Exhibit 10.1

January 29, 2009

To the Respective Holders of Cell Therapeutics, Inc. Series A, B, C and D
Preferred Stock:

Cell Therapeutics, Inc. (“CTI”) solicits your cooperation in a proposed exchange
transaction. If the exchange transaction is not successfully executed, CTI will
probably be forced to seek bankruptcy protection. Given the state of CTI’s
operations/cash position and the large amount of debt which stands ahead of the
preferred stock, it is likely that bankruptcy would have a very unhappy result
for the preferred stock.

In the aggregate, CTI’s outstanding preferred stock was purchased for
approximately $8.0 million. We believe the current fair value of the preferred
stock is a small fraction of its initial purchase price.

The preferred stock’s existing rights look good on paper but are highly unlikely
to be realizable in practice. Working in cooperation with CTI and each other to
effect the exchange transaction is the best hope for the preferred stockholders
to realize a profit on their CTI investment, or at least to avoid loss.

Specifically, it is proposed that, by signing a copy of this letter where
indicated below and returning it to CTI, you will agree to exchange all your
existing preferred stock for the same number of shares of newly-created Series F
Preferred Stock (“Series F”).

The Series F will not have many bells and whistles but will have a sharply
reduced conversion price and therefore will have a significantly greater upside
leverage potential than the existing preferred stock. We are attaching a draft
copy of the proposed Series F charter document (and we urge you to read it to
see all the provisions in complete detail), but a simplified summary of the key
provisions would include:

1. Convertible at the holder’s option into common stock at $0.14 per share (a
very significant decrease from the current preferred stock series’ conversion
price), beginning on the later of April 1, 2009 or effectiveness of CTI’s
authorized-common-shares increase; not convertible before that date. (Needless
to say, all per-share figures in this letter shall be proportionally adjusted
for any reverse stock split, etc. occurring after the date of this letter.)
Because you would hold the new preferred stock and then its underlying common
stock through Securities Act Section 3(a)(9) exchanges, the holding periods
would tack back to your original purchase date; that means that (assuming you
are not a CTI affiliate) the common stock would be freely tradeable in your
hands under SEC Rule 144(b) [formerly Rule 144(k)] regardless of the status of
CTI’s registration statements and prospectuses.

2. No automatic or voluntary redemption by the holder. No Triggering Events.

3. No dividends other than pro rata with dividends on common, if any.

4. CTI can call the Series F at its stated value any time (on 20 days’ notice)
after December 31, 2009 or after the day the common stock has held a $0.28
market price for 10 consecutive trading days, whichever comes first. If the
Series F conversion feature is in-the-money, this will enable time for
conversion at the $0.14 conversion price.

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5. The Series F votes, together with the Common class, on an
as-if-converted-to-Common basis (even before April 1, 2009, when it is not
technically convertible yet).

6. No special protective provisions other than as required by law, other than a
prohibition on new series of preferred stock senior to the Series F.

Closing conditions applicable to the exchange transaction are:

1. To eliminate concerns that other current preferred stock holders could gain a
relative advantage by not participating in this plan of reorganization, it is a
closing condition to the swap that 100% in interest of all currently outstanding
preferred stock shall have been committed via the respective holders’ signatures
of counterparts of this letter agreement by no later than the close of business
on Monday, February 2, 2009. (Provided, that CTI may in its discretion lower
this percentage to as low as 82% in interest of the currently outstanding
preferred stock.)

2. The NASDAQ Listing of Additional Shares office shall have confirmed to CTI,
in response to CTI’s January 23, 2009 letter describing the exchange transaction
(and any supplements to such letter), that the exchange transaction will not be
integrated with the original preferred stock purchases (or with any other CTI
transaction) so as to require CTI shareholders approval of the exchange
transaction under NASDAQ Stock Market Rule 4350(i)(1).

The closing of the swap will, in fact, become effective one business day after
CTI notifies the holders that the applicable percentage threshold condition and
the NASDAQ condition have been satisfied.

Additional requirements applicable to the exchange transaction are:

1. Each participating holder, by signing below, agrees to from and after the
closing of the swap vote for/consent to any CTI-proposed stock split, reverse
stock split or share authorization increase with regard to CTI common stock, as
long as the holder owns Series F or the underlying common.

2. Each participating holder, by signing below, represents and warrants that it
is the record owner of such preferred stock and agrees to deliver its existing
preferred stock share certificate(s) to CTI, free and clear of all liens,
encumbrances and adverse claims, by no later than three business days after the
closing of the swap. However, even if the holder breaches the agreement by
failing to deliver these existing preferred stock share certificate(s), these
existing preferred stock share certificate(s) shall be void and shall no longer
represent CTI securities.

3. Each participating holder, by signing below, consents (as a member of its
series, and looking to the attainment of a consent by the holders of at least
67% of the shares of such series) to all of the transactions contemplated by the
exchange transaction as described in this letter (and to all effects of such
transactions).

4. Each participating holder, by signing below, hereby agrees to and hereby
does, effective upon the closing of the swap, release and discharge CTI and its
affiliates and agents from any and all claims, liabilities and causes of action,
in law, equity or otherwise, which arose from or were related to the holder’s
CTI Series A, B, C and/or D Preferred Stock (expressly agreeing and
understanding that such release applies also to all unknown, unsuspected and
unanticipated claims,

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liabilities and causes of action which arose from or were related to the
holder’s CTI Series A, B, C and/or D Preferred Stock, and expressly waiving any
and all rights and benefits conferred upon the holder by all relevant federal
and state statutes and common law principles related to such application of such
release).

In connection with the proposed exchange transaction, CTI makes the following
representations and warranties to each respective holder:

(a) The offer and issuance of the Series F is and will be (and the offer and
issuance of common stock upon conversion thereof is and will be) exempt from
registration under the Securities Act of 1933, as amended, pursuant to the
exemption provided by Section 3(a)(9) thereof. As a result of the foregoing, and
assuming such holder is not and does not become an affiliate of CTI, the common
stock issuable upon conversion of Series F shall be freely tradable by such
holder.

(b) CTI has the requisite power and authority to enter into this letter
agreement and, upon the time for the closing under this letter agreement and
thereafter, CTI shall have the requisite power and authority to perform its
obligations under this letter agreement and to issue the Series F (and, upon
conversion, the shares of common stock issuable upon conversion of the Series F)
in accordance with the terms hereof. The execution and delivery of this letter
agreement by CTI, and the consummation by CTI of the transactions contemplated
hereby, including, without limitation, the issuance of the Series F (and, upon
conversion, the shares of common stock issuable upon conversion of the Series
F), have been duly authorized by CTI’s board of directors, and (other than any
filings as may be required by any federal and state securities agencies and the
filing of Articles of Amendment to create the Series F and, after approval by
CTI’s shareholders, to increase CTI’s authorized number of shares of common
stock) no further filing, consent or authorization is required by CTI, its board
of directors or its shareholders. This letter agreement has been duly executed
and delivered by CTI, and constitutes the legal, valid and binding obligations
of CTI, enforceable against CTI in accordance with its terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies.

(c) The Series F (and, upon conversion, the shares of common stock issuable upon
conversion of the Series F), when issued pursuant to the terms hereof, will be
validly issued, fully paid and nonassessable and free from all taxes, liens,
charges and other encumbrances with respect to the issue thereof (other than the
voting agreement described herein).

(d) CTI and its board of directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Articles of Incorporation or
other organizational document or the laws of the jurisdiction of its
incorporation or otherwise which is or could become applicable to such holder as
a result of the transactions contemplated by this letter agreement, including,
without limitation, CTI’s issuance of the Series F.

For avoidance of misunderstanding: each holder agreeing to this proposal will be
exchanging a security with the following rights for a new security which lacks
such rights (and also lacks certain other rights of the existing preferred
shares):

1. The holder’s right to optionally redeem for cash in February, April, July or
December 2009.

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2. The holder’s right to redeem for cash as a result of a past or future
Triggering Event.

3. The holder’s right to seek, for redemption as a result of a Triggering Event,
more than 100% of Stated Value.

4. Accrued dividends to date.

5. Future dividend accumulations.

6. Certain series-level protective provisions.

7. Registration rights.

8. Liquidated damages and interest.

9. Certain restrictions against issuer-initiated redemptions.

We believe you will conclude that, under all the circumstances, the proposed
exchange transaction is nonetheless a superior deal for you — both to avoid an
immediate loss and to preserve the potential for future upside if CTI survives
and thrives. Although $0.14 per share is above CTI’s current market value, it is
a significant reduction in conversion price from the current preferred stock’s
conversion prices; this would provide upside potential leverage which is
currently absent.

To accept this proposal, please sign below and return to CTI by emailing to each
of jbianco@ctiseattle.com, ayamamoto@ctiseattle.com and htrubitt@sycr.com as
soon as possible. (Please note the close-of-business February 2, 2009 hard
deadline.) Due to the press of time and the number of holders, we will not be in
a position to undertake individual negotiations. However, if you have any
questions about the background or operation of the exchange transaction, please
call Louis Bianco at (206) 272-4004 or our lawyer Hayden Trubitt at
(858) 720-2166.

 

Very truly yours, /s/ James A. Bianco, M.D. James A. Bianco, M.D. Chief
Executive Officer

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COUNTERPART SIGNATURE BLOCK FOR HOLDERS (RE CTI PREFERRED STOCK EXCHANGE
TRANSACTION LETTER AGREEMENT)

We hereby irrevocably agree to participate fully in the preferred stock exchange
transaction described in the above letter agreement, and we agree to and do make
all of the agreements and covenants and give the release set forth above, all
subject to the closing conditions expressly stated above.

 

Name of Holder:     By:     Title: