Document:

Exhibit
4.1

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:  December 18, 2006                                                                                                                 Warrant
No. 2006-   

THIS CERTIFIES that OPPENHEIMER & CO. INC. (the “Holder”) of this Warrant
(this “Warrant”), has the
right to purchase from LIPID SCIENCES, INC., a Delaware corporation (the “Company”), up to 183,703
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 during
the period commencing on the first Business Day following the six month
anniversary of 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 such commencement date (the “Expiration
Date”).  This Warrant is
issued pursuant to a placement agent letter agreement, dated as of
November 30, 2006 and in connection with the sale of shares of the Company’s
Common Stock to various investors at a price of $1.35 per share (the “Offering Price”).  For purposes of this Warrant, a “Business Day” shall
mean any day other than Saturday, a Sunday or a day on which the New York Stock
Exchange is closed or on which the City of New York are required or authorized
by law to be closed.

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
commencing on the six month anniversary of 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 $2.18 (subject to adjustment for the events specified
in Section 4 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”)
and the Exercise Price (by delivery of immediately available funds).  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.  After
delivery of the Exercise Notice, the Holder shall promptly deliver the original
warrant to the Company for cancellation. 
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 4 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.

(e)           Redemption
Right.  Should the Company’s Common
Stock trade at $3.64 or greater per share (as appropriately adjusted for stock
splits, stock dividends, combinations, recapitalizations and the like) for
thirty (30) consecutive Trading Days (the “Redemption Threshold”), on the basis
of closing prices of the Common Stock quoted on the Principal Market as
reported by the Wall Street Journal (or, if the Wall Street Journal is not then representing such prices, by
a comparable reporting service of national reputation selected by the Company),
the Company may, at its sole option, redeem the Warrant by repurchasing it from
the Holder for a purchase price of $0.01 per Warrant Share (as appropriately
adjusted for stock splits, stock dividends, combinations, recapitalizations and
the like).  The Company shall exercise
its redemption right at any time after the Redemption Threshold has been met by
delivery of thirty (30) days’ prior written notice to Holder (the “Redemption Exercise Period”).  Notwithstanding the foregoing, if the
Redemption Threshold is met prior to this Warrant becoming exercisable by
Holder, the Company may provide notice of its intention to redeem the Warrant
and the Redemption Exercise Period shall commence upon the date the Warrant
first becomes exercisable.  Holder shall
have the right to exercise the Warrant in accordance with Section 1(b)
above prior to expiration of the Redemption Exercise Period.

2.             Delivery of Warrant Shares Upon
Exercise.  Upon exercise pursuant to Section 1
of this Warrant, the Company shall issue and deliver or caused to be delivered
to the Holder the number of 

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Warrant Shares as shall
be determined as provided herein 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”).  The Company shall effect delivery of Warrant
Shares to the Holder 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 legend
set forth on the face of this Warrant 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.

(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).

(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.             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 4.

(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.

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(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 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 4(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 lesser of
(x) the Offering Price or (y) 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 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 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 4(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.

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(ii)           Effect
On Exercise Price of Certain Events. 
For purposes of determining the adjusted Exercise Price under Section 4(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 lesser of (x) the Offering Price or (y) the Exercise Price
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 4(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 4(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 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 lesser of (x) the
Offering Price or (y) the Exercise Price 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 4(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 4(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 

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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 4(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; Expiration of Cancellation.  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 4(c)(ii)(B)
of this Warrant; or (z) the rate at which any Convertible Securities are
convertible into or 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.  In addition, if the Purchase Rights or
Convertible Securities shall expire or be cancelled, the Exercise Price in
effect at the time of such expiration or cancellation shall be readjusted to
the Exercise Price which would have been in effect had an adjustment been made
upon the issuance of such Purchase Rights or Convertible Securities on the
basis of the issuance of only the number of shares of Common Stock actually
issued upon the exercise or conversion of such Purchase Rights or Convertible
Securities prior to such expiration or cancellation.

(D)          Calculation of Consideration
Received.  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 

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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 4(c) upon the issuance of any
Excluded Securities and in no event shall the Exercise Price be adjusted
pursuant to Section 4(c) to a price less than $1.72 per Warrant
Share.  For purposes hereof, “Excluded Securities” means
(I) securities sold pursuant to the Stock Purchase Agreement between the
Company and investors dated of even date herewith; (II) securities issued
upon exercise of this Warrant; (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; and (VI) shares
of Common 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.

(iv)          Notice
Of Adjustments.  Upon the occurrence
of each adjustment or readjustment of the Exercise Price pursuant to this Section 4(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 4(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 4, the Holder of this
Warrant shall, upon exercise of 

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this Warrant, become entitled to receive securities or assets (other
than Common Stock) then, wherever appropriate, all references herein to shares
of Common Stock 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 4.  Upon any
adjustment that results in a decrease in the Exercise Price, number of shares
of Common Stock into which this Warrant is exercisable shall be adjusted by
multiplying the number of Warrant Shares issuable immediately prior to such
adjustment by a fraction, the numerator of which is the Exercise Price in
effect prior to such adjustment and the denominator of which is the new
Exercise Price.

(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.

5.             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 closing price of the Company’s Common Stock as
of the Exercise Date.

6.             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
securities laws.  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.

7.             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.

8.             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.

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9.             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, (ii) on the next Business Day after timely delivery to
a reputable overnight courier and (iii) on the Business Day actually received
if deposited in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid), addressed as follows:

If to the Company:

Lipid Sciences, Inc.

7068 Koll Center Parkway

Suite 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:

Allen Matkins Leck Gamble Mallory & Natsis

Three Embarcadero Center, 12th Floor

San Francisco, CA 94111-4074

Attn:  Roger S.
Mertz, Esq.

Tel: (415) 273-7441

Fax: (415) 837-1516

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

10.           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 California applicable
to contracts made and to be performed entirely within the State of California.

11.           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 set forth in writing and is signed by the Company and the Holder.

12.           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.

 9
 

 

13.           Headings.

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

14.           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.

15.           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]

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

	
  

  	
  LIPID SCIENCES, INC.

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ S. Lewis Meyer, Ph.D.

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  S. Lewis Meyer,
  Ph.D.

  	
   

  
	
   

  	
   

  	
  Its: 

  	
  President and
  Chief Executive Officer

  	
   

  
								

 

 11

 

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”), and tenders herewith
payment of the purchase price in full, together with all applicable transfer
taxes, if any.  Capitalized terms used
herein and not otherwise defined shall have the respective meanings set forth
in the Warrant.

	
  Date:

  	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
  Name of
  Registered Holder

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

 1

 

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 Registration Rights Agreement applicable to a
Holder.

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
  Name of
  Registered Holder

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  Accepted and Agreed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Transferee Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
							

 

 1Exhibit
4.2

REGISTRATION RIGHTS
AGREEMENT

This REGISTRATION RIGHTS
AGREEMENT (this “Agreement”), dated as of
December 18, 2006, is by and between LIPID SCIENCES, INC, a Delaware
corporation (the “Company”), and each of the
entities whose names appear on the signature pages hereof.  With the exception Oppenheimer & Co. Inc.
(“Placement Agent”),
such entities are each referred to herein as an “Investor”
and, collectively, as the “Investors.”

The Company has agreed,
on the terms and subject to the conditions set forth in the Stock Purchase
Agreement, dated as of December 18, 2006 (the “Stock
Purchase Agreement”), to issue and sell to each Investor named
therein shares (“Shares”) of the Company’s
common stock, par value $0.001 per share (the “Common
Stock”).

The Company has agreed,
on the terms and subject to the conditions set forth in the placement agent
letter agreement, dated as of November 30, 2006 (the “Placement Agent Agreement”),
to issue to Placement Agent warrants exercisable for shares of the Company’s
Common Stock equal to 4% of the number of Shares sold to the Investors (the “Warrants”).  The shares of Common Stock into which the
Warrants are exercisable are referred to herein as the “Warrant
Shares,” and the Shares, the Warrants and the Warrant Shares are
collectively referred to herein as the “Securities.”

In order to induce each
Investor to enter into the Stock Purchase Agreement and the Placement Agent,
the Placement Agent Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended (the “Securities Act”), and under
applicable state securities laws.

In consideration of each
Investor entering into the Stock Purchase Agreement, and the Placement Agent
entering into the Placement Agent Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:

1.                                       DEFINITIONS.

For purposes of this
Agreement, the following terms shall have the meanings specified:

“Business Day”
means any day other than a Saturday, a Sunday or a day on which the Commission
is closed or on which banks in the City of New York are authorized by law to be
closed.

“Commission”
means the Securities and Exchange Commission.

“Effective Date”
means the date on which the Registration Statement is declared effective by the
Commission.

“Filing Deadline”
means the thirtieth (30th) calendar day following the Closing Date.

“Holder”
means any person owning or having the right to acquire, through exercise of the
Warrants or otherwise, Registrable Securities, including initially the
Placement Agent each Investor and thereafter any permitted assignee thereof.

“Registrable Securities”
means the Shares and the Warrant Shares and any other shares of Common Stock
issuable pursuant to the terms of the Stock Purchase Agreement or the

 

Warrants, any shares of
capital stock issued or issuable from time to time (with any adjustments) in
replacement of, in exchange for or otherwise in respect of the Shares or the
Warrant Shares, together with any securities issued or issuable upon any stock
split, dividend or other distribution, recapitalization or similar event with
respect to the foregoing.

“Registration Deadline”
means the earlier to occur of (i) the ninetieth (90th) calendar day
following the Closing Date and (ii) the fifth (5th) Business Day following
the day on which the Commission informs the Company that no review of the
Registration Statement will be made by the staff of the Commission or that the
staff of the Commission has no further comments on the Registration Statement.

“Registration Period”
has the meaning set forth in Section 2(c) of this Agreement.

“Registration Statement”
means a registration statement or statements, including amendments and
supplements, prepared in compliance with the Securities Act and pursuant to
Rule 415 under the Securities Act (“Rule 415”)
or any successor rule providing for the offering of securities on a continuous
or delayed basis.

Capitalized terms used
herein and not otherwise defined shall have the respective meanings specified
in the Stock Purchase Agreement.

2.                                       REGISTRATION.

(a)           Filing of Registration Statement.  On or before the Filing Deadline, the Company
shall prepare and file with the Commission a Registration Statement on Form S-3
as a “shelf” registration statement under Rule 415 covering the resale of
the Registrable Securities.  Such
Registration Statement shall state, to the extent permitted by Rule 416 under
the Securities Act, that it also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon the exercise of the Warrants
in order to prevent dilution resulting from stock splits, stock dividends,
recapitalization, reorganization reclassification or other event that
subdivides all of the outstanding shares of Common Stock.

(b)           Effectiveness.  The Company shall use commercially reasonable
efforts to cause the Registration Statement to become effective as soon as
practicable following the filing thereof, but in no event later than the Registration
Deadline.  The Company shall respond
promptly to any and all comments made by the staff of the Commission with
respect to the Registration Statement, and shall submit to the Commission,
within three (3) Business Days after the Company learns that no review of the
Registration Statement will be made by the staff of the Commission or that the
staff of the Commission has no further comments on the Registration Statement,
as the case may be, a request for acceleration of the effectiveness of such
Registration Statement to a time and date not later than two (2) Business Days
after the submission of such request. 
The Company will maintain the effectiveness of each Registration
Statement filed pursuant to this Agreement until the earlier to occur of
(i) the date on which all of the Registrable Securities eligible for
resale thereunder have been publicly sold pursuant to either the Registration
Statement or Rule 144, and (ii) the date on which all of the Registrable
Securities remaining to be sold under such Registration Statement may be
immediately sold to the public under Rule 144(k) under the Securities Act (“Rule 144(k)”) or any successor
provision (the period beginning on the Closing Date and ending on the earlier
to occur of (i) or (ii) above being referred to herein as the “Registration Period”).

(c)           For a total of no more than twenty
(20) Business Days in any twelve (12) month period, the Company may, due to the
existence of material non-public information concerning the 

 2
 

 

Company, suspend the use of any Prospectus included in
any registration statement contemplated by this Section if, in the good faith
opinion of the Company following consultation with legal counsel, such
information would be required to be disclosed in such Prospectus and the disclosure
of such information at such time would have a Material Adverse Effect upon the
Company (an “Allowed Delay”); provided that the Company shall promptly
(a) notify the Holders in writing of the existence of (but in no event,
without the prior written consent of a Holder, shall the Company disclose to
such Holder any of the facts or circumstances regarding) material non-public
information giving rise to an Allowed Delay, (b) advise the Holders in
writing to cease all sales under the Registration Statement until the end of
the Allowed Delay and (c) use reasonable best efforts to terminate an
Allowed Delay as promptly as practicable.

(d)           Registration Default.  If (i) the Registration Statement is not
filed on or before the Filing Deadline or declared effective by the Commission
on or before the Registration Deadline, (ii) after the Registration
Statement has been declared effective by the Commission, other than during an
Allowed Delay, sales of Registrable Securities (other than such Registrable
Securities as are then freely saleable pursuant to Rule 144(k)) cannot be made
by a Holder under a Registration Statement for any reason not within the
exclusive control of such Holder or (iii) other than during an Allowed
Delay, an amendment or supplement to a Registration Statement, or a new
registration statement, required to be filed pursuant to the terms of this
Agreement is not filed as required hereunder (each of the events described in
the foregoing clauses (i), (ii) and (iii) being referred to herein as a “Registration Default”), the Company
shall make cash payments to each Holder equal to one and one half percent
(1.5%) of the aggregate Purchase Price paid by such Holder for such Holder’s
Registrable Securities for each thirty (30) day period (pro-rated for partial
30-day periods) in which a Registration Default exists. Each such payment shall
be paid exclusively with respect to the Shares only, and for the avoidance of
doubt, not with respect to the Warrant Shares or any shares of Common Stock
issuable pursuant to the terms of the Warrants. 
Each such payment shall be required to be made under this Section 2(d)
shall be made within five (5) Business Days following the last day of each
calendar month in which a Registration Default exists.  Any such payment shall be in addition to any
other remedies available to each Holder at law or in equity, whether pursuant
to the terms hereof, the Stock Purchase Agreement or otherwise.

(e)           Allocation of Warrant Shares.  The initial number of Shares and Warrant
Shares included in any Registration Statement and each increase in the number
thereof included therein shall be allocated pro
rata among the Holders based on the aggregate number of Registrable
Securities issued or issuable to each Holder at the time the Registration
Statement covering such initial number of Registrable Securities or increase
thereof is declared effective by the Commission (such number to be determined
using the Exercise Price in effect at such time and without regard to any
restriction on the ability of a Holder to exercise such Holder’s Warrant as of
such date).  In the event that a Holder
sells or otherwise transfers any of such Holder’s Registrable Securities, each
transferee shall be allocated the portion of the then remaining number of
Registrable Securities included in such Registration Statement allocable to the
transferor.

(f)            Registration of Other Securities.  During the period beginning on the date
hereof and ending on the Effective Date, the Company shall refrain from filing
any registration statement (other than (i) a Registration Statement filed
hereunder or (ii) a registration statement on Form S-8 with respect to
stock option plans and agreements and stock plans currently in effect and
disclosed in the Stock Purchase Agreement or the schedules thereto. In no event
shall the Company include any securities other than Registrable Securities, and
such indeterminate number of additional shares of Common Stock as may become
issuable upon the exercise of the Warrants in order to prevent dilution resulting
from stock splits, stock dividends, recapitalization, reorganization
reclassification or other event that subdivides all of the outstanding shares
of Common Stock on any Registration Statement filed by the Company on behalf of
the Holders pursuant to the terms hereof

 3
 

 

3.                                       OBLIGATIONS
OF THE COMPANY.

In addition to performing
its obligations hereunder, including, without limitation, those pursuant to Section 2
of this Agreement, the Company shall, with respect to each Registration
Statement:

(a)           prepare and file with the Commission
such amendments and supplements to such Registration Statement and the
prospectus used in connection with such Registration Statement as may be
necessary to comply with the provisions of the Securities Act or to maintain
the effectiveness of such Registration Statement during the Registration
Period, or as may be reasonably requested by a Holder in order to incorporate
information concerning such Holder or such Holder’s intended method of
distribution;

(b)           [Intentionally Omitted];

(c)           so long as a Registration Statement
is effective covering the resale of the applicable Registrable Securities owned
by a Holder, furnish to each Holder such number of copies of the prospectus
included in such Registration Statement, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents as such Holder may reasonably request in order to facilitate the
disposition of such Holder’s Registrable Securities;

(d)           use reasonable best efforts to register
or qualify the Registrable Securities under the securities or “blue sky” laws
of such jurisdictions within the United States as shall be reasonably requested
from time to time by a Holder, and do any and all other acts or things which
may reasonably be necessary or advisable to enable such Holder to consummate
the public sale or other disposition of the Registrable Securities in such
jurisdictions; provided that the
Company shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such jurisdiction;

(e)           notify each Holder promptly after
becoming aware of the occurrence of any event (but shall not, without the prior
written consent of such Holder, disclose to such Holder any facts or
circumstances constituting material non-public information) as a result of
which the prospectus included in such Registration Statement, as then in
effect, contains an untrue statement of material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, and as promptly as
practicable prepare and file with the Commission and furnish to each Holder a
reasonable number of copies of a supplement or an amendment to such prospectus
as may be necessary so that such prospectus does not contain an untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;

(f)            use commercially reasonable efforts
to prevent the issuance of any stop order or other order suspending the
effectiveness of such Registration Statement and, if such an order is issued,
use commercially reasonable efforts to obtain the withdrawal thereof as
promptly as practicable and notify each Holder in writing of the issuance of
such order and the resolution thereof;

(g)           furnish to each Holder, on the date
that such Registration Statement, or any successor registration statement,
becomes effective, a letter, dated such date, signed by an officer of or
counsel to the Company and addressed to such Holder, confirming such
effectiveness and, to the knowledge of such officer or such counsel, the
absence of any stop order;

(h)           provide to each Holder and its
representatives the reasonable opportunity to conduct a reasonable inquiry of
the Company’s financial and other records during normal business hours 

 4
 

 

and make available during normal business hours and
with reasonable advance notice its officers, directors and employees for
questions regarding information which such Holder may reasonably request in
order to fulfill any due diligence obligation on its part; and

(i)            permit counsel for each Holder to
review such Registration Statement and all amendments and supplements thereto,
and any comments made by the staff of the Commission concerning such Holder
and/or the transactions contemplated by the Transaction Documents and the
Company’s responses thereto, within a reasonable period of time prior to the
filing thereof with the Commission (or, in the case of comments made by the
staff of the Commission, within a reasonable period of time following the
receipt thereof by the Company).

4.                                       OBLIGATIONS
OF EACH HOLDER.

In connection with the
registration of Registrable Securities pursuant to a Registration Statement,
each Holder shall:

(a)           at least five (5) Business Days prior
to the first anticipated filing date of any Registration Statement, furnish to
the Company such information in writing regarding itself (including a
shareholder questionnaire) and the intended method of disposition of such
Registrable Securities as the Company shall reasonably request in order to
effect the registration thereof;

(b)           upon receipt of any notice from the
Company of the happening of any event of the kind described in Sections 2(c),
3(e) or 3(f) of this Agreement, immediately discontinue any sale
or other disposition of such Registrable Securities pursuant to such Registration
Statement until (i) in the case of any event described in Section 2(c),
notice from the Company that the Allowed Delay has ended and sales under the
Registration Statement may resume, (ii) the filing of an amendment or
supplement as described in Section 3(e) of this Agreement or
(iii) withdrawal of the stop order referred to in Section 3(f)
of this Agreement, and use reasonable best efforts to maintain the
confidentiality of such notice and its contents;

(c)           to the extent required by applicable
law, deliver a prospectus to the purchaser of such Registrable Securities;

(d)           in response to a request from the
Company, promptly disclose to the Company the number of Registrable Securities
then held by it; and

(e)           promptly notify the Company in the
event that any information supplied by such Holder in writing for inclusion in
such Registration Statement or related prospectus is untrue or omits to state a
material fact required to be stated therein or necessary to make such
information not misleading in light of the circumstances then existing;
immediately discontinue any sale or other disposition of such Registrable
Securities pursuant to such Registration Statement until the filing of an
amendment or supplement to such prospectus as may be necessary so that such
prospectus does not contain an untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
and use reasonable best efforts to assist the Company as may be appropriate to
make such amendment or supplement effective for such purpose.

5.                                       INDEMNIFICATION.

In the event that any
Registrable Securities are included in a Registration Statement under this
Agreement:

 5
 

 

(a)           To the extent permitted by law, the
Company shall indemnify and hold harmless each Holder, the officers, partners,
managers, members, shareholders, directors, employees, agents and
representatives of such Holder, and each person, if any, who controls such
Holder within the meaning of the Securities Act or the Securities Exchange Act
of 1934, as amended (the “Exchange Act”),
against any and all losses, claims, damages and other liabilities (whether
joint or several) (collectively, including reasonable legal expenses or other
out-of-pocket expenses reasonably incurred in connection with investigating or
defending same, “Losses”), insofar as any such
Losses arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in such Registration Statement
under which such Registrable Securities were registered, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, or (ii) the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.  The foregoing indemnity
shall not apply to amounts paid in settlement of any Loss if such settlement is
effected without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be obligated to indemnify any
person for any Loss to the extent that such Loss arises out of or is based upon
(i) any disclosure or any omission or alleged omission (to state a
material fact required to be stated therein or necessary to make statements
therein not misleading) that is based upon or in conformity with written
information furnished (or not furnished, in the case of an omission) by such
person expressly for use in such Registration Statement or (ii) a failure
of such person to deliver or cause to be delivered the final prospectus
contained in the Registration Statement and made available by the Company, if
such delivery is required by applicable law.

(b)           To the extent permitted by law, each
Holder who is named in such Registration Statement as a selling shareholder,
acting severally and not jointly, shall indemnify and hold harmless the
Company, the officers, directors, employees, agents and representatives of the
Company, and each person, if any, who controls the Company within the meaning
of the Securities Act or the Exchange Act, against any and all Losses to the
extent (and only to the extent) that any such Losses arise out of or are based
upon (i) any disclosure or any omission or alleged omission (to state a
material fact required to be stated therein or necessary to make statements
therein not misleading) that is based upon or in conformity with written
information furnished (or not furnished, in the case of an omission) by such
person expressly for use in such Registration Statement, or (ii) a failure
of such Holder to deliver or cause to be delivered the final prospectus
contained in the Registration Statement and made available by the Company, if
such delivery is required under applicable law. 
The foregoing indemnity shall not apply to amounts paid in settlement of
any such Loss if such settlement is effected without the consent of such Holder
(which consent shall not be unreasonably withheld, and may be withheld to the
extent that any settlement or compromise does not include as an unconditional
term thereof, a release of the indemnified party from all liability in respect
of such claim or litigation without any admission as to fault); provided, however, that, in no event shall
any indemnity under this Section 5(b) exceed the net proceeds
resulting from the sale of the Registrable Securities sold by such Holder under
such Registration Statement.

(c)           Promptly after receipt by an
indemnified party under this Section 5 of notice of the
commencement of any action (including any governmental action), such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 5, promptly deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in and to assume the
defense thereof with counsel selected by the indemnifying party and reasonably
acceptable to the indemnified party; provided,
however, that an indemnified party shall have the right to retain
its own counsel, with the reasonably incurred fees and expenses of one such
counsel for all indemnified parties to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate under applicable standards of
professional conduct due to actual or potential conflicting interests between such
indemnified party and any other party represented by such counsel in such 

 6
 

 

proceeding.  The
failure to deliver written notice to the indemnifying party within a reasonable
time of the delivery of notice of any such action, to the extent prejudicial to
its ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 5 with
respect to such action, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 5 or with
respect to any other action unless the indemnifying party is materially
prejudiced as a result of not receiving such notice.

(d)           In the event that the indemnity
provided in Sections 5(a) or 5(b) of this Agreement is
unavailable or insufficient to hold harmless an indemnified party for any
reason, the Company and each Holder agree, severally and not jointly, to
contribute to the aggregate Losses to which the Company or such Holder may be
subject in such proportion as is appropriate to reflect the relative fault of
the Company and such Holder in connection with the statements or omissions
which resulted in such Losses; provided,
however, that in no case shall such Holder be responsible for any
amount in excess of the net proceeds resulting from the sale of the Registrable
Securities sold by it under the Registration Statement.  Relative fault shall be determined by reference
to whether any alleged untrue statement or omission relates to information
provided by the Company or by such Holder. 
The Company and each Holder agree that it would not be just and
equitable if contribution were determined by pro
rata allocation or any other method of allocation which does not
take account of the equitable considerations referred to above.  Notwithstanding the provisions of this Section 5(d),
no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who is not guilty of such fraudulent misrepresentation.  For purposes of this Section 5,
each person who controls a Holder within the meaning of either the Securities
Act or the Exchange Act and each officer, partner, manager, member,
shareholder, director, employee, agent or representative of such Holder shall
have the same rights to contribution as such Holder, and each person who
controls the Company within the meaning of either the Securities Act or the
Exchange Act and each officer, director, employee, agent or representative of
the Company shall have the same rights to contribution as the Company, subject
in each case to the applicable terms and conditions of this Section 5(d).

(e)           The obligations of the Company and
each Holder under this Section 5 shall survive the exercise of the
Warrants in full, the completion of any offering or sale of Registrable
Securities pursuant to a Registration Statement under this Agreement, or
otherwise.

6.                                       REPORTS.

With a view to making
available to each Holder the benefits of Rule 144 and any other similar rule or
regulation of the Commission that may at any time permit such Holder to sell
securities of the Company to the public without registration, the Company
agrees to:

(a)           make and keep public information
available, as those terms are understood and defined in Rule 144;

(b)           file with the Commission in a timely
manner all reports and other documents required of the Company under the
Exchange Act; and

(c)           furnish to such Holder, so long as such
Holder owns any Registrable Securities, promptly upon written request
(i) a written statement by the Company, if true, that it has complied with
the reporting requirements of Rule 144 and the Exchange Act, (ii) to the
extent not publicly available through the Commission’s EDGAR database, a copy
of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company with the Commission, and 

 7
 

 

(iii) such other information as may be reasonably
requested by such Holder in connection with such Holder’s compliance with any
rule or regulation of the Commission which permits the selling of any such
securities without registration.

7.                                       MISCELLANEOUS.

(a)           Expenses of Registration.  All reasonable expenses, other than
underwriting discounts and commissions and fees and expenses of counsel and
other advisors to each Holder, incurred in connection with the registrations,
filings or qualifications described herein, including (without limitation) all
registration, filing and qualification fees, printers’ and accounting fees, the
fees and disbursements of counsel for the Company, and the fees and
disbursements incurred in connection with the opinion and letter described in Section 3(g)
of this Agreement, shall be borne by the Company.

(b)           Amendment; Waiver.  Except as expressly provided herein, neither
this Agreement nor any term hereof may be amended or waived except pursuant to
a written instrument executed by the Company and the Holders of at least
seventy-five percent (75%) of the Registrable Securities that are either then
outstanding or are issuable on exercise of the Warrants then outstanding
(without regard to any limitation on such exercise). Any amendment or waiver
effected in accordance with this Section 7(b) shall be binding upon
each Holder, each future Holder and the Company.  The failure of any party to exercise any
right or remedy under this Agreement or otherwise, or the delay by any party in
exercising such right or remedy, shall not operate as a waiver thereof.

(c)           Notices.  Any notice, demand or request required or
permitted to be given by the Company or a Holder pursuant to the terms of this
Agreement 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, (ii) on the next
Business Day after timely delivery to a reputable overnight courier and (iii)
on the Business Day actually received if deposited in the U.S. mail (certified
or registered mail, return receipt requested, postage prepaid), addressed as
follows:

If to
the Company:

Lipid Sciences,
Inc.

7068 Koll Center Parkway

Suite 401

Pleasanton, CA  94566

Attn:  Sandra Gardiner

Tel:  (925) 249-4000

Fax:  (925) 249-4080

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

Roger S. Mertz,
Esq.

Allen Matkins Leck Gamble Mallory & Natsis LLP

Three Embarcadero Center, 12th Floor

San Francisco, California  94111-4074

Tel:  (415) 837-1515

Fax:  (415) 837-1516

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

 8
 

 

(d)           Assignment.  Upon the transfer of any Warrant or
Registrable Securities by a Holder, the rights of such Holder hereunder with
respect to such securities so transferred shall be assigned automatically to
the transferee thereof, and such transferee shall thereupon be deemed to be a “Holder”
for purposes of this Agreement, as long as: 
(i) the Company is, within a reasonable period of time following
such transfer, furnished with written notice of the name and address of such
transferee, (ii) the transferee agrees in writing with the Company to be
bound by all of the provisions hereof, and (iii) such transfer is made in
accordance with the applicable requirements of the Stock Purchase Agreement or
the Warrants, as applicable.

(e)           Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed one and the same instrument.  This Agreement, once executed by a party, may
be delivered to any other party hereto by facsimile transmission.

(f)            Governing Law.  This Agreement shall 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.

(g)           Holder of Record.  A person is deemed to be a Holder whenever
such person owns or is deemed to own of record such Registrable Securities.  If the Company receives conflicting
instructions, notices or elections from two or more persons with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the record owner of such
Registrable Securities.

(h)           Entire Agreement.  This Agreement and the other Transaction
Documents constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. 
There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein.  This Agreement and the other Transaction
Documents supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and thereof.

(i)            Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

(j)            Third Party Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other person.

(k)           Confidentiality.  The Company shall hold in confidence and not
make any disclosure of information concerning a Holder provided to the Company
unless (i) disclosure of such information is necessary to comply with federal
or state securities laws, (ii) the disclosure of such information is necessary
to avoid or correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a subpoena or
other final, non-appealable order from a court or governmental body of
competent jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this Agreement
or any other agreement.  The Company
agrees that it shall, upon learning that disclosure of such information
concerning a Holder is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt written notice to
such Holder and allow such Holder , at the Holder’s expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.

 9
 

 

[Signature Pages to
Follow]

 10
 

 

IN WITNESS WHEREOF, the undersigned have executed this
Registration Rights Agreement as of the date first-above written.

	
  LIPID SCIENCES, INC.,

  
	
  a Delaware
  corporation

  
	
   

  
	
   

  
	
  By:

  	
  /s/ S. Lewis Meyer, Ph.D.

  	
   

  
	
   

  	
  Name: 

  	
  S. Lewis Meyer,
  Ph.D.

  	
   

  
	
   

  	
  Its: 

  	
  President and
  Chief Executive Officer

  	
   

  
						

 

OPPENHEIMER & CO. INC.

	
  By:

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
  Its: 

  	
   

  	
   

  
						

 

 11
 

 

IN WITNESS WHEREOF, the undersigned have executed this
Registration Rights Agreement as of the date first-above written.

	
  

  	
   (INVESTOR NAME)

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
   

  	
   (Name of General Partner/Manager, if
  applicable)

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

 12

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