Exhibit 10.1

SETTLEMENT AGREEMENT AND FULL AND FINAL RELEASE OF CLAIMS

1. This Settlement Agreement and Full and Final Release of Claims (“Agreement”)
is between Craig W. Philips (“Philips”) and Cell Therapeutics, Inc. (“CTI”). The
parties desire to settle any and all disputes between them.

2. Severance Payment. In consideration of Philips’ execution of this Agreement
and for other good and sufficient consideration as described herein, CTI will
pay Philips a total of Four Hundred Thirty-Five Thousand Five Hundred Dollars
($435,500.00) in severance, which is the equivalent of thirteen months’ salary
at the rate of Thirty-Three Thousand Five Hundred Dollars ($33,500.00) per
month, as follows: Twenty-five percent (25%) of the full amount shall be paid
within thirty (30) days of the Effective Date of this Agreement as defined in
Paragraph 20 herein, but no later than December 31, 2012, less legally required
deductions. This first payment shall be in the gross amount of $108,750.00. The
balance shall be paid in equal monthly installments in the gross amount of
$27,229.16 over a period of twelve months beginning with the first regular pay
date that is at least thirty (30) days following the first payment, without
interest, less legally required deductions. In the event CTI is delinquent in
making a payment due to Philips under the terms of this Agreement, CTI shall
have a five (5) business day grace period following written notice of
delinquency from Philips in which to make such payment. If payment is not made
during the grace period, CTI shall pay interest on the unmade payment at a
monthly interest rate of 1%, amortized daily.

3. COBRA Premiums. CTI will reimburse Philips for COBRA premiums for a period of
thirteen (13) months beginning October 1, 2012, within thirty (30) days of
receipt of evidence of Philips’ payment of such premiums. Philips acknowledges
that CTI has reimbursed him for his COBRA premium for October 1, 2012.

4. Payment of Attorneys’ Fees and Costs. CTI will make a payment of Ten Thousand
Dollars ($10,000.00), for attorneys’ fees and costs, to Davis Wright Tremaine,
within thirty (30) days of the Effective Date of this Agreement.

5. Stock Option Grants; Voting. All shares that Philips was entitled to, or
would have been entitled to through deferred vesting, have already been awarded
and have been exercised. Philips will discontinue all other vesting in any stock
option grants or restricted stock grants. Philips agrees to vote his existing
shares in CTI in a manner consistent with the recommendation of CTI’s board of
directors from the execution of this Agreement through October 13, 2013.

6. Resignations. Philips resigned from CTI on June 16, 2012. Execution of this
Agreement shall also constitute Philips’ resignation from all other positions he
held at CTI’s subsidiaries and affiliates, including all Board, Officer and
Director positions. In addition, Philips will return his current Aequus share
certificate in exchange for a new share certificate for 50,000 shares, and will
pay all taxes as applicable.

7. Full Release of Claims by Philips Against CTI. Philips agrees that in
exchange for the consideration outlined in Paragraphs 2 through 5 herein, and on
behalf of himself and his marital

 

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community, heirs, executors, successors and assigns, to release all known and
unknown claims that he currently has against CTI and any of its current and
former parents, subsidiaries, affiliates, related companies, joint ventures,
their predecessors and successors, and with respect to each such entity, all of
its past, present and future officers, directors, agents and/or employees
(collectively referred to as the “Released Parties”), except claims that the law
does not permit him to waive by signing this Agreement. This release includes,
but is not limited to, any and all claims or causes of action arising under:
(1) any federal, state, local or foreign law relating to employment
discrimination (including the Age Discrimination in Employment Act, 29 U.S.C. §
621 et seq., if applicable); (2) any federal, state, local or foreign law
relating to employment or termination rights and/or benefits (including the
Employee Retirement Income Security Act of 1974); and (3) any other basis for
legal or equitable relief whether based on express or implied contract, tort,
statute or other legal or equitable ground. Philips further acknowledges that
termination of his employment is permanent and the Released Parties have no
obligation to notify Philips of employment opportunities or to offer Philips
employment in any capacity after the Resignation Date. Philips understands that
he is not waiving any claims arising from events occurring after the date
Philips signs this Agreement.

It is understood and agreed that the waivers in this Agreement are not intended
to waive Philips’ rights: (a) to indemnification under any agreement with CTI,
any applicable provision of CTI’s Bylaws, or any directors and officers
liability insurance policy maintained by CTI, or pursuant to applicable law;
(b) under ERISA or applicable plan documents to receive any accrued vested
benefits and any benefits specifically reserved for him in this Agreement; or
(c) respecting CTI’s obligations under this Agreement.

8. Release of Claims by CTI Against Philips. CTI agrees that in exchange for the
foregoing release and Philips’ obligations under this Agreement, CTI and its
current and former parents, subsidiaries, affiliates, related parties, joint
ventures and their predecessors and successors, agree to release and forever
discharge all known and unknown claims, including attorneys’ fees and costs,
they currently have against Philips up to the date of this Agreement; provided,
however, that the foregoing release and discharge shall not be applicable to
Philips’ obligations under this Agreement.

9. Non-Admission Clause. Philips and CTI agree that this Agreement is not an
admission of guilt or wrongdoing by the other party or the Released Parties and
acknowledge that the Released Parties do not believe or admit that they have
done anything wrong. Philips has not filed or caused to be filed any lawsuit,
complaint, or charge with respect to any claim this Agreement purports to waive.
Philips understands that nothing in this Agreement prevents him from filing or
prosecuting a charge with any administrative agency relating to any released
claims; however, Philips agrees that he will not seek any damages or other
relief for himself, and waives any claim for damages, and/or other personal
relief.

Further, Philips agrees to cause the withdrawal or dismissal with prejudice of
any claim he has purported to waive in this Agreement. If he is ever awarded or
recovers any amount as to a claim he has purported to waive in this Agreement,
he agrees that the amount of any award or recovery shall be reduced by the
amounts he was paid under this Agreement, with the setoff being appropriately
adjusted for his return of any such amounts. If such a setoff is not effected,
Philips promises to pay, or assign his right to receive, the amount that should
have been setoff to CTI.

 

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10. Covenant Not to Compete. Philips agrees that for a period of twelve
(12) months beginning June 17, 2012, he will not participate as an employee,
director, owner, consultant, independent contractor or in any other position or
with any other entity that competes with CTI; in particular, he shall not work
with or for any entity whose work includes the classes of compounds currently in
development by CTI, including anthracenediones, paclitaxel conjugates, JAK
inhibitors, DNA minor groove binding agents, bisplatinates, recombinant genetic
technology generating polyamino acid spliced proteins or peptides.

11. Confidentiality and Non-Disparagement. Philips agrees to keep all details
surrounding his resignation and this Agreement in strict confidence except to
his immediate family and financial and legal advisors on a need-to-know basis,
unless required to by law, court order or subpoena. In the event that Philips
receives a court order or subpoena that would require him to disclose
information regarding his resignation and this Agreement, he agrees to notify
CTI in writing within three business days of his receipt of the order or
subpoena. Philips agrees to assert the attorney-client privilege with respect to
any privileged communications to and from Philips’ attorneys and legal support
personnel, and he has declined, and will continue to decline, to waive the
attorney-client privilege with respect to any such communications. Philips
agrees not to make any disparaging remarks about CTI or its products, services,
employees, officers or directors. CTI agrees that it and its executive officers
and directors will not make any disparaging remarks about Philips

12. Cooperation. For a period of three (3) years following the execution of this
Agreement, Philips also agrees, at CTI’s reasonable request, to cooperate with
CTI, its subsidiaries and affiliates, and any of their officers, directors,
agents, employees, attorneys and advisors in CTI’s investigation of, preparation
for, and prosecution or defense of any matter(s) brought by or against CTI or
any Released Party, including without limitation litigation concerning:
(a) facts or circumstances about which Philips has any actual or alleged
knowledge or expertise that was obtained during his employment with CTI or
(b) any of Philips’ acts or omissions, real or alleged, during Philips’
employment with CTI. Philips agrees that, upon CTI’s reasonable notice, he will
appear and provide full and truthful testimony in proceedings associated with
the above referenced matters, provided that CTI shall pay Philips for consulting
work at a rate of $195.00 per hour, to be capped at $1500.00 per day pay for any
activities under this paragraph and shall also reimburse Philips for all
reasonable travel expenses associated with such activities. CTI shall work with
Philips as reasonably practicable to schedule the activities contemplated by
this paragraph so as not to unreasonably interfere with Philips’ other
commitments. CTI shall promptly notify Philips in the event it receives any
subpoena or other notice of any governmental investigations of CTI in which
Philips may be requested by CTI to become involved.

13. Confidential CTI Information. Philips agrees to maintain and preserve all
confidential information and trade secrets of CTI of which he is aware. Such
Confidential Information includes, but is not limited to, information about
sales of any CTI products, the marketing of those products, and potential plans
or strategies for increasing sales of those products. Philips agrees that he
will not, unless he is legally compelled to do so by subpoena or court order and
then only after written notice at least five (5) days prior to the return date
of the subpoena or court order, discuss with, relate to, complain to, or bring
to the attention of any governmental agency, whether state, local or federal, or
any other person, including media, any of CTI’s Confidential Information and
trade secrets. Notice of subpoena or court order shall be delivered to the
attention of Legal Affairs, Cell Therapeutics, Inc., 3101 Western Avenue, Suite
600,

 

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Seattle WA. 98121. To the extent prohibited by law, this paragraph does not
prevent Philips from participating in government investigations.

14. Disclosure. The parties hereby agree that CTI is required by government and
other regulatory bodies, including but not limited to the SEC or foreign
equivalent, to disclose the terms of this Agreement. CTI may make reasonable
disclosures and issue relevant statements as necessary (e.g. Form 8-K). Philips
hereby authorizes and consents to the public disclosure of this Agreement for
such purposes in the form attached as Exhibit A. Any related disclosures
regarding Philips’ resignation shall be consistent with Exhibit A.

15. No Rehire. Philips understands and agrees that, as a condition of receiving
the consideration described in Paragraph 2 through 5 herein, he will not be
entitled to any future employment with CTI, its subsidiaries or affiliates.
Philips further agrees that he will not apply for or otherwise seek future
employment with or engagement by CTI, its subsidiaries or affiliates in any
capacity, including employee, independent contractor or vendor.

16. Return of CTI Property. Philips agrees that no later than October 26, 2012
he will return to CTI all laptops, iPads, iPhones, key cards, corporate credit
card and phone card, if any, and any other CTI equipment or property in his
possession or control, including but not limited to hardware, software, email
files, source code, memos, notes, OneNote notebooks, tables, spreadsheets,
PowerPoint decks, white papers, reports, financial or marketing data, status
reports, customer lists, research data and any other proprietary or confidential
data, documents and materials in any form or media (collectively, “CTI
Property”). Philips also agrees that he has permanently deleted all CTI Property
from any computer, electronic device, or storage device that is in his
possession, custody or control, including (without limitation) desktop and
laptop computers, mobile telephones, tablet devices, memory sticks, disks, and
hard drives.

17. Entire Agreement. Philips and CTI acknowledge that this Agreement contains
the entire agreement of CTI and Philips as to matters discussed in it and that
it merges any and all prior written and oral communications concerning those
matters. Other than what is expressly stated in this Agreement, no different or
additional promises or representations of any kind have been made to induce
Philips to sign this Agreement, which he signs freely and in the absence of any
coercion or duress whatsoever. Philips understands that the terms of this
Agreement may not be modified, amended or superseded except by a subsequent
written agreement signed by Philips and the undersigned CTI representative.

18. Enforcement, Jurisdiction and Venue; Attorneys’ Fees. Philips agrees that
the laws of the State of Washington will govern in any action brought by either
party to interpret or enforce the terms of this Agreement, without regard to
principles of conflicts of laws that would call for the application of the
substantive law of any jurisdiction other than the State of Washington. Philips
further agrees that any dispute arising in connection with the execution and/or
operation of this Agreement will be determined in a state or federal Washington
court of competent jurisdiction, to whose personal jurisdiction Philips agrees
to submit. The substantially prevailing party in any such action shall be
entitled to its reasonable attorneys’ fees and costs, including fees and costs
on appeal. The provisions of this Agreement are severable, and if any part of
this Agreement is found to be unenforceable (with the exception of the Release
contained in Paragraph 7), the remainder of this Agreement will remain fully
valid and enforceable. To the

 

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extent any terms of this Agreement are called into question, all provisions
shall be interpreted in a manner that would make them consistent with current
law.

19. Remedy for Certain Breaches. Philips acknowledges that in consideration for
the covenants and provisions set forth in Paragraphs 10, 13 and 15 of this
Agreement, CTI has agreed to the consideration provided herein, and that the
provisions of Paragraphs 10, 13 and 15 are required for the fair and reasonable
protection of CTI. Philips further agrees that a breach of any of the covenants,
obligations or agreements set forth in Paragraphs 10, 13 and 15 will result in
irreparable and continuing damage to CTI in its business and property for which
there will be no adequate remedy at law, and that Philips agrees that in the
event of any such breach CTI and its successors or assigns shall be entitled to
injunctive relief, without the payment of bond, to restrain such breach by
Philips, and to such other and further relief (including damages) as is proper
under the circumstances.

20. Older Worker Benefit Protection Act. In compliance with the terms of the Age
Discrimination in Employment Act and the Older Worker Benefit Protection Act,
Philips expressly acknowledges that he has consulted with counsel prior to
signing this Agreement, that he understands its terms, that he is not waiving
rights or claims arising after the date he signs this Agreement, and that he is
receiving consideration for his release of claims to which he would not
otherwise be entitled. Philips understands that he may take up to twenty-one
(21) days to consider this Agreement. Philips understands that he may sign this
Agreement before the end of the 21-day consideration period but may not be
required to do so. Philips understands that after he signs this Agreement, he
has an additional seven (7) days to revoke the Agreement by providing written
notice of such revocation to the attention of Legal Affairs, Cell Therapeutics,
Inc., 3101 Western Avenue, Suite 600, Seattle WA 98121. Philips understands that
this Agreement shall not become effective or enforceable until the eighth
(8th) day following the date he signs and returns this Agreement, provided that
he does not timely revoke the Agreement (the “Effective Date”).

I ACKNOWLEDGE THAT I HAVE CAREFULLY READ AND HAVE VOLUNTARILY SIGNED THIS
AGREEMENT AND RELEASE, THAT I FULLY UNDERSTAND ITS FINAL AND BINDING EFFECT,
THAT BY SIGNING I INTENDED TO FULLY AND FINALLY RELEASE ANY AND ALL CLAIMS I MAY
HAVE AGAINST CTI AND THE OTHER RELEASED PARTIES DESCRIBED IN PARAGRAPH SEVEN
(7) ABOVE, AND THAT, PRIOR TO SIGNING THIS AGREEMENT AND RELEASE, I HAVE BEEN
ADVISED OF MY RIGHT TO CONSULT, AND HAVE BEEN GIVEN ADEQUATE TIME TO REVIEW MY
LEGAL RIGHTS WITH AN ATTORNEY OF MY CHOICE.

 

CRAIG W. PHILIPS:      

/s/ Craig W. Philips

     

October 25, 2012

      Date

 

 

 

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CELL THERAPEUTICS, INC.:

        

By:

  

/s/ Louis A. Bianco

     

October 24, 2012

     

Louis A. Bianco

Executive Vice President, Finance & Administration

   Date            

 

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