Vice President, Sales Employment Agreement

Exhibit 10.40


EMPLOYMENT AGREEMENT


THIS EMPLOYMENT AGREEMENT ("Agreement") between Ciphergen Biosystems, Inc., a Delaware corporation (the "Company") and Martin Verhoef ("Executive," and together with the Company, the "Parties") who lives at 736 Midland Way, Redwood City, CA, is effective as of January 8, 2004 (the "Effective Date").


WHEREAS, Executive is currently employed as the Company's Senior Vice President, Sales, Marketing and Operations.


WHEREAS, the Company desires to promote Executive to Executive Vice President of the Company and President of the Biosystems Division and Executive is willing to accept such employment promotion by the Company on the terms and subject to the conditions set forth in this Agreement.


NOW, THEREFORE, the Parties agree as follows:


1. Position . The Company will employ Executive as Executive Vice President of Ciphergen Biosystems, Inc. and President of the Biosystems Division. In this position, Executive will be expected to devote Executive's full business time, attention and energies to the performance of Executive's duties with the Company. Executive may devote time to outside Board or advisory positions as pre-approved by the Chief Executive Officer of Ciphergen Biosystems, Inc. Executive will render such business and professional services in the performance of such duties, consistent with Executive's position within the Company, as shall be reasonably assigned to Executive by the Company's CEO or Board of Directors. 2. Compensation . The Company will pay Executive a base salary of $250,000 on an annualized basis, payable in accordance with the Company's standard payroll policies, including compliance with applicable tax withholding requirements. In addition, Executive will be eligible for a bonus of up to 35% of Executive's base salary for achievement of reasonable performance-related goals to be defined by the Company's CEO or Board of Directors. The exact payment terms of a bonus, if any, are to be set by the Compensation Committee of the Board of Directors, in its sole discretion. 3. Benefits . During the term of Executive's employment, Executive will be entitled to the Company's standard benefits covering employees at Executive's level, including the Company's group medical, dental, vision and term life insurance plans, section 125 plan, employee stock purchase plan and 401(k) plan, as such plans may be in effect from time to time, subject to the Company's right to cancel or change the benefit plans and programs it offers to its employees at any time. 4. At-Will Employment . Executive's employment with the Company is for an unspecified duration and constitutes "at-will" employment. This employment relationship may be


terminated at any time, with or without good cause or for any or no cause, at the option either of the Company or Executive, with or without notice. 5. Termination without Cause or for Good Reason . In the event the Company terminates Executive's employment for reasons other than for Cause (as defined below) or Executive terminates his employment for Good Reason (as defined below), and provided that Executive signs and does not revoke a standard release of all claims against the Company, and does not breach any provision of this Agreement (including but not limited to Section 10 and Section 11 hereof) or the PIIA, as hereinafter defined, Executive shall be entitled to receive: (i) continued payment of Executive's base salary as then in effect for a period of twelve (12) months following the date of termination (the "Severance Period"), to be paid periodically in accordance with the Company's standard payroll practices; and


(ii) continuation of Company health and dental benefits through COBRA premiums paid by the Company directly to the COBRA administrator during the Severance Period; provided, however, that such premium payments shall cease prior to the end of the Severance Period if Executive commences other employment with reasonably comparable or greater health and dental benefits.


Executive will not be eligible for any bonus, vesting of stock options or other benefits not described above after termination, except as may be required by law.


6. Termination After Change of Control . If Executive's employment is terminated by the Company for reasons other than for Cause (as defined below) or by Executive for Good Reason (as defined below) within the 12 month period following a Change of Control (as defined below), then, in addition to the severance obligations due to Executive under paragraph 5 above, 100% of any then-unvested shares under Company stock options then held by Executive will vest upon the date of such termination. 7. Definitions . For purposes of this Agreement: a. "Cause" means termination of employment by reason of Executive's: (i) material breach of this Agreement, the PIIA (as hereinafter defined) or any other confidentiality, invention assignment or similar agreement with the Company; (ii) repeated negligence in the performance of duties or nonperformance or misperformance of such duties that in the good faith judgment of the Board of Directors of the Company adversely affects the operations or reputation of the Company; (iii) refusal to abide by or comply with the good faith directives of the Company's CEO or Board of Directors or the Company's standard policies and procedures, which actions continue for a period of at least ten (10) days after written notice from the Company; (iv) violation or breach of the Company's Code of Ethics, Financial Information Integrity Policy, Insider Trading Compliance Program, or any other similar code or policy adopted by the Company and generally applicable to the Company's employees, as then in effect; (v) willful dishonesty, fraud, or misappropriation of funds or property with respect to the business or affairs of the Company; (vi) conviction by, or entry of a

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plea of guilty or nolo contendere in, a court of competent and final jurisdiction for any crime which constitutes a felony in the jurisdiction involved; or (vii) abuse of alcohol or drugs (legal or illegal) that, in the Board ...