EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is by and between Peregrine Pharmaceuticals, Inc., a Delaware corporation (“Employer” or the “Company”) and Steven W. King (“Executive”).

1.    Employment .  Upon the terms and conditions hereinafter set forth, Employer hereby employs Executive to serve as the President and Chief Executive Officer of the Company (“CEO”), and Executive hereby accepts such employment under the terms and conditions set forth herein.

2.    Effective Date .  The effective date of the Agreement shall be March 18, 2009 (the “Effective Date”).  The employment relationship pursuant to this Agreement shall be for an initial two   year period commencing on the Effective Date set forth above (“Initial Term”), unless sooner terminated in accordance with Section 7 below.  This Agreement will automatically renew for one (1) year periods (“Subsequent Term”), unless either party gives to the other written notice at least ninety (90) days prior to the commencement of the next year’s period, of such party’s intent not to renew this Agreement.

3.    Duties .  Executive shall perform such duties as are customarily performed by a President and Chief Executive Officer, and such other duties and responsibilities that may be assigned to him by the Board of Directors.  Specifically, Executive shall manage the Company’s operations, and perform such duties and responsibilities as set forth in the CEO’s job description.

Executive shall report to the Board of Directors and have such authority as is delegated by the Board of Directors.  Executive shall be governed by the policies and practices established by the Company.  Employer requires that:  (i) Executive will devote his utmost knowledge and best skill to the performance of his duties; (ii) Executive shall devote his full business time (not less than 40 hours per week) to the rendition of such services, subject to absences for customary vacations and for temporary illness; and (iii) Executive will not engage in any other gainful occupation which requires his personal attention and/or creates a conflict of interest with his job responsibilities under this Agreement without the prior written consent of the Board of Directors of the Company, with the exception that Executive may personally trade in stock, bonds, securities, commodities or real estate investments for his own benefit to the extent permitted by the provisions herein and applicable law.

Executive’s job performance will be reviewed annually.  Executive acknowledges and understands that performance reviews do not necessitate or correlate with salary increases and that a favorable performance review neither guarantees continued employment nor increased compensation.

4.    At-Will Employment .  Executive and Employer agree that Executive’s employment may be terminated by Executive or by Employer, with or without cause in accordance with paragraph 7 of this Agreement.  Executive and Employer expressly agree that this provision is intended by Executive and Employer to be the complete and final expression of their understanding regarding the terms and conditions under which Executive’s employment may be terminated.  Executive and Employer further understand and agree that no representation contrary to this provision is valid, and that this provision may not be augmented, contradicted or modified in any way, except in writing signed by Executive and Chairperson of the Compensation Committee.

5.1   Base Salary .  Effective May 7, 2006, Executive shall be paid an annual base salary of Three Hundred Fifty-Three Thousand Seven Hundred Fifty Dollars ($353,750), payable according to Employer's payroll schedule and subject to applicable state and federal withholdings and other payroll deductions.  Such annual base salary shall be automatically increased by 5% on each of the following anniversary dates:  May 1, 2007 and May 1, 2008.  The payment of such annual increase and retroactive pay shall not be paid and shall be deferred until the sooner of (i) a change in control event, (ii) upon termination of employment (iii) or upon the approval of such payment by the Compensation Committee of the Board.

5.2   Bonus .  In addition to Executive’s base salary, Executive may be eligible to receive an additional discretionary bonus of up to one hundred percent (100%) of his then in effect base salary, as determined by the Board of Directors in their sole discretion (“Target Bonus”).  Executive acknowledges that although a discretionary bonus may be provided by the Company, any such bonus is neither required nor guaranteed by this Agreement.

5.3   Stock Options .  Executive may also be eligible to receive stock options as determined by the Board of Directors in their sole discretion.  Any such stock option will be granted pursuant to, and will be subject to the terms of the Company’s Stock Option Plans.

6.1   Benefits .  Executive shall, in accordance with Company policy and the terms of the applicable plan documents, be eligible to participate in benefits under any Company benefit plan or arrangement which may be in effect from time to time and made available to its executive management employees.

6.2   Paid-Time-Off (PTO) .  Executive shall earn and accrue paid-time-off covering vacation and sick time benefits at the rate of twenty (20) days per year for employment periods of up to five years of service.  The PTO accrual rate shall automatically increase by five (5) additional days for each additional 5 years of service up to maximum of thirty (30) days per year after 10 years of service.  For example, after five years of service, the annual PTO accrual rate shall increase to twenty-five (25) days.  Unused PTO shall carry over to the next year, but Executive shall cease accruing further PTO at any time Executive has accrued two times his annual accrual rate.  Unused PTO days which are not in excess of two-times the annual accrual rate shall be paid in a cash lump sum payment promptly after Executive’s termination of employment.

6.3   Expenses .  Employer shall reimburse Executive on the 1 ^st and 15 ^th of each month for receipts Executive submits for all reasonable and necessary travel and other business expenses incurred by Executive in the performance of Executive’s duties hereunder, consistent with Employer’s normal expense reimbursement policy.

7.1   Termination With Cause .  If Executive (a) breaches in any material respect or fails to fulfill in any material respect fiduciary duty owed to Employer; (b) breaches in any material respect this Agreement or any other confidentiality or non-solicitation, non-competition agreement between Employer and Executive; (c) pleads guilty to or is convicted of a felony; (d) is found to have engaged in any reckless, fraudulent, dishonest or grossly negligent misconduct, (e) fails to perform his duties to the Company, provided that Executive fails to cure any such failure within thirty (30) days after written notice from Employer of such failure, provided further, however, that such right to cure shall not apply to any repetition of the same failure previously cured hereunder; or (f) violates any material rule, regulation or policy of the Company that may be established and made known to Employer's employees from time to time, including without limitation, the Company Employee Handbook, a copy of which has been provided to Executive, Employer may terminate immediately his employment and Executive shall have no right to receive any compensation or benefit hereunder after such termination other than base salary and PTO earned or accrued but unpaid as of the date of termination (collectively “Standard Entitlements”).  Notwithstanding the foregoing, Executive shall not be terminated for Cause pursuant to Subsection 7.1, unless and until Executive has received written notice of the proposed termination for Cause, including details of the bases for such termination, and Executive has had an opportunity to be heard before at least a majority of the Board. Executive shall be deemed to have had such an opportunity if written notice is given to him at least ten (10) days in advance of a meeting and Executive has the actual opportunity to be heard, at that meeting, by no less than a majority of the Board on the issues of his proposed termination. Executive shall not be entitled to any bonus, or proration thereof, if terminated under this paragraph.

7.2   Termination Without Cause .  As stated in Section 4 of this Agreement, Executive or the Company may at any time terminate Executive’s employment with or without cause.  If the Company terminates Executive’s employment within the Initial or Subsequent Terms and such termination is not a Termination With Cause as defined above, the Company shall continue to pay Executive’s base salary then in effect as of the date of such termination on a pro-rated basis according to Employer’s payroll schedule and subject to applicable withholdings for a period of twelve months or the remainder of the two-year time period from the Effective Date, whichever time period is greater (collectively “Severance”), provided only if Executive signs a general release.  Such Severance shall include the payment (“grossed-up” for all employee taxes at the state and federal bonus rates) by Company of group insurance benefits for Executive and family, including health and dental insurance during the Severance period and the payment of the proration of any Target Bonus.  In addition, Executive shall have up to two years from the date of Termination to exercise any vested and outstanding stock options, not to exceed the original expiration date of the option agreement.

In order to be entitled to the Severance reflected herein, Executive must sign a general release of all claims known and unknown, against Employer, its officers and directors, agents and employees and any related entities or persons.  Nothing herein will be construed to limit or modify the duty of Executive to mitigate Executive’s damages in the event Employer terminates Executive’s employment without Cause.

7.3   Termination Upon Death or Disability .  Executive’s employment shall terminate upon his death or disability ("disability" being defined as any mental or physical condition which, in the reasonable opinion of a mutually agreed upon licensed physician and/or psychiatrist (as the case may be), renders Executive unable or incompetent to carry out Executive's duties under this Agreement, with or without reasonable accommodation, for a period of at least six months).  In the event of a termination of Executive’s employment for death or disability, Executive shall have no right to receive any further compensation or benefit hereunder after such termination other than the payment by Company of group insurance benefits previously provided to Executive for a period of twelve months, and base salary and PTO earned or accrued but unpaid as of the date of termination.

7.4   Change of Control .  In the event of any merger, acquisition or consolidation of the Company where the Company is not the surviving or resulting corporation, or upon transfer of all or substantially all of the assets of the Company, and whereby Executive is terminated within three (3) months prior or thirty-six (36) months after the aforementioned events in this paragraph 7.4, or if Executive’s position is not in a substantially similar position or position satisfactory to Executive, at Executive’s sole discretion, or if Executive’s then current Base Salary and related benefits are reduced or negatively impacted in any material respect, or if Company relocates Executive’s principal place of work to a location more than fifty (50) miles from the original location, without Executive’s prior written approval (“Change of Control”), then if Executive, within twelve (12) months after an event constituting a Change of Control, elects to resign his employment with the Corporation, Executive shall be paid a lump sum amount equivalent to thirty-six months of Executive’s base salary then in effect plus 100% of his Target Bonus upon the execution of a general release, which amount is due and payable within ten (10) business days of Executive notice under this section 7.4.  Such lump sum payment shall be considered to be in full and complete satisfaction of any and all rights which Executive may enjoy under the terms of this Agreement, except that any and all of Executive’s unvested stock options shall become fully vested and exercisable and the exercise period shall be extended for two (2) additional years from the date of the Change of Control, not to exceed to the original expiration date of the option grant.  In addition, Severance shall include the payment (“grossed-up” for employee taxes at the state and federal bonus rates) by Company of group insurance benefits for Executive and family, including health and dental insurance during the entire thirty-six month Severance period.

7.5   Voluntary Resignation or Resignation For Good Reason.   Other than pursuant to the circumstances of a Change of Control, as defined in Section 7.4, in which case Section 7.4 shall apply, Executive may voluntarily resign Executive’s position with Company, at any time, on thirty (30) days advance written notice to Company and Company shall pay Executive his Base Salary during the minimum 30 day notice period plus any accrued and unpaid benefits as of the termination date.  In the event Executive provides ninety (90) days advance written notice (“Extended Notice Period”) to Company, Company shall pay Executive his Base Salary then in effect and shall continue to provide other contractual benefits including group insurance benefits during the Extended Notice Period and for a period of nine (9) months after the Extended Notice Period provided Executive makes himself telephonically available to the Board of Director and the executive team for up to 2 hours per week.  If, within ninety (90) days of the initial existence of the condition(s) that constitute Good Reason, Executive:(a) provides written notice to the Board of his intention to resign his employment for Good Reason; (b) provides written notice to the Board of the grounds that Executive believes he has to resign for Good Reason and within thirty (30) days of receipt of such written notice, the Board has not cured by eliminating the condition(s) that constitute Good Reason; and (c) Executive actually terminates his employment within 12 months following the initial existence of the Good Reason condition, then Executive shall be entitled to receive the Standard Entitlements to the date of resignation plus the Severance described in paragraph 7.2 above, provided Executive complies with the conditions in paragraph 7.2 above.  All other Company obligations to Executive pursuant to this Agreement will become automatically terminated and completely extinguished.  Executive will be deemed to have resigned with “Good Reason” in the following circumstances:  (a) Company relocates Executive’s principal place of work to a location more than fifty (50) miles from the original location, without Executive’s prior written approval; (b) Executive’s position and/or duties are modified so that Executive’s duties are no longer consistent with the position of Chief Executive Officer; (c) Executive’s Base Salary and related benefits as set forth in paragraph 5.1, as adjusted from time to time, are reduced without Executive’s written authorization.