exv10w20



 





Exhibit 10.20



EMPLOYMENT AGREEMENT




          THIS EMPLOYMENT AGREEMENT is dated as of this 14th day of April 2003 by
and between LIPID SCIENCES, INC., a Delaware corporation (the “Company”), and
S. LEWIS MEYER, Ph.D., an individual residing at 5232 Springridge Way,
Fairfield, California, 94585 (the “Employee”).



W I T N E S S E T H:




          WHEREAS, the Company desires 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 (as hereinafter defined), setting forth the terms and conditions
of the 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
employs the Employee as Chief Executive Officer and President of the Company
and the Employee agrees upon the terms and conditions herein set forth 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 commence
on April 14, 2003 (the “Effective Date”) and continue until the third
anniversary thereof (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 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)     Stock Option. Subject to approval of the Board, the Company shall
grant to the Employee an option to purchase 850,000 shares of the Company’s
common stock (the “Option”) with a per share exercise price equal to the fair
market value of the per share price of the common stock on the date of grant
and shall vest in four equal installments (at a rate of 25% of the number of
shares subject to the Option per installment) on the date of grant, and on the
first, second and third anniversaries of the date of grant. The Option is
intended to be treated as an “incentive stock option” to the maximum extent
permitted under the Internal Revenue Code of 1986, as amended. The Option
shall be subject to the terms and conditions of the Company’s Performance
Equity Plan and the option agreement entered into thereunder to the extent the
terms and conditions are not addressed in this Section 3(c).



          (d)     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.



          (e)     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.



 









 





          (f)     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.



 









 





          (b)     Termination without Cause.



          (i)     If, prior to 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 a period of 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.
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.



          (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 executed and delivered to the Company,
contemporaneously with the execution and delivery of this Agreement, 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 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:
	 	Shearman & Sterling

1080 Marsh Road

Menlo Park, CA 94025







 








 






	 	 	 	 	 
	

	 	 	 	Facsimile No.: (650) 838-3699

Attn: James B. Bucher, Esq.
	 
	
      
   
(ii)

	 	To the Employee:
	 	S. Lewis Meyer, Ph.D.

5232 Springridge Way

Fairfield, CA 94585


Facsimile No.: (707) 863-9807






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.



          (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 Section 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/ Richard G. Babbit
 	 
	 	 	Name:  	Richard G. Babbitt 	 
	 	 	Title:  	Chairman of the Board of Directors 	 
	 
	 	EMPLOYEE

 	 
	 	By:  	/s/ S. Lewis Meyer, Ph.D.
 	 
	 	 	S. LEWIS MEYER, Ph.D.