This paper presents a new observer design technique for Lipschitz nonlinear systems. Necessary and sufficient conditions for existence of a stable observer gain are developed using a S-Procedure Lemma. The developed condition is expressed in terms of the existence of a solution to an Algebraic Riccati Equation in one variable. Thus, the need to solve Linear Matrix Inequalities in multiple variables is eliminated. The advantage of the developed approach is that it is significantly less conservative than other previously published results for Lipschitz systems. It yields a stable observer for larger Lipschitz constants than other techniques previously published in literature.