Document:

Exhibit 8.3

    
      

      

    

    

      ROYALTY
        AGREEMENT 

      

      THIS
        AGREEMENT (the "Agreement") is made this 29th
        day of
        September, 2005 by and between Don Tolman ("Author"), and Benacquista Galleries,
        Inc. (“Company”). 

      

      WHEREAS,
        Company desires to use Author's name, logo and likeness in connection with
        Company's, publishing marketing and sale of various electronic, print and
        other
        products by Author or others, including but not limited to the printed
        manuscript called the Farmacist’s Desk Reference (“FDR”), the Trademark the
        Farmacist’s Desk Reference, the trademark “FDR” and derivative works thereof
        (together the “FDR Works”), any works under the trademark YNOT Education, YNOT
        Educate or YNOT (together “YNOT Works”), and including from time to time other
        works that Author may write, publish or create on any subject (“Other
        Works”).

      

      NOW
        THEREFORE, in consideration of the premises set forth above and the promises
        set
        forth below, the sufficiency and receipt of which are hereby acknowledged,
        the
        parties hereby agree as follows:

      

      I.    License
        of Intellectual Property.
        

      

      A.    Limited
        License of Name and Marks.

      

      1.    Author
        hereby licenses to Company the use of his name and likeness in connection
        with
        the FDR, FDR Works, YNOT Works and Other Works.

      

      2.    Company
        agrees that its usage of Author's name and likeness on Other Works shall
        only be
        with Author’s prior written consent. Company further agrees that the
        exploitation of such right of usage shall protect the name and goodwill of
        Author.

      

      3.    Company
        agrees that it shall not use, or permit any person or entity to use, Author’s
        name or likeness or any portion thereof, without the prior written consent
        of
        Author, except to the limited extent that such use is authorized under this
        Agreement. Company agrees that Author is the owner of the trademarks YNOT
        and
        derivatives thereof and FDR and derivatives thereof (the “Marks”) and that
        company’s rights to these Marks are limited to the rights specifically granted
        in this Agreement by Author.

      

      4.    Upon
        termination or expiration of this Agreement, Company shall: (i) immediately
        cease utilization of Author's name, likeness or the Marks for any purpose;
        (ii)
        return to Author any original manuscripts; and (iii) cease to sell or publish
        any of the FDR Works, YNOT Works or Other Works, except with respect to any
        physical inventory of the same, which may be either destroyed or sold to
        Author
        at Company’s actual cost, at Company’s discretion.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      B.    Review
        and Approval.
        In
        order to protect the reputation and goodwill of Author, Company shall provide
        Author with the right to review and pre-approve all uses of Author’s name,
        likeness or the Marks.

      

      C.    Exclusive
        Publishing Rights;Royalty Payments.

      

      1.    Subject
        to
        the terms and conditions hereof, Author hereby grants to Company the exclusive
        and sole rights to publish the FDR, and the exclusive and sole rights to
        the
        Marks and to the sale or distribution of FDR Works or YNOT Works. In addition,
        the Author shall not publish Other Works for payment without the written
        consent
        of Company during the term of this Agreement.

      

      2.    The
        Company shall pay the Author $1.00 for each copy of the FDR which is actually
        sold by the Company. Such FDR Royalty shall be due and payable quarterly
        to the
        Author, less any discounts for returned books.

      

      3.    The
        Company shall pay the Author a General Royalty of 5% of all proceeds which
        it
        actually collects from sale or license of any of the FDR Works, YNOT Works
        or
        Other Works. This General Royalty shall not apply to any commercial endorsements
        of the Company, it’s websites, any corporate communications made by Author on
        behalf of Company or any other sales except those of a specific product which
        uses Author’s Name, the Marks, the FDR Works, the YNOT Works or Other Works
        (together the “Collected Works”). Such General Royalty shall be due and payable
        quarterly and may be offset by any returns.

      

      4.    These
        royalties shall not give any ownership rights to the Company in any of the
        Collected Works.

       

      

      II.    Noncompetition.

      

      A.    During
        the Term of this Agreement, Author agrees not to endorse or promote, or license
        its name or likeness to, any competitors of Company in connection with the
        marketing and sale of any products or services substantially similar or related
        to those sold by the Company.

      

      B.    During
        the Term of this Agreement, Company agrees not to enter into any endorsement
        or
        promotional agreement or understanding (whether written or oral) using any
        of
        the Collected Works of Marks, without permission of the Author.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      III.    Reporting
        and Inspection.

      

      A.    Reporting.
        During
        the Term of this Agreement, Company shall provide to Author written quarterly
        reports (at the address specified in Section XIX (Notice) below) setting
        forth
        Company's monthly gross sales of products where royalties are due, including
        the
        amount of Author's entitled royalties based on such gross sales. Such reports
        shall be made concurrently with the quarterly royalty payments payable to
        Author
        by Company.

      

      B.    Inspection.
        During
        the Term of this Agreement, upon reasonable notice and during regular business
        hours, Author or its agent(s) shall have the right to inspect all books and
        records of Company relating to the subject matter of this Agreement. Upon
        Author’s request, Company shall make and send copies to Author of the books and
        records of Company regarding and pertaining to the Collected Works and this
        Agreement.

      

      IV.    Confidential
        Information.
        The
        parties shall maintain the confidentiality of all of the confidential and
        proprietary information and data ("Confidential Information") of the other
        party. The parties also shall take all reasonable steps to ensure that no
        use,
        by themselves or by any third parties, shall be made of the other party’s
        Confidential Information without such other party’s consent. Each party’s
        Confidential Information shall remain the property of that party and shall
        be
        considered to be furnished in confidence to the other party when necessary
        under
        the terms of this Agreement. Upon the termination or expiration of this
        Agreement, each party shall: (i) deliver immediately to the other party all
        Confidential Information of the other party, including but not limited to
        all
        written and electronic documentation of all Confidential Information, and
        all
        copies thereof; (ii) make no further use of it; and (iii) make reasonable
        efforts to ensure that no further use of it is made by either that party
        or its
        officers, directors, employees, agents, contractors, or any other person
        or
        third party. Each party's confidentiality obligations under this Section
        shall
        survive any termination or expiration of this Agreement.

      

      V.    Term
        and Termination.
        This
        Agreement shall be effective as of the date and year first above written
        and
        shall remain in full force and effect for a period of 2 (two) years from
        such
        date and year (the initial “Term”). In the Initial Term, and each term
        thereafter Author must receive minimum royalties of at least $250,000 or
        author
        may terminate this Agreement. Thereafter, this Agreement shall renew
        automatically for 2 successive 2 year Terms, unless terminated by Author
        for
        Company’s failure to pay the Minimum Royalty. In the event that Company fails to
        sell enough Collected Works to pay the Minimum Royalty, Company has the right,
        but not the obligation, to advance Author the balance to be paid under the
        Minimum Royalty. Any such advance would be credited toward future Royalty
        Payments due the Author. In the event of a material breach
        of
        this Agreement, this Agreement may be terminated by the non-breaching party
        immediately upon written notice to the other party, such termination which
        shall
        be contingent upon the breaching party failing to cure such breach within
        30
        days of its receipt of such written notice from the non-breaching party.
        In the
        event of one party’s insolvency, fraud or willful misconduct, this Agreement may
        be terminated by the other party immediately upon written notice to the
        offending party.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

       VI.    Relationship
        of Parties.
        The
        relationship of Author and Company to each other is that of independent
        contractors. Nothing herein shall create any Author, joint venture, partnership,
        or agency relationship of any kind between the parties, except as the Author
        is,
        independently of this Agreement, an officer or director of the Company. Neither
        party is authorized to incur any liability, obligation or expense on behalf
        of
        the other or to use the other's monetary credit in conducting any activities
        under this Agreement.

      

      VII.    Indemnification
        and Insurance.

      

      A.    Indemnification.
        Each
        party hereby agrees to indemnify, save and hold harmless the other party,
        its
        subsidiaries, affiliates, related entities, partners, agents, officers,
        directors, employees, attorneys, heirs, successors, and assigns, and each
        of
        them, from and against any and all claims, actions, demands, losses, damages,
        judgments, settlements, costs and expenses (including reasonable attorneys'
        fees
        and expenses), and liabilities of every kind and character whatsoever, which
        may
        arise by reason of: (i) any act or omission by the party or any of its officers,
        directors, employees, or agents; and/or (ii) the inaccuracy or breach of
        any of
        the covenants, representations and warranties made in this Agreement. This
        indemnity shall require the payment of costs and expenses as they occur.
        Each
        party shall promptly notify the other party upon receipt of any claim or
        legal
        action referenced in this Section. The provisions of this Section shall survive
        any termination or expiration of this Agreement.

      

      B.    Insurance.
        In
        order to assure the indemnity described in this Section, Company shall, at
        its
        sole expense, carry and keep in full force and effect at all times during
        the
        Term of this Agreement a liability insurance policy with a single limit of
        at
        least one million dollars ($1,000,000) to cover potential liability to Author
        and/or others arising under this Agreement. Company shall name Author as
        an
        additional insured on such insurance policy, and such insurance policy shall
        contain a provision by which the insurer agrees that such policy shall not
        be
        cancelled except after thirty (30) days written notice to Author. Company
        agrees
        to provide to Author, within one year of the commencement of the initial
        Term of
        this Agreement, a copy of the certificate evidencing such insurance policy.
        Any
        insurance policy carried or to be carried by Company hereunder shall be primary
        over any insurance policy that might be carried by Author. Company's
        indemnification of Author under this Section shall in no way be limited by
        the
        extent of Company's insurance coverage. The provisions of this Section shall
        survive any termination or expiration of this Agreement for a period of one
        (1)
        year.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      VIII.    Warranties.
        Each
        party covenants, warrants and represents that it shall comply with all laws
        and
        regulations applicable to this Agreement, and that it shall exercise due
        care
        and act in good faith at all times in performance of its obligations under
        this
        Agreement. The provisions of this Section shall survive any termination or
        expiration of this Agreement.

      

       
        IX.    Waiver.
        Either
        party's waiver of, or failure to exercise, any right provided for in this
        Agreement shall not be deemed a waiver of any further or future right under
        this
        Agreement.

      

       
         X.    Governing
        Law.
        All
        questions with respect to the construction, performance and enforcement of
        this
        Agreement, and the rights and liabilities of the parties hereunder, shall
        be
        determined in accordance with the laws of the State of Nevada. Any legal
        action
        taken or to be taken by either party regarding this Agreement or the rights
        and
        liabilities of parties hereunder shall be brought only before a federal,
        state
        or local court of competent jurisdiction located within the State of Nevada.
        Each party hereby consents to, and agrees not to contest, the jurisdiction
        of
        the federal, state and local courts located within the State of
        Nevada.

      

       
        XI.    Headings.
        The
        headings of the various paragraphs hereof are intended solely for the
        convenience of reference and are not intended for any purpose whatsoever
        to
        explain, modify or place any construction upon any of the provisions of this
        Agreement.

      

      XII.    Assignment.
        This
        Agreement may not be assigned, or the rights granted hereunder transferred
        or
        sub-licensed, by either party without the express prior written consent of
        the
        other party.

      

      XIII.    Heirs,
        Successors and Assigns.
        This
        Agreement shall be binding upon and inure to the benefit of each party, its
        subsidiaries, affiliates, related entities, partners, agents, officers,
        directors, employees, heirs, successors, and assigns, without regard to whether
        it is expressly acknowledged in any instrument of succession or
        assignment.

      

      XIV.    Counterparts.
        This
        Agreement may be executed in one (1) or more counterparts, each of which
        shall
        be deemed an original and all of which taken together shall constitute one
        (1)
        and the same instrument.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

        
        XV.    Entire
        Agreement.
        This
        Agreement: (i) constitutes the entire agreement between the parties hereto
        with
        respect to the subject matter hereof; (ii) supersedes and replaces all prior
        agreements, oral and written, between the parties relating to the subject
        matter
        hereof; and (iii) may be amended only by a written instrument clearly setting
        forth the amendment(s) and executed by both parties.

      

       
        XVI.    Independent
        Agreement.
        This
        Agreement is an independent agreement which is not in any way contingent
        upon or
        related to any other contractual obligations of the parties. 

      

       XVII.    Severability.
        All
        provisions of this Agreement are severable. If any provision or portion hereof
        is determined to be unenforceable in arbitration or by a court of competent
        jurisdiction, then the remaining portion of the Agreement shall remain in
        full
        effect.

      

      XVIII.    Force
        Majeure.
        Neither
        party shall be liable for failure to perform its obligations under this
        Agreement due to events beyond its reasonable control, including, but not
        limited to, strikes, riots, wars, fire, acts of God, and acts in compliance
        with
        any applicable law, regulation or order (whether valid or invalid) of any
        governmental body.

      

        
        XIX.    Notice.
        All
        notices and demands of any kind or nature that either party to this Agreement
        may be required or may desire to serve upon the other in connection with
        this
        Agreement shall be in writing and may be served personally, by certified
        mail,
        or by commercial overnight courier (e.g.,
        Federal
        Express), with constructive receipt deemed to have occurred 10 calendar days
        after the mailing or sending of such notice, to the following
        addresses:

      

      
        	 	
                If
                  to Author:

              	
                _________________________________________

              
	 	 	
                _________________________________________

              
	 	 	
                _________________________________________

              
	 	 	
                Attn.:
                  ________________, ___________________

              
	 	 	 
	 	
                If
                  to Company:

              	
                
                  _________________________________________

                

              
	 	 	
                
                  _________________________________________

                

              
	 	 	
                
                  _________________________________________

                

              
	 	 	
                
                  Attn.:
                    ________________, ___________________

                

              
	 	 	 

      

      

      * 
        *  *  *  *

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      IN
        WITNESS WHEREOF, the parties hereto have caused duplicate originals of this
        Agreement to be executed by their respective duly authorized representatives
        as
        of the date and year first above written.

      

      

      
        	 	
                Don
                  Tolman

              
	 	 	 
	 	 	 
	 	 	 
	 	
                By:  
                  /s/ Don
                  Tolman                                 
                  

              
	 	 	
                Don
                  Tolman

              
	 	 	 
	 	 	 
	 	
                Benacquista
                  Galleries, Inc.

              
	 	
                A
                  Nevada corporation

              
	 	 	 
	 	 	 
	 	 	 
	 	
                By:  
                  /s/ James
                  Price                                  
                  

              
	 	 	
                James
                  Price

              
	 	 	
                President
                  and CEOExhibit 4.1

 

Exhibit A to

Securities Purchase
Agreement

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW, AND MAY NOT
BE OFFERED FOR SALE, SOLD OR TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT
THERETO, OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER,
SALE OR TRANSFER. SUBJECT TO COMPLIANCE WITH THE REQUIREMENTS OF THE SECURITIES
ACT AND APPLICABLE STATE SECURITIES LAWS, THIS WARRANT AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE PLEDGED OR HYPOTHECATED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THIS
WARRANT OR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT.

 

WARRANT TO PURCHASE COMMON STOCK 

 

OF

 

LIPID SCIENCES, INC.

 

	
  Issue Date:  September      ,
  2005

  	
   

  	
  Warrant No. A-      

  

 

THIS CERTIFIES
that                              (the
“Holder”) of this Series A
Warrant (this “Warrant”), has the right to
purchase from LIPID SICENCES, INC., a Delaware corporation (the “Company”), up to                     fully
paid and nonassessable shares of the Company’s common stock, par value $0.001
per share (the “Common Stock”), subject to
adjustment as provided herein, at a price per share equal to the Exercise Price
(as defined below), at any time beginning on the date on which this Warrant is
issued (the “Issue Date”) and ending at
5:00 p.m., New York City time, on the date that is the fifth (5th)
anniversary of the Issue Date (the “Expiration Date”).  This Warrant is issued pursuant to a
Securities Purchase Agreement, dated as of September 28, 2005 (the “Securities Purchase Agreement”).  Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the
Securities Purchase Agreement.

 

 

1.             Exercise.

 

(a)           Right to Exercise;
Exercise Price.  Subject to the terms
and conditions set forth herein, the Holder shall have the right to exercise
this Warrant at any time and from time to time during the period beginning on
the Issue Date and ending on the Expiration Date as to all or any part of the
shares of Common Stock covered hereby (the “Warrant
Shares”).  The “Exercise Price” for each Warrant
Share purchased by the Holder upon the exercise of this Warrant shall be equal
to $4.20 (subject to adjustment for the events specified in Section 6
of this Warrant).

 

(b)           Exercise Notice.  In order to exercise this Warrant, the Holder
shall deliver, at any time prior to 5:00 p.m. New York City time on the
Business Day on which the Holder wishes to effect such exercise (the “Exercise Date”), to the Company an
executed copy of the notice of exercise in the form attached hereto as Exhibit A (the “Exercise Notice”), the original
Warrant and, in the case of a Cash Exercise (as defined below), the Exercise
Price.  The Exercise Notice shall also state the name or names (with
address) in which the shares of Common Stock that are issuable on such exercise
shall be issued.  In the
case of a dispute as to the calculation of the Exercise Price or the number of
Warrant Shares issuable hereunder (including, without limitation, the
calculation of any adjustment pursuant to Section 6 of this
Warrant), the Company shall promptly issue to the Holder the number of Warrant
Shares that are not disputed and shall submit the disputed calculations to a
certified public accounting firm of national recognition (other than the
Company’s independent accountants) promptly following the date on which the
Exercise Notice is delivered to the Company. The Company shall cause such
accountant to calculate the Exercise Price and/or the number of Warrant Shares
issuable hereunder and to notify the Company and the Holder of the results in
writing no later than ten (10) Business Days following the day on which
such accountant received the disputed calculations (the “Dispute
Procedure”). Such accountant’s calculation shall be deemed
conclusive absent manifest error.  The
fees of any such accountant shall be borne by the party whose calculations were
most at variance with those of such accountant.

 

(c)           Holder of Record.  The Holder shall, for all purposes, be deemed
to have become the holder of record of the Warrant Shares specified in an
Exercise Notice as of 5:00 p.m. New York City time on the Exercise Date,
irrespective of the date of delivery of such Warrant Shares.  Except as specifically provided herein,
nothing in this Warrant shall be construed as conferring upon the Holder hereof
any rights as a stockholder of the Company prior to the Exercise Date.

 

(d)           Cancellation of
Warrant.  This Warrant shall be
canceled upon its exercise and, if this Warrant is exercised in part, the
Company shall, at the time that it delivers Warrant Shares to the Holder
pursuant to such exercise as provided herein, issue a new warrant, and deliver
to the Holder a certificate representing such new warrant, with terms identical
in all respects to this Warrant (except that such new warrant shall be
exercisable into the number of shares of Common Stock with respect to which
this Warrant shall remain unexercised); provided, however, that the Holder shall be entitled to exercise all
or any portion of such new warrant at any time following the time at which this
Warrant is exercised, regardless of whether the Company has actually issued
such new warrant or delivered to the Holder a certificate therefor. 

 

2

 

2.             Delivery of
Warrant Shares Upon Exercise.  Upon
exercise pursuant to Section 1 of this Warrant, the Company shall
deliver within a reasonable time, not exceeding (A) the close of business
on the third (3rd) Business Day following the Exercise Date and (B) with
respect to Warrant Shares that are the subject of a Dispute Procedure, the
close of business on the third (3rd) Business Day following the determination
made pursuant to Section 1(b) of this Warrant (each of the
dates specified in (A) and (B) being referred to as a “Delivery Date”), issue and deliver
or caused to be delivered to the Holder the number of Warrant Shares as shall
be determined as provided herein.  The
Company shall effect delivery of Warrant Shares to the Holder by, as long as
the Transfer Agent participates in the Depository Trust Company (“DTC”) Fast Automated Securities
Transfer program (“FAST”), crediting the account
of the Holder or its nominee at DTC (as specified in the applicable Exercise
Notice) with the number of Warrant Shares required to be delivered, no later
than the close of business on such Delivery Date.  In the event that the Transfer Agent is not a
participant in FAST, or if the Warrant Shares are not otherwise eligible for
delivery through FAST, or if the Holder so specifies in an Exercise Notice or
otherwise in writing on or before the Exercise Date, the Company shall effect
delivery of Warrant Shares by delivering to the Holder or its nominee physical
certificates representing such Warrant Shares, no later than the close of
business on such Delivery Date.  The
certificates representing the Warrant Shares may bear legends in accordance
with the Securities Purchase Agreement or applicable law.  

 

3.             Failure to Deliver
Warrant Shares. 

 

(a)           In
the event that the Company fails for any reason to deliver to the Holder the
number of Warrant Shares specified in the applicable Exercise Notice on or
before the Delivery Date therefor (an “Exercise Default”), the Company shall pay to
the Holder payments (“Exercise
Default Payments”) in the amount of (i) (N/365) multiplied
by (ii) the aggregate Exercise Price of the Warrant Shares which are the
subject of such Exercise Default multiplied by (iii) the lower of twelve
percent (12%) per annum and the maximum rate permitted by applicable law (the “Default Interest Rate”),
where “N” equals the number of days elapsed between the original Delivery Date
of such Warrant Shares and the date on which all of such Warrant Shares are
issued and delivered to the Holder.  Cash
amounts payable hereunder shall be paid on or before the fifth (5th) Business
Day of each calendar month following the calendar month in which such amount
has accrued.  Notwithstanding anything in
this Warrant to the contrary, the Company is not obligated to issue any shares
in excess of the Holder’s Allocation Amount (as defined in Section 4(b) of
this Warrant), the failure to deliver such Warrant Shares shall not be an
Exercise Default, and no Exercise Default Payment shall be due with regards to
such Warrant Shares.

 

(b)           In
the event that the Holder has not received certificates representing the
Warrant Shares on or before the Delivery Date, the Holder may, upon written
notice to the Company (an “Exercise Default Notice”),
regain on the date of such notice the rights of the Holder under the exercised
portion of this Warrant that is the subject of such Exercise Default.  In such event, the Holder shall retain all of
the Holder’s rights and remedies with respect to the Company’s failure to
deliver such Warrant Shares (including without limitation the right to receive
the cash payments specified in Section 3(a) of this Warrant).

 

3

 

(c)           The Holder’s rights and
remedies hereunder are cumulative, and no right or remedy is exclusive of any
other.  In addition to the amounts
specified herein, the Holder shall have the right to pursue all other remedies
available to it at law or in equity (including, without limitation, a decree of
specific performance and/or injunctive relief). 
Nothing herein shall limit the Holder’s right to pursue actual damages
for the Company’s failure to issue and deliver Warrant Shares on the applicable
Delivery Date.                        

 

4.             Exercise
Limitations.  

 

(a)           In no event shall a
Holder be permitted to exercise this Warrant, or part hereof, if, upon such
exercise the number of shares of Common Stock beneficially owned by the Holder
(other than shares which would otherwise be deemed beneficially owned except
for being subject to a limitation on exercise analogous to the limitation
contained in this Section 4(a)), would exceed 4.99% of the
number of shares of Common Stock then issued and outstanding.  As used herein, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the rules thereunder.  To the extent that the limitation contained
in this Section 4(a) applies, the submission of an Exercise
Notice by the Holder shall be deemed to be the Holder’s representation that
this Warrant is exercisable pursuant to the terms hereof and the Company shall
be entitled to rely on such representation without making any further inquiry
as to whether this Section 4(a) applies.  Nothing contained herein shall be deemed to
restrict the right of a Holder to exercise this Warrant, or part thereof, at
such time as such exercise will not violate the provisions of this Section 4(a).  This Section 4(a) may not be
amended unless such amendment is approved by the holders of a majority of the
Common Stock then outstanding; provided, however, that the limitations
contained in this Section 4(a) shall cease to apply (x) upon
thirty (30) days’ prior written notice from the Holder to the Company, or (y)
immediately upon written notice from the Holder to the Company at any time
after the public announcement or other disclosure of a Major Transaction (as
defined in Section 6(d) of this Warrant).

 

(b)           Notwithstanding
anything to the contrary in this Warrant, the Series B Warrant or the Securities
Purchase Agreement (including, without limitation, any adjustment of the
Exercise Price pursuant to Section 6(c) hereof), no Holder
shall be entitled to receive at any time upon exercise of this Warrant a number
of Warrant Shares that when added to (i) the number of Warrant Shares
previously received by such Holder upon exercise of this Warrant plus (ii) the
number of shares of Common Stock previously purchased by such Holder pursuant
to the Securities Purchase Agreement plus (iii) the number of shares of
Common Stock previously received by such Holder upon exercise of its Series B
Warrant, would exceed the product of (A) the Cap Amount and (B) such
Holder’s Pro Rata Share (such product, the “Allocation Amount”).  In the event that any Investor to which this
Warrant was originally issued shall sell or otherwise transfer any part of this
Warrant, the remaining Warrant Shares allocable to such transferring Investor’s
Allocation Amount shall be allocated between the transferring Investor and the
transferee in proportion to amount of this Warrant being transferred.

 

5.             Payment of the
Exercise Price; Cashless Exercise. 
The Holder may pay the Exercise Price in either of the following forms
or, at the election of Holder, a combination thereof:

 

4

 

(a)           through a cash exercise
(a “Cash Exercise”) by delivering
immediately available funds, or

 

(b)           if,
if at any time after the first year following the Issue Date, an effective
Registration Statement is not available for the resale of all of the Warrant
Shares issuable hereunder at the time an Exercise Notice is delivered to the
Company, through a cashless exercise (a “Cashless Exercise”).  The Holder may effect a Cashless Exercise by
surrendering this Warrant to the Company and noting on the Exercise Notice that
the Holder wishes to effect a Cashless Exercise, upon which the Company shall
issue to the Holder the number of Warrant Shares determined as follows:

 

	
   

  	
   

  	
  X = Y x (A-B)/A

  
	
   

  	
   

  	
   

  
	
  where:

  	
   

  	
  X = the number of Warrant Shares to be issued to the Holder;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Y = the number of Warrant Shares with
  respect to which this Warrant is being exercised;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A = the Market Price as of the Exercise Date; and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B = the Exercise Price.

  

 

For purposes of Rule 144, it is intended
and acknowledged that the Warrant Shares issued in a Cashless Exercise
transaction shall be deemed to have been acquired by the Holder, and the
holding period for the Warrant Shares required by Rule 144 shall be deemed
to have been commenced, on the Issue Date.

 

6.             Anti-Dilution
Adjustments; Distributions; Other Events. 
The Exercise Price and the number of Warrant Shares issuable hereunder
shall be subject to adjustment from time to time as provided in this Section 6.  

 

(a)           Subdivision
or Combination of Common Stock.  If
the Company, at any time after the Issue Date, subdivides (by any stock split,
stock dividend, recapitalization, reorganization, reclassification or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, then after the date of record for effecting such subdivision, the
Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced.  If the Company,
at any time after the Issue Date, combines (by reverse stock split,
recapitalization, reorganization, reclassification or otherwise) its shares of
Common Stock into a smaller number of shares, then, after the date of record
for effecting such combination, the Exercise Price in effect immediately prior
to such combination will be proportionally increased.

 

(b)           Distributions.  If the Company shall declare or make any
distribution of its assets (or rights to acquire its assets) to holders of
Common Stock as a partial liquidating dividend or otherwise (including any
dividend or distribution to the Company’s stockholders in cash or shares (or
rights to acquire shares) of capital stock of a subsidiary) (a “Distribution”), the

 

5

 

Company shall deliver written notice of such Distribution (a “Distribution Notice”) to the
Holder at least twenty (20) Business Days prior to the earlier to occur of (i) the
record date for determining stockholders entitled to such Distribution (the “Record Date”) and (ii) the date
on which such Distribution is made (the “Distribution Date”).  The Holder shall be entitled to a reduction
in the Exercise Price as of the Record Date therefor, such reduction to be
effected by reducing the Exercise Price in effect on the Business Day
immediately preceding the Record Date by an amount equal to the fair market
value of the assets to be distributed divided by the number of shares of
Common Stock as to which such Distribution is to be made, such fair market
value to be reasonably determined in good faith by the independent members of
the Company’s Board of Directors.

 

(c)           Dilutive Issuances.  

 

(i)            Adjustment
Upon Dilutive Issuance.  If, at any
time after the Issue Date, the Company issues or sells, or in accordance with Section 6(c)(ii) of
this Warrant, is deemed to have issued or sold, any shares of Common Stock for
no consideration or for a consideration per share less than the Exercise Price
on the date of such issuance or sale (or deemed issuance or sale) (a “Dilutive Issuance”), then the
Exercise Price shall be adjusted as follows:

 

(A)          If
such Dilutive Issuance occurs prior to the Effective Date (as defined in the
Registration Rights Agreement), then effective immediately upon the Dilutive
Issuance, the Exercise Price shall be adjusted so as to equal the consideration
received or receivable by the Company (on a per share basis) for the additional
shares of Common Stock so issued, sold or deemed issued or sold in such
Dilutive Issuance (which, in the case of a deemed issuance or sale, shall be
calculated in accordance with Section 6(c)(ii) of this
Warrant).  Notwithstanding the foregoing,
prior to the Effective Date, the Company shall not engage in any transaction
that would result in the issuance or deemed issuance of shares of Common Stock
(other than Excluded Securities (as defined below) for no consideration.

 

(B)           If
such Dilutive Issuance occurs on or after the Effective Date, then effective
immediately upon the Dilutive Issuance, the Exercise Price shall be adjusted so
as to equal an amount determined by multiplying such Exercise Price by the
following fraction:

 

	
   

  	
  N0 + N1

  	
   

  
	
   

  	
  N0 + N2

  	
   

  
	
   

  	
   

  	
   

  
	
  where:

  	
   

  	
   

  
	
   

  	
  N0
  =

  	
  the number
  of shares of Common Stock outstanding immediately prior to the issuance, sale
  or deemed issuance or sale of such additional shares of Common Stock in such
  Dilutive Issuance (without taking into account any shares of Common Stock
  issuable upon conversion, exchange or exercise of any securities or other
  instruments which are convertible into or exercisable or 

  

 

6

 

	
   

  	
   

  	
  exchangeable
  for Common Stock (“Convertible Securities”)
  or options, warrants or other rights to purchase or subscribe for Common
  Stock or Convertible Securities (“Purchase Rights”),
  including, without limitation, the Warrants;

  
	
   

  	
   

  	
   

  
	
   

  	
  N1
  =

  	
  the number
  of shares of Common Stock which the aggregate consideration, if any, received
  or receivable by the Company for the total number of such additional shares
  of Common Stock so issued, sold or deemed issued or sold in such Dilutive
  Issuance (which, in the case of a deemed issuance or sale, shall be
  calculated in accordance with Section 6(c)(ii) of this
  Warrant) would purchase at the Exercise Price in effect immediately prior to
  such Dilutive Issuance; and

  
	
   

  	
   

  	
   

  
	
   

  	
  N2
  =

  	
  the number
  of such additional shares of Common Stock so issued, sold or deemed issued or
  sold in such Dilutive Issuance.

  

 

Notwithstanding
the foregoing, no adjustment shall be made pursuant hereto if such adjustment
would result in an increase in the Exercise Price.

 

(ii)           Effect
On Exercise Price Of Certain Events. 
For purposes of determining the adjusted Exercise Price under Section 6(c)(i) of
this Warrant, the following will be applicable:

 

(A)          Issuance Of Purchase
Rights.  If the Company issues or
sells any Purchase Rights, whether or not immediately exercisable, and the
price per share for which Common Stock is issuable upon the exercise of such
Purchase Rights (and the price of any conversion of Convertible Securities, if
applicable) is less than the Exercise Price in effect on the date of issuance
or sale of such Purchase Rights, then the maximum total number of shares of
Common Stock issuable upon the exercise of all such Purchase Rights (assuming
full conversion, exercise or exchange of Convertible Securities, if applicable)
shall, as of the date of the issuance or sale of such Purchase Rights, be
deemed to be outstanding and to have been issued and sold by the Company for
such price per share.  For purposes of
the preceding sentence, the “price per share for which Common Stock is issuable
upon the exercise of such Purchase Rights” shall be determined by dividing (x)
the total amount, if any, received or receivable by the Company as
consideration for the issuance or sale of all such Purchase Rights, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of all such Purchase Rights, plus, in the case
of Convertible Securities issuable upon the exercise of such Purchase Rights,
the minimum aggregate amount of additional consideration payable upon the conversion,
exercise or exchange of all such Convertible Securities (determined in
accordance with the calculation method set forth in Section 6(c)(ii)(B) of
this Warrant), by (y) the maximum total number of shares of Common Stock
issuable upon the exercise of all such Purchase Rights (assuming full
conversion, exercise or exchange of Convertible Securities, if
applicable).  Except as provided in Section 6(c)(ii)(C) of
this Warrant, no further adjustment to the Exercise Price shall be made upon
the actual issuance of such Common Stock upon the exercise of

 

7

 

such Purchase
Rights or upon the conversion, exercise or exchange of Convertible Securities
issuable upon exercise of such Purchase Rights.

 

(B)           Issuance Of
Convertible Securities.  If the
Company issues or sells any Convertible Securities, whether or not immediately
convertible, exercisable or exchangeable, and the price per share for which
Common Stock is issuable upon such conversion, exercise or exchange is less
than the Exercise Price in effect on the date of issuance or sale of such
Convertible Securities, then the maximum total number of shares of Common Stock
issuable upon the conversion, exercise or exchange of all such Convertible
Securities shall, as of the date of the issuance or sale of such Convertible
Securities, be deemed to be outstanding and to have been issued and sold by the
Company for such price per share.  If the
Convertible Securities so issued or sold do not have a fluctuating conversion
or exercise price or exchange ratio, then for the purposes of the immediately
preceding sentence, the “price per share for which Common Stock is issuable
upon such conversion, exercise or exchange” shall be determined by dividing (A) the
total amount, if any, received or receivable by the Company as consideration
for the issuance or sale of all such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the conversion, exercise or exchange of all such Convertible Securities
(determined in accordance with the calculation method set forth in this Section 6(c)(ii)(B)),
by (B) the maximum total number of shares of Common Stock issuable upon
the exercise, conversion or exchange of all such Convertible Securities.  If the Convertible Securities so issued or
sold have a fluctuating conversion or exercise price or exchange ratio (a “Variable Rate Convertible Security”),
then for purposes of the first sentence of this Section 6(c)(ii)(B),
the “price per share for which Common Stock is issuable upon such conversion,
exercise or exchange” shall be deemed to be the lowest price per share which
would be applicable (assuming all holding period and other conditions to any
discounts contained in such Variable Rate Convertible Security have been
satisfied) if the conversion price of such Variable Rate Convertible Security
on the date of issuance or sale thereof were seventy-five percent (75%) of the
actual conversion price on such date (the “Assumed Variable Market Price”), and, further, if the
conversion price of such Variable Rate Convertible Security at any time or
times thereafter is less than or equal to the Assumed Variable Market Price
last used for making any adjustment under this Section 6(c) with
respect to any Variable Rate Convertible Security, the Exercise Price in effect
at such time shall be readjusted to equal the Exercise Price which would have
resulted if the Assumed Variable Market Price at the time of issuance of the
Variable Rate Convertible Security had been seventy-five percent (75%) of the
actual conversion price of such Variable Rate Convertible Security existing at
the time of the adjustment required by this sentence.  No further adjustment to the Exercise Price
shall be made upon the actual issuance of such Common Stock upon conversion,
exercise or exchange of such Convertible Securities.

 

(C)           Change In Option
Price Or Conversion Rate.  If there
is a change at any time in (x) the amount of additional consideration payable
to the Company upon the exercise of any Purchase Rights; (y) the amount of
additional consideration, if any, payable to the Company upon the conversion,
exercise or exchange of any Convertible Securities the adjustment for which is
not otherwise covered under Section 6(c)(ii)(B) of this
Warrant; or (z) the rate at which any Convertible Securities are convertible
into or

 

8

 

exercisable or
exchangeable for Common Stock, then in any such case, the Exercise Price in
effect at the time of such change shall be readjusted to the Exercise Price
which would have been in effect at such time had such Purchase Rights or
Convertible Securities still outstanding provided for such changed additional
consideration or changed conversion, exercise or exchange rate, as the case may
be, at the time initially issued or sold.

 

(D)          Calculation Of
Consideration Received.  If any
Common Stock, Purchase Rights or Convertible Securities are issued or sold for
cash, the consideration received therefor will be the amount received by the
Company therefor, after deduction of all underwriting discounts or allowances
in connection with such issuance, grant or sale.  In case any Common Stock, Purchase Rights or
Convertible Securities are issued or sold for a consideration part or all of
which shall be other than cash, including in the case of a strategic or similar
arrangement in which the other entity will provide services to the Company,
purchase services from the Company or otherwise provide intangible consideration
to the Company, the amount of the consideration other than cash received by the
Company (including the net present value of the consideration expected by the
Company for the provided or purchased services) shall be the fair market value
of such consideration, except where such consideration consists of marketable
securities, in which case the amount of consideration received by the Company
will be the average of the last sale prices thereof on the principal market for
such securities during the period of ten Trading Days immediately preceding the
date of receipt.  In case any Common
Stock, Purchase Rights or Convertible Securities are issued in connection with
any merger or consolidation in which the Company is the surviving corporation,
the amount of consideration therefor will be deemed to be the fair market value
of such portion of the net assets and business of the non-surviving corporation
as is attributable to such Common Stock, Purchase Rights or Convertible
Securities, as the case may be.  The
independent members of the Company’s Board of Directors shall calculate
reasonably and in good faith, using standard commercial valuation methods
appropriate for valuing such assets, the fair market value of any consideration
other than cash or securities; provided, however, that if the Holder does not
agree to such fair market value calculation within three Business Days after
receipt thereof from the Company, then such fair market value shall be
determined in good faith by an investment banker or other appropriate expert of
national reputation selected by the Holder and reasonably acceptable to the
Company, with the costs of such appraisal to be borne equally by the Company
and the Holder.

 

(iii)          Exceptions
To Adjustment Of Exercise Price. 
Notwithstanding the foregoing, no adjustment to the Exercise Price shall
be made pursuant to this Section 6(c) upon the issuance of any
Excluded Securities.  For purposes
hereof, “Excluded Securities” means
(I) securities purchased under the Securities Purchase Agreement; (II)
securities issued upon exercise of the Warrants; (III) shares of Common Stock
issuable or issued to employees, consultants or directors from time to time
upon the exercise of options, in such case granted or to be granted in the
discretion of the Board of Directors pursuant to one or more stock option plans
or restricted stock plans in effect as of the Issue Date; (IV) shares of Common
Stock issued in connection with any stock split, stock dividend or
recapitalization of the Company; (V) securities issued in connection with bona
fide licensing or other strategic transactions not for the primary purpose of
raising equity capital approved by the Board of Directors; (VI) shares of
Common

 

9

 

Stock issued in connection with
the acquisition by the Company of any corporation or other entity occurring
after the Effective Date and as long as a fairness opinion with respect to such
acquisition is rendered by an investment bank of national recognition; and (VII)
233,853 shares of Common Stock issuable to SRI International pursuant to that
certain Warrant and Shareholder Rights Agreement (the “SRI Warrant”) issued by
the Company to SRI on October 6, 2000 (plus any additional shares of Common Stock
that may become issuable under the SRI Warrant in order to prevent dilution
resulting from any stock split, stock dividend, recapitalization,
reorganization, reclassification or other event that subdivides all of the
outstanding shares of Common Stock).

 

(iv)          Notice
Of Adjustments.  Upon the occurrence
of each adjustment or readjustment of the Exercise Price pursuant to this Section 6(c) resulting
in a change in the Exercise Price by more than one percent (1%), or any change
in the number or type of stock, securities and/or other property issuable upon
exercise of this Warrant, the Company, at its expense, shall promptly compute
such adjustment or readjustment or change and prepare and furnish to the Holder
a certificate setting forth such adjustment or readjustment or change and
showing in detail the facts upon which such adjustment or readjustment or
change is based.  The Company shall, upon
the written request at any time of the Holder, furnish to the Holder a like
certificate setting forth (i) such adjustment or readjustment or change, (ii) the
Exercise Price at the time in effect and (iii) the number of shares of
Common Stock and the amount, if any, of other securities or property which at
the time would be received upon exercise of this Warrant.

 

(d)           Major
Transactions.  In the event of a
merger, consolidation, business combination, tender offer, exchange of shares,
recapitalization, reorganization, redemption or other similar event, as a
result of which shares of Common Stock shall be changed into the same or a
different number of shares of the same or another class or classes of stock or
securities or other assets of the Company or another entity or the Company
shall sell all or substantially all of its assets (each of the foregoing being
a “Major Transaction”), the Company
will give the Holder at least twenty (20) Trading Days’ written notice prior to
the earlier of (I) the closing or effectiveness of such Major Transaction and
(II) the record date for the receipt of such shares of stock or securities or
other assets, and the Holder shall be permitted to exercise this Warrant in
whole or in part at any time prior to the record date for the receipt of such
consideration and shall be entitled to receive, for each share of Common Stock
issuable to the Holder upon such exercise, the same per share consideration
payable to the other holders of Common Stock in connection with such Major
Transaction.  If and to the extent that
the Holder retains this Warrant or any portion hereof following such record
date, the Company will cause the surviving or, in the event of a sale of
assets, purchasing entity, as a condition precedent to such Major Transaction,
to assume the obligations of the Company with respect to this Warrant, with
such adjustments to the Exercise Price and the securities covered hereby as may
be necessary in order to preserve the economic benefits of this Warrant to the
Holder.  The failure to give any notice
required by this Section 6(d) or any defect therein shall not
affect the legality or validity of any Major Transaction or the vote upon any
such action.

 

(e)           Adjustments;
Additional Shares, Securities or Assets. 
In the event that at any time, as a result of an adjustment made
pursuant to this Section 6, the Holder of this Warrant shall, upon
exercise of this Warrant, become entitled to receive securities or assets
(other than Common Stock) then, wherever appropriate, all references herein to
shares of Common Stock

 

10

 

shall be deemed to refer to and include such shares and/or other
securities or assets; and thereafter the number of such shares and/or other
securities or assets shall be subject to adjustment from time to time in a
manner and upon terms as nearly equivalent as practicable to the provisions of
this Section 6.  Any
adjustment made herein that results in a decrease in the Exercise Price shall
also effect a proportional increase in the number of shares of Common Stock
into which this Warrant is exercisable.

 

(f)            Board Discretion.  Notwithstanding any provision in this Warrant
to the contrary, subject to the prior written consent of the Holder, the Board
of Directors has the right to reduce the Exercise Price and/or increase the
number of Warrant Shares issuable under this Warrant at any time or from time
to time in its sole and absolute discretion.

 

7.             Fractional
Interests.

 

No fractional shares or scrip representing fractional shares shall be
issuable upon the exercise of this Warrant. 
If, on exercise of this Warrant, the Holder hereof would be entitled to
a fractional share of Common Stock or a right to acquire a fractional share of
Common Stock, the Company shall, in lieu of issuing any such fractional share,
pay to the Holder an amount in cash equal to the product resulting from
multiplying such fraction by the Market Price as of the Exercise Date.

 

8.             Transfer of this
Warrant.

 

The Holder may sell, transfer, assign, pledge or otherwise dispose of
this Warrant, in whole or in part, as long as such sale or other disposition is
made pursuant to an effective registration statement or an exemption from the
registration requirements of the Securities Act, and applicable state security
laws, and is otherwise made in accordance with the applicable provisions of the
Securities Purchase Agreement.  Upon such
transfer or other disposition, the Holder shall deliver this Warrant to the
Company together with a written notice to the Company, substantially in the
form of the Transfer Notice attached hereto as Exhibit B
(the “Transfer Notice”), indicating
the person or persons to whom this Warrant shall be transferred and, if less
than all of this Warrant is transferred, the number of Warrant Shares to be
covered by the part of this Warrant to be transferred to each such person.  Within three (3) Business Days of
receiving a Transfer Notice and the original of this Warrant, the Company shall
deliver to the transferee designated by the Holder a Warrant or Warrants of
like tenor and terms for the appropriate number of Warrant Shares and, if less
than all this Warrant is transferred, shall deliver to the Holder a Warrant for
the remaining number of Warrant Shares.

 

9.             Benefits of this
Warrant.

 

This Warrant shall be for the sole and exclusive benefit of the Holder
of this Warrant and nothing in this Warrant shall be construed to confer upon
any person other than the Holder of this Warrant any legal or equitable right,
remedy or claim hereunder.

 

11

 

10.           Loss, Theft,
Destruction or Mutilation of Warrant.

 

Upon receipt by the Company of evidence of the loss, theft, destruction
or mutilation of this Warrant, and (in the case of loss, theft or destruction)
of indemnity reasonably satisfactory to the Company, and upon surrender of this
Warrant, if mutilated, the Company shall execute and deliver a new Warrant of
like tenor and date.

 

11.           Notice or Demands.

 

Any notice, demand or request required or permitted to be given by the
Company or the Holder pursuant to the terms of this Warrant shall be in writing
and shall be deemed delivered (i) when delivered personally or by
verifiable facsimile transmission, unless such delivery is made on a day that
is not a Business Day, in which case such delivery will be deemed to be made on
the next succeeding Business Day and (ii) on the Business Day actually
received if deposited in the U.S. mail (certified or registered mail, return
receipt requested, postage prepaid) or sent via overnight courier, addressed as
follows:

 

If to the Company:

 

Lipid Sciences, Inc.
7068 Koll Center Parkway
Ste 401
Pleasanton, CA 94566
 
Attn:  Sandra Gardiner
Chief Financial Officer
Tel:  (925) 249-4000
Fax:  (925) 249-4080
 

with a copy (which shall not constitute
notice) to:

 

Shearman & Sterling LLP
1080 Marsh Road
Menlo Park, CA 94025
 
Attn: James B. Bucher
Tel: (650) 838-3737
Fax: (650) 838-3699

 

and if to the Holder, to such address as shall be designated by the
Holder in writing to the Company.

 

12.           Applicable Law.

 

This Warrant is issued under
and shall for all purposes be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed
entirely within the State of New York.

 

12

 

13.           Amendments.

 

No amendment, modification or
other change to, or waiver of any provision of, this Warrant may be made unless
such amendment, modification or change is (A) set forth in writing and is
signed by the Company and the Holder and (B) agreed to in writing by the
holders of at least two-thirds (2/3) of the number of shares into which the
Warrants are exercisable (without regard to any limitation contained herein on
such exercise), it being understood that upon the satisfaction of the
conditions described in (A) and (B) above, each Warrant (including
any Warrant held by the Holder who did not execute the agreement specified in (B) above)
shall be deemed to incorporate any amendment, modification, change or waiver
effected thereby as of the effective date thereof.

 

14.           Entire Agreement.

 

This Warrant
and the other Transaction Documents constitute the entire agreement and
supersede all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof and thereof.

 

15.           Headings.

 

The headings
in this Warrant are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.

 

16.           Restrictions.

 

The Holder acknowledges that the shares acquired upon exercise of this
Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws.

 

17.           Successors and
Assigns.

 

Subject to applicable securities laws, this Warrant and the rights and
obligations evidenced hereby shall inure to the benefit of and be binding upon
the successors of the Company and the successors and permitted assigns of the Holder.

 

[Signature Page to Follow]

 

13

 

IN WITNESS
WHEREOF, the Company has duly executed and delivered this Warrant as of the
Issue Date.

 

 

	
   

  	
  LIPID SCIENCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

EXHIBIT A to WARRANT

 

EXERCISE NOTICE

 

The undersigned Holder hereby irrevocably exercises the right to
purchase                    of
the shares of Common Stock (“Warrant Shares”) of LIPID SCIENCES, INC.
evidenced by the attached Warrant (the “Warrant”).  Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.

 

1.             Form of Exercise
Price.  The Holder intends that payment
of the Exercise Price shall be made as:

 

             
a Cash Exercise with respect to                        
Warrant Shares; and/or

 

             
a Cashless Exercise with respect to                        
Warrant Shares, as permitted by Section 5(b) of the attached
Warrant.

 

2.             Payment of Exercise
Price.  In the event that the Holder has
elected a Cash Exercise with respect to some or all of the Warrant Shares to be
issued pursuant hereto, the Holder shall pay the sum of $                       
to the Company in accordance with the terms of the Warrant.

 

 

	
  Date:

  	
   

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Name of Registered Holder

  	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
					

 

 

EXHIBIT B to WARRANT

 

TRANSFER NOTICE

 

FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant
hereby sells, assigns and transfers unto the person or persons named below the
right to purchase                shares
of the Common Stock of LIPID SCIENCES, INC. evidenced by the attached
Warrant.  By signing this Transfer
Notice, the transferee agrees to be legally bound by the terms of the attached
Warrant and of the related Securities Purchase Agreement and Registration
Rights Agreement applicable to an Investor.

 

 

	
  Date:

  	
   

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Name of Registered Holder

  	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
  Accepted and Agreed:

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Transferee Name

  
	
   

  
	
   

  
	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  
	
  Address:

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