Exhibit 10.1

Execution Version

PFENEX INC.

EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement (the “Agreement”) is entered into by and
between Pfenex Inc. (the “Company”), and Evert B. Schimmelpennink (“Executive”).
This Agreement will be effective as the date Executive commences employment with
the Company (the “Effective Date”). It is expected that the Effective Date will
be August 3, 2017.

1. Duties and Scope of Employment.

(a) Positions, Duties and Authority. Effective as of the Effective Date,
Executive will serve as the Company’s President and Chief Executive Officer,
reporting directly to the Company’s Board of Directors (the “Board”). Executive
will render such business and professional services in the performance of
Executive’s duties, consistent with Executive’s position within the Company, as
will reasonably be assigned to Executive by the Board. At all times, Executive’s
duties, responsibilities and authority shall be at least commensurate with those
of a president and chief executive officer of a publicly traded company
comparable to the Company in the United States. The period of Executive’s
employment under this Agreement is referred to herein as the “Employment Term.”

(b) Board Membership. Executive will be appointed to the Board on the Effective
Date, and will be nominated for election and re-election to the Board
continuously during the Employment Term, subject to any required stockholder
approval. If Executive’s service with the Company as its President and Chief
Executive Officer terminates for any reason, Executive will resign from all
director and officer positions with the Company.

(c) Obligations. During the Employment Term, Executive will perform Executive’s
duties faithfully and to the best of Executive’s ability and will devote
Executive’s full business efforts and time to the Company. For the duration of
the Employment Term, Executive agrees not to actively engage in any other
employment, occupation or consulting activity for any direct or indirect
remuneration without the prior approval of the Board, except as provided in
Schedule 1; provided, however, that Executive may manage personal investments,
participate in civic, charitable, educational and professional activities, and,
after the first anniversary of the Effective Date and with the prior approval of
the Board, which shall not be unreasonably withheld, serve on the board of
directors (or comparable governing body), including any board committees, of one
for-profit company that does not compete with the Company, provided that such
activities do not materially interfere with the performance of his
responsibilities to the Company. In the event of any conflict between any policy
of the Company and the terms of this Agreement, the terms of this Agreement
shall govern and control.

2. At-Will Employment. The parties agree that Executive’s employment with the
Company will be “at-will” employment and may be terminated at any time with or
without Cause or notice. Executive understands and agrees that neither
Executive’s job performance nor promotions, commendations, bonuses or the like
from the Company give rise to or in any way serve as the basis for modification,
amendment, or extension, by implication or otherwise, of Executive’s employment
with the Company. However, as described in this Agreement, Executive may be
entitled to severance benefits depending on the circumstances of Executive’s
termination of employment with the Company.

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3. Compensation.

(a) Base Salary. Effective as of the Effective Date, the Company will pay
Executive an annual salary at the initial rate of $530,000 as compensation for
Executive’s employment services to the Company (the “Base Salary”). The Base
Salary will be paid periodically in accordance with the Company’s normal payroll
practices and be subject to the usual, required withholdings. The Base Salary,
as in effect from time to time, shall not be reduced without Executive’s prior
written consent, except for a reduction that is in the same percentage as the
percentage reduction in the base compensation of all of the Company’s senior
executives.

(b) Relocation Reimbursements.

(i) Executive will be eligible to receive reimbursement for reasonable temporary
housing and travel between Chicago, Illinois and San Diego, California for up to
twelve (12) months, plus an amount equal to the full gross up for any taxable
income Executive may recognize as a result of such reimbursement (the “Initial
Relocation Reimbursement”). The Initial Relocation Reimbursement will be paid to
Executive in accordance with the terms and conditions of Company’s expense
reimbursement policy and provided Executive remains an employee of the Company
on the date(s) the Initial Relocation Reimbursement is paid to Executive.
Notwithstanding the foregoing, if, prior to the first anniversary of the
Effective Date (x) Executive’s employment with the Company terminates due to
Executive’s voluntary resignation other than for Good Reason or (y) the Company
terminates Executive’s employment with the Company for Cause, then, Executive
must repay the gross amount of the Initial Relocation Reimbursement paid to the
Company within thirty (30) days of the date of such termination of employment.

(ii) Executive will be eligible to receive reimbursement for reasonable
relocation expenses related to relocation to the San Diego Metropolitan area
from Chicago, Illinois, up to a maximum of $200,000, plus an additional amount
equal to the full gross up for any taxable income Executive may recognize as a
result of such reimbursement (the “Subsequent Relocation Reimbursement”).
Expenses covered by the Subsequent Relocation Reimbursement will be paid to
Executive as incurred by him in accordance with the terms and conditions of
Company’s expense reimbursement policy. The Company acknowledges that certain
expenses eligible to be reimbursed through the Subsequent Relocation
Reimbursement may occur beyond the twelve (12)-month anniversary of the
Effective Date and that reasonable relocation expenses may include, inter alia,
real estate agent fees, moving and shipping fees, any capital loss on the sale
of Executive’s current home, and any monthly housing payments Executive makes on
his current Chicago residence after purchasing a residence in San Diego.
Notwithstanding the foregoing, if either (i) Executive has failed to permanently
relocate his (and his family’s) residence to the San Diego Metropolitan area as
of the twelve (12)-month anniversary of the Effective Date, or (ii) prior to
such relocation Executive’s employment is terminated by the Company for Cause or
by Executive without Good Reason, then Executive shall not be entitled to
payment of any portion of the Subsequent Relocation Reimbursement (including,
notwithstanding Section 6(a)(iii), reimbursement for expenses already incurred),
and Executive shall be required to repay to the Company the gross amount of any
portion of the Subsequent Relocation Reimbursement already received. For
purposes of clarification, the Subsequent Relocation Reimbursement will not be
subject to any clawback by the Company once paid, except as provided in the
preceding sentence.

 

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(c) Target Bonus. Executive will be eligible to receive an annual target bonus
of fifty percent (50%) of Executive’s Base Salary upon achievement of
performance objectives to be determined by the Board or the Compensation
Committee of the Board in its sole discretion (the “Target Bonus”); provided,
however, that the Board or the Compensation Committee of the Board, in its sole
discretion, may approve a payment in excess of the Target Bonus if either
determines, in its sole discretion, that Executive has achieved the related
performance objective(s) above target level(s). For calendar year 2017, the
Target Bonus will be pro-rated for the portion of the calendar year that
Executive is actually employed by the Company under the terms of this Agreement.
The Target Bonus, or any portion thereof, will be paid, less applicable
withholdings, as soon as practicable after the Board determines that the Target
Bonus has been earned, but in no event shall the Target Bonus be paid after the
later of (i) the fifteenth (15th) day of the third (3rd) month following the
close of the Company’s fiscal year in which the Target Bonus is earned or
(ii) March 15 following the calendar year in which the Target Bonus is earned.

(d) Stock Option. Subject to the approval of the Board (or a committee thereof),
on the first trading day of the month following the Effective Date, Executive
will be granted a nonstatutory stock option to purchase 350,000 shares of the
Company’s common stock at an exercise price per share equal to the fair market
value of the Company’s common stock on the date of grant, which will be the
closing price of the Company’s common stock as reported by the NYSE MKT on the
date of grant (the “Option”). Subject to the accelerated vesting provisions set
forth herein, the Option will vest as to twenty-five percent (25%) of the shares
subject to the Option one (1) year after the Effective Date, and as to 1/48th of
the shares subject to the Option monthly thereafter on the same day of the month
as the Effective Date (and if there is no corresponding day, the last day of the
month), so that the Option will be fully vested and exercisable four (4) years
from the Effective Date, subject to Executive continuing to provide services to
the Company through the relevant vesting dates. Except as provided herein, the
Option will be subject to the terms and conditions of an equity incentive plan
and related stock option agreement approved by the Board (or a committee
thereof), including vesting requirements (collectively, the “Equity Documents”)
and will be granted in accordance with the Company’s equity grant policy.

(e) Equity. Executive will be eligible to receive awards of stock options,
restricted stock units or other equity awards pursuant to any plans or
arrangements the Company may have in effect from time to time, including,
without limitation, that Executive will be eligible for annual stock option
grants following December 31, 2017, during the annual focal review for other
senior executives of the Company. The Board or the Compensation Committee of the
Board will determine in its discretion whether Executive will be granted any
such equity awards and the terms of any such award in accordance with the terms
of any applicable plan or arrangement that may be in effect from time to time.

(f) Review and Adjustments. Executive’s Base Salary, Target Bonus, and other
compensatory arrangements will be subject to review and adjustment in accordance
with the Company’s applicable policies, subject to the last sentence in
Section 3(a) and Executive’s ability to resign for Good Reason and receive
severance benefits as set forth in Section 6.

 

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4. Employee Benefits. During the Employment Term, Executive will be entitled to
participate in the employee benefit plans currently and hereafter maintained by
the Company of general applicability to other senior executives of the Company.
The Company reserves the right to cancel or change the benefit plans and
programs it offers to its employees at any time.

5. Expenses. The Company will reimburse Executive for reasonable travel,
entertainment or other expenses incurred by Executive in the furtherance of or
in connection with the performance of Executive’s duties hereunder, in
accordance with the Company’s expense reimbursement policy as in effect from
time to time.

6. Severance.

(a) Termination for Any Reason. Upon termination of Executive’s employment for
any reason, Executive (or his estate) shall be entitled to receive (i) his Base
Salary accrued through the date of termination, (ii) earned but unused vacation
and paid time off as of the date of termination, (iii) reimbursement of expenses
properly incurred prior to termination and properly documented in accordance
with the Company’s policy, (iv) all benefits, including continuation and
conversion rights, provided upon termination of employment under the Company’s
employee benefit plans and policies in accordance with the terms of such plans
and policies, and (v) except in the case of termination for Cause or resignation
without Good Reason, Executive’s Target Bonus actually earned for the fiscal
year ending prior to the date of termination to the extent not yet paid on the
date of termination (collectively the “Accrued Obligations”). For avoidance of
doubt, upon termination for Cause or resignation without Good Reason, Executive
shall not be entitled to any payments or benefits other than the Accrued
Obligations.

(b) Termination for other than Cause, Death or Disability Apart from a Change of
Control. If, outside of the Change of Control Period, (i) the Company (or any
parent or subsidiary or successor of the Company) terminates Executive’s
employment with the Company other than for Cause, death or Disability, or
(ii) the Executive resigns from such employment for Good Reason, then, subject
to Section 7, Executive will be entitled to receive, in addition to the Accrued
Obligations:

(i) continuing payments of severance pay for a period of twelve (12) months at a
rate equal to (x) the sum of (A) one hundred percent (100%) of Executive’s Base
Salary rate, as then in effect, plus (B) the sum of all performance bonuses paid
to Executive for the Company’s fiscal year immediately preceding the fiscal year
in which Executive’s termination of employment occurs divided by (y) twelve
(12). The severance will be paid, less applicable withholdings, in installments
over the severance period described herein with the first payment to commence on
the sixty-first (61st) day following Executive’s termination of employment (and
include any severance payments that otherwise would have been paid to Executive
within the sixty (60) days following Executive’s termination date), with any
remaining payments paid in accordance with the Company’s normal payroll
practices for the remainder of the severance period following Executive’s
termination of employment (subject to any delay as may be required by
Section 7(c)).

 

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(ii) if Executive elects continuation coverage pursuant to the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) within the time
period prescribed pursuant to COBRA for Executive and Executive’s eligible
dependents, then the Company will reimburse Executive for the COBRA premiums for
such coverage (at the coverage levels in effect immediately prior to Executive’s
termination) until the earlier of (A) a period of twelve (12) months from the
date of termination or (B) the date upon which Executive and/or Executive’s
eligible dependents are no longer eligible for COBRA continuation coverage. The
reimbursements will be made by the Company to Executive consistent with the
Company’s normal expense reimbursement policy. Notwithstanding the first
sentence of this Section 6(a)(ii), if the Company determines in its sole
discretion that it cannot provide the foregoing benefit without potentially
violating, or being subject to an excise tax under, applicable law (including,
without limitation, Section 2716 of the Public Health Service Act), the Company
will in lieu thereof provide to Executive a taxable monthly payment, payable on
the last day of a given month (except as provided by the following sentence), in
an amount equal to the monthly COBRA premium that Executive would be required to
pay to continue the group health coverage for Executive and/or Executive’s
eligible dependents in effect on the termination of employment date (which
amount will be based on the premium for the first month of COBRA coverage),
which payments will be made regardless of whether Executive and/or Executive’s
eligible dependents elect COBRA continuation coverage and will commence on the
month following Executive’s termination of employment and will end on the
earlier of (x) the date upon which Executive obtains other employment or (y) the
date the Company has paid an amount equal to twelve (12) payments. Any such
taxable monthly payments that otherwise would have been paid to Executive within
the sixty (60) days following Executive’s termination date instead will be paid
on the sixty-first (61st) day following Executive’s termination of employment,
with any remaining payments paid as provided in the prior sentence (subject to
any delay as may be required by Section 7(c)). For the avoidance of doubt, the
taxable payments in lieu of COBRA reimbursements may be used for any purpose,
including, but not limited to continuation coverage under COBRA, and will be
subject to all applicable tax withholdings.

(c) Termination for other than Cause, Death or Disability or Resignation by
Executive for Good Reason Related to a Change of Control. If, within the Change
of Control Period (i) the Company (or any parent or subsidiary or successor of
the Company) terminates Executive’s employment with the Company other than for
Cause, death or Disability, or (ii) the Executive resigns from such employment
for Good Reason, then, subject to Section 7, Executive will be entitled to
receive, in addition to the Accrued Obligations:

(i) a lump sum payment equal to two hundred percent (200%) of the sum of:
(A) Executive’s Base Salary, as then in effect, or if greater, at the level in
effect immediately prior to the Change of Control, plus (B) Executive’s Target
Bonus in effect for the fiscal year in which Executive’s termination of
employment occurs. The severance will be paid, less applicable withholdings, on
the sixty-first (61st) day following Executive’s termination of employment in
accordance with the Company’s normal payroll practices (subject to any delay as
may be required by Section 7(c)). For the avoidance of doubt, if (x) Executive
incurred a termination of employment prior to a Change of Control that qualifies
Executive for severance payments under Section 6(b)(i); and (y) a Change of
Control occurs within the six (6)-month period following Executive’s termination
of employment that qualifies Executive for the superior benefits under this
Section 6(c)(i), then Executive shall be entitled to a lump-sum payment of the
amount calculated under this Section 6(c)(i), less amounts already paid under
Section 6(b)(i).

 

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(ii) if Executive elects continuation coverage pursuant to COBRA within the time
period prescribed pursuant to COBRA for Executive and Executive’s eligible
dependents, then the Company will reimburse Executive for the COBRA premiums for
such coverage (at the coverage levels in effect immediately prior to Executive’s
termination) until the earlier of (A) a period of twenty-four (24) months from
the date of termination or (B) the date upon which Executive and/or Executive’s
eligible dependents are no longer eligible for COBRA continuation coverage. The
reimbursements will be subject to the same conditions, limitations, and
restrictions as the COBRA benefits described in Section 6(b)(ii); provided,
however, that if the Company provides Executive a taxable monthly payment in
lieu of COBRA reimbursement, such payment will end on the earlier of (x) the
date upon which Executive obtains other employment or (y) the date the Company
has paid an amount equal to twenty-four (24) payments; and

(iii) accelerated vesting as to one hundred percent (100%) of Executive’s
then-outstanding equity awards of Company stock or rights to acquire Company
common stock. For outstanding Company equity awards subject to performance-based
vesting, the performance goals will be deemed achieved at one hundred percent
(100%) of applicable target levels for the relevant performance period, unless
otherwise provided in the agreement related to the performance-based award. For
the avoidance of doubt, if the qualifying termination occurs prior to a Change
of Control, then any unvested portion of Executive’s outstanding equity awards
will remain outstanding for six (6) months or the occurrence of a Change of
Control (whichever is earlier) so that any vesting acceleration benefits
provided under this clause (iii) can be provided if a Change of Control occurs
within six (6) months following such termination (provided that in no event will
the equity awards remain outstanding beyond the equity award’s maximum term or
expiration date). In such case, if no Change of Control occurs within six
(6) months following Executive’s termination, any unvested portion of
Executive’s equity awards automatically will be forfeited without having vested.

(d) Termination for Death or Disability. If Executive’s employment with the
Company terminates due to Executive’s death or Disability, then Executive, or
his estate, shall be entitled to receive, in addition to the Accrued
Obligations, an amount equal to a pro-rata portion of his Target Bonus for the
year of termination, which will be paid within thirty (30) days following the
date of termination, subject to Section 7.

(e) Termination for Cause, Resignation without Good Reason. If Executive’s
employment with the Company (or any parent or subsidiary or successor of the
Company) terminates voluntarily by Executive (except upon resignation for Good
Reason), for Cause by the Company or due to Executive’s death or Disability,
then (i) all vesting will terminate immediately with respect to Executive’s
outstanding equity awards, (ii) all payments of compensation by the Company to
Executive hereunder will terminate immediately (except as with respect to the
Accrued Obligations), and (iii) Executive will only be eligible for severance
benefits in accordance with the Company’s established policies, as any, as then
in effect.

(f) Exclusive Remedy. In the event of a termination of Executive’s employment
with the Company (or any parent or subsidiary or successor of the Company), the
provisions of this Section 6 are intended to be and are exclusive and in lieu of
any other rights or remedies to which Executive or the Company may otherwise be
entitled, whether at law, tort or contract, in equity, or under this Agreement,
including any prior employment agreements entered into between the Company and
Executive. Executive will be entitled to no severance or other benefits upon
termination of employment with respect to acceleration of award vesting or
severance pay other than those benefits expressly set forth in this Section 6
or, in the case of an equity award, the Equity Documents.

 

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7. Conditions to Receipt of Severance; No Duty to Mitigate.

(a) Separation Agreement and Release of Claims. The receipt of any severance
pursuant to Sections 6(b), (c), or (d) (other than the Accrued Obligations) will
be subject to Executive, or his estate, signing and not revoking a separation
agreement and release of claims in a form reasonably satisfactory to the Company
(the “Release”) and provided that such Release becomes effective and irrevocable
no later than sixty (60) days following the termination date (such deadline, the
“Release Deadline”). The Release shall be furnished to Executive, or his estate,
within five (5) days following the date of termination, will not require
Executive, or his estate, to release his right to payments pursuant to Section 6
or his right to indemnification and/or insurance coverage against claims by
third parties, and will not impose any restrictive covenants upon Executive’s
activities following termination in excess of any to which he is party as of
immediately prior to his termination date. If the Release does not become
effective and irrevocable by the Release Deadline, Executive will forfeit any
rights to severance or benefits under this Agreement. In no event will severance
payments or benefits be paid or provided until the Release becomes effective and
irrevocable.

(b) Nonsolicitation; Nondisparagement. The receipt of any severance benefits
pursuant to Section 6(b), (c), or (d) will be subject to Executive, or his
estate, not violating the provisions of Sections 11 or 23. In the event
Executive, or his estate, breaches the provisions of Sections 11 or 23, all
continuing payments and benefits to which Executive, or his estate, may
otherwise be entitled pursuant to Section 6(b) or (c) will be immediately
suspended, provided that if it is subsequently determined by arbitration or by a
court of competent jurisdiction that Executive, or his estate, did not breach
such provisions, all suspended amount shall be promptly paid to Executive or his
estate.

(c) Section 409A.

(i) Notwithstanding anything to the contrary in this Agreement, no severance pay
or benefits to be paid or provided to Executive, if any, pursuant to this
Agreement that, when considered together with any other severance payments or
separation benefits, are considered deferred compensation under Code
Section 409A, and the final regulations and any guidance promulgated thereunder
(“Section 409A”) (together, the “Deferred Payments”) will be paid or otherwise
provided until Executive has a “separation from service” within the meaning of
Section 409A. Similarly, no severance payable to Executive, if any, pursuant to
this Agreement that otherwise would be exempt from Section 409A pursuant to
Treasury Regulation Section 1.409A-1(b)(9) will be payable until Executive has a
“separation from service” within the meaning of Section 409A.

(ii) Notwithstanding anything to the contrary in this Agreement, if Executive is
a “specified employee” within the meaning of Section 409A at the time of
Executive’s termination (other than due to death), then the Deferred Payments
that are payable within the first six (6) months following Executive’s
separation from service, will become payable on the first payroll date that
occurs on or after the date six (6) months and one (1) day following the date of
Executive’s

 

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separation from service. All subsequent Deferred Payments, if any, will be
payable in accordance with the payment schedule applicable to each payment or
benefit. Notwithstanding anything herein to the contrary, if Executive dies
following Executive’s separation from service, but prior to the six (6) month
anniversary of the separation from service, then any payments delayed in
accordance with this paragraph will be payable in a lump sum as soon as
administratively practicable after the date of Executive’s death and all other
Deferred Payments will be payable in accordance with the payment schedule
applicable to each payment or benefit. Each payment and benefit payable under
this Agreement is intended to constitute a separate payment for purposes of
Section 1.409A-2(b)(2) of the Treasury Regulations.

(iii) Any amount paid under this Agreement that satisfies the requirements of
the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the
Treasury Regulations will not constitute Deferred Payments for purposes of
clause (i) above.

(iv) Any amount paid under this Agreement that qualifies as a payment made as a
result of an involuntary separation from service pursuant to
Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the
Section 409A Limit (as defined below) will not constitute Deferred Payments for
purposes of clause (i) above.

(v) With regard to any provision herein that provides for reimbursement of costs
and expenses or in-kind benefits, except as permitted by Section 409A, (x) the
right to reimbursement or in-kind benefits shall not be subject to liquidation
or exchange for another benefit, (y) the amount of expenses eligible for
reimbursement, or in-kind benefits, provided during any taxable year shall not
affect the expenses eligible for reimbursement, or in-kind benefits, to be
provided in any other taxable year; provided, that this clause (v) shall not be
violated with regard to expenses reimbursed under any arrangement covered by
Section 105(b) of the Code solely because such expenses are subject to a limit
related to the period the arrangement is in effect and (z) such payments shall
be made on or before the last day of Executive’s taxable year following the
taxable year in which the expense occurred.

(vi) The foregoing provisions are intended to comply with the requirements of
Section 409A so that none of the severance payments and benefits to be provided
hereunder will be subject to the additional tax imposed under Section 409A, and
any ambiguities herein will be interpreted to so comply. The Company and
Executive agree to work together in good faith to consider amendments to this
Agreement and to take such reasonable actions which are necessary, appropriate
or desirable to avoid imposition of any additional tax or income recognition
prior to actual payment to Executive under Section 409A. Executive agrees and
acknowledges that the Company makes no representations or warranties with
respect to the application of Section 409A and other tax consequences to any
payments hereunder and, by the acceptance of any such payments, Executive agrees
to accept the potential application of Section 409A and the other tax
consequences of any payments made hereunder.

(d) Confidential Information Agreement. Executive’s receipt of any payments or
benefits under Section 6 will be subject to Executive continuing to comply with
the terms of Confidential Information Agreement (as defined in Section 10).

 

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(e) No Duty to Mitigate. Executive will not be required to mitigate the amount
of any payment contemplated by this Agreement, nor will any earnings that
Executive may receive from any other source reduce any such payment.

8. Definitions.

(a) Cause. For purposes of this Agreement, “Cause” is defined as (i) the willful
failure, disregard, or refusal by Executive to perform the services hereunder or
follow the reasonable instructions of the Board; provided, however, that any
willful failure, disregard, or refusal by Executive to perform the services
hereunder that can reasonably be cured shall not constitute Cause unless cure is
not effected, as determined in good faith by the Board, within thirty (30) days
after notice thereof is received by the Executive from the Company; (ii) any
willful or grossly negligent act by the Executive having the effect of injuring,
in a material way (whether financial or otherwise) as determined in good faith
by the Board, the business or reputation of the Company or any of its
subsidiaries or affiliates; (iii) Executive’s conviction of, guilty plea, or
plea of nolo contendere to any felony or a misdemeanor involving moral
turpitude; (iv) the determination by the Company, after a reasonable and good
faith investigation by the Company following a written allegation by an employee
of the Company, that the Executive engaged in some form of harassment prohibited
by law (including, without limitation, age, sex, disability, or race
discrimination) unless Executive’s actions were specifically directed by the
Board; or (v) material breach by the Executive of any provision of this
Agreement or any Confidential Information Agreement. For purposes of this
Agreement, no act (including any failure to act) shall be considered willful
unless done by Executive without a good faith belief that such act was in, or
not opposed to, the best interests of the Company, and the Company may not
terminate Executive’s employment for “Cause” for the sole reason of Executive’s
failure to meet the performance targets set forth by the Board or Compensation
Committee of the Board that are related to the Target Bonus.

(b) Change of Control. For purposes of this Agreement, “Change of Control” means
the occurrence of any of the following events:

(i) a change in the ownership of the Company which occurs on the date that any
one person, or more than one person acting as a group (“Person”), acquires
ownership of the stock of the Company that, together with the stock held by such
Person, constitutes more than fifty percent (50%) of the total voting power of
the stock of the Company; provided, however, that for purposes of this
subsection, the acquisition of additional stock by any one Person, who is
considered to own more than fifty percent (50%) of the total voting power of the
stock of the Company will not be considered a Change of Control; or

(ii) a change in the ownership of a substantial portion of the Company’s assets
which occurs on the date that any Person acquires (or has acquired during the
twelve (12) month period ending on the date of the most recent acquisition by
such Person or Persons) assets from the Company that have a total gross fair
market value equal to or more than fifty percent (50%) of the total gross fair
market value of all of the assets of the Company immediately prior to such
acquisition or acquisitions; provided, however, that for purposes of this
subsection (iii), the following will not constitute a change in the ownership of
a substantial portion of the Company’s assets: (A) a transfer to an entity that
is controlled by the Company’s stockholders immediately after the transfer, or
(B) a transfer of assets by the Company to: (1) a stockholder of the

 

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Company (immediately before the asset transfer) in exchange for or with respect
to the Company’s stock, (2) an entity, fifty percent (50%) or more of the total
value or voting power of which is owned, directly or indirectly, by the Company,
(3) a Person, that owns, directly or indirectly, fifty percent (50%) or more of
the total value or voting power of all the outstanding stock of the Company, or
(4) an entity, at least fifty percent (50%) of the total value or voting power
of which is owned, directly or indirectly, by a Person described in this
subsection (8)(b)(iii). For purposes of this subsection (iii), gross fair market
value means the value of the assets of the Company, or the value of the assets
being disposed of, determined without regard to any liabilities associated with
such assets.

For purposes of this definition, Persons will be considered to be acting as a
group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar business transaction
with the Company.

Notwithstanding the foregoing, a transaction will not be deemed a Change of
Control unless the transaction qualifies as a change in control event within the
meaning of Section 409A, as it has been and may be amended from time to time,
and any proposed or final Treasury Regulations and Internal Revenue Service
guidance that has been promulgated or may be promulgated thereunder from time to
time.

Further and for the avoidance of doubt, a transaction will not constitute a
Change of Control if: (i) its sole purpose is to change the state of the
Company’s incorporation, or (ii) its sole purpose is to create a holding company
that will be owned in substantially the same proportions by the Persons who held
the Company’s securities immediately before such transaction.

(c) Change of Control Period. For purposes of this Agreement, “Change of Control
Period” means the period that begins six (6) months prior to a Change of Control
and ends twelve (12) months following a Change of Control.

(d) Code. For purposes of this Agreement, “Code” means the Internal Revenue Code
of 1986, as amended.

(e) Disability. For purposes of this Agreement, “Disability” means that
Executive has determined to be eligible for long term disability benefits under
any plan or policy maintained by the Company and applicable to Executive or, in
the absence of any such plan or policy, been unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment for a period of ninety (90) consecutive days or more, or more than
one hundred and eighty (180) days within any twelve (12)-month period, in each
case, reasonably determined by the Board based upon the opinion of a qualified
physician selected by the Board with the approval of Executive or his
representative, which shall not be unreasonably withheld.

(f) Good Reason. For the purposes of this Agreement, “Good Reason” means
Executive’s resignation within thirty (30) days following the expiration of any
Company cure period (discussed below) following the occurrence of one or more of
the following, without Executive’s express written consent: (i) a material
breach of any provision of this Agreement by the Company; (ii) any material
reduction by the Company of Executive’s duties, responsibilities, or authority;
(iii) a

 

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material relocation of the Company’s principal place of business of Executive
outside of the San Diego Metropolitan area; (iv) a material diminution in
Executive’s annual base compensation; or (v) a material breach by the Company of
this Agreement. Executive will not resign for Good Reason without first
providing the Company with written notice of the acts or omissions constituting
the grounds for “Good Reason” within ninety (90) days of the initial existence
of the grounds for “Good Reason” and a reasonable cure period of not less than
thirty (30) days following the date the Company receives such notice during
which such condition must not have been cured.

(g) Section 409A Limit. For purposes of this Agreement, “Section 409A Limit”
will mean two (2) times the lesser of: (i) Executive’s annualized compensation
based upon the annual rate of pay paid to Executive during the Executive’s
taxable year preceding the Executive’s taxable year of Executive’s separation
from service as determined under Treasury Regulation
Section 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance
issued with respect thereto; or (ii) the maximum amount that may be taken into
account under a qualified plan pursuant to Section 401(a)(17) of the Internal
Revenue Code for the year in which Executive’s separation from service occurred.

9. Limitation on Payments. In the event that the severance and other benefits
provided for in this Agreement or otherwise payable to Executive (the
“Payments”) (i) constitute “parachute payments” within the meaning of
Section 280G of the Code and (ii) but for this Section 9, would be subject to
the excise tax imposed by Section 4999 of the Code, then Executive’s Payments
will be either:

(a) delivered in full, or

(b) delivered as to such lesser extent which would result in no portion of such
severance benefits being subject to the excise tax under Section 4999 of the
Code,

whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by Executive on an after-tax basis, of the greatest amount of
Payments, notwithstanding that all or some portion of such Payments may be
taxable under Section 4999 of the Code. If a reduction in the Payments
constituting “parachute payments” is necessary so that no portion of such
Payments is subject to the excise tax under Section 4999 of the Code, the
reduction shall occur in the following order: (1) reduction of the cash
severance payments; (2) cancellation of accelerated vesting of equity awards;
and (3) reduction of continued employee benefits. In the event that acceleration
of vesting of equity award compensation is to be reduced, such acceleration of
vesting shall be cancelled first for all performance-based vesting and second
for all time-based vesting, in each case in the reverse order of the date of
grant of Executive’s equity awards.

A nationally recognized certified professional services firm selected by the
Company, the Company’s legal counsel or such other person or entity to which the
parties mutually agree (the “Firm”) shall perform the foregoing calculations
related to the excise tax. The Company shall bear all expenses with respect to
the determinations by the Firm required to be made hereunder. For purposes of
making the calculations required by this Section, the Firm may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Code
Sections 280G and 4999. The Company and

 

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Executive will furnish to the Firm such information and documents as the Firm
may reasonably request in order to make a determination under this Section. The
Firm engaged to make the determinations hereunder shall provide its
calculations, together with detailed supporting documentation, to the Company
and Executive within fifteen (15) calendar days after the date on which
Executive’s right to the severance benefits or other payments is triggered (if
requested at that time by the Company or Executive) or such other time as
requested by the Company or Executive. Any good faith determinations of the Firm
made hereunder shall be final, binding, and conclusive upon the Company and
Executive.

10. Confidential Information. Executive agrees to execute the Company’s At-Will
Employment, Confidential Information, Invention Assignment, and Arbitration
Agreement (the “Confidential Information Agreement”) concurrently with the
execution of this Agreement. Nothing in Section 1 of the Confidential
Information Agreement shall be construed to limit in any way Executive’s rights
under this Agreement.

11. Non-Solicitation. Until the date one (1) year after the termination of
Executive’s employment with the Company for any reason, Executive agrees not,
either directly or indirectly, to solicit any employee of the Company (or any
parent or subsidiary of the Company) to leave Executive’s employment either for
Executive or for any other entity or person.

12. Assignment. This Agreement will be binding upon and inure to the benefit of
(a) the heirs, executors and legal representatives of Executive upon Executive’s
death and (b) any successor of the Company. Any such successor of the Company
will be deemed substituted for the Company under the terms of this Agreement for
all purposes. For this purpose, “successor” means any person, firm, corporation
or other business entity which at any time, whether by purchase, merger or
otherwise, directly or indirectly acquires all or substantially all of the
assets or business of the Company. None of the rights of Executive to receive
any form of compensation payable pursuant to this Agreement may be assigned or
transferred except by will or the laws of descent and distribution. Any other
attempted assignment, transfer, conveyance or other disposition of either
party’s rights or obligations without the express written consent of the other
party will be null and void.

13. Notices. All notices, requests, demands and other communications called for
hereunder will be in writing and will be deemed given (i) on the date of
delivery if delivered personally, (ii) one (1) day after being sent by a
well-established commercial overnight service, or (iii) four (4) days after
being mailed by registered or certified mail, return receipt requested, prepaid
and addressed to the parties or their successors at the following addresses, or
at such other addresses as the parties may later designate in writing:

If to the Company:

Pfenex

10790 Roselle St.

San Diego, CA 92121

Attn: Chairman of the Board of Directors

If to Executive:

at the last residential address known by the Company.

 

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14. Severability. In the event that any provision hereof becomes or is declared
by a court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement will continue in full force and effect without said provision.

15. Arbitration. The parties agree 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 service to
the Company, shall be subject to arbitration in accordance with the provisions
of the Confidential Information Agreement, and further agree that the
arbitration shall be conducted by a single arbitrator selected in accordance
with the JAMS Rules, as defined in the Confidential Information Agreement, who
shall be either a retired judge or an attorney licensed to practice in the State
of California as of the time of the arbitration.

16. Integration. This Agreement, along with the Confidential Information
Agreement, the Equity Documents, and the Indemnification Agreement as defined in
Section 24, represents the entire agreement and understanding between the
parties as to the subject matter herein and supersedes all prior or
contemporaneous agreements whether written or oral. With respect to equity
awards granted on or after the date of this Agreement, the acceleration of
vesting provisions provided herein will apply to such equity awards. This
Agreement may be modified only by agreement of the parties by a written
instrument executed by the parties that is designated as an amendment to this
Agreement. The terms of this Agreement shall survive the termination of
Executive’s employment for any reason to the extent necessary to enable the
parties to enforce their respective rights hereunder.

17. Waiver of Breach. The waiver of a breach of any term or provision of this
Agreement, which must be in writing, will not operate as or be construed to be a
waiver of any other previous or subsequent breach of this Agreement.

18. Headings. All captions and section headings used in this Agreement are for
convenient reference only and do not form a part of this Agreement.

19. Tax Withholding. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.

20. Governing Law. This Agreement will be governed by the laws of the State of
California (with the exception of its conflict of laws provisions).

21. Acknowledgment. Executive acknowledges that Executive has had the
opportunity to discuss this matter with and obtain advice from Executive’s
private attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.

22. Counterparts. This Agreement may be executed in counterparts, and each
counterpart will have the same force and effect as an original and will
constitute an effective, binding agreement on the part of each of the
undersigned.

 

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23. Nondisparagement. Both during the Employment Term and at all times
thereafter, regardless of the reason for termination, Executive shall not
disparage the Company, the Board, the Company’s affiliates, or their products or
services, and the Company shall not disparage, and shall instruct the
then-current members of the Board and its then-current senior executives not to
disparage, Executive. Nothing contained herein shall preclude any person from
enforcing the terms of this Agreement or providing truthful testimony in any
judicial or other governmental proceeding when required to do so by legal
process.

24. Indemnification Agreement. The Company and Executive shall enter into an
Indemnification Agreement (the “Indemnification Agreement”) in substantially the
form attached as Exhibit 10.4 to the Company’s Form S-1 Registration Statement
filed with the Securities and Exchange Commission on June 5, 2014. In the event
that the Company adopts a more favorable form of Indemnification Agreement, or
amendments to the form of Indemnification Agreement, for other executives or
Board members in the future, Executive shall be given the opportunity to enter
into a new or amended Indemnification Agreement on the same terms.

 

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by their duly authorized officers, as of the day and year first
above written.

COMPANY:

PFENEX INC.

 

By: /s/ Paul Wagner                                        
                                  Date: 8/3/17                                  
                                              Name: Paul
Wagner                                                                          
Title: CFO                                       
                                                  

EXECUTIVE:

 

/s/ Evert Schimmelpennink                                       
                       Date: 8/3/17                                   
                                             EVERT B. SCHIMMELPENNINK   

[SIGNATURE PAGE TO EXECUTIVE EMPLOYMENT AGREEMENT]

 

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SCHEDULE 1

 

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