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.


1.1                                 The
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”).











1.2                                 Executive
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”).


1.3                                 Executive 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.


1.4                                 Executive’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.


3.1                                 Effective 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.


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


3.3                                 All 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.


3.4                                 In 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.


3.5                                 Executive’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.


3.6                                 Executive 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.


4.3                                 In 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.


4.4                                 Except 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.


5.1                                 Executive 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”).


5.2                                 While 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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