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 of Director’s reasonable judgment,
materially impairs Executive’s ability to perform Executive’s duties.


 


b.              “Change
of Control” means (i) after the date hereof, any “person” (as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 50% or more of the total voting power represented by the Company’s
then outstanding voting securities; or (ii) the date of the consummation of a
merger or consolidation of the Company with any other corporation or entity
that has been approved by the stockholders of the Company, other than a merger
or consolidation that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent more than fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation, or (iii) the date of the consummation of the sale or
disposition of all or substantially all of the Company’s assets.


 


c.               “Good
Reason” means, without Executive’s consent, (i) a material and adverse change
in Executive’s duties (excluding any changes in such duties resulting from the
Company becoming part of a larger entity pursuant to a Change of Control) or
base salary, or (ii) Executive being required to relocate to an office location
more than 50 miles from Ciphergen’s current headquarters in Fremont, CA.


 


8.                                       Employment, Confidential Information and Invention
Assignment Agreement.  As a condition of Executive’s employment,
Executive shall complete, sign and return the Company’s standard form of
Proprietary Information and Inventions Agreement (the “PIIA”).


 


9.                                       Non-Contravention. 
Executive represents to the Company that Executive’s signing of this
Agreement, the PIIA, the issuance of stock options to Executive, and
Executive’s commencement of employment with the Company does not violate any
agreement Executive has with Executive’s previous employer and Executive’s
signature confirms this representation.


 


10.                                 Conflicting Employment. 
Executive agrees that, except as pre-approved by the Company’s Chief
Executive Officer pursuant to paragraph 1 above, during the term of Executive’s
employment with the Company, Executive will not engage in any other employment,
occupation, consulting or other business activity competitive with or directly
related to the business in which the Company is now involved or becomes
involved during the term of Executive’s employment, nor will Executive engage
in any other activities that conflict with Executive’s obligations to the Company.


 


11.                                 Nonsolicitation.  From the date of this Agreement
until 12 months after the termination of this Agreement (the “Restricted
Period”), Executive will not, directly or indirectly, solicit or encourage any
employee or contractor of the Company or its affiliates to terminate employment
with, or cease providing services to, the Company or its affiliates.  During the


 


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Restricted Period, Executive will
not, whether for Executive’s own account or for the account of any other
person, firm, corporation or other business organization, solicit or interfere
with any person who is or during the period of Executive’s engagement by the
Company was a collaborator, partner, licensor, licensee, vendor, supplier, customer
or client of the Company or its affiliates to the Company’s detriment.  Executive acknowledges that compliance with
the obligations of this paragraph is a condition to Executive’s right to
receive the severance payments set forth in paragraph 5 above.


 


12.                                 Arbitration and Equitable Relief.


 


a.               In
consideration of Executive’s employment with the Company, its promise to
arbitrate all employment-related disputes and Executive’s receipt of the
compensation and other benefits paid to Executive by the Company, at present
and in the future, EXECUTIVE AGREES THAT ANY AND ALL CONTROVERSIES, CLAIMS, OR
DISPUTES WITH ANYONE (INCLUDING THE COMPANY AND ANY EMPLOYEE, OFFICER,
DIRECTOR, STOCKHOLDER OR BENEFIT PLAN OF THE COMPANY IN THEIR CAPACITY AS SUCH
OR OTHERWISE) ARISING OUT OF, RELATING TO, OR RESULTING FROM EXECUTIVE’S
EMPLOYMENT WITH THE COMPANY OR THE TERMINATION OF EXECUTIVE’S EMPLOYMENT WITH
THE COMPANY, INCLUDING ANY BREACH OF THIS AGREEMENT, SHALL BE SUBJECT TO
BINDING ARBITRATION UNDER THE ARBITRATION RULES SET FORTH IN CALIFORNIA CODE OF
CIVIL PROCEDURE SECTION 1280 THROUGH 1294.2, INCLUDING SECTION 1283.05 (THE
“RULES”) AND PURSUANT TO CALIFORNIA LAW. 
Disputes which Executive agrees to arbitrate, and thereby agree to waive
any right to a trial by jury, include any statutory claims under state or
federal law, including, but not limited to, claims under Title VII of the Civil
Rights Act of 1964, the Americans with Disabilities Act of 1990, the Age
Discrimination in Employment Act of 1967, the Older Workers Benefit Protection
Act, the California Fair Employment and Housing Act, the California Labor Code,
claims of harassment, discrimination or wrongful termination and any statutory
claims.  Executive further understands
that this agreement to arbitrate also applies to any disputes that the Company
may have with Executive.


 


b.              Executive
agrees that any arbitration will be administered by the American Arbitration
Association (“AAA”) and that the neutral arbitrator will be selected in a
manner consistent with its National Rules for the Resolution of Employment
Disputes.  Executive agrees that the
arbitrator shall have the power to decide any motions brought by any party to
the arbitration, including motions for summary judgment and/or adjudication and
motions to dismiss and demurrers, prior to any arbitration hearing.  Executive also agrees that the arbitrator
shall have the power to award any remedies, including attorneys’ fees and
costs, available under applicable law. 
Executive understands the Company will pay for any administrative or
hearing fees charged by the arbitrator or AAA except that Executive shall pay
the first $125.00 of any filing fees associated with any arbitration Executive
initiates.  Executive agrees that the
arbitrator shall administer and conduct any arbitration in a manner consistent
with the Rules and that to the extent that the AAA’s National


 


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Rules for the Resolution
of Employment Disputes conflict with the Rules, the Rules shall take precedence.  Executive agrees that the decision of the
arbitrator shall be in writing.


 


c.               Except
as provided by the Rules and this Agreement, arbitration shall be the sole,
exclusive and final remedy for any dispute between Executive and the
Company.  Accordingly, except as
provided for by the Rules and this Agreement, neither Executive nor the Company
will be permitted to pursue court action regarding claims that are subject to
arbitration.  Notwithstanding, the arbitrator
will not have the authority to disregard or refuse to enforce any lawful
company policy, and the arbitrator shall not order or require the Company to
adopt a policy not otherwise required by law which the Company has not adopted.


 


d.              In
addition to the right under the Rules to petition the court for provisional
relief, Executive agrees that any party may also petition the court for
injunctive relief where either party alleges or claims a violation of the PIIA
between Executive and the Company or any other agreement regarding trade
secrets, confidential information, nonsolicitation or Labor Code §2870.  Executive understands that any breach or
threatened breach of such an agreement will cause irreparable injury and that
money damages will not provide an adequate remedy therefor and both parties
hereby consent to the issuance of an injunction.  In the event either party seeks injunctive relief, the prevailing
party shall be entitled to recover reasonable costs and attorneys fees.


 


e.               Executive
understands that this Agreement does not prohibit Executive from pursuing an
administrative claim with a local, state or federal administrative body such as
the Department of Fair Employment and Housing, the Equal Employment Opportunity
Commission or the Workers’ Compensation Board. 
This Agreement does, however, preclude Executive from pursuing court
action regarding any such claim.


 


f.                 Executive
acknowledges and agrees that Executive is executing this Agreement voluntarily
and without any duress or undue influence by the Company or anyone else.  Executive further acknowledges and agrees
that Executive has carefully read this Agreement and that Executive has asked
any questions needed for Executive to understand the terms, consequences and
binding effect of this Agreement and fully understand it, including that
Executive is waiving Executive’s right to a jury trial.  Finally, Executive agrees that Executive has
been provided an opportunity to seek the advice of an attorney of Executive’s
choice before signing this Agreement.


 


13.                                 Successors of the Company.  The
rights and obligations of the Company under this Agreement shall inure to the
benefit of, and shall be binding upon, the successors and assigns of the
Company. This Agreement shall be assignable by the Company in the event of a
merger or similar transaction in which the Company is not the surviving entity,
or of a sale of all or substantially all of the Company’s assets.


 


14.                                 Enforceability; Severability.  If any
provision of this Agreement shall be invalid or unenforceable, in whole or in
part, such provision shall be deemed to be modified or restricted to the extent
and in the manner necessary to render the same valid and enforceable, or shall
be deemed excised from this Agreement, as the case may require, and this
Agreement shall be construed and


 


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enforced to the maximum extent
permitted by law as if such provision had been originally incorporated herein
as so modified or restricted, or as if such provision had not been originally
incorporated herein, as the case may be.


 


15.                                 Governing Law.  This Agreement shall be
construed and enforced in accordance with the laws of the State of California
without giving effect to California’s choice of law rules.  This Agreement is deemed to be entered into
entirely in the State of California. 
This Agreement shall not be strictly construed for or against either
party.


 


16.                                 No Waiver.  No waiver of any term of this
Agreement constitutes a waiver of any other term of this Agreement.


 


17.                                 Amendment To This Agreement.  This
Agreement may be amended only in writing by an agreement specifically
referencing this Agreement, which is signed by both Executive and an executive
officer or member of the Board of Directors of the Company authorized to do so
by the Board by resolution.


 


18.                                 Headings.  Section headings in this
Agreement are for convenience only and shall be given no effect in the
construction or interpretation of this Agreement.


 


19.                                 Notice.  All notices made pursuant to
this Agreement, shall be given in writing, delivered by a generally recognized
overnight express delivery service, and shall be made to the following
addresses, or such other addresses as the Parties may later designate in
writing:


 


If to the Company:


 


Ciphergen Biosystems, Inc.


6611 Dumbarton Circle


Fremont, California 94555


Attention: 
Chief Financial Officer


 


If to Executive:


 


Martin Verhoef


736 Midland Way


Redwood City, CA 94062


 


20.                                 Expense Reimbursement.  The
Company shall promptly reimburse Executive reasonable business expenses
incurred by Executive in furtherance of or in connection with the performance
of Executive’s duties hereunder, including expenditures for travel, in
accordance with the Company’s expense reimbursement policy as in effect from
time to time.


 


21.                                 General; Conflict.  This Agreement
and the PIIA, when signed by Executive, set forth the terms of Executive’s
employment with the Company and supersede any and all prior


 


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representations and agreements,
whether written or oral.  Executive and
the Company agree that in the event of any conflict between the provisions of
this Agreement with the PIIA or with the Offer Letter to Executive dated April
5, 2000, the provisions of this Agreement shall control.


 


 


	
   

  	
  Ciphergen
  Biosystems, Inc.

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ACCEPTED AND
  AGREED TO this

  8th day of January, 2004.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Martin Verhoef

  	
   

  
						



 


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