Exhibit 10.1

CELL THERAPEUTICS, INC.

JAMES BIANCO EMPLOYMENT AGREEMENT

This Employment Agreement is entered into by and between Cell Therapeutics, Inc.
(the “Company”), and James A. Bianco (the “Executive”) (the “Agreement”) and
effective January 1, 2011 (the “Effective Date”). This Agreement will
automatically terminate on December 31, 2012 (the “Termination Date”); provided,
however, that this Agreement shall be automatically renewed, and Executive’s
employment hereunder shall be automatically extended, for one (1) additional
year on the Termination Date and each anniversary of the Termination Date
thereafter, unless either party gives written notice at least sixty (60) days
prior to the Termination Date (or any anniversary of the Termination Date
thereafter) of such party’s desire to terminate this Agreement on such date (a
“Non-Renewal Notice”); further provided that Executive’s employment may be
terminated at any time pursuant to Section 2 subject to the severance provisions
of Section 7.

1. Duties and Scope of Employment.

(a) Positions and Duties. As of the Effective Date, Executive will continue to
serve as Chief Executive Officer of the Company reporting directly to the
Company’s Board of Directors (the “Board”). Executive will render such business
and professional services in the performance of his duties, consistent with
Executive’s position within the Company, as will reasonably be assigned to him
by the Board.

(b) Board Membership. During Executive’s employment, at each annual meeting of
the Company’s stockholders at which Executive’s term as a member of the Board
has otherwise expired, the Company will nominate Executive to serve as a member
of the Board. Executive’s service as a member of the Board will be subject to
any required stockholder approval. While a member of the Board, Executive will
be permitted to attend all meetings of the Board and executive sessions thereof,
on substantially the same basis as other members of the Board, except as is
prohibited by applicable law or listing standard and except any meeting of the
Independent Directors held in an executive session. Notwithstanding the
preceding sentence, Executive will not have the right to attend any portion of a
meeting or executive session where the item of discussion relates to Executive’s
employment, including (but not limited to) his compensation, performance, and/or
service on the Board.

(c) Obligations. During Executive’s employment, Executive will perform his
duties faithfully and to the best of his ability and will devote his full
business efforts and time to the Company. For the duration of Executive’s
employment, Executive agrees not to actively engage in any other employment,
occupation or consulting activity for any direct or indirect remuneration
without the prior written approval of the Board. Notwithstanding the foregoing,
Executive may serve on civic or charitable boards, fulfill speaking engagements
and manage personal investments, provided that they do not materially interfere
with Executive’s responsibilities and are otherwise not competitive and do not
conflict with the Company’s business in any manner. Executive may also serve in
non-executive roles (including as a non-executive chairman of a board or a
similar role) for other entities, provided Executive receives

 

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prior written approval from the Board, which approval shall not be unreasonably
withheld. As of the Effective Date, the Board has approved Executive’s role as a
consultant and as a member of the Board of Directors of Aequus Biopharma, Inc.
Executive shall comply with the Company’s policies and rules, as they may be in
effect from time to time during Executive’s employment.

2. At-Will Employment. The parties agree that the Executive’s employment with
the Company constitutes “at-will” employment and may be terminated at any time
with or without cause or notice. Executive understands and agrees that neither
his 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 his employment with the
Company.

3. Compensation.

(a) Base Salary. During Executive’s employment, the Company will pay Executive
as compensation for his services a base salary at the annualized rate of Six
Hundred Fifty Thousand Dollars ($650,000) (the “Base Salary”); provided that the
Compensation Committee of the Board (the “Committee”) shall periodically review
such Base Salary and, in its sole discretion after due consideration, determine
to maintain or increase such Base Salary for the remainder of Executive’s
employment. The Base Salary will be paid periodically in accordance with the
Company’s normal payroll practices and be subject to the usual, required
withholding.

(b) Annual Bonus. During Executive’s employment, Executive will be eligible to
earn an annual performance bonus each calendar year based upon Executive’s
actual achievement for the calendar year relative to certain specified objective
or subjective performance goals, as determined by the Committee in its sole
discretion. Specifically, Executive will be eligible to earn a target bonus for
a calendar year of performance based upon Executive’s achievement of specified
reasonable and achievable individual, financial and/or business goals (the
“Target Bonus Goals”), which goals are established, after consultation with
Executive, by the Committee no later than ninety (90) days after the beginning
of each calendar year of performance. Executive will be eligible to receive a
target bonus of at least fifty percent (50%) of his Base Salary upon one hundred
percent (100%) achievement of the Target Bonus Goals. Executive may be eligible
to earn a greater bonus amount (up to one hundred and twenty-five percent
(125%) of his Base Salary) if actual performance exceeds the Target Bonus Goals.
For purposes of clarity, the Committee may approve individual Target Bonus Goals
which, if achieved, will result in some portion of the target bonus being
achieved, as determined by the Committee in its’ sole discretion. The Committee
will determine the specific bonus goals, targets and bonus formula each year and
may also, in its’ sole discretion, approve discretionary bonuses in any amount
at any time.

Notwithstanding anything stated herein to the contrary, Executive must be
employed by or providing services to the Company on the date bonus payments are
made to be eligible to receive any target or additional bonus amounts (Executive
will not receive any target or additional bonus amounts if Executive’s service
terminates, for any reason, prior to the date either such bonus amount is paid).
The Committee will generally determine annual bonuses for a particular year
within ninety (90) days after the end of that year.

 

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(c) Equity Compensation. During Executive’s employment, Executive will be
eligible to receive equity awards at the discretion of the Board or the
Committee, as applicable, under and pursuant to the terms of the Company’s
equity plans. As the outstanding performance-based equity awards held by
Executive and the other senior executive officers of the Company are scheduled
to expire on December 31, 2011, the Committee intends to develop a successor
program of equity awards for the Company’s executive officers for the period
following expiration of such awards and to provide for Executive to participate
in such program, subject to his continued employment through the adoption of
such new program, on such terms and conditions as the Committee shall determine
consistent with his position as Chief Executive Officer.

4. Executive Benefits. During Executive’s employment, Executive will be entitled
to the benefits set forth in this Section 4.

(a) Health Benefits. Executive will be entitled to participate in the employee
benefit plans currently and hereafter maintained by the Company and generally
available to other senior executives of the Company, including, without
limitation, the Company’s group medical, dental, vision, and flexible-spending
account plans. To the extent the Company cancels or changes the benefit plans
and programs generally available to other senior executives of the Company, the
Company reserves the right to cancel or change the benefit plans and programs it
offers to Executive on an equivalent basis. In addition, the Company shall
reimburse Executive for his retainer fees for physician concierge services (MD2)
each year, subject to a maximum cap on such reimbursements of Fifteen Thousand
Dollars ($15,000) for each year.

(b) Life/Disability Insurance. The Company will pay the annual premiums for
universal life insurance (or other non-term life insurance) for the benefit of
Executive and his beneficiaries, with a policy coverage amount of not less than
Five Million Dollars ($5,000,000). Furthermore, the Company will provide, at
Executive’s expense, disability insurance for the benefit of Executive.
Executive’s Base Salary will be increased by the amount of the annual premium
for such disability coverage and the Company’s records will reflect that the
premiums for the disability policy have been paid by the Executive. The above
benefits are subject to availability at reasonable cost and any limitations
resulting from Executive’s physical condition; and provided that in no event
shall the premiums for the life and disability insurance contemplated by this
Section 4(b) for any particular year exceed Fifty Thousand Dollars ($50,000) in
the aggregate (such cap shall be adjusted annually based on the cost of living
adjustments applicable to U.S. social security benefits beginning with calendar
year 2012). Executive shall not be entitled to any tax gross-up for these
benefits. In the event the premiums exceed such cap, the Company shall pay the
annual premiums for such coverage as may be available and which is as comparable
to the above coverage as possible, with total premiums for any particular year
not to exceed the annual premium cap specified above. The life insurance policy
will accrue to the benefit of Executive and Executive will be entitled to the
full ownership and benefit of the policy, even after termination of his
employment for any reason.

(c) Health Club Membership. The Company will reimburse the Executive for the
reasonable dues and expenses of maintaining his health club membership, not to
exceed Five Hundred Dollars ($500) per month (Executive shall not be entitled to
any tax gross-up for this health club benefit).

 

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(d) Chartered Aircraft. To the extent permitted by the Company’s travel policy
to be reviewed and approved from time to time by the Company’s audit committee:
(i) the Company shall pay for Executive’s use of chartered aircraft for business
purposes when cost effective and/or in the best interests of the Company, and
(ii) Executive’s family members may accompany Executive on such business trips,
provided that Executive must pay the Company the amount necessary to ensure that
such travel by Executive’s family members will not be treated as taxable
compensation to Executive. (Executive shall not be entitled to any tax gross-up
for this chartered aircraft benefit).

(e) Tax Preparation. The Company shall reimburse Executive for all reasonable
costs and expenses incurred by Executive for outside tax planning and tax return
preparation services for Executive, up to a maximum of Five Thousand Dollars
($5,000) (Executive shall not be entitled to any tax gross-up for this tax
preparation benefit).

(f) Medical License Fees. The Company shall promptly reimburse Executive for all
reasonable and necessary costs and expenses incurred by Executive to maintain
Executive’s medical license (Executive shall not be entitled to any tax gross-up
for this benefit).

5. Vacation and Sick Leave. Executive will be entitled to paid vacation of four
(4) weeks per year in accordance with the Company’s vacation policy, with the
timing and duration of specific vacations mutually and reasonably agreed to by
parties hereto, and any accrued but unused vacation time will be carried to the
following year (but not beyond one year); subject, in each case, to Company
policy as in effect from time to time (which, without limitation, may further
limit vacation carry-overs from year to year and may suspend or limit vacation
time accruals when accrued and unused levels reach certain established amounts).
Sick time may not be carried over from year to year. Executive and the Company
agree that, as of the Effective Date, Executive has zero (0) accrued and unused
vacation time and zero (0) accrued and unused sick time.

6. 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.

7. Severance.

(a) Accrued Obligations. Upon the termination of Executive’s employment with the
Company for any reason, Executive shall be entitled to receive (i) any Base
Salary that had accrued but had not been paid on or before the termination date;
(ii) payment of accrued and unused vacation time in accordance with and subject
to Company policies then in effect (including any applicable caps and other
limitations under such policies); and (iii) any reimbursement due to Executive
pursuant to Section 4 or Section 6 (collectively, the “Accrued Obligations”). In
the event of a termination of your employment or a change in control of the
Company, your performance-based equity awards granted in December 2009, as
subsequently amended and including the restricted stock awarded in July 2010
related to these awards, will be governed by the applicable award agreements,
and nothing in this Section 7 shall apply as to such awards.

 

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(b) Involuntary Termination. If Executive’s employment is terminated by the
Company without Cause (as defined herein) or if Executive resigns from
Executive’s employment for Good Reason (as defined herein) (for purposes of
clarity, a termination without Cause or for Good Reason does not include a
termination that occurs as a result of Executive’s death or disability), and
provided that such termination constitutes a “separation from service” as
defined in Treasury Regulation Section 1.409A-1(h) (“Separation”) and Executive
signs and does not revoke a general release of all claims in the form prescribed
by the Company (a “Release”) and such Release becomes effective within
fifty-five (55) days of Executive’s Separation (the “Deadline”), then, subject
to Section 7(f) below and in addition to the Accrued Obligations, Executive
shall receive: (i) two (2) years of Base Salary, which shall be paid in
twenty-four (24) equal monthly installments, commencing on the Company’s first
normal payroll date that occurs on or after the Deadline (and in all events
within sixty (60) days after the Separation); (ii) any unvested portion of any
outstanding options and/or any unvested shares of Company common stock that have
been issued under any stock option and stock incentive plans of the Company or
otherwise will immediately vest and become exercisable and will remain
exercisable for a period of two (2) years following the date of Executive’s
Separation (except with respect to any options granted pursuant to a plan
intended to qualify under Section 423 of the Internal Revenue Code of 1986, as
amended (the “Code”)), subject to the terms of the applicable plan and award
agreement; (iii) the Company shall reimburse Executive for monthly premiums paid
to continue Executive’s (and, if applicable, Executive’s eligible spouse and
dependents) Company health insurance under the Consolidated Omnibus Budget
Reconciliation Act (“COBRA”) for two (2) years from the date that Executive
(and, if applicable, Executive’s eligible spouse and dependents) lose health
care coverage as an employee under the Company’s health plans until the earlier
of: (1) a date two (2) years after the date health care coverage is lost as an
employee; or (2) a date on which the Executive is covered under the medical plan
of another employer, which does not exclude pre-existing conditions; and
(iv) the Company shall continue to pay premiums to maintain any life insurance
for Executive, existing and paid for by the Company as of the date of
Executive’s Separation, for two (2) years following Executive’s Separation,
which payments shall be made on each regularly scheduled due date for such
payments beginning with the first regularly scheduled due date that occurs on or
after the Deadline (with any payments due prior to such time being made on such
date).

(c) Voluntary Termination; Termination for Cause. If Executive’s employment with
the Company terminates voluntarily (other than for Good Reason by Executive) or
for Cause by the Company or due to Executive’s death or disability, then (i) all
vesting of unvested or restricted shares of Company common stock or of any
outstanding options under any stock option and stock incentive plans of the
Company or otherwise held by Executive will terminate immediately; (ii) all
payments of compensation by the Company to Executive hereunder will terminate
immediately (except as to the Accrued Obligations), and (iii) Executive will
only be eligible for severance benefits in accordance with the Company’s
established policies as then in effect.

(d) Involuntary Termination after a Change of Control. In the event of a Change
of Control (as defined below) and, immediately prior to, upon or within two
(2) years after the date of the Change of Control, Executive is terminated
without Cause or voluntarily terminates for Good Reason (for purposes of
clarity, a termination without Cause or for Good Reason does not include a
termination that occurs as a result of Executive’s death or disability)

 

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and provided that such termination constitutes a Separation and Executive signs
and does not revoke a Release and such Release becomes effective by the
Deadline, then Executive shall not receive the severance set forth in
Section 7(b) above and shall instead receive (subject to Section 7(f) and in
addition to the Accrued Obligations) the following: (i) a lump sum payment equal
to two (2) years of Base Salary, plus an amount equal to the greater of the
average of the three (3) prior years’ bonuses or thirty percent (30%) of
Executive’s Base Salary, which shall be paid on the Company’s first normal
payroll date that occurs on or after the Deadline (and in all events within
sixty (60) days after the Separation), (ii) the Company shall reimburse
Executive for monthly premiums paid to continue Executive’s (and, if applicable,
Executive’s eligible spouse and dependents) Company health insurance under COBRA
for two (2) years from the date that Executive (and, if applicable, Executive’s
eligible spouse and dependents) lose health care coverage as an employee under
the Company’s health plans until the earlier of: (1) a date two (2) years after
the date health care coverage is lost as an employee; or (2) a date on which the
Executive is covered under the medical plan of another employer, which does not
exclude pre-existing conditions; and (iii) the Company shall continue to pay
premiums to maintain any life insurance for Executive, existing and paid for by
the Company as of the date of Executive’s Separation, for two (2) years
following Executive’s Separation, which payments shall be made on each regularly
scheduled due date for such payments beginning with the first regularly
scheduled due date that occurs on or after the Deadline (with any payments due
prior to such time being made on such date).

(e) Code Section 409A. Notwithstanding any other provision herein, in the event
that the sixty (60) day period following Executive’s Separation referred in
Section 7(b) or 7(d), as applicable, spans two calendar years, the cash payment
referred to in clause (i) of such section shall be made (or commence) in the
second of the two calendar years. For purposes of Code Section 409A, each
payment that is paid under Sections 7(b) and/or (d) above is hereby designated
as a separate payment. Notwithstanding anything stated herein to the contrary,
each of the separate payments made within six (6) months of Executive’s
Separation, to the extent subject to Code Section 409A, is intended to be exempt
from Code Section 409A pursuant to Treasury Regulation
Section 1.409A-1(b)(9)(iii); provided that (i) to the extent that any of such
payments do not qualify to be exempt from Code Section 409A pursuant to Treasury
Regulation Section 1.409A-1(b)(9)(iii) or otherwise exceeds the limit set forth
in Treasury Regulation Section 1.409A-1(b)(9)(iii)(A) or any similar limit
promulgated by the Treasury or the IRS, and (ii) if the Company (for this
purpose, “employer” as defined in Treasury Regulation Section 1.409A-1(h)(3)) is
publicly traded on an established securities market or otherwise at the time of
Executive’s Separation and, at the time of Executive’s Separation Executive is a
“specified employee,” as defined in Treasury Regulation Section 1.409A-1(i),
then the portion of the payments that does not qualify or otherwise exceeds such
limit shall not be paid during the six (6) month period following Executive’s
Separation and shall instead be paid on the first business day following the
expiration of such six (6) month period or, if earlier, the date of Executive’s
death, and any remaining payments shall continue to be paid in accordance with
this Section 7.

(f) Forfeiture of Severance Benefits. Notwithstanding the foregoing, Executive
will forfeit, and if already paid, repay to the Company on an after-tax basis,
any severance benefits set forth in Section 7(b) or (d) if: (i) the Company is
required to restate financials due to the material noncompliance of the Company
with any financial reporting requirement under the U.S. securities laws during
any period for which Executive was Chief

 

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Executive Officer of the Company; (ii) Executive acts in a manner that would
have constituted Cause had he been employed at the time of such act; and/or
(iii) Executive otherwise violates the terms of this Agreement, including but
not limited to the provisions of Section 12.

(g) No Mitigation. Executive shall not be required to mitigate the amount of any
payment or benefit contemplated by this Section 7, nor shall any such payment or
benefit be reduced by any earnings or benefits that the Executive may receive
from any other source.

8. Change of Control Benefits. In the event of a Change of Control during
Executive’s employment, any unvested portion of any outstanding options and/or
any unvested shares of Company common stock that have been issued under any
stock option and stock incentive plans of the Company or otherwise held by
Executive at the time of the Change of Control will have such vesting
accelerated so as to become 100% vested and exercisable and will remain
exercisable for a period of two (2) years following the date of Executive’s
Separation (except with respect to any options granted pursuant to a plan
intended to qualify under Section 423 of the Code), subject to the terms of the
applicable plan and award agreement. Thereafter, any outstanding options and/or
shares of Company common stock that have been issued under any stock option and
stock incentive plans of the Company or otherwise held by Executive will be
subject to the terms, definitions and provisions of the applicable plan and
award agreements.

9. Section 280G. Notwithstanding anything contained in this Agreement to the
contrary, to the extent that the payments and benefits provided under this
Agreement and benefits provided to, or for the benefit of, Executive under any
other Company plan or agreement (such payments or benefits are collectively
referred to as the “Benefits”) would be subject to the excise tax (the “Excise
Tax”) imposed under Section 4999 of the Code, the Benefits shall be reduced (but
not below zero) if and to the extent that a reduction in the Benefits would
result in Executive retaining a larger amount, on an after-tax basis (taking
into account federal, state and local income taxes and the Excise Tax), than if
Executive received all of the Benefits (such reduced amount if referred to
hereinafter as the “Limited Benefit Amount”). Unless the Executive shall have
given prior written notice specifying a different order to the Company to
effectuate the Limited Benefit Amount, any such notice consistent with the
requirements of Section 409A of the Code to avoid the imputation of any tax,
penalty or interest thereunder, the Company shall reduce or eliminate the
Benefits by first reducing or eliminating those payments or benefits which are
not payable in cash and then by reducing or eliminating cash payments, in each
case in reverse order beginning with payments or benefits which are to be paid
the farthest in time from the determination by the Accountants described below.
Any notice given by Executive pursuant to the preceding sentence shall take
precedence over the provisions of any other plan, arrangement or agreement
governing Executive’s rights and entitlements to any benefits or compensation. A
determination as to whether the Benefits shall be reduced to the Limited Benefit
Amount pursuant to this Agreement and the amount of such Limited Benefit Amount
shall be made in writing by the Company’s independent public accountants (the
“Accountants”), whose determination shall be conclusive and binding upon
Executive and the Company for all purposes. The Accountants shall provide such
determination, together with detailed supporting calculations and documentation
to the Company and Executive within ten (10) business days of the date of
termination of the Executive’s employment, if applicable, or such other time as
requested by the Company or Executive (provided Executive reasonably believes
that any of the Benefits may be subject to the Excise Tax), and if the
Accounting Firm

 

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determines that no Excise Tax is payable by Executive with respect to any
Benefits, it shall furnish Executive with an opinion reasonably acceptable to
Executive that no Excise Tax will be imposed with respect to any such Benefits.
For purposes of making the calculations required by this Section, the
Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on interpretations of the Code for which there is
a “substantial authority” tax reporting position. The Company and Executive will
furnish to the Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this Section. The
Company will bear all costs the Accountants may reasonably incur in connection
with any calculations contemplated by this Section.

10. Definitions.

(a) Cause. For purposes of this Agreement, “Cause” is defined as (i) gross
negligence or willful misconduct in the performance of Executive’s duties to the
Company after written notice to Executive and the failure to cure same within
ten (10) days after receipt of written notice; (ii) refusal or failure to act in
accordance with any lawful specific direction or order of the Board after
written notice to Executive of such refusal or failure and failure to cure the
same within ten (10) days after receipt of written notice; (iii) commission of
any act of fraud with respect to the Company; (iv) Executive’s material breach
of any written agreement or material policy of the Company after written notice
to Executive of such breach and failure to cure, if curable, the same within ten
(10) days after receipt of written notice; and (v) Executive’s conviction of, or
plea of nolo contendre to, a crime which adversely affects the Company’s
business or reputation, in each case as determined by the Board.

(b) Change of Control. For purposes of this Agreement, “Change of Control” of
the Company is defined as: (i) any “person” (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing 33% or more of
the total voting power represented by the Company’s then outstanding voting
securities; or (ii) a change in the composition of the Board occurring within a
two-year period, as a result of which fewer than a majority of the directors are
Incumbent Directors; or (iii) the date of the consummation of a merger or
consolidation of the Company with any other corporation that has been approved
by the shareholders of the Company, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation, or the shareholders of the Company approve a plan of complete
liquidation of the Company; or (iv) the date of the consummation of the sale or
disposition by the Company of all or substantially all the Company’s assets;
provided that a transaction shall not constitute a Change of Control for
purposes of this Agreement unless it is a “change in the ownership or effective
control” of the Company, or a change “in the ownership of a substantial portion
of the assets” of the Company within the meaning of Section 409A of the Code.
“Incumbent Directors” will mean directors who either (i) are members of the
Company as of the date hereof, or (ii) are elected, or nominated for election,
to the Board with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but will not include an
individual whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors to the Company).

 

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(c) Good Reason. For purposes of this Agreement, “Good Reason” is defined as a
voluntary resignation by Executive upon thirty (30) days prior written notice to
the Company, within sixty (60) days following the occurrence of one or more of
the following events without Executive’s prior written consent: (i) a material
reduction in Executive’s responsibilities, authority, titles or offices
resulting in material diminution of his position, excluding for this purpose an
isolated, insubstantial, inadvertent action not taken in bad faith; (ii) a
reduction of more than ten percent (10%) of Executive’s Base Salary, other than
as a part of an across-the-board salary reduction applicable to executive
officers of the Company; (iii) relocation of Executive’s primary place of
business for the performance of his duties to a location which is more than
fifty (50) miles from its prior location; or (iv) a material breach by the
Company of this Agreement; and provided further that the Company shall have
thirty (30) days after delivery of such notice to cure, and only if the Company
does not cure within that time shall there be Good Reason.

11. Confidential Information. Executive agrees that the Company’s Confidential
Information and Invention Assignment Agreement (the “Confidential Information
Agreement”) that Executive has previously signed will remain in full force and
effect throughout the term of this Agreement.

12. Confidential Nature of Severance Payments.

(a) Noncompete. Executive agrees that, while he is employed by the Company and
for the two (2) year period following termination of his employment, he will not
(except in furtherance of his employment with the Company), without the prior
written consent of the Company, either directly or indirectly (i) solicit
business from, or compete with the Company or any Company affiliate for the
business of, any customer of the Company or any Company affiliate, (ii) operate,
control, advise, be engaged by, perform any consulting services for, invest in
(other than less than one percent (1%) of the outstanding stock in a publicly
held corporation which is traded over-the-counter or on a recognized securities
exchange), or (iii) otherwise become associated in any capacity with, any
business, company, partnership, organization, proprietorship, or other entity
who or which researches, sells, manufacturers or distributes oncology drugs or
oncology products in those geographical areas in which the Company or any
Company affiliate conducts or has conducted such business during Executive’s
employment.

(b) Non-Solicitation. Executive agrees that while he is employed by the Company
and for an two (2) year period thereafter, he will not (except in furtherance of
his employment with the Company), without the prior written consent of the
Company, directly or indirectly solicit, induce, or attempt to solicit or induce
any employee, agent, or other representative or associate of the Company or any
Company affiliate to terminate its relationship with the Company or any Company
affiliate or in any way interfere with such a relationship or a relationship
between the Company or any Company affiliate and any of its suppliers or
distributors.

 

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(c) Understanding of Covenants. The Executive represents that he (i) is familiar
with the foregoing covenants not to compete and not to solicit, and (ii) is
fully aware of his obligations hereunder, including, without limitation, the
reasonableness of the length of time, scope and geographic coverage of these
covenants.

13. 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 Executive’s
right to compensation or other benefits will be null and void.

14. 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:

Cell Therapeutics, Inc.

501 Elliot Avenue West, Suite 400

Seattle, Washington 98819

Attn: Chairman of the Board

If to Executive:

At the last address provided to the Company

or, in the event Executive changes residences, at the last residential address
known by the Company.

15. 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.

16. Arbitration.

(a) Executive agrees that any dispute or controversy arising out of, relating
to, or in connection with this Agreement, or the interpretation, validity,
construction, performance, breach, or termination thereof, will be settled by
binding arbitration to be held in King County, Washington in accordance with the
National Rules for the Resolution of Employment Disputes

 

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then in effect of the American Arbitration Association (the “Rules”). The
arbitrator may grant injunctions or other relief in such dispute or controversy.
The decision of the arbitrator will be final, conclusive and binding on the
parties to the arbitration. Judgment may be entered on the arbitrator’s decision
in any court having jurisdiction.

(b) The arbitrator(s) will apply Washington law to the merits of any dispute or
claim, without reference to rules of conflicts of law. The arbitration
proceedings will be governed by federal arbitration law and by the Rules,
without reference to state arbitration law. The Executive hereby consents to the
personal jurisdiction of the state and federal courts located in Washington for
any action or proceeding arising from or relating to this Agreement or relating
to any arbitration in which the parties are participants.

(c) EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES
ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE
AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH
THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE,
BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION
CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE’S RIGHT TO A JURY TRIAL AND RELATES TO
THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE
RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, DISCRIMINATION CLAIMS.

17. Integration. This Agreement, together with the Confidential Information
Agreement, 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. No waiver, alteration, or modification of
any of the provisions of this Agreement will be binding unless in writing and
signed by duly authorized representatives of the parties hereto.

18. 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.

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

20. Section 409A. It is intended that any amounts payable under this Agreement
shall either be exempt from or comply with Section 409A of the Code (including
the Treasury regulations and other published guidance relating thereto) so as
not to subject Executive to payment of any additional tax, penalty or interest
imposed under Code Section 409A. The provisions of this Agreement shall be
construed and interpreted to avoid the imputation of any such additional tax,
penalty or interest under Code Section 409A yet preserve (to the nearest extent
reasonably possible) the intended benefit payable to Executive. To the extent
that any benefits pursuant to Section 7(b) or 7(d) or reimbursements pursuant to
Section 4 or 6 are taxable to Executive, any reimbursement payment due to
Executive pursuant to any such provision shall be paid to Executive on or before
the last day of Executive’s taxable year following the taxable year in which the
related expense was incurred. The benefits and reimbursements pursuant to

 

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such provisions are not subject to liquidation or exchange for another benefit
and the amount of such benefits and reimbursements that Executive receives in
one taxable year shall not affect the amount of such benefits or reimbursements
that Executive receives in any other taxable year.

21. Governing Law. This Agreement will be governed by the laws of the State of
Washington.

22. Acknowledgment. Executive acknowledges that he has had the opportunity to
discuss this matter with and obtain advice from his 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.

23. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original as against any party whose signature
appears thereon, and all of which together shall constitute one and the same
instrument. This Agreement shall become binding when one or more counterparts
hereof, individually or taken together, shall bear the signatures of all of the
parties reflected hereon as the signatories. Photographic copies of such signed
counterparts may be used in lieu of the originals for any purpose.

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 date and year set
forth below.

Cell Therapeutics, Inc.

 

By:  

/s/ Frederick W. Telling, Ph.D.

     Date: March 10, 2011 Title:   Chairman, Compensation Committee      James
A. Bianco, M.D.

/s/ James A. Bianco, M.D.

     Date: March 9, 2011

 

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