Exhibit
10.2


August 7, 2006


Re: Lipid Sciences, Inc. — Private Placement 


Dear Investor:


We appreciate your
interest in our private placement of shares of common stock and warrants
issuable for common stock (the “Financing”).  This
letter confirms additional information regarding the Financing.  We understand that you and the other
investors will rely on this letter in connection with the purchase of
securities in the Financing.  Please note
that capitalized terms not defined in this letter have the meaning set forth in
the Securities Purchase Agreement to be entered into by you and the Company.


As of
the Execution Date, the Company confirms to you that:


There is no
transaction, arrangement, or other relationship between the Company and an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its Exchange Act filings and is not so disclosed or
that otherwise would be reasonably likely to have a Material Adverse Effect.


The Company has
not, and to its knowledge no one acting on its behalf has, (i) taken, directly
or indirectly, any action designed to cause or to result in the stabilization
or manipulation of the price of any security of the Company to facilitate the
sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid
any compensation for soliciting purchases of, any of the Securities, or (iii)
paid or agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.


Since December 31,
2005, there has been no material adverse change and no material adverse
development in the business, properties, operations, condition (financial or
otherwise), results of operations or prospects of the Company or its
Subsidiaries.  Since December 31, 2005,
the Company has not (i) declared or paid any dividends, (ii) sold any assets,
individually or in the aggregate, in excess of $500,000 outside of the ordinary
course of business or (iii) had capital expenditures, individually or in the
aggregate, in excess of $500,000.  The
Company has not taken any steps to seek protection pursuant to any bankruptcy
law nor does the Company have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy proceedings or any actual
knowledge of any fact which would reasonably lead a creditor to do so.  The Company is not as of the date hereof, and
after giving effect to the transactions contemplated hereby to occur at the
Closing, will not be Insolvent (as defined below).  For purposes of the foregoing, “Insolvent”
means (i) the present fair saleable value of the Company’s assets is less than
the amount required to pay the Company’s total indebtedness, (ii) the Company
is unable to pay its debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured, or (iii) the Company
intends to incur or believes that it will incur debts that would be beyond its
ability to pay as such debts mature.


7068 Koll Center Parkway, Suite 401, Pleasanton,
CA  94566-3111


Tel: 
925-249-4000    Fax:  925-249-4040


www.lipidsciences.com


 









 



Further,
in connection with the Financing, the Company will do the following on or prior
to the Closing:


·                  deliver
to each Investor a certificate evidencing the incorporation and good standing
of the Company and each of its operating Subsidiaries in such corporation’s
state of incorporation issued by the Secretary of State of such state of
incorporation as of a date within 10 days of the Closing Date;


·                  deliver
to each Investor a certified copy of the Certificate of Incorporation as
certified by the Secretary of State of the State of Delaware within 10 days of
the Closing Date;


·                  deliver
to each Investor a letter from the Company’s transfer agent certifying the
number of shares of Common Stock outstanding as of a date within five days of
the Closing Date; and


·                  obtain
all governmental, regulatory or third party consents and approvals, if any,
necessary for the sale of the Shares and the Warrants.


Further, in connection with the Financing, the Company will
make the following disclosures:


The
Company shall, on or before 8:30 a.m., New York City Time, on the first
Business Day after the date of this Agreement, issue a press release (the “Press Release”)
disclosing all material terms of the transactions contemplated hereby.  From and after the filing of the Company’s
quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2006 with
the Securities and Exchange Commission, no Investor shall be in possession of
any material, nonpublic information received from the Company, any of its
Subsidiaries or any of its respective officers, directors, employees or agents,
that is not disclosed in such quarterly report. 
The Company shall not, and shall cause each of its Subsidiaries and each
of their respective officers, directors, employees and agents, not to, provide
any Investor with any material, nonpublic information regarding the Company or
any of its Subsidiaries from and after the filing of the Press Release without
the express written consent of such Investor.


Please call me if you
have any questions.


	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  LIPID SCIENCES,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sandra
  Gardiner

  	
   

  
	
   

  	
  Sandra Gardiner

  
	
   

  	
  Chief Financial
  Officer

  



 


 



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