason and, except with respect to obligations of the Company expressly provided for herein, the Employee unconditionally releases the Company and its subsidiaries and affiliates, and their respective directors, officers, employees and stockholders, or any of them, from any and all claims, liabilities or obligations under any severance arrangements of the Company or any of its subsidiaries or affiliates.

(b)Tax Withholding.  All amounts paid to Employee hereunder shall be subject to all applicable federal, state and local wage withholding.

(c)Notices.  Any notice hereunder by either party to the other shall be given in writing by personal delivery, or certified mail, return receipt requested, or (if to the Company) by facsimile, in any case delivered to the applicable address set forth below:

(i)	To the Company:	Lipid Sciences, Inc.
		7068 Koll Center Parkway, Suite 401
		Pleasanton, CA 94566-3111
		Facsimile No.: (925) 249-4000
		Attn: Chairman of the Board of Directors
	With a copy to:	Allen Matkins Leck Gamble Mallory & Natsis LLP

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		Three Embarcadero Center, Suite 1200
		San Francisco, CA 94111
		Fax: (415) 837-1516
		Attn: Roger S. Mertz, Esq.
(ii)	To the Employee:	S. Lewis Meyer, Ph.D.
		Last known residential address
		and fax number on file with the Company

or to such other persons or other addresses as either party may specify to the other in writing.

(d)Representation by the Employee.  The Employee represents and warrants that his entering into this Agreement does not, and that his performance under this Agreement and consummation of the transactions contemplated hereby will not, violate the provisions of any agreement or instrument to which the Employee is a party or any decree, judgment or order to which the Employee is subject, and that this Agreement constitutes a valid and binding obligation of the Employee in accordance with its terms.  Breach of this representation will render all of the Company’s obligations under this Agreement void ab initio.

(e)Assignment; Assumption of Agreement.  No right, benefit or interest hereunder shall be subject to assignment, encumbrance, charge, pledge, hypothecation or setoff by the Employee in respect of any claim, debt, obligation or similar process.  The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company to assume expressly and to agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

(f)Amendment.  No provision of this Agreement may be amended, modified, waived or discharged unless such amendment, modification, waiver or discharge is agreed to in writing and signed by the parties.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

(g)Severability.  If any term or provision hereof is determined to be invalid or unenforceable in a final court or arbitration proceeding, (i) the remaining terms and provisions hereof shall be unimpaired and (ii) the invalid or unenforceable term or provision shall be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision.

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

(i)Entire Agreement.  This Agreement and the Confidentiality Agreement contain the entire agreement of the Employee, the Company and any predecessors or affiliates thereof with respect to the subject matter hereof and all prior agreements and negotiations are superceded hereby.

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(j)Counterparts.  This Agreement may be executed by the parties hereto in counterparts, each of which shall be deemed an original, but both such counterparts shall together constitute one and the same document.

(k)Survival.  The provisions of Sections 4 and 5 (including the provisions of the Confidentiality Agreement) shall survive the termination of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement, effective as of the day and year first written above.

LIPID SCIENCES, INC.
By:	/s/ Sandra Gardiner
	Name: Sandra Gardiner
	Title: Chief Financial Officer
EMPLOYEE
By:	/s/ S. Lewis Meyer, Ph.D.
	S. LEWIS MEYER, Ph.D.

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EX-10.2

EXHIBIT 10.2

SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), is entered into by and between Lipid Sciences, Inc., a Delaware corporation (the “Company”), and Sandra Gardiner (“Executive”), is effective as of March 1, 2007 except as otherwise provided, and amends and restates in its entirety the Existing Employment Agreement (defined below).  The Company and Executive are hereinafter collectively referred to as the “Parties,” and may individually be referred to as a “Party.”

RECITALS

WHEREAS, the Company and Executive previously entered into an Employment Agreement, dated as of February 1, 2001, which agreement was thereafter amended and restated as of July 1, 2003 (the “Existing Employment Agreement”), which governs the terms and conditions of Executive’s compensation and employment relationship with the Company, including the severance benefits to which Executive would be entitled in the event the Company were to terminate Executive’s employment without cause; and

WHEREAS the Parties wish to further revise and amend the Existing Employment agreement and to have this Agreement replace and supersede in its entirety the Existing Employment Agreement.

NOW THEREFORE, for good and sufficient consideration, the Parties agree as follows:

AGREEMENT

1.EMPLOYMENT.

1.1The Company will continue to employ Executive, and Executive hereby accepts such continued employment by the Company, upon the terms and conditions set forth in this Agreement, commencing effective as of March 1, 2007 except as otherwise provided herein (the “Effective Date”), and continuing until July 1, 2008 (the “Initial Term”); provided, however, that immediately prior to the expiration of the Initial Term, and on each anniversary thereafter (the date immediately prior to expiration of the Initial Term and each subsequent anniversary, a “Renewal Date”), the term of Executive’s employment under this Agreement will be extended automatically until the following subsequent anniversary unless either party elects not to renew this Agreement by serving notice of such intention not to renew on the other party at least ninety days prior to the expiration of a Renewal Date (the period commencing on the Effective Date and ending on expiration of the Initial Term or such later date to which the term of the Employee’s employment under this Agreement will have been extended, the “Term”).

1.2Executive will continue to serve as Chief Financial Officer of the Company.  Executive will report to the President and Chief Executive Officer of the Company (the “CEO”).

1.3Executive will do and diligently perform all services, acts or things necessary or advisable to carry out the duties normally accorded to Executive’s position; provided, however, that at all times during the Term (as hereinafter defined) Executive will be subject to the direction of the CEO.

1.4Executive’s place of employment will be at the office of the Company located in Pleasanton, California, but Executive agrees to travel to the extent and to the places necessary for the performance of her duties to the Company.

2.LOYAL AND CONSCIENTIOUS PERFORMANCE.  During her employment by the Company, Executive will devote her full business employment, interest, abilities and productive time to the proper and efficient performance of her duties under this Agreement.  During the Term, Executive may not, directly or indirectly, render services to any other person or organization for which Executive receives compensation without the prior written approval of the President & CEO of the Company.  Executive hereby agrees to refrain from engaging in any activity that does, will or could reasonably be deemed to conflict with the best interests of the Company.

3.COMPENSATION OF EXECUTIVE.

3.1Effective as of January 1, 2007 the Company will pay Executive a base salary of Two Hundred and Thirty Six Thousand dollars ($236,000) per year (the “Base Salary”), payable in accordance with the Company’s payroll practices as are in effect from time to time.  The Base Salary will be prorated for any partial year of employment on the basis of a 365-day fiscal year.

3.2The Base Salary may be changed from time to time by mutual agreement of Executive, the CEO and the Board.

3.3All of Executive’s compensation is subject to customary withholding taxes and any other employment taxes as are required to be collected or withheld by the Company.

3.4In the discretion of the Board and in accordance with Company practices as are in effect from time to time, Executive will be entitled to participate in employee benefit plans or arrangements made available by the Company now or in the future to its executives and key management employees.

3.5Executive’s performance will be reviewed by the CEO on a periodic basis (not less than once each fiscal year).  The CEO, with approval of the Board, may, in their sole discretion, award bonuses to Executive as may be appropriate or desirable based on Executive’s performance.

3.6Executive is entitled to receive prompt reimbursement of all reasonable expenses incurred by Executive in performing services for the Company, including expenses

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related to travel, entertainment, parking, and business meetings upon prompt submission of receipts documenting the expenses and consistent with the Company’s reimbursement policies as are in effect from time to time.

4.TERMINATION.  Subject to the notice and other provisions of this Section 4, the Company will have the right to terminate Executive’s employment hereunder, and Executive will have the right to resign, at any time for any reason or for no stated reason.

4.1(i)If prior to the expiration of the Term, Executive’s employment is terminated by the Company for “Good Cause” (as hereinafter defined) or if Executive resigns from her employment hereunder for any reason, Executive will be entitled to payment of (A) her Base Salary accrued up to and including the date of termination or resignation, and (B) any unreimbursed expenses.  Except to the extent required by the terms of the benefits provided under Section 3.4 or applicable law, Executive has no right under this Agreement or otherwise to receive any other compensation or to participate in any other plan, program or arrangement after such termination or resignation of employment.

(ii)Termination for “Good Cause” means the Company’s termination of Executive’s employment because of Executive’s: (A) conviction of any felony or any crime involving fraud or dishonesty; (B) participation (whether by affirmative act or omission) in a fraud, act of dishonesty or other act of material misconduct against the Company; (C) violation of any fiduciary duty or duty of loyalty owed to the Company; (D) breach in any material respect of any contract between Executive and the Company, including, without limitation, this Agreement and the Employee Confidential Information and Inventions Agreement and Confidential Disclosure Agreement (as hereinafter defined); and (E) repeated violation of any material Company policy.

(iii)Termination of Executive’s employment for Good Cause will be communicated by delivery to Executive of a written notice from the Company stating that Executive will be terminated for Good Cause, specifying the particulars thereof and the effective date of such termination.  In the cases of Sections 4.1(ii)(C), 4(ii)(D) and 4(ii)(E), the Executive shall have thirty (30) business days from the date of receipt of such notice to effect a cure of the actions constituting Good Cause, or to effect a cure of the adverse effect such actions, but only in circumstances where such cure or correction is feasible.  Upon cure or correction thereof by the Executive to the reasonable satisfaction of the Company, the action shall no longer constitute Cause for purposes of this Agreement.  The date of a resignation by Executive will be the date specified in a written notice of resignation from Executive to the Company.  Executive will provide at least 30 days’ advance written notice of her resignation.

4.2(i)If, prior to or at any time following the expiration of the Term, the Company terminates Executive’s employment for any reason other than “Good Cause” or Disability (such termination being hereinafter referred to as a “Termination Without Cause”), Executive will be entitled to (i) payment of her Base Salary accrued up to and including the date of such Termination Without Cause, (ii) payment of any unreimbursed expenses, and (iii) severance, subject to both Executive’s execution and delivery of a release in the form then deemed appropriate by the Company, and, if requested by the Company at the time of the termination, the Executive’s agreement to provide consulting services during the Severance

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Period (as hereinafter defined) for no additional compensation, of (A) continuation of the Base Salary, at the rate in effect on the date of the Termination Without Cause, for a period of nine (9) months commencing on the date next following the date of the Termination Without Cause (the “Severance Period”); provided, however, that if Executive obtains new employment during the Severance Period, severance amounts due under this Agreement will be offset by any amounts paid to Executive by the subsequent employer, and (B) continued participation on the same terms and conditions as are in effect immediately prior to the Termination Without Cause in the Company’s retirement, Section 125, health and welfare benefit plans provided to the Employee at the time of such Termination Without Cause through the expiration of the Severance Period, or until Executive becomes eligible to participate in a subsequent employer’s benefit plan, whichever occurs first.  For the avoidance of doubt, Employee is entitled to the benefits of subsections (A) and (B) herein if Employee’s employment is terminated without Cause at any time on or after the Effective Date.  Anything herein to the contrary notwithstanding, the Company shall have no obligation to continue to maintain during the Severance Period any plan, program or level of benefits solely as a result of the provisions of this Agreement.

(ii)The date of the Termination Without Cause will be the date specified in a written notice of termination to Executive.  The Company will provide at least 30 days advance written notice of the Termination Without Cause.  For the avoidance of doubt, Executive’s employment will continue until the date specified in the written notice of termination to the Executive.

4.3In the event of Executive’s Disability, the Company will be entitled to terminate Executive’s employment.  In the case that the Company terminates Executive’s employment due to Disability, Executive will be entitled to her Base Salary up to and including the date of termination as well as any unpaid expense reimbursements.  As used in this Section 4.3, the term “Disability” means the Company’s determination that due to physical or mental illness or incapacity, whether total or partial, Executive is substantially unable to perform her duties hereunder for a period of 90 consecutive days or shorter periods aggregating 90 days during any period of 180 consecutive days.

4.4Except as provided in this Section 4.4, no Base Salary or benefits shall be payable under this Agreement following the date of Executive’s death.  In the event of Executive’s death, any Base Salary earned by Executive up to the date of death, as well as any unreimbursed expenses, will be paid to Executive’s estate or Executive’s named beneficiary within a reasonable period following her death.

5.CONFIDENTIAL INFORMATION; INVENTIONS; NONSOLICITATION.

5.1Executive recognizes that her employment with the Company will involve contact with information of substantial value to the Company, which is neither stale nor generally known in the trade, and which gives the Company an advantage over its competitors that do not know or use it, including but not limited to, techniques, designs, drawings, processes, inventions, developments, equipment, prototypes, sales and customer information, and business and financial information relating to the business, products, practices and techniques of the Company (hereinafter referred to as “Confidential Information”).  Executive will at all times regard and preserve as confidential such Confidential Information obtained by Executive from

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whatever source and will not, either during her employment with the Company or thereafter, publish or disclose any part of such Confidential Information in any manner at any time, or use the same except on behalf of the Company, without the prior written consent of the Company; provided, however, that Executive may disclose Confidential Information in the best interest of the Company with properly executed Company confidentiality or secrecy agreements with a third party.  Executive agrees to abide by her continuing obligations under both the Employee Confidential Information and Inventions Agreement and the Confidential Disclosure Agreement, both dated as of February 1, 2001, between Executive and the Company, attached to the Existing Employment Agreement (the “Confidential Information Agreements”).

5.2While Executive is employed by the Company and for one (1) year thereafter, in order to protect the Confidential Information and the Company’s proprietary information from unauthorized use, Executive may not, either directly or through others, solicit or attempt to solicit any employee, consultant or independent contractor of the Company to terminate his or her relationship with the Company in order to become an employee, consultant or independent contractor to or for any other person or business entity.

6.SUCCESSORS.  The Company will require any successor (whether direct or indirect, by purchase, merger, or consolidation) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

7.ASSIGNMENT AND BINDING EFFECT.  This Agreement is binding on and inures to the benefit of Executive and Executive’s heirs, executors, personal representatives, administrators and legal representatives.  Because of the unique and personal nature of Executive’s duties under this Agreement, neither this Agreement nor any rights or obligations under this Agreement are assignable by Executive.  This Agreement is binding on and inures to the benefit of the Company and its successors, assigns and legal representatives.

8.NO OTHER SEVERANCE BENEFITS.  Except as specifically set forth in this Agreement, Executive covenants and agrees that she will not be entitled to any other form of severance benefits from the Company, including, without limitation, benefits otherwise payable under the Company’s regular severance policies, if any, in the event her employment hereunder ends for any reason and, except with respect to obligations of the Company expressly provided for herein.  In consideration for the Company’s payment of the severance benefits set forth in this Agreement, Executive agrees to execute a Separation and Release Agreement which waives Executive’s right to file a lawsuit alleging breach of contract, discrimination and any tort claims.

9.NOTICES.  All notices or demands of any kind required or permitted to be given by the Company or Executive under this Agreement will be given in writing and will be personally delivered (and receipted for) or mailed by certified mail, return receipt requested, postage prepaid, and if mailed to the Company, will be addressed to its principal place of business, and if mailed to Executive, will be addressed to her at her last known address on the records of the Company, or at such other address or addresses as either Party may hereinafter designate in writing to the other Party.  Notices sent by FedEx or similar overnight delivery

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service or by facsimile transmission will also constitute notice under this Section 9, effective upon receipt thereof.

10.CHOICE OF LAW.  This Agreement will be construed and interpreted in accordance with the laws of the State of California, without regard to the conflict of laws provision thereof.

11.INTEGRATION.  This Agreement and the Confidential Information Agreements contain the complete, final and exclusive agreement of the Parties relating to the subject matter of this Agreement and the Confidential Information Agreements, respectively, and supersede all prior oral and written employment agreements or arrangements between the Parties, including, without limitation, the Existing Employment Agreement except with respect to the obligations relating to the Confidential Information Agreements.

12.AMENDMENT.  This Agreement may not be amended or modified except by a written agreement signed by Executive and the Company.

13.WAIVER.  No term, covenant or condition of this Agreement or any breach thereof will be deemed waived, except with the written consent of the Party against whom the wavier in claimed, and any waiver or any such term, covenant, condition or breach will not be deemed to be a waiver of any preceding or succeeding breach of the same or any other term, covenant, condition or breach.

14.SEVERABILITY.  The finding by a court of competent jurisdiction of the unenforceability, invalidity or illegality of any provision of this Agreement will not render any other provision of this Agreement unenforceable, invalid or illegal.  Such court will have the authority to modify or replace the invalid or unenforceable term or provision with a valid and enforceable term or provision which most accurately represents the parties’ intention with respect to the invalid or unenforceable term or provision.

15.INTERPRETATION; CONSTRUCTION.  The headings set forth in this Agreement are for convenience of reference only and will not be used in interpreting this Agreement.  Executive has been encouraged, and has consulted with, her own independent counsel and tax advisors with respect to the terms of this Agreement.  The Parties acknowledge that each Party and its counsel has reviewed and revised, or had an opportunity to review and revise, this Agreement, and the normal rule of construction to the effect that any ambiguities are to be resolved against the party primarily responsible for drafting this Agreement will not be employed in the interpretation of this Agreement.

16.REPRESENTATIONS AND WARRANTIES.  Executive represents and warrants that, to the best of Executive’s knowledge, she is not restricted or prohibited, contractually or otherwise, from entering into and performing each of the terms and covenants contained in this Agreement, and that her execution and performance of this Agreement will not violate or breach any other agreements between Executive and any other person or entity.

17.COUNTERPARTS.  This Agreement may be executed in two counterparts, each of which will be deemed an original, all of which together will constitute one and the same instrument.

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18.ARBITRATION.  If any dispute arises regarding the application, interpretation, or enforcement of this Agreement, including fraud in the inducement, the dispute will be resolved by final and binding arbitration before one arbitrator at the Judicial Arbitration and Mediation Service in Pleasanton, California.  The decision of the arbitrator will be written, will state the essential findings and conclusions on which the award is based, and will be final and may not be appealed by either of the Parties.  Each Party will have a reasonable opportunity to conduct adequate discovery and Executive will not be required to bear any type of expense that Executive would not be required to bear if Executive were bringing a civil lawsuit in place of arbitration.

19.ATTORNEYS’ FEES AND COSTS.  The prevailing party in any dispute arising out of this Agreement will be entitled to reimbursement by the losing party of all of its or her attorneys’ fees and costs including, but not limited to, arbitrator’s fees and expert’s fees.

20.SURVIVAL.  The provisions of Sections 4 and 5 (including the provisions of the Confidential Agreements) shall survive the termination of this Agreement.

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

LIPID SCIENCES, INC.
By:	/s/ S. Lewis Meyer, Ph.D.
	S. Lewis Meyer, Ph.D.
	President and Chief Executive Officer
/s/ Sandra Gardiner
Sandra Gardiner

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EX-10.3

EXHIBIT 10.3

SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), is entered into by and between Lipid Sciences, Inc., a Delaware corporation (the “Company”), and Dale Richardson (“Executive”), is effective as of March 1, 2007 except as otherwise provided, and amends and restates in its entirety the Existing Employment Agreement (defined below).  The Company and Executive are hereinafter collectively referred to as the “Parties,” and may individually be referred to as a “Party.”

RECITALS

WHEREAS, the Company and Executive previously entered into an Employment Agreement, dated as of July 6, 2000 , which agreement was thereafter amended and restated as of July 1, 2003 (the “Existing Employment Agreement”), which governs the terms and conditions of Executive’s compensation and employment relationship with the Company, including the severance benefits to which Executive would be entitled in the event the Company were to terminate Executive’s employment without cause; and

WHEREAS, the Parties wish to further revise and amend the Existing Employment Agreement and to have this Agreement replace and supersede in its entirety the Existing Employment Agreement.

NOW, THEREFORE, for good and sufficient consideration, the Parties agree as follows:

AGREEMENT

1.EMPLOYMENT.

1.1The Company will continue to employ Executive, and Executive hereby accepts such continued employment by the Company, upon the terms and conditions set forth in this Agreement, commencing effective as of March 1, 2007 except as otherwise provided herein (the “Effective Date”), and continuing until July 1, 2008 (the “Initial Term”); provided, however, that immediately prior to the expiration of the Initial Term, and on each anniversary thereafter (the date immediately prior to expiration of the Initial Term and each subsequent anniversary, a “Renewal Date”), the term of Executive’s employment under this Agreement will be extended automatically until the following subsequent anniversary unless either party elects not to renew this Agreement by serving notice of such intention not to renew on the other party at least ninety days prior to the expiration of a Renewal Date (the period commencing on the Effective Date and ending on expiration of the Initial Term or such later date to which the term of the Employee’s employment under this Agreement will have been extended, the “Term”).

1.2Executive will continue to serve as Vice President, Business Development of the Company.  Executive will report to the President and Chief Executive Officer of the Company (the “CEO”).

1.3Executive will do and diligently perform all services, acts or things necessary or advisable to carry out the duties normally accorded to Executive’s position; provided, however, that at all times during the Term (as hereinafter defined) Executive will be subject to the direction of the CEO.

1.4Executive’s place of employment will be at the office of the Company located in Pleasanton, California, but Executive agrees to travel to the extent and to the places necessary for the performance of his duties to the Company.

2.LOYAL AND CONSCIENTIOUS PERFORMANCE.  During his employment by the Company, Executive will devote his full business employment, interest, abilities and productive time to the proper and efficient performance of his duties under this Agreement.  During the Term, Executive may not, directly or indirectly, render services to any other person or organization for which Executive receives compensation without the prior written approval of the President & CEO of the Company.  Executive hereby agrees to refrain from engaging in any activity that does, will or could reasonably be deemed to conflict with the best interests of the Company.

3.COMPENSATION OF EXECUTIVE.

3.1Effective as of January 1, 2007 the Company will pay Executive a base salary of Two Hundred Fifty-Eight Thousand Dollars ($258,000) per year (the “Base Salary”), payable in accordance with the Company’s payroll practices as are in effect from time to time.  The Base Salary will be prorated for any partial year of employment on the basis of a 365-day fiscal year.

3.2The Base Salary may be changed from time to time by mutual agreement of Executive, the CEO and the Board.

3.3All of Executive’s compensation is subject to customary withholding taxes and any other employment taxes as are required to be collected or withheld by the Company.

3.4In the discretion of the Board and in accordance with Company practices as are in effect from time to time, Executive will be entitled to participate in employee benefit plans or arrangements made available by the Company now or in the future to its executives and key management employees.

3.5Executive’s performance will be reviewed by the CEO on a periodic basis (not less than once each fiscal year).  The CEO, with approval of the Board, may, in their sole discretion, award bonuses to Executive as may be appropriate or desirable based on Executive’s performance.

3.6Executive is entitled to receive prompt reimbursement of all reasonable expenses incurred by Executive in performing services for the Company, including expenses

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related to travel, entertainment, parking, and business meetings upon prompt submission of receipts documenting the expenses and consistent with the Company’s reimbursement policies as are in effect from time to time.

4.TERMINATION.  Subject to the notice and other provisions of this Section 4, the Company will have the right to terminate Executive’s employment hereunder, and Executive will have the right to resign, at any time for any reason or for no stated reason.

4.1(i)If prior to the expiration of the Term, Executive’s employment is terminated by the Company for “Good Cause” (as hereinafter defined) or if Executive resigns from his employment hereunder for any reason, Executive will be entitled to payment of (A) his Base Salary accrued up to and including the date of termination or resignation, and (B) any unreimbursed expenses.  Except to the extent required by the terms of the benefits provided under Section 3.4 or applicable law, Executive has no right under this Agreement or otherwise to receive any other compensation or to participate in any other plan, program or arrangement after such termination or resignation of employment.

(ii)Termination for “Good Cause” means the Company’s termination of Executive’s employment because of Executive’s: (A) conviction of any felony or any crime involving fraud or dishonesty; (B) participation (whether by affirmative act or omission) in a fraud, act of dishonesty or other act of material misconduct against the Company; (C) violation of any fiduciary duty or duty of loyalty owed to the Company; (D) breach in any material respect of any contract between Executive and the Company, including, without limitation, this Agreement and the Employee Confidential Information and Inventions Agreement and Confidential Disclosure Agreement (as hereinafter defined); and (E) repeated violation of any material Company policy.

(iii)Termination of Executive’s employment for Good Cause will be communicated by delivery to Executive of a written notice from the Company stating that Executive will be terminated for Good Cause, specifying the particulars thereof and the effective date of such termination.  In the cases of Sections 4.1(ii)(C), 4(ii)(D) and 4(ii)(E), the Executive shall have thirty (30) business days from the date of receipt of such notice to effect a cure of the actions constituting Good Cause, or to effect a cure of the adverse effect such actions, but only in circumstances where such cure or correction is feasible.  Upon cure or correction thereof by the Executive to the reasonable satisfaction of the Company, the action shall no longer constitute Cause for purposes of this Agreement.  The date of a resignation by Executive will be the date specified in a written notice of resignation from Executive to the Company.  Executive will provide at least 30 days’ advance written notice of his resignation.

4.2(i)If, prior to or at any time following the expiration of the Term, the Company terminates Executive’s employment for any reason other than “Good Cause” or Disability (such termination being hereinafter referred to as a “Termination Without Cause”), Executive will be entitled to (i) payment of his Base Salary accrued up to and including the date of such Termination Without Cause, (ii) payment of any unreimbursed expenses, and (iii) severance, subject to both Executive’s execution and delivery of a release in the form then deemed appropriate by the Company, and, if requested by the Company at the time of the termination, the Executive’s agreement to provide consulting services during the Severance

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Period  (as hereinafter defined) for no additional compensation, of (A) continuation of the Base Salary, at the rate in effect on the date of the Termination Without Cause, for a period of 9 months commencing on the date next following the date of the Termination Without Cause (the “Severance Period”); provided, however, that if Executive obtains new employment during the Severance Period, severance amounts due under this Agreement will be offset by any amounts paid to Executive by the subsequent employer, and (B) continued participation on the same terms and conditions as are in effect immediately prior to the Termination Without Cause in the Company’s retirement, Section 125, health and welfare benefit plans provided to the Employee at the time of such Termination Without Cause through the expiration of the Severance Period, or until Executive becomes eligible to participate in a subsequent employer’s benefit plan, whichever occurs first.  For the avoidance of doubt, Employee is entitled to the benefits of subsections (A) and (B) herein if Employee’s employment is terminated without Cause at any time on or after the Effective Date.  Anything herein to the contrary notwithstanding, the Company shall have no obligation to continue to maintain during the Severance Period any plan, program or level of benefits solely as a result of the provisions of this Agreement.

(ii)The date of the Termination Without Cause will be the date specified in a written notice of termination to Executive.  The Company will provide at least 30 days advance written notice of the Termination Without Cause.  For the avoidance of doubt, Executive’s employment will continue until the date specified in the written notice of termination to the Executive.

4.3In the event of Executive’s Disability, the Company will be entitled to terminate Executive’s employment.  In the case that the Company terminates Executive’s employment due to Disability, Executive will be entitled to his Base Salary up to and including the date of termination as well as any unpaid expense reimbursements.  As used in this Section 4.3, the term “Disability” means the Company’s determination that due to physical or mental illness or incapacity, whether total or partial, Executive is substantially unable to perform his duties hereunder for a period of 90 consecutive days or shorter periods aggregating 90 days during any period of 180 consecutive days.

4.4Except as provided in this Section 4.4, no Base Salary or benefits shall be payable under this Agreement following the date of Executive’s death.  In the event of Executive’s death, any Base Salary earned by Executive up to the date of death, as well as any unreimbursed expenses, will be paid to Executive’s estate or Executive’s named beneficiary within a reasonable period following his death.

5.CONFIDENTIAL INFORMATION; INVENTIONS; NONSOLICITATION.

5.1Executive recognizes that his employment with the Company will involve contact with information of substantial value to the Company, which is neither stale nor generally known in the trade, and which gives the Company an advantage over its competitors that do not know or use it, including but not limited to, techniques, designs, drawings, processes, inventions, developments, equipment, prototypes, sales and customer information, and business and financial information relating to the business, products, practices and techniques of the Company (hereinafter referred to as “Confidential Information”).  Executive will at all times regard and preserve as confidential such Confidential Information obtained by Executive from

4

whatever source and will not, either during his employment with the Company or thereafter, publish or disclose any part of such Confidential Information in any manner at any time, or use the same except on behalf of the Company, without the prior written consent of the Company; provided, however, that Executive may disclose Confidential Information in the best interest of the Company with properly executed Company confidentiality or secrecy agreements with a third party.  Executive agrees to abide by his continuing obligations under both the Employee Confidential Information and Inventions Agreement and the Confidential Disclosure Agreement, both dated as of July 6, 2000, between Executive and the Company, attached to the Existing Employment Agreement (the “Confidential Information Agreements”).

5.2While Executive is employed by the Company and for one (1) year thereafter, in order to protect the Confidential Information and the Company’s proprietary information from unauthorized use, Executive may not, either directly or through others, solicit or attempt to solicit any employee, consultant or independent contractor of the Company to terminate his or her relationship with the Company in order to become an employee, consultant or independent contractor to or for any other person or business entity.

6.SUCCESSORS.  The Company will require any successor (whether direct or indirect, by purchase, merger, or consolidation) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

7.ASSIGNMENT AND BINDING EFFECT.  This Agreement is binding on and inures to the benefit of Executive and Executive’s heirs, executors, personal representatives, administrators and legal representatives.  Because of the unique and personal nature of Executive’s duties under this Agreement, neither this Agreement nor any rights or obligations under this Agreement are assignable by Executive.  This Agreement is binding on and inures to the benefit of the Company and its successors, assigns and legal representatives.

8.NO OTHER SEVERANCE BENEFITS.  Except as specifically set forth in this Agreement, Executive covenants and agrees that he will not be entitled to any other form of severance benefits from the Company, including, without limitation, benefits otherwise payable under the Company’s regular severance policies, if any, in the event his employment hereunder ends for any reason and, except with respect to obligations of the Company expressly provided for herein.  In consideration for the Company’s payment of the severance benefits set forth in this Agreement, Executive agrees to execute a Separation and Release Agreement which waives Executive’s right to file a lawsuit alleging breach of contract, discrimination and any tort claims.

9.NOTICES.  All notices or demands of any kind required or permitted to be given by the Company or Executive under this Agreement will be given in writing and will be personally delivered (and receipted for) or mailed by certified mail, return receipt requested, postage prepaid, and if mailed to the Company, will be addressed to its principal place of business, and if mailed to Executive, will be addressed to him at his last known address on the records of the Company, or at such other address or addresses as either Party may hereinafter designate in writing to the other Party.  Notices sent by FedEx or similar overnight delivery

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service or by facsimile transmission will also constitute notice under this Section 9, effective upon receipt thereof.

10.CHOICE OF LAW.  This Agreement will be construed and interpreted in accordance with the laws of the State of California, without regard to the conflict of laws provision thereof.

11.INTEGRATION.  This Agreement and the Confidential Information Agreements contain the complete, final and exclusive agreement of the Parties relating to the subject matter of this Agreement and the Confidential Information Agreements, respectively, and supersede all prior oral and written employment agreements or arrangements between the Parties, including, without limitation, the Existing Employment Agreement except with respect to the obligations relating to the Confidential Information Agreements.

12.AMENDMENT.  This Agreement may not be amended or modified except by a written agreement signed by Executive and the Company.

13.WAIVER.  No term, covenant or condition of this Agreement or any breach thereof will be deemed waived, except with the written consent of the Party against whom the wavier in claimed, and any waiver or any such term, covenant, condition or breach will not be deemed to be a waiver of any preceding or succeeding breach of the same or any other term, covenant, condition or breach.

14.SEVERABILITY.  The finding by a court of competent jurisdiction of the unenforceability, invalidity or illegality of any provision of this Agreement will not render any other provision of this Agreement unenforceable, invalid or illegal.  Such court will have the authority to modify or replace the invalid or unenforceable term or provision with a valid and enforceable term or provision which most accurately represents the parties’ intention with respect to the invalid or unenforceable term or provision.

15.INTERPRETATION; CONSTRUCTION.  The headings set forth in this Agreement are for convenience of reference only and will not be used in interpreting this Agreement.  Executive has been encouraged, and has consulted with, his own independent counsel and tax advisors with respect to the terms of this Agreement.  The Parties acknowledge that each Party and its counsel has reviewed and revised, or had an opportunity to review and revise, this Agreement, and the normal rule of construction to the effect that any ambiguities are to be resolved against the party primarily responsible for drafting this Agreement will not be employed in the interpretation of this Agreement.

16.REPRESENTATIONS AND WARRANTIES.  Executive represents and warrants that, to the best of Executive’s knowledge, he is not restricted or prohibited, contractually or otherwise, from entering into and performing each of the terms and covenants contained in this Agreement, and that his execution and performance of this Agreement will not violate or breach any other agreements between Executive and any other person or entity.

17.COUNTERPARTS.  This Agreement may be executed in two counterparts, each of which will be deemed an original, all of which together will constitute one and the same instrument.

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18.ARBITRATION.  If any dispute arises regarding the application, interpretation, or enforcement of this Agreement, including fraud in the inducement, the dispute will be resolved by final and binding arbitration before one arbitrator at the Judicial Arbitration and Mediation Service in Pleasanton, California.  The decision of the arbitrator will be written, will state the essential findings and conclusions on which the award is based, and will be final and may not be appealed by either of the Parties.  Each Party will have a reasonable opportunity to conduct adequate discovery and Executive will not be required to bear any type of expense that Executive would not be required to bear if Executive were bringing a civil lawsuit in place of arbitration.

19.ATTORNEYS’ FEES AND COSTS.  The prevailing party in any dispute arising out of this Agreement will be entitled to reimbursement by the losing party of all of its or his attorneys’ fees and costs including, but not limited to, arbitrator’s fees and expert’s fees.

20.SURVIVAL.  The provisions of Sections 4 and 5 (including the provisions of the Confidential Agreements) shall survive the termination of this Agreement.

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

LIPID SCIENCES, INC.
By:	/s/ S. Lewis Meyer, Ph.D.
	S. Lewis Meyer, Ph.D.
	President and Chief Executive Officer
	/s/ Dale Richardson
	Dale Richardson

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