Document:

exv4w2

 

Exhibit 4.2

	 	 	 
	Certificate
No.          
	 	          Rights

NEITHER THIS RIGHTS CERTIFICATE NOR THE RIGHTS REPRESENTED HEREBY ARE
TRANSFERABLE, ASSIGNABLE, SUBJECT TO PLEDGE OR OTHERWISE ALIENABLE. THE
REGISTERED HOLDER HEREOF WILL FORFEIT THE NUMBER OF RIGHTS EQUAL TO THE NUMBER
OF SHARES OF COMMON STOCK, PAR VALUE $.001 PER SHARE (“COMMON
STOCK”), OF LIPID
SCIENCES, INC., A DELAWARE CORPORATION (FORMERLY KNOWN AS NZ CORPORATION, AN
ARIZONA CORPORATION) (THE “COMPANY”), TO WHICH SUCH RIGHTS RELATE SOLD OR
OTHERWISE TRANSFERRED BY THE HOLDER DURING THE PERIOD COMMENCING ON NOVEMBER
28, 2001 AND ENDING ON (AND INCLUDING) NOVEMBER 29, 2003 AND SUCH RIGHTS WILL
BE NULL AND VOID AND HAVE NO FURTHER FORCE OR EFFECT. ADDITIONAL SHARES OF
COMMON STOCK, IF ANY, WILL BE ISSUED IN ACCORDANCE WITH THE TERMS AND
CONDITIONS SPECIFIED BELOW AS SOON AS PRACTICABLE AFTER NOVEMBER 29, 2003 TO
THOSE HOLDERS OF RIGHTS WHO HAVE NOT OTHERWISE FORFEITED SUCH RIGHTS.

RIGHTS CERTIFICATE

LIPID SCIENCES, INC.

          This certifies that    is the registered holder of
the number of Rights set forth above, each of which entitles the registered
holder thereof, subject to the terms and conditions set forth in this Rights
Certificate and in the Agreement and Plan of Merger dated July 9, 2001 by and
between Lipid Sciences, Inc., a Delaware corporation (formerly known as NZ
Corporation, an Arizona corporation) (the “Company”), and Lipid Sciences, Inc.,
a privately held company (“Pre-Merger Lipid”), (the “Merger Agreement”), the
Joint Proxy Statement/Prospectus of the Company and Pre-Merger Lipid dated
November 8, 2001 (the “Original Joint Proxy Statement/Prospectus”) and the
Prospectus Supplement of the Company and Pre-Merger Lipid dated March 6, 2002
(together with the Original Joint Proxy Statement/Prospectus, being referred to
herein, collectively, as the “Joint Proxy Statement/Prospectus”), to qualify to
receive additional shares of Common Stock, par value $.001 per share (“Common
Stock”), of the Company. The number of Rights evidenced by this Rights
Certificate set forth above, shall be subject to adjustment in certain events
as provided below and in the Merger Agreement and the Joint Proxy
Statement/Prospectus.

          This Rights Certificate is subject to all of the definitions, terms and
conditions of the Merger Agreement and the Joint Proxy Statement/Prospectus,
which definitions, terms and conditions are hereby incorporated herein by
reference, unless otherwise specified herein. Copies of the Merger Agreement
and Joint Proxy Statement/Prospectus are on file at the principal office of the
Company and are available from the Company upon written request.

          In order to qualify to receive additional shares of Common Stock
(“Additional Merger Shares”), if any, the registered holder hereof must have
been a direct registered holder of Common Stock as of November 28, 2001
(“Pre-Merger Common Stock”), or must have taken whatever action necessary to
become a direct registered owner of Pre-Merger Common Stock on or before April
30, 2002, as provided in the Merger Agreement and Joint Proxy
Statement/Prospectus. The registered holder hereof shall forfeit the number of
Rights equal to the number of shares of Pre-Merger Common Stock sold or
otherwise transferred by such holder during the period commencing on November 28, 2001 and ending on (and
including) November 29, 2003 (the “Holding Period”).

1

 

          Additional Merger Shares, if any, shall be issued to the holders of Rights
who have not otherwise forfeited such Rights as a result of selling or
otherwise transferring their Pre-Merger Common Stock during the Holding Period
if, at no time during the Holding Period, does:

          (i)     the Closing Price (as defined below) per share of the Common
Stock equal or exceed $12.00 per share (subject to adjustment as provided
below) (“Minimum Price”) over any period of 20 consecutive trading days,
and

          (ii)     the total Volume (as defined below) of the shares of Common
Stock trading at the Minimum Price or greater during such 20 day equals
or exceeds an aggregated 1,500,000 shares (“Minimum Volume”).

          The number of Additional Merger Shares, if any, to be issued to the holder
of the Rights shall be calculated as follows: each Right (other than a
forfeited Right) shall entitle the holder thereof to the number of Additional
Merger Shares equal to (a) the difference between (1) the Minimum Price and (2)
the average of the highest consecutive 100 Closing Prices per share of Common
Stock during the one-year period immediately prior to the second anniversary of
the Effective Date (“Hundred Day Average Price”), divided by (b) the Hundred
Day Average Price.

          No fractional Additional Merger Shares shall be issued. In lieu thereof,
any fractional shares shall be rounded up to the nearest whole share of Common
Stock. Notwithstanding the foregoing, each Right will entitle the holder
thereby to a maximum of one Additional Merger Share, subject to adjustment as
provided below.

          Additional Merger Shares, if any, shall be issued to the holders of record
of the Rights at the close of business, Eastern Standard Time, on November 29,
2003 in accordance with the records of the Company as promptly as practicable
after November 29, 2003 to those holders of Rights Certificates who have not
otherwise forfeited their Rights.

          The amount of Additional Merger Shares to be issued will be computed by
the Company’s independent public accountants, and the determination by such
independent public accountants shall be final and binding on the Company and
the holders of such rights.

          For purposes of this Rights Certificate, “Closing Price” per share of
Common Stock on a Trading Day (as hereinafter defined) shall mean the last
reported sale price per share of Common Stock regular way or, in case no such
reported sale takes place on such Trading Day, the average of the closing bid
and asked prices regular way for such Common Stock for such Trading Day, in
either case on the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or if the Common Stock is not listed or
admitted to trading on any national securities exchange, but is traded in the
over-the-counter market, the closing sale price per share of such Common Stock
or, in case no sale is publicly reported, the average of the closing bid and
asked quotations for the Common Stock, as reported on The Nasdaq Stock Market
(“Nasdaq”) or any comparable system or, if such Common Stock is not quoted on
Nasdaq or a comparable system, the closing sale price of Common Stock or, in
case no sale is publicly reported, the average of the closing bid and asked
prices per share, as furnished by two members of the National Association of
Securities Dealers, Inc. who make a market in such Common Stock selected from time to time by the Company for that purpose.
In addition, for purposes of this Rights Certificate, a “Trading Day” shall
mean, if such Common Stock is listed or admitted to trading on any national
securities exchange, a business day during which such exchange was open for
trading and at least one trade of Common Stock was effected on such exchange on
such business day, or if such Common Stock is not listed or admitted to trading
on any national securities exchange but is traded in the over-the-counter
market, a business day during which the over-the-counter market was open for
trading and at least one “eligible dealer” quoted both a bid and asked price
for the Common Stock. An “eligible dealer” for any day shall include any
broker-dealer who quoted both a bid and asked price for such day, but shall not
include any broker-dealer who quoted only a bid or only an asked price for such
day. For purposes of this Rights Certificate, “Volume” shall mean the volume
reported on the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or if the Common Stock is not listed or
admitted to trading on any national securities exchange, but is traded in the
over-the-counter market, the volume as reported by Nasdaq or any comparable
system; provided that if any such reported volume includes both “buy side” and
“sell-side” volume, then Volume for purposes of this Rights Certificate shall
only include “buy side” volume.

2

 

          The number of Additional Merger Shares will be subject to adjustment from
time to time during the Holding Period as hereinafter set forth:

          (i)     If the number of outstanding shares of the Common Stock is
increased by a stock dividend on the Common Stock payable in shares of
Common Stock or by a split-up, recapitalization or reclassification of
            shares of Common Stock or other similar event, then, on the effective
date thereof, the number of shares of Common Stock that may be issued
pursuant to the Right shall be increased in proportion to such increase
in outstanding shares.

          (ii)     If the number of outstanding shares of Common Stock is
decreased by a consolidation, combination or reclassification of shares
of Common Stock or other similar event, then, upon the effective date
thereof, the number of shares of Common Stock that may be issued pursuant
to the Right shall be decreased in proportion to such decrease in
outstanding shares.

Whenever the number of shares of Common Stock that may be issued pursuant to
the Rights is adjusted, as provided herein, the Minimum Price and the Volume
shall be adjusted in similar proportion (to the nearest cent or share) so as to
maintain the relative entitlements of the Rights before and after the effective
date of the adjusting event.

          In case of any reclassification or reorganization of the outstanding
shares of Common Stock, other than a change covered by the foregoing provisions
hereof, or which solely affects the par value of such shares of Common Stock,
or in the case of any merger or consolidation of the Company with or into
another corporation (other than a consolidation or merger in which the Company
is the continuing corporation and which does not result in any reclassification
or reorganization of the outstanding shares of the Common Stock), or in the
case of any sale or conveyance to another corporation or entity of the property
of the Company as an entirety or substantially as an entirety in connection
with which the Company is dissolved, the holder of the Right shall be entitled
thereafter until the expiration of the Holding Period to receive the kind and amount of shares of stock or other securities or
property (including cash) receivable upon such reclassification,
reorganization, merger or consolidation, or upon a dissolution following any
such sale or other transfer, by a holder of the number of shares of the
Company’s Common Stock that would be issuable pursuant to the Right immediately
prior to such event; and if any reclassification also results in a change in
shares of the Company’s Common Stock covered by two paragraphs immediately
preceding this paragraph, then such adjustment shall be made pursuant to such
sections. The provisions of this paragraph shall similarly apply to successive
reclassifications, reorganizations, mergers or consolidations, sales or other
transfers.

3

 

     The registered holder of this Rights Certificate, as such, shall not be
entitled to vote or receive dividends or be deemed for any purpose the holder
of Additional Merger Shares or of any other securities which may at any time be
issuable hereunder, nor shall anything contained herein or in the Merger
Agreement or the Joint Proxy Statement/Prospectus be construed to confer upon
the holder hereof, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as expressly provided herein or in the Merger Agreement or
the Joint Proxy Statement/Prospectus), or to receive dividends or subscription
rights or otherwise, until Additional Merger Shares, if any, or other
securities, if any, become issuable to the holder hereof in accordance with the
terms hereof and the terms of the Merger Agreement and the Joint Proxy
Statement/Prospectus.

     The registered holder of this Rights Certificate shall surrender this
Rights Certificate to the Company at its principal office upon any sale,
transfer, assignment, pledge or other alienation of the Pre-Merger Common Stock
to which the Rights represented hereby relate. Upon such surrender, the holder
will be entitled to receive another Rights Certificate evidencing Rights
relating to Pre-Merger Common Stock not so sold, transferred, assigned, pledged
or otherwise alienated. The Rights relating to Pre-Merger Common Stock sold,
transferred, assigned, pledged or otherwise alienated shall be forfeited by the
registered holder and will be null and void and have no further force or effect
notwithstanding any failure by the registered holder to surrender to the
Company this Rights Certificate.

     This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been signed by the proper officers of the Company.

     WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.

Dated as of ______________, 200_.

ATTEST:

	 	 	 	 	 	 	 
	By:

	 	 
	 	By:
	 	 
	

	 	
 
	 	 	 	
 
	

	 	Phillip C. Radlick, PhD
	 	 	 	Barry D. Michaels
	

	 	President and CEO and Director
	 	 	 	Chief Financial Officer

4exv10w14

 

Exhibit 10.14

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

          THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), is
entered into by and between Lipid Sciences, Inc., a Delaware corporation (the
“Company”), and Dale Richardson (“Executive”). 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 are currently parties to the Employment
Agreement, dated as of July 6, 2000 (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 Company is cognizant of the attendant distractions resulting
from Executive having to seek subsequent employment on short notice in the
event Executive’s employment were terminated without cause; and

          WHEREAS, the Company desires to allay the concerns of Executive that are
articulated in the foregoing recital by providing an extended period during
which Executive would be entitled to severance benefits in the event
Executive’s employment were terminated without cause; and

          WHEREAS, the Company now deems it appropriate and in the best interests of
the Company to amend and restate the Existing Employment Agreement in its
entirety to (i) increase the period during which Executive is entitled to
receive severance benefits in the event Executive’s employment is terminated
without cause and (ii) modify other terms and conditions to reflect the current
provisions governing Executive’s employment relationship with the Company and
to clarify certain other provisions in this Agreement; and

          WHEREAS, Executive desires to be in the employ of the Company on the terms
and conditions set forth in this Agreement; and

          WHEREAS, the Parties desire that this Agreement replace and supersede in
its entirety the Existing Employment Agreement.

 

 

AGREEMENT

          1. EMPLOYMENT.

               1.1 The Company will employ Executive, and Executive hereby accepts
employment by the Company, upon the terms and conditions set forth in this
Agreement, commencing effective as of July 1, 2003 (the “Effective Date”), and
continuing until the third anniversary of the Effective Date (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 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 serve as Vice President, Business Development 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 his duties to the Company.

          2. LOYAL AND CONSCIENTIOUS PERFORMANCE. During his employment by the
Company, Executive will devote his full business employment, interest,
abilities and productive time to the proper and efficient performance of his
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 The Company will pay Executive a salary of two hundred, thirty-two
thousand, four hundred and fifteen dollars ($232,415) 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.

Page 2 of 7

 

               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 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 his employment hereunder for any reason, Executive will
be entitled to payment of (A) his 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

Page 3 of 7

 

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 his resignation.

               4.2 (i) If, prior to 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 his 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
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 12 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. 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.

               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 his
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 his 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 his death.

Page 4 of 7

 

          5. CONFIDENTIAL INFORMATION; INVENTIONS; NONSOLICITATION.

               5.1 Executive recognizes that his employment with the Company will involve
contact with information of substantial value to the Company, which is neither
old 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 whatever source and will not, either
during his 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 his continuing obligations under both the Employee Confidential
Information and Inventions Agreement and the Confidential Disclosure Agreement,
both dated as of July 6, 2000, 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 he 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 his 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

Page 5 of 7

 

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 him at his 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 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, his 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

Page 6 of 7

 

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, he 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 his 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.

          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 his attorneys’ fees and costs including, but not limited
to, arbitrator’s fees and expert’s fees.

          20. SURVIVAL. The provisions of Section 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/ Dale Richardson	 
	 	 	Dale Richardson	 

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