Document:

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.

  
					

 

 8EXHIBIT 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

 3
 

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.

 6
 

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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