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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