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Exhibit 10.1

 

Case 2:10-cv-00564-MJP    Document 73-1    Filed 11/06/12    Page 1 of 63

The Honorable Marsha J. Pechman

 

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

 

   

)

    

In re CELL THERAPEUTICS, INC.,

 

)

    

Master Docket No. C 10-564 MJP

DERIVATIVE LITIGATION

 

)

        

)

      

)

    

STIPULATION OF SETTLEMENT

This Document Relates To:

 

)

      

)

    

ALL ACTIONS

 

)

        

)

    

 

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ROBBINS UMEDA LLP

600 B Street, Suite 1900

San Diego, CA 92101

Tel: (619) 525-3990 — Fax: (619) 525-3991

STIPULATION OF SETTLEMENT

     

Master Docket No. C 10-564 MJP

           

 

 

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This Stipulation of Settlement, dated November 6, 2012 (the “Stipulation”), is
made and entered into by and among the following Settling Parties,1 each by and
through their respective counsel: (i) plaintiffs Joseph Shackleton, Terry
Marbury, Paul Cyrek, Brandon Bohland, and Lawrence J. Alexander (collectively,
“Plaintiffs”), on behalf of themselves and derivatively on behalf of Cell
Therapeutics, Inc. (“CTI” or the “Company”);2 (ii) defendants John H. Bauer,
James A. Bianco, Vartan Gregorian, Richard L. Love, Mary O’Neil Mundinger,
Phillip M. Nudelman, Jack W. Singer, and Frederick W. Telling (the “Individual
Defendants”) and nominal defendant CTI (collectively, “Defendants”). The
Stipulation is intended by the Settling Parties to fully, finally, and forever
resolve, discharge, and settle the Released Claims, upon and subject to the
terms and conditions hereof (the “Settlement”).

 

I.

INTRODUCTION AND PROCEDURAL OVERVIEW

A.         The Derivative Action

On April 1, 2010, plaintiff Joseph Shackleton filed a complaint against the
Individual Defendants and nominal defendant CTI in the U.S. District Court for
the Western District of Washington, captioned Shackleton v. Bauer, Case No. C
2:10-cv-00564-MJP (the “Shackleton Complaint”). The Shackleton Complaint
asserted claims on behalf of CTI, alleging that the CTI Board of Directors
(“Board”), among other things, failed to adequately supervise or exercise
oversight as to the Company’s disclosures related to pixantrone, a treatment for
non-Hodgkin’s lymphoma, and the Company’s disclosures related to communications
with the U.S. Food and Drug Administration (“FDA”) about the FDA approval
process for pixantrone. Specifically, the Shackleton Complaint alleged that the
Company failed to disclose that: (i) a Special Protocol

 

 

1 All capitalized terms are defined in Section IV.1 below, unless otherwise
noted.

2 Plaintiffs Joseph Shackleton and Paul Cyrek continue to hold their shares of
CTI stock. Plaintiffs Terry Marbury, Brandon Bohland, and Lawrence J. Alexander
no longer own CTI stock.

 

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ROBBINS UMEDA LLP

600 B Street, Suite 1900

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Tel: (619) 525-3990 — Fax: (619) 525-3991

STIPULATION OF SETTLEMENT

     

Master Docket No. C 10-564 MJP

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Assessment with the FDA for a pixantrone clinical trial, PIX301, was allegedly
invalidated in March 2008; (ii) PIX301 allegedly enrolled a large number of
patients who did not suffer from aggressive non-Hodgkin’s lymphoma; and
(iii) the results from PIX301 allegedly demonstrated that pixantrone was
cardiotoxic. The Shackleton Complaint also alleged that, as a result of the
foregoing, the Company lacked a reasonable basis for positive statements about
pixantrone and its prospects. Defendants deny all of the allegations made in the
Complaint.

Plaintiffs Terry Marbury and Paul Cyrek thereafter filed substantially similar
complaints: Marbury v. Bianco, No. 2:10-cv-00578-MJP was filed with the Court on
April 5, 2010, and Cyrek v. Bauer, No. 2:10-cv-00625-TSZ was filed with the
Court on April 13, 2010. By order dated May 10, 2010 (Dkt. No. 11), the Court
consolidated these three derivative complaints as In re Cell Therapeutics, Inc.
Derivative Litigation, Master Docket No. C 10-564 MJP (the “Action” or
“Derivative Action”), and appointed Robbins Umeda LLP and Federman & Sherwood as
Co-Lead Counsel for plaintiffs. The May 10, 2010 order also provided that
Defendants did not need to respond to the complaints filed in the Action, and
that the parties would confer upon a proposed schedule for the filing of an
amended complaint and briefing on any motion to dismiss the amended complaint.

Three additional complaints were thereafter filed and consolidated into the
Action. On June 1, 2010, plaintiff Carey Souda filed a complaint in this Court
captioned Souda v. Bauer, Case No. 2:10-cv-00905-MJP, which was consolidated
with the Action in an order dated July 19, 2010 (Dkt. No. 26); and on July 27,
2010, plaintiff Brandon Bohland filed a complaint in this Court captioned
Bohland v. Bauer, Case No. 2:10-cv-00564-JCC, which was consolidated into the
Action in an order dated November 16, 2010 (Dkt. No. 43). On October 4, 2010,
plaintiff Lawrence J. Alexander filed a substantially similar derivative
complaint captioned Alexander v. Bianco, No. 10-2-34849-2 SEA, in the Superior
Court of Washington, King County, which was removed to this Court on October 5,
2010, and assigned as Case No. 2:10-cv-01597-MJP, and thereafter consolidated
into the Action in an order dated March 1, 2011 (Dkt. No. 52).

 

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STIPULATION OF SETTLEMENT

     

Master Docket No. C 10-564 MJP

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B.         The Securities Class Action

Preceding the filing of any of the complaints in this Action, several federal
securities class action complaints were filed against CTI and certain of its
current officers, beginning in March 2010. Those actions were consolidated by
this Court under the caption In re Cell Therapeutics, Inc. Class Action
Litigation, Master Docket No. C10-414MJP (the “Securities Class Action”).
Plaintiffs in the Securities Class Action brought claims under sections 10(b),
20(a), and 20A of the Securities Exchange Act of 1934 and U.S. Securities and
Exchange Commission (“SEC”) Rule 10b-5, alleging that between March 25, 2008,
and March 22, 2010, CTI and three of its executive officers made, or allowed to
be made, false or misleading disclosures related to communications with the FDA
regarding pixantrone. On October 27, 2010, defendants moved to dismiss the
Securities Class Action. On February 4, 2011, the Court denied in large part
defendants’ motion to dismiss. By order dated March 30, 2011, the Court set a
litigation schedule for the Securities Class Action, with discovery scheduled to
conclude on January 27, 2012. On February 14, 2012, lead plaintiff in the
Securities Class Action filed a motion for preliminary approval of a proposed
class action settlement. The Court granted the motion for preliminary approval
on March 16, 2012. On July 20, 2012, the Court approved the settlement. On
July 25, 2012, the Court entered a final judgment and order dismissing the
Securities Class Action with prejudice.

C.         Stay of Derivative Action

On November 23, 2010, the parties in the Derivative Action filed a stipulation
asking the Court to postpone all deadlines in the Action pending the Court’s
ruling on defendants’ motion to dismiss the Securities Class Action (Dkt.
No. 44). This stipulation also provided that in the event that the motion to
dismiss the Securities Class Action was denied, the derivative Plaintiffs would
receive copies of all discovery produced in the Securities Class Action, and
would file and serve a consolidated complaint within forty-five days of the
close of discovery in the Securities Class Action. On November 30, 2010, the
Court approved this stipulation (Dkt. No. 45). On

 

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February 4, 2011, following the denial in large part of defendants’ motion to
dismiss the Securities Class Action, this Court lifted the stay in the
Derivative Action (Dkt. No. 46).

After the stay of the Derivative Action was lifted, Plaintiffs received the
discovery produced in the Securities Class Action contemporaneously as it was
produced in that action. To date, Plaintiffs have reviewed and analyzed
approximately 231,000 pages of documents produced by Defendants and third
parties.

 

 

D.

Settlement Negotiations

In the fall of 2011, the parties to the Securities Class Action invited the
parties in the Derivative Action to participate in a mediation. In preparation
for the mediation, the Plaintiffs in the Derivative Action prepared a damages
analysis and report, and made a settlement demand proposing, inter alia,
corporate governance reforms.

The parties to the Derivative Action and Securities Class Action participated in
a day-long mediation with the late Honorable Nicholas H. Politan (Ret.) on
October 26, 2011. The Securities Class Action ultimately settled for $19 million
to the class, the proceeds of which were funded entirely by the Company’s
insurers.

Following the October 26, 2011 mediation, the parties to the Derivative Action
continued to engage in arm’s-length settlement negotiations. Plaintiffs in the
Derivative Action prepared and delivered a second, supplemental settlement
demand letter to the Company on January 18, 2012, proposing additional corporate
governance measures.

On April 17, 2012, the parties to the Derivative Action participated in a second
day-long mediation session with the Honorable Howard B. Wiener (Ret.) (“Judge
Wiener”). With assistance from Judge Wiener, the Settling Parties were able to
reach agreement on the majority of the material settlement terms herein.

 

II.

CLAIMS OF THE PLAINTIFFS AND BENEFITS OF SETTLEMENT

Plaintiffs believe that the claims asserted in this Action have merit and that
their investigation supports the claims asserted. Without conceding the merit of
any of the Individual

 

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600 B Street, Suite 1900

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Defendants’ defenses or lack of merit of any of their allegations, however,
Plaintiffs recognize the expense and length of continued proceedings necessary
to prosecute the Action against the Individual Defendants through trial and
through appeals. Plaintiffs have also taken into account the uncertain outcome
and the risk of any litigation, especially in complex actions such as the
Derivative Action, as well as the difficulties and delays inherent in such
litigation. Plaintiffs are also mindful of the inherent problems of proof and
possible defenses to the claims asserted in the Action. Plaintiffs believe that
the Settlement set forth in the Stipulation confers substantial benefits upon
CTI and its shareholders. Based on their evaluation, Plaintiffs believe that the
Settlement set forth in this Stipulation is in the best interests of CTI and its
shareholders.

 

III.

THE INDIVIDUAL DEFENDANTS’ DENIAL OF WRONGDOING AND LIABILITY

The Individual Defendants deny each and all of the claims and contentions
alleged by Plaintiffs in this Action. The Individual Defendants deny all claims
of wrongdoing or liability against them arising out of any of the conduct,
statements, acts, or omissions alleged, or that could have been alleged, in the
Action. The Individual Defendants also deny, among other things, the allegations
that Plaintiffs, CTI, or its shareholders have suffered damage, or that
Plaintiffs, CTI, or its shareholders were harmed by the conduct alleged in the
Action. The Individual Defendants further assert that at all relevant times,
they acted in good faith and in a manner they reasonably believed to be in the
best interests of CTI and its shareholders.

Nonetheless, the Individual Defendants have concluded that further conduct of
the Action would be protracted and expensive, and that it is desirable that the
Action be fully and finally settled in the manner and upon the terms and
conditions set forth in this Stipulation. The Individual Defendants agree to the
proposed Settlement without admitting any wrongdoing or liability.

 

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STIPULATION OF SETTLEMENT

     

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IV.

TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT

NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among Plaintiffs (for
themselves and derivatively on behalf of CTI), the Individual Defendants, and
CTI, by and through their respective counsel or attorneys of record:

1.        Definitions

As used in the Stipulation the following terms have the meanings specified
below:

1.1      “Action” or “Derivative Action” means the consolidated derivative
action In re Cell Therapeutics, Inc. Derivative Litigation, Master Docket No. C
10-564 MJP, and any and all actions that have been consolidated under that
docket number.

1.2      “Board” means the CTI Board of Directors.

1.3      “CTI” or “the Company” means Cell Therapeutics, Inc.

1.4      “Co-Lead Counsel” means the law firms of Federman & Sherwood and
Robbins Umeda LLP.

1.5      “Complaint” means any and all shareholder derivative complaints filed
in the Action or in any of the actions consolidated into the Action.

1.6      “Court” means the U.S. District Court for the Western District of
Washington.

1.7      “Current CTI Shareholder” means any Person who owns CTI common stock as
of the date of the execution of this Stipulation and who continue to hold CTI
common stock as of the date of the Settlement Hearing, excluding the Individual
Defendants, the officers and directors of CTI, members of their immediate
families, and their legal representatives, heirs, successors, or assigns, and
any entity in which any of the Individual Defendants has or had a controlling
interest.

1.8      “Defendants” means nominal defendant CTI and the Individual Defendants.

1.9      “Effective Date” means the first date by which all of the events and
conditions specified in paragraph 6.1 have been met and have occurred.

 

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1.10      “Final” means the time when a judgment or order has not been reversed,
vacated, or modified in any way and is no longer subject to appellate review,
either because of disposition on appeal and conclusion of the appellate process
or because of passage, without action, of time for seeking appellate review.
Specifically, a judgment becomes Final when: (i) either no appeal has been filed
and the time has passed for any notice of appeal to be timely filed in the
Action; or (ii) an appeal has been filed and any court of appeal has either
affirmed the judgment and/or dismissal, or dismissed that appeal and the time
for any reconsideration or further appellate review has passed; or (iii) if a
higher court has granted further appellate review, when that court has either
affirmed the underlying judgment and/or dismissal, or affirmed the court of
appeals’ decision affirming the judgment and /or dismissal, or dismissed the
appeal.

1.11      “Individual Defendants” means John H. Bauer, James A. Bianco, Vartan
Gregorian, Richard L. Love, Mary O’Neil Mundinger, Phillip M. Nudelman, Jack W.
Singer, and Frederick W. Telling.

1.12      “Judgment” means the judgment to be rendered by the Court,
substantially in the form attached hereto as Exhibit E.

1.13      “Person” means an individual, corporation, limited liability
corporation, professional corporation, partnership, limited partnership, limited
liability partnership, association, joint stock company, estate, legal
representative, trust, unincorporated association, government or any political
subdivision or agency thereof, and any business or legal entity and their
spouses, heirs, predecessors, successors, representatives, or assignees.

1.14      “Plaintiffs” means Joseph Shackleton, Terry Marbury, Paul Cyrek,
Brandon Bohland, and Lawrence J. Alexander, together with any of their
respective agents, heirs, assigns, predecessors, and/or successors.

1.15      “Plaintiffs’ Counsel” means the law firms of Federman & Sherwood,
Robbins Umeda LLP, Bottini & Bottini, Inc., the Law Offices of Clifford A.
Cantor, P.C., the Law Offices of Marc Henzel, and The Kendall Law Group, LLP.

 

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STIPULATION OF SETTLEMENT

     

Master Docket No. C 10-564 MJP

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1.16      “Related Persons” means (i) the Individual Defendants’ respective
spouses, marital communities, heirs, successors, executors, estates, or
administrators; any entity in which an Individual Defendant and/or member(s) of
his or her family has or had a controlling interest; any members of an
Individual Defendant’s immediate family; or any trust of which any Individual
Defendant is or was the settlor or which is or was for the benefit of any
Individual Defendant and/or member(s) of his or her family; (ii) each of the
Individual Defendant’s present and former attorneys, legal representatives,
insurers, and assigns in connection with the Action; and (iii) all of CTI’s past
and present directors, officers, partners, controlling shareholders, accountants
or auditors, advisors, employees, affiliates, predecessors, successors, parents,
subsidiaries, divisions, joint ventures, and related or affiliated entities.

1.17       “Released Claims” shall collectively mean all claims (including
“Unknown Claims”) debts, demands, rights, liabilities, and causes of action of
every nature and description whatsoever, known or unknown, whether or not
concealed or hidden, asserted or that could have been asserted by any derivative
plaintiff on behalf of CTI or its predecessors, successors, subsidiaries,
affiliates, divisions, and assigns, or by CTI or its predecessors, successors,
subsidiaries, affiliates, divisions, and assigns, against each and every
Released Person (including, without limitation, claims for damages, interest,
attorneys’ fees, expert or consulting fees and any other costs, expenses or
liability, negligence, negligent supervision, gross negligence, intentional
conduct, indemnification, breach of duty of care and/or breach of duty of
loyalty or good faith, fraud, misrepresentation, unjust enrichment, constructive
trust, breach of fiduciary duty, negligent misrepresentation, unfair
competition, insider trading, professional negligence, mismanagement, corporate
waste, breach of contract, or violations of any state or federal statutes,
rules, or regulations) that were alleged in the Action, or that arise from or
relate to the matters or occurrences that were alleged in the Action, or that
could have been asserted with respect to the matters or occurrences that were
alleged in the Action, for conduct occurring through, and including the date on
which, this Stipulation is fully executed by all signatories.

 

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STIPULATION OF SETTLEMENT

     

Master Docket No. C 10-564 MJP

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1.18      “Settlement” means the resolution of the Action as set forth herein.

1.19      “Settlement Hearing” means the hearing at which the Court will review
the adequacy, fairness, and reasonableness of the Settlement.

1.20      “Released Persons” means each and all of the Individual Defendants and
the Related Persons.

1.21      “Settling Parties” means, collectively, each of the Individual
Defendants, Plaintiffs (on behalf of themselves and derivatively on behalf of
CTI), and CTI.

1.22      “Unknown Claims” means any of the Released Claims which any of the
Plaintiffs, CTI, the Related Persons, or CTI shareholders do not know or suspect
to exist in his, her, or its favor at the time of the release of the Released
Persons, including claims which, if known by him, her, or it, might have
affected his, her, or its settlement with and release of the Released Persons,
or might have affected his, her, or its decision not to object to this
Settlement. With respect to any and all Released Claims, the Settling Parties
stipulate and agree that, upon the Effective Date, the Plaintiffs, Individual
Defendants, CTI, and the Related Persons shall expressly waive, and each of the
CTI shareholders shall be deemed to have, and by operation of the Judgment shall
have, expressly waived, the provisions, rights and benefits of section 1542 of
the California Civil Code, which provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

Upon the Effective Date, Plaintiffs, Individual Defendants, CTI, and the Related
Persons shall expressly waive, and each of the CTI shareholders shall be deemed
to have, and by operation of the Judgment shall have, expressly waived any and
all provisions, rights, and benefits conferred by any law of any jurisdiction or
any state or territory of the United States, or principle of common law, which
is similar, comparable, or equivalent to section 1542 of the California Civil
Code. Plaintiffs, Individual Defendants, CTI, Related Persons, and CTI
shareholders may

 

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Master Docket No. C 10-564 MJP

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hereafter discover facts in addition to or different from those which he, she,
or it now knows or believes to be true with respect to the subject matter of the
Released Claims, but, upon the Effective Date, each Plaintiff, Released Person,
and CTI shall expressly settle and release, and each CTI shareholder shall be
deemed to have, and by operation of the Judgment shall have, fully, finally, and
forever settled and released, any and all Released Claims, known or unknown,
suspected or unsuspected, contingent or non-contingent, whether or not concealed
or hidden, which now exist, or heretofore have existed upon any theory of law or
equity now existing or coming into existence in the future, including, but not
limited to, conduct which is negligent, intentional, with or without malice, or
a breach of any duty, law, or rule, without regard to the subsequent discovery
or existence of such different or additional facts. The Settling Parties
acknowledge, and the CTI shareholders shall be deemed by operation of the
Judgment to have acknowledged, that the foregoing waiver was separately
bargained for and is a key element of the Settlement of which this release is a
part.

2.        Corporate Governance Measures

2.1      In connection with the prosecution and settlement of the Action, CTI
has agreed to implement the Corporate Governance Measures set forth below. The
Corporate Governance Measures shall be adopted by the Board within ninety days
after the Effective Date of the Settlement and maintained for a minimum of four
years from the Effective Date, subject to revisions that may be required by
changes in applicable laws and/or regulations, except that this obligation will
terminate if and when there is a change of control of the Company. Defendants
acknowledge that the filing, prosecution, and settlement of this Action was a
material and substantial contributing factor in bringing about the following
changes to the Company’s corporate governance structure that were made after the
filing of this Action.

BOARD SEATS

2.2      On September 20, 2011, CTI appointed Dr. Reed V. Tuckson to the Board,
increasing the size of the Board to nine directors. Dr. Tuckson is the Executive
Vice President

 

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Master Docket No. C 10-564 MJP

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and Chief of Medical Affairs at UnitedHealth Group and oversees the
clinically-related programs of that company’s six operating businesses. He has
extensive experience and expertise in overseeing clinical programs, as well as
in other aspects of the Company’s operations, such as the development and
commercialization of drug products.

2.3        The Board has fixed the number of directors at twelve, and the
Board’s Nominating and Governance Committee (“Governance Committee”) will
continue to evaluate potential candidates to find directors with the necessary
experience and expertise to fill remaining vacancies on the Board.

SCIENTIFIC REVIEW AND OVERSIGHT COMMITTEE

2.4        The Board will adopt a resolution stating that if the Company becomes
engaged in significant research and development activities related to potential
drug products involving more than 35% of the Company’s prior year’s total
operating expenses based on audited financial statements, the Board shall
consider the formation of a Scientific Review and Oversight Committee to oversee
these activities. The Board will form such a committee if, in the Board’s
judgment, it would be an efficient, effective, and appropriate addition to the
Company’s controls and procedures. If the Board decides to form such a
committee, it will have discretion as to the nature of its composition,
authority, and responsibilities.

DISCLOSURE COMMITTEE

2.5        As part of this Settlement, the Board will adopt the charter for the
Disclosure Committee attached hereto as Exhibit A, and CTI will make changes to
the composition, authority, and responsibilities of the Disclosure Committee in
accordance with the terms of that charter.

MANAGEMENT ASSESSMENT OF DISCLOSURE CONTROLS

2.6        The Chief Executive Officer (“CEO”), the Chief Financial Officer
(“CFO”), and the President (collectively, the “Senior Officers”) will assess the
adequacy of the Company’s disclosure controls annually, and at any other such
time as the Senior Officers deem appropriate.

 

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Master Docket No. C 10-564 MJP

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Should the Senior Officers identify any material weaknesses with regard to these
controls, they shall take corrective action, or as they deem appropriate,
recommend that the Board take corrective action. This assessment shall include
evaluation of the process of reviewing disclosures and examination of the
effectiveness of internal communications regarding the status of the Company’s
products and the Company’s interactions with the FDA.

CHIEF COMPLIANCE AND GOVERNANCE OFFICERS

2.7        CTI has a Chief Compliance Officer for the purpose of overseeing its
Corporate Integrity Agreement, and will maintain this position. The Board will
adopt a resolution stating that the Chief Compliance Officer will monitor the
Code of Business Conduct and Ethics, and work with the head of CTI’s regulatory
department to maintain compliance with applicable regulations promulgated by the
FDA. The Chief Compliance Officer will also work to ensure that all material
communications with the FDA regarding compliance are appropriately communicated
to senior management, the Disclosure Committee, and the Board. The Chief
Compliance Officer will provide written, quarterly reports to the Board that
include updates on significant developments related to the Company’s clinical
programs.

2.8        In addition, as part of this Settlement, the Board will adopt a
resolution establishing the position of Chief Governance Officer, who will be a
member of the Disclosure Committee and will report to the Board’s Governance
Committee. The Governance Committee will continue to consist of a minimum of
three directors of the Board who are “independent” according to the definition
in Section 4200(a)(15) of the rules for the NASDAQ stock exchange (and/or any
other exchange on which CTI securities is actively traded).

2.9        The Chief Governance Officer will monitor the Corporate Governance
Guidelines and the Code of Ethics for Senior Officers. The Chief Governance
Officer will maintain and monitor the system for reporting and investigating
compliance and ethics concerns and will promote awareness of, and provide for
training regarding, issues related to compliance and ethics, as he or she
determines is necessary and appropriate.

 

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ROBBINS UMEDA LLP

600 B Street, Suite 1900

San Diego, CA 92101

Tel: (619) 525-3990 — Fax: (619) 525-3991

STIPULATION OF SETTLEMENT

     

Master Docket No. C 10-564 MJP

   - 12 -         

 

 

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2.10      The Chief Governance Officer will provide a written report to the
Governance Committee at least once a year, and will immediately report in
writing to the Governance Committee any allegations of compliance or ethics
violations. The Chief Governance Officer will recommend to the Governance
Committee any proposed changes to the Company’s system for reporting and
investigating compliance and ethics concerns, and the Governance Committee will
then consider these recommendations and submit any changes that it recommends to
the Board for approval.

CROSS-FUNCTIONAL TRAINING OF THE BOARD

2.11      The Chief Compliance Officer will provide for training to be given to
the Board at least once a year that is focused on the Company’s interactions
with the FDA, and which may include an update on relevant FDA practices,
policies, and regulations; information regarding appropriate interactions with
the FDA; and guidance related to the disclosure of communications with the FDA.
The Chief Compliance Officer will provide an annual written report to the Board
on this training.

INSIDER TRADING POLICY

2.12      The Board has appointed the Company’s CFO to serve as the Company’s
Trading Compliance Officer, and a senior CTI officer will continue to serve in
this position. The Trading Compliance Officer will evaluate CTI’s current
Insider Trading Policy and make any recommendations for improvement to the Board
within six months of the Effective Date of the Settlement. As part of this
evaluation, the Trading Compliance Officer will develop potential amendments to
that policy as appropriate to ensure compliance with insider trading regulations
and present any such proposed amendments to the Board for approval. The Trading
Compliance Officer will ensure that the Insider Trading Program includes a
process to review and approve all stock sales by Section 16 officers and
directors before those trades are made, unless the trades are made pursuant to a
trading plan established under SEC Rule 10b5-1.

 

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ROBBINS UMEDA LLP

600 B Street, Suite 1900

San Diego, CA 92101

Tel: (619) 525-3990 — Fax: (619) 525-3991

STIPULATION OF SETTLEMENT

     

Master Docket No. C 10-564 MJP

   - 13 -         

 

 

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2.13      The Trading Compliance Officer will be responsible for monitoring the
Insider Trading Policy in accordance with the terms of the policy, including
reviewing the trades and/or potential trades in CTI securities by CTI’s section
16 officers and directors.

2.14      The Trading Compliance Officer will be available to meet directly with
the Board’s independent directors upon their request, outside the presence of
any other senior executives. The Trading Compliance Officer will make a written
report to the Board at least once a year regarding his or her monitoring of the
Insider Trading Program, and any violations of the Insider Trading Policy,
including appropriate actions taken in response to non-compliance.

DIRECTOR INDEPENDENCE

2.15      The Board currently consists of nine directors, seven of whom are
“independent” according to the definition in section 4200(a)(15) of the rules
for the NASDAQ stock exchange. CTI will continue to maintain a majority of
directors on the Board who are independent according to the NASDAQ definition,
as consistent with CTI’s director independence policy.

MEETINGS IN EXECUTIVE SESSION

2.16      The Board will adopt a resolution stating that the independent
directors on the Board shall meet in executive session at least four times a
year, in person or by teleconference, outside the presence of the officer
directors.

CHAIRMAN OF THE BOARD

2.17      The Board will adopt a resolution stating that the positions of CEO
and Chairman of the Board shall continue to be separated, and the Chairman shall
continue to be an independent director. The Chairman shall continue to be
subject to election by the shareholders as a member of the Board every three
years.

WHISTLEBLOWER POLICY

2.18      The Company shall continue to engage an independent, third-party
supplier to provide and monitor one or more whistleblower hotlines for CTI
employees and other stakeholders. The contact information for a whistleblower
hotline will be posted by the

 

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ROBBINS UMEDA LLP

600 B Street, Suite 1900

San Diego, CA 92101

Tel: (619) 525-3990 — Fax: (619) 525-3991

STIPULATION OF SETTLEMENT

     

Master Docket No. C 10-564 MJP

   - 14 -         

 

 

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Company in a prominent position on its public website, so as to be available not
only to employees, but to customers, vendors, and other third parties. The
hotline(s) shall provide a communication channel through which employees and
other stakeholders may report, anonymously if they choose, concerns regarding
the integrity of CTI’s internal financial controls, the accuracy or completeness
of CTI’s financial statements and other public disclosures, and other concerns
about ethics, compliance, and/or the professional conduct of CTI’s officers. The
Corporate Governance Officer shall ensure that any complaints made through the
hotline(s) shall be provided to the chair of the Audit Committee within three
business days, and the Board shall ensure that all whistleblower complaints are
promptly and thoroughly investigated by an appropriate entity, in consultation
with the independent members of the Board.

DIRECTOR COMPENSATION

2.19     The Board shall adopt a resolution stating that if the Board renews
eligibility for the equity-based incentive awards for Board directors that are
triggered by the regulatory approval of pixantrone, it shall not extend the
deadline for the achievement of this goal past December 31, 2017.

2.20     The Board shall adopt a resolution stating that a “Say on Pay”
shareholder vote, conducted pursuant to section 14A(a)(1) of the Securities and
Exchange Act, shall be held annually, rather than every three years, and the
Senior Officers shall abstain from such vote.

3.         Procedure for Implementing the Settlement

3.1       Promptly after execution of this Stipulation, Plaintiffs shall submit
the Stipulation and its exhibits to the Court and shall apply for an order
substantially in the form of Exhibit B hereto, requesting the preliminary
approval of the Settlement set forth in this Stipulation (the “Preliminary
Approval Order”), and approval for the publication of a notice of settlement
(“Notice of Settlement”) substantially in the form of Exhibit C hereto, which
shall include the terms of the Settlement set forth in this Stipulation, any
fees and expenses requested by Plaintiffs’ Counsel, any incentive fee awards
requested by Plaintiffs, and the date of the

 

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ROBBINS UMEDA LLP

600 B Street, Suite 1900

San Diego, CA 92101

Tel: (619) 525-3990 — Fax: (619) 525-3991

STIPULATION OF SETTLEMENT

     

Master Docket No. C 10-564 MJP

   - 15 -         

 

 

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Settlement Hearing. Within ten calendar days of the issuance of the Preliminary
Approval Order, CTI shall cause the Notice of Settlement and Stipulation to be
filed with the SEC via a Form 8-K, publish the short-form Notice of Settlement
for one day in Investor’s Business Daily (“Summary Notice”) substantially in the
form of Exhibit D hereto, and post the Notice of Settlement and Stipulation on
CTI’s website such that visitors to the “Investors” section of the website will
find hyperlinks to the Form 8-K. All costs in providing notice will be paid by
CTI.

3.2       Plaintiffs will request that after the notice is given, the Court hold
a hearing (the “Settlement Hearing”) and approve the Settlement of the Action as
set forth herein, consider the Plaintiffs’ request for approval of attorneys’
fees, expenses, and incentive fee awards to Plaintiffs, and enter the Judgment
dismissing the Action with prejudice.

4.         Releases

4.1       Upon the Effective Date, Plaintiffs (acting on their own behalf and
derivatively on behalf of CTI); CTI, its predecessors, successors, subsidiaries,
affiliates, divisions, and assigns; and each of CTI’s shareholders (solely in
their capacity as CTI shareholders) shall be deemed to have, and by operation of
the Judgment shall have, fully, finally, and forever released, relinquished, and
discharged the Released Claims against the Released Persons and any and all
claims (including Unknown Claims) arising out of, relating to, or in connection
with the defense, settlement, or resolution of the Action against the Released
Persons, provided that nothing herein shall in any way impair or restrict the
rights of any Settling Party to enforce the terms of the Stipulation or the
Judgment.

4.2       Upon the Effective Date, Plaintiffs (acting on their own behalf and,
derivatively on behalf of CTI); CTI, its predecessors, successors, subsidiaries,
affiliates, divisions, and assigns; and each of CTI’s shareholders (solely in
their capacity as CTI shareholders) will be forever barred and enjoined from
commencing, instituting, or prosecuting any of the Released Claims or any action
or other proceeding against any of the Released Persons based on the Released
Claims or any action or proceeding, arising out of, related to, or in connection
with the

 

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ROBBINS UMEDA LLP

600 B Street, Suite 1900

San Diego, CA 92101

Tel: (619) 525-3990 — Fax: (619) 525-3991

STIPULATION OF SETTLEMENT

     

Master Docket No. C 10-564 MJP

   - 16 -         

 

 

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Settlement or resolution of the action, provided, that nothing herein shall in
any way impair or restrict the rights of any Settling Party to enforce the terms
of the Stipulation or Judgment.

4.3       Upon the Effective Date, each of the Released Persons shall be deemed
to have, and by operation of the Judgment shall have, fully, finally, and
forever released, relinquished, and discharged each and all of the Plaintiffs,
Plaintiffs’ Counsel, CTI, the Related Persons, and all CTI shareholders (solely
in their capacity as CTI shareholders) from all claims (including Unknown
Claims), arising out of, relating to, or in connection with the institution,
prosecution, assertion, settlement, or resolution of the Action or the Released
Claims. Nothing herein shall in any way impair or restrict the rights of any
Settling Party to enforce the terms of the Stipulation or Judgment.

5.          Attorneys’ Fees and Expenses

5.1       Plaintiffs and Co-Lead Counsel intend to petition the Court for an
award of fees and expenses in connection with the Action (the “Fee and Expense
Application”). The Settling Parties agree that Plaintiffs are entitled to an
award of reasonable attorneys’ fees reflecting, among other factors, the
substantial benefits conferred by the Settlement and the risks undertaken in
pursuing the Action, as well as compensation for reasonable expenses incurred in
prosecuting the Action. The Settling Parties do not agree on the amount of
attorneys’ fees and expenses that should be awarded in the Action, however, and
have agreed to present this matter to the Court for resolution.

5.2       The Fee and Expense Application shall be Plaintiffs’ and/or Co-Lead
Counsel’s sole application for an award of fees or expenses in connection with
this Action. Final resolution by the Court of the Fee and Expense Application
shall not be a precondition to the dismissal of the Action in accordance with
this Stipulation, and the Settling Parties agree that the Fee and Expense
Application may be considered separately from the proposed Settlement.

5.3       Co-Lead Counsel intend to seek Court approval for an award in the
amount of $1,500.00 for Plaintiff Shackleton (the “Incentive Award”). The
Individual Defendants and CTI

 

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ROBBINS UMEDA LLP

600 B Street, Suite 1900

San Diego, CA 92101

Tel: (619) 525-3990 — Fax: (619) 525-3991

STIPULATION OF SETTLEMENT

     

Master Docket No. C 10-564 MJP

   - 17 -         

 

 

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agree not to object to a request for Court approval of the Incentive Award. The
Incentive Award will be funded by any fee amount awarded in the Fee and Expense
Application.

5.4     Any fee amount shall be allocated among Plaintiffs’ Counsel by Co-Lead
Counsel in the manner Co-Lead Counsel believe reflects each of Plaintiffs’
Counsel’s relative contributions to the initiation, prosecution, and successful
resolution of the Action. CTI and the Individual Defendants shall have no
liability whatsoever with respect to the allocation of the fee amount among
Plaintiffs’ Counsel.

5.5     The Settling Parties acknowledge and agree that the Individual
Defendants and/or CTI (or its insurer(s)) shall pay, or cause to be paid on
behalf of the Individual Defendants and CTI, any fees and expenses awarded by
the Court to Federman & Sherwood, as receiving agent for Plaintiffs’ Counsel,
within twenty business days of the date on which an order awarding such fees and
expenses becomes Final.

 

 

 6.

Conditions of Settlement, Effect of Disapproval, Cancellation, or Termination

6.1     The Effective Date is conditioned on the occurrence of all of the
following events and is the first date by which all of the following events and
conditions have been met and have occurred:

(a)      approval of the Settlement by the Board, including the Corporate
Governance Measures;

(b)      entry by the Court of the Judgment dismissing the Action with
prejudice, and an order approving the Settlement; and

(c)      the Judgment has become Final.

6.2     If the Effective Date does not occur because any of the conditions
specified in paragraph 6.1 have not been met, and it appears that they will not
be met, then the Stipulation shall be canceled and terminated subject to
paragraph 6.3, unless the Settling Parties agree in writing to proceed with the
Stipulation.

 

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ROBBINS UMEDA LLP

600 B Street, Suite 1900

San Diego, CA 92101

Tel: (619) 525-3990 — Fax: (619) 525-3991

STIPULATION OF SETTLEMENT

     

Master Docket No. C 10-564 MJP

   - 18 -         

 

 

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6.3       If for any reason the Effective Date of the Stipulation does not
occur, then any payment that has been made to Co-Lead Counsel of attorneys’ fees
and expenses, and any and all interest accrued thereon since payment, shall be
returned to CTI within twenty (20) business days of said event. The return
obligation set forth in this paragraph is the several obligation of all
Plaintiffs’ Counsel who have received a payment in the Action. Co-Lead Counsel
shall have the right to seek contribution from any Plaintiffs’ Counsel that
receives any part of the fee amount for the purposes of satisfying its repayment
obligation.

7.         Miscellaneous Provisions

7.1       The Settling Parties: (a) acknowledge that it is their intent to
consummate this Stipulation; and (b) agree to cooperate to the extent reasonably
necessary to effectuate and implement all terms and conditions of the
Stipulation and to exercise their best efforts to accomplish the foregoing terms
and conditions of the Stipulation.

7.2       The Settling Parties agree that in the event of a planned, proposed,
or actual change-in-control of CTI they will continue to seek final approval of
this Stipulation expeditiously, including, but not limited to, adhering to the
schedule set forth in the Preliminary Approval Order if it has been entered,
subject to paragraph 6.1.

7.3       Pending the Effective Date of this Stipulation, or the termination of
the Stipulation according to its terms, Plaintiffs are barred and enjoined from
commencing, prosecuting, instigating, or in any way participating in the
commencement or prosecution of any action asserting any Released Claims against
any Released Person.

7.4       The Settling Parties intend this Stipulation to be a final and
complete resolution of all disputes between the Settling Parties with respect to
the Action. The Stipulation compromises claims that are contested and shall not
be deemed an admission by any Settling Party as to the merits of any claim,
allegation, or defense. The Settling Parties agree that the claims are being
settled voluntarily after consultation with competent legal counsel. The
Settling Parties will jointly request that the Judgment contain a finding that
during the course of the

 

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ROBBINS UMEDA LLP

600 B Street, Suite 1900

San Diego, CA 92101

Tel: (619) 525-3990 — Fax: (619) 525-3991

STIPULATION OF SETTLEMENT

     

Master Docket No. C 10-564 MJP

   - 19 -         

 

 

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litigation, the Settling Parties and their respective counsel at all times
complied with the requirements of Federal Rule of Civil Procedure 11 and all
other similar laws.

7.5        Neither the Stipulation (including any exhibits attached hereto) nor
the Settlement, nor any act performed or document executed pursuant to or in
furtherance of the Stipulation or the Settlement: (a) is or may be deemed to be,
or may be offered, attempted to be offered, or used in any way by the Settling
Parties as a presumption, a concession, or an admission of, or evidence of, any
fault, wrongdoing, or liability of the Settling Parties or of the validity of
any Released Claims; or (b) is intended by the Settling Parties to be offered or
received as evidence or used by any other person in any other actions or
proceedings, whether civil, criminal, or administrative. The Released Persons
may file the Stipulation and/or the Judgment in any action that may be brought
against them in order to support a defense or counterclaim based on principles
of res judicata, collateral estoppel, full faith and credit, release, standing,
good faith settlement, judgment bar or reduction, or any other theory of claim
preclusion or issue preclusion or similar defense or counterclaim, and any of
the Settling Parties may file the Stipulation and documents executed pursuant
and in furtherance thereto in any action to enforce the Settlement.

7.6        The exhibits to this Stipulation are material and integral parts
hereof and are fully incorporated herein by this reference.

7.7        The Stipulation may be amended or modified only by a written
instrument signed by or on behalf of all Settling Parties or their respective
successors-in-interest.

7.8        This Stipulation and the exhibits attached hereto constitute the
entire agreement among the Settling Parties and no representations, warranties,
or inducements have been made to any Settling Party concerning the Stipulation
or any of its exhibits other than the representations, warranties, and covenants
contained and memorialized in such documents. Except as otherwise provided
herein, each Settling Party shall bear its own costs.

 

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ROBBINS UMEDA LLP

600 B Street, Suite 1900

San Diego, CA 92101

Tel: (619) 525-3990 — Fax: (619) 525-3991

STIPULATION OF SETTLEMENT

     

Master Docket No. C 10-564 MJP

   - 20 -         

 

 

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7.9      Counsel for the Settling Parties are expressly authorized by their
respective clients to take all appropriate action required or permitted to be
taken pursuant to the Stipulation to effectuate its terms and also are expressly
authorized by their respective clients to enter into any modifications or
amendments to the Stipulation which they deem appropriate on behalf of their
respective clients.

7.10    The Stipulation may be executed in one or more counterparts. A faxed
signature or electronically scanned signature shall be deemed an original
signature for the purposes of this Stipulation. All executed counterparts and
each of them shall be deemed to be one and the same instrument. A complete set
of counterparts, either originally executed or copies thereof, shall be filed
with the Court.

7.11    The Stipulation and the Settlement shall be binding upon, and inure to
the benefit of, the successors and assigns of the Settling Parties and the
Released Persons.

7.12    The Settling Parties agree that if any disputes arise related to the
implementation and enforcement of the terms of the Stipulation, said disputes
are to be resolved by Judge Wiener first by way of mediation, and, if mediation
is unsuccessful, then by way of binding non-appealable arbitration. If for any
reason Judge Wiener is unavailable or has a conflict, the Settling Parties will
agree on a substitute neutral so that this clause may be enforced without
returning to court. If the Settling Parties cannot agree upon a substitute
neutral, they will jointly petition Judge Wiener to select a neutral for them to
enforce this clause.

7.13    This Stipulation and the exhibits attached hereto shall be considered to
have been negotiated, executed, and delivered, and to be wholly performed, in
the State of Washington, and the rights and obligations of the parties to the
Stipulation shall be construed and enforced in accordance with, and governed by,
the internal, substantive laws of the State of Washington without giving effect
to that State’s choice of law principles.

 

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ROBBINS UMEDA LLP

600 B Street, Suite 1900

San Diego, CA 92101

Tel: (619) 525-3990 — Fax: (619) 525-3991

STIPULATION OF SETTLEMENT

     

Master Docket No. C 10-564 MJP

   - 21 -         

 

 

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7.14    The Settling Parties hereby represent and warrant that they have not
assigned any rights, claims, or causes of action that were asserted or could
have been asserted in connection with, under, or arising out of the Released
Claims.

7.15    Without further order of the Court, the Settling Parties may agree to
reasonable extensions of time to carry out any of the provisions of this
Stipulation.

IN WITNESS WHEREOF, the Settling Parties have caused the Stipulation to be
executed by their duly authorized attorneys and dated November 6, 2012.

DATED: November 6, 2012

 

 

   

/s/ Barry M. Kaplan

   

Barry M. Kaplan, WSBA #8661

   

Claire Loebs Davis, WSBA #39812

   

WILSON SONSINI GOODRICH & ROSATI

   

Professional Corporation

   

701 Fifth Avenue, Suite 5100

   

Seattle, WA 98104-7036

   

Telephone:  (206) 883-2500

   

Facsimile:   (206) 883-2699

   

Email:  bkaplan@wsgr.com

   

Email: cldavis@wsgr.com

   

 

Douglas J. Clark, admitted pro hac vice

   

WILSON SONSINI GOODRICH & ROSATI

   

Professional Corporation

   

650 Page Mill Road

   

Palo Alto, CA 94304

   

 

Telephone:  (650) 493-9300

   

Facsimile:   (650) 493-6811

   

Email:  dclark@wsgr.com

   

 

Attorneys for Individual Defendants and

   

Nominal Defendant Cell Therapeutics, Inc.

 

DATED: November 6, 2012

       

 

 

   

Brian J. Robbins

   

Craig W. Smith (pro hac vice)

   

Shane P. Sanders (pro hac vice)

   

ROBBINS UMEDA LLP

   

600 B Street, Suite 1900

 

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ROBBINS UMEDA LLP

600 B Street, Suite 1900

San Diego, CA 92101

Tel: (619) 525-3990 — Fax: (619) 525-3991

STIPULATION OF SETTLEMENT

     

Master Docket No. C 10-564 MJP

   - 22 -         

 

 

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7.14    The Settling Parties hereby represent and warrant that they have not
assigned any rights, claims, or causes of action that were asserted or could
have been asserted in connection with, under, or arising out of the Released
Claims.

7.15    Without further order of the Court, the Settling Parties may agree to
reasonable extensions of time to carry out any of the provisions of this
Stipulation.

IN WITNESS WHEREOF, the Settling Parties have caused the Stipulation to be
executed by their duly authorized attorneys and dated November 6, 2012.

DATED: November 6, 2012

 

 

   

 

   

Barry M. Kaplan, WSBA #8661

   

Claire Loebs Davis, WSBA #39812

   

WILSON SONSINI GOODRICH & ROSATI

   

Professional Corporation

   

701 Fifth Avenue, Suite 5100

   

Seattle, WA 98104-7036

   

Telephone:  (206) 883-2500

   

Facsimile:   (206) 883-2699

   

Email:  bkaplan@wsgr.com

   

Email: cldavis@wsgr.com

   

 

Douglas J. Clark, admitted pro hac vice

   

WILSON SONSINI GOODRICH & ROSATI

   

Professional Corporation

   

650 Page Mill Road

   

Palo Alto, CA 94304

   

 

Telephone:  (650) 493-9300

   

Facsimile:   (650) 493-6811

   

Email:  dclark@wsgr.com

   

 

Attorneys for Individual Defendants and

   

Nominal Defendant Cell Therapeutics, Inc.

 

DATED: November 6, 2012

       

 

 

/s/ Brian J. Robbins

   

Brian J. Robbins

   

Craig W. Smith (pro hac vice)

   

Shane P. Sanders (pro hac vice)

   

ROBBINS UMEDA LLP

   

600 B Street, Suite 1900

 

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ROBBINS UMEDA LLP

600 B Street, Suite 1900

San Diego, CA 92101

Tel: (619) 525-3990 — Fax: (619) 525-3991

STIPULATION OF SETTLEMENT

     

Master Docket No. C 10-564 MJP

   - 22 -         

 

 

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San Diego, CA 92101

   

Telephone: (619) 525-3990

   

Facsimile:  (619) 525-3991

   

 

Co-Lead Counsel for Plaintiffs

 

DATED: November 6, 2012

       

 

/s/ William B. Federman

   

William B. Federman

   

FEDERMAN & SHERWOOD

   

10205 N. Pennsylvania Ave.

   

Oklahoma City, OK 73120

   

Telephone: (405) 235-1560

   

Facsimile: (405) 239-2112

   

 

Co-Lead Counsel for Plaintiffs

   

 

Clifford Cantor, WSBA #17893

   

LAW OFFICES OF CLIFFORD A. CANTOR, P.C.

   

627 208th Ave. SE

   

Sammanish, WA 98074

   

Telephone: (425) 868-7813

   

Facsimile: (425) 868-7870

   

 

Additional Counsel for Plaintiffs Joseph

   

Shackleton, Terry Marbury, Paul Cyrek,

   

Brandon Bohland, and Lawrence J. Alexander

   

 

Mark S. Henzel

   

LAW OFFICES OF MARC HENZEL

   

273 Montogmery Ave., Suite 202

   

Bala Cynwyd, PA 19004

   

Telephone: (610) 660-8000

   

Facsimile: (610) 660-8080

   

Additional Counsel for Plaintiff Paul Cyrek

   

 

Joe Kendall

   

Jamie J. McKey

   

THE KENDALL LAW GROUP, LLP

   

3232 McKinney, Suite 700

   

Dallas, TX 75204

   

Telephone: (214) 744-3000

   

Facsimile: (214) 744-3015

   

Additional Counsel for Plaintiff Brandon

   

Bohland

 

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ROBBINS UMEDA LLP

600 B Street, Suite 1900

San Diego, CA 92101

Tel: (619) 525-3990 — Fax: (619) 525-3991

STIPULATION OF SETTLEMENT

     

Master Docket No. C 10-564 MJP

   - 23 -         

 

 

--------------------------------------------------------------------------------

Case 2:10-cv-00564-MJP    Document 73-1    Filed 11/06/12    Page 26 of 63

 

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  Frank Bottini

   

  BOTTINI & BOTTINI INC.

   

  7817 Ivanhoe Avenue, Suite 102

   

  La Jolla, CA 92037

   

  Telephone: (858) 914-2001

   

  Facsimile: (858) 914-2002

   

 

Additional Counsel for Plaintiff Lawrence J.

   

Alexander

748239

 

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ROBBINS UMEDA LLP

600 B Street, Suite 1900

San Diego, CA 92101

Tel: (619) 525-3990 — Fax: (619) 525-3991

STIPULATION OF SETTLEMENT

     

Master Docket No. C 10-564 MJP

   - 24 -         

 

 

--------------------------------------------------------------------------------

Case 2:10-cv-00564-MJP    Document 73-1    Filed 11/06/12    Page 27 of 63

 

 

 

 

 

Exhibit A

--------------------------------------------------------------------------------

Case 2:10-cv-00564-MJP    Document 73-1    Filed 11/06/12    Page 28 of 63

 

Exhibit A

CHARTER OF THE DISCLOSURE COMMITTEE

of Cell Therapeutics, Inc.

This Disclosure Committee Charter (“Charter”) has been adopted by the Disclosure
Committee (“Committee”) of Cell Therapeutics, Inc. (“Company”) and approved by
the Company’s Board of Directors (“Board”). The Committee shall review and
reassess this Charter periodically and recommend any proposed changes for
approval by the Board.

 

I.

PURPOSE

It is the Company’s policy that all disclosures made by the Company to its
shareholders or the investment community should be accurate and complete, and
fairly present the Company’s financial condition and results of operations in
all material respects, and should be made on a timely basis as required by
applicable laws and stock exchange requirements. The Committee has been
established pursuant to the authority of the Chief Executive Officer and Chief
Financial Officer and is intended to follow the suggestion of the Securities and
Exchange Commission (“SEC”) that is contained in SEC Release No. 33-8124,
34-46427 “Certification of Disclosure in Companies’ Quarterly and Annual
Reports” to establish a disclosure committee.

 

II.

RESPONSIBILITIES

The Committee shall assist the Chief Executive Officer (“CEO”), Chief Financial
Officer (“CFO”), and President (collectively, “Senior Officers”) in fulfilling
their responsibility for oversight of the accuracy and timeliness of the
disclosures made by the Company, by being responsible for the following tasks,
subject to the supervision and oversight of the Senior Officers:

 

 

—

 

Evaluate and monitor the integrity and effectiveness of controls and procedures
(“Disclosure Controls”) that are designed to ensure: (1) the accurate and timely
disclosure of information required to be disclosed by the SEC; (2) the accuracy
of other written disclosures that the Company issues to the investment
community, including, without limitation, disclosures related to the Company’s
financial condition, products, product approval efforts, and interactions with
federal agencies, including the Food and Drug Administration (“FDA”); and
(3) the accurate communication of information to management, including the
Senior Officers, as appropriate to allow timely decisions regarding disclosures.

 

 

—

 

Through the chair of the Committee, provide an annual written report to the
Audit Committee of the Board regarding the integrity and effectiveness of the
Disclosure Controls. The Committee shall provide additional information
regarding the Disclosure Controls, and the meetings and other activities of the
Committee, at the request of the Audit Committee.

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—

 

Evaluate and monitor the existing lines of communication across the Company’s
operations and business units, for their effectiveness in collecting relevant
information on a timely basis for use by the Committee and Senior Officers in
making disclosure decisions.

 

 

—

 

As a member of the Committee, the Chief Medical Officer will ensure that the
members of the Committee are kept apprised of potentially material oral and/or
written communications to or from the FDA. The Chief Medical Officer will also
ensure that the Board is kept regularly apprised of all potentially material
oral and/or written communications to or from the FDA.

 

 

—

 

Report problems with the Disclosure Controls to the Senior Officers, and propose
any necessary and appropriate changes to such controls, and to the lines of
communication within the Company. When the majority of the Committee deems it to
be appropriate, problems and proposed changes may be reported directly to the
Board.

 

 

—

 

Review the Company’s Forms 10-Q, Forms 10-K, proxy statements, and annual
reports prior to issuance, to ensure the adequacy and accuracy of the
disclosures included therein. The Committee will then pass such disclosures on
for review by the Audit Committee of the Board, accompanied by a letter
describing the activities of the Committee in regard to such disclosures and
including its recommendation regarding those disclosures.

 

 

—

 

By a majority vote, advise the CEO and the CFO of the Company with respect to
the certifications they provide in connection with the Company’s quarterly and
annual reports.

 

 

—

 

Review the Company’s quarterly earnings press releases and related materials,
prior to submission to the Audit Committee, to ensure the adequacy and accuracy
of the disclosures included therein.

 

 

—

 

Hold ad hoc meetings upon the occurrence of events that may require the filing
of a Form 8-K, to discuss whether such disclosure should be made, and the form
and content of any such disclosure. Such meetings may be called by one of the
Senior Officers, if, in his or her judgment, there has been a potentially
material development that requires review by the Committee.

 

 

—

 

Review in advance the Company’s press releases, scripts developed for analyst
conference calls, and related documents, such as Forms 8-K.

 

 

—

 

Consult as appropriate with other Company personnel in connection with the
review of disclosures or potentially material information, and request input
from advisors including outside counsel and outside auditors.

 

2

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—

 

Undertake any other duties or responsibilities that the Company’s Chief
Financial Officer, President, General Counsel and Audit Committee together
determine are necessary or desirable.

 

III.

MEMBERSHIP

The membership of the Committee shall consist of the following:

 

 

—

 

President

 

 

—

 

Chief Financial Officer

 

 

—

 

Chief Medical Officer or the head(s) of the clinical and regulatory departments

 

 

—

 

General Counsel or the head of the legal department

 

 

—

 

Chief Compliance Officer

 

 

—

 

Chief Governance Officer

 

 

—

 

Head of the corporate communications department

Such members may be replaced, or new members added, at any time by the Board.
The Chief Financial Officer shall serve as the head of the Committee, unless
another member is selected by the Board.

The Committee may invite other Company personnel, outside auditors, outside
counsel, or other outside advisors to attend its meetings, as it deems necessary
and appropriate to perform its duties and responsibilities. A representative of
each major department in the Company, including clinical, regulatory, quality,
legal, finance, manufacturing, human resources, corporate communications, and
marketing, shall be invited to participate in the meetings held to review the
Forms 10-Q and 10-K.

 

IV.

OPERATIONS

The Committee shall meet at least quarterly, but may meet more frequently as
circumstances dictate, or at the request of the Senior Officers. Meetings may
occur in person or via conference call. When meetings are not practicable or
appropriate, the Committee may be consulted via electronic mail, copied to all
members of the Committee, in lieu of a meeting.

The occurrence of each meeting of the Committee shall be recorded, and minutes
shall be kept of each meeting that is held to review Forms 10-Q, Forms 10-K,
proxy statements, and annual reports.

The Committee shall solicit the input of department representatives as necessary
to review the accuracy of disclosures related to issues within their expertise,
including, but not limited to: (1) financial reporting; (2) the Company’s
ongoing relationships and communications

 

3

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Case 2:10-cv-00564-MJP    Document 73-1    Filed 11/06/12    Page 31 of 63

 

with regulators, including, but not limited to, the FDA, SEC, NASDAQ, and
foreign equivalents; (3) the status of the Company’s clinical trials; and
(4) the status of the Company’s manufacturing activities.

In helping the Committee to discharge its duties, the Senior Officers shall have
full access to all Company books, records, facilities, and personnel.

The Committee shall solicit advice and counsel on the accuracy and materiality
of disclosures, whenever it deems it to be necessary and appropriate, from the
Company’s outside auditors, outside counsel, regulatory advisors, and other
independent advisors. The Committee may ask independent advisors to assist it in
evaluating the adequacy of the Disclosure Controls, if it deems it necessary and
appropriate to do so.

The head of the Committee shall have the authority to retain separate and
independent advisors at the Company’s expense, to provide advice and counsel on
material risk issues and the appropriate disclosure of such issues, including,
but not limited to, the Company’s clinical trials and its communications with
regulators.

 

4

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Exhibit B

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The Honorable Marsha J. Pechman

 

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

 

    

)

      

In re CELL THERAPEUTICS, INC.,    

 

)

    

Master Docket No. C 10-564 MJP

DERIVATIVE LITIGATION

 

)

        

)

    

[PROPOSED] ORDER PRELIMINARILY

APPROVING SETTLEMENT AND PROVIDING FOR NOTICE

 

)

    

This Document Relates To:

 

)

      

)

    

ALL ACTIONS

 

)

        

)

    

 

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[PROPOSED] ORDER PRELIMINARILY

APPROVING SETTLEMENT

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900       San Diego, CA 92101
      Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

--------------------------------------------------------------------------------

Case 2:10-cv-00564-MJP    Document 73-1    Filed 11/06/12    Page 34 of 63

 

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Plaintiffs, the Individual Defendants and nominal party Cell Therapeutics, Inc.
(“CTI”) have made application, pursuant to Federal Rule of Civil Procedure 23.1
(“Rule 23.1”), for an order: (i) preliminarily approving the Settlement of the
above-captioned Action, in accordance with the Stipulation of Settlement dated
November 6, 2012 (the “Stipulation”), which, together with the exhibits annexed
thereto, sets forth the terms and conditions for the proposed settlement of the
Action and dismissal of the Action with prejudice; and (ii) approving the form
and content of the Summary Notice of Pendency and Proposed Settlement of Action
(“Summary Notice”) for publication and the Notice of Pendency and Proposed
Settlement of Action (“Notice”) for filing by CTI with the U.S. Securities and
Exchange Commission (“SEC”) and posting, along with the Stipulation, on CTI’s
website.

After review and consideration of the Stipulation filed with the Court and the
exhibits annexed thereto, and after due deliberation,

IT IS HEREBY ORDERED that:

1.          The Court, for purposes of this order, adopts all defined terms as
set forth in the Stipulation.

2.          The Court hereby preliminarily approves, subject to further
consideration at the Settlement Hearing described below, the Stipulation and the
Settlement set forth therein, including the terms and conditions for settlement
and dismissal with prejudice of the Action.

3.          A hearing (the “Settlement Hearing”) shall be held before this Court
on                     , 2012, at                          .m. to determine:
(i) whether the Settlement of the Action on the terms and conditions provided
for in the Stipulation is fair, reasonable, and adequate to CTI and Current CTI
Shareholders, and should be finally approved by the Court; (ii) whether the
Notice fully satisfied the requirements of Rule 23.1 and the requirements of due
process; (iii) whether a Judgment as provided in, and attached as Exhibit E to
the Stipulation should be entered, dismissing the Action with prejudice;
(iv) whether all Released Claims against the Released Persons should be fully
and finally released; (v) the amount of attorneys’ fees and

 

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[PROPOSED] ORDER PRELIMINARILY

APPROVING SETTLEMENT

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 1 -    San Diego, CA
92101       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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expenses to be paid to Plaintiffs’ Counsel for their efforts in connection with
the litigation; (vi) whether, and in what amount, the Plaintiffs are entitled to
incentive awards for their efforts in connection with the litigation; and
(vii) to rule upon such other matters as the Court may deem appropriate.

4.          The Court approves, as to form and content, the Summary Notice and
the Notice attached as exhibits to the Stipulation and finds that the
publication of the Summary Notice and the filing and posting of the Notice,
substantially in the manner and form set forth in this order, constitutes
adequate and reasonable notice to Current CTI Shareholders pursuant to Rule 23.1
and the requirements of due process. Non-material changes to the form of Notice
and Summary Notice may be made without further approval of the Court.

5.          If for any reason the Effective Date of the Settlement, as defined
in paragraph 6.1 of the Stipulation, does not occur, the Stipulation, including
any amendment(s) thereof, shall, without the need for further action by the
Court or any of the Settling Parties, be null and void, of no further force or
effect, and without prejudice to any party, and may not be introduced as
evidence or referred to in any actions or proceedings by any person or entity.
Each party shall be restored to his, her, or its respective position as it
existed as of November 6, 2012.

6.          No later than ten calendar days following entry of this order, CTI
shall cause the Summary Notice, substantially in the form annexed as Exhibit D
to the Stipulation, to be published once in Investor’s Business Daily, and shall
cause a copy of the Notice, substantially in the form annexed as Exhibit C to
the Stipulation, to be filed with the SEC via Form 8-K.

7.          No later than ten calendar days following entry of this order, CTI
shall cause the Notice and the Stipulation to be posted on the “Investors”
section of CTI’s website.

8.          No later than fourteen calendar days before the Objection Deadline
described in ¶11 below, Plaintiffs and Plaintiffs’ Counsel shall file and serve
(1) their motion in support of final approval of the Settlement, and (2) their
application for an award of fees and reimbursement of expenses in connection
with the Action (the “Fee and Expense Application”).

 

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[PROPOSED] ORDER PRELIMINARILY

APPROVING SETTLEMENT

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 2 -    San Diego, CA
92101       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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9.          No later than the Objection Deadline, Defendants shall file and
serve their opposition papers, if any, to the Fee and Expense Application.

10.        Any Current CTI Shareholder may object and/or appear and show cause,
if he, she or it has any concern as to why the Settlement of the Action should
not be approved as fair, reasonable, and adequate, why the Judgment should not
be entered thereon, or as to the amount of compensation and reimbursement to
Plaintiffs’ Counsel.

11.        Unless otherwise ordered by the Court, no Current CTI Shareholder
shall be heard or entitled to contest the approval of the terms and conditions
of the Settlement, or, if approved, the Judgment to be entered thereon approving
the same, or Plaintiffs’ Fee and Expense Application, unless that shareholder
has, at least twenty-one calendar days prior to the Settlement Hearing (the
“Objection Deadline”): (i) filed with the Clerk of the Court for the U.S.
District Court for the Western District of Washington, 700 Stewart Street,
Seattle, Washington 98101, a written objection to the Settlement or any of its
terms, including the Fee and Expense Application, setting forth: (a) the nature
of the objection; (b) proof of current ownership of CTI common stock, including
the number of shares of CTI common stock and the date of purchase; and (c) any
documentation in support of such objection; and (ii) if a Current CTI
Shareholder intends to appear and requests to be heard at the Settlement
Hearing, such shareholder must have, in addition to the requirements of
(i) above, filed with the Clerk of the Court: (a) written notice of such
shareholder’s intention to appear; (b) a statement that indicates the basis for
such appearance; and (c) the identities of any witnesses the shareholder intends
to call or evidence the shareholder intends to present at the Settlement Hearing
and the subjects of their testimony. If a Current CTI Shareholder files a
written objection and/or written notice of intent to appear, such shareholder
must also simultaneously serve copies of such notice, proof, statement, and
documentation, together with copies of any other papers or briefs such
shareholder files with the Court (either by hand delivery or by first class
mail) upon each of the following thereof:

 

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[PROPOSED] ORDER PRELIMINARILY

APPROVING SETTLEMENT

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 3 -    San Diego, CA
92101       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

--------------------------------------------------------------------------------

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ROBBINS UMEDA LLP

     

WILSON SONSINI

 

Attn: Craig W. Smith

     

  GOODRICH & ROSATI

 

600 B Street, Suite 1900

     

Attn: Barry M. Kaplan

 

San Diego, CA 92101

     

701 Fifth Avenue, Suite 5100

       

Seattle, WA 98104

 

FEDERMAN & SHERWOOD

       

Attn: Sara E. Collier

     

Counsel for CTI and the Individual

 

10205 North Pennsylvania Avenue

     

Defendants

 

Oklahoma City, OK 73120

       

Co-Lead Counsel for Plaintiffs

     

Any Current CTI Shareholder who does not make his, her, or its objection in the
manner provided herein shall be deemed to have waived such objection and shall
forever be foreclosed from making any objection to the fairness, reasonableness,
or adequacy of the Settlement and/or the Fee and Expense Application, unless
otherwise ordered by the Court, and shall otherwise be bound by the Judgment to
be entered and the releases to be given.

12.        No later than seven calendar days prior to the Settlement Hearing,
CTI shall serve on all counsel and file with the Court proof, by affidavit or
declaration, of the publication of the Summary Notice in Investor’s Business
Daily, the filing of the Notice on Form 8-K with the SEC, and the posting of the
Notice and Stipulation on its website.

13.        No later than seven calendar days prior to the Settlement Hearing,
the Settling Parties shall file and serve their responses to objections, if any,
from Current CTI Shareholders, and Plaintiffs shall file and serve their reply,
if any, in further support of their Fee and Expense Application and motion in
support of final approval of the Settlement.

14.        Neither the Stipulation nor the Settlement, nor any act performed or
document executed pursuant to or in furtherance of the Stipulation or the
Settlement: (i) is or may be deemed to be or may be used as an admission of, or
evidence of, the validity of any Released Claim, or of any wrongdoing or
liability of the Individual Defendants and/or the Related Persons; or (ii) is or
may be deemed to be or may be used as an admission of, or evidence of, any fault
or omission of any of the Individual Defendants and/or the Related Persons in
any civil, criminal, or administrative proceeding in any court, administrative
agency, or other tribunal.

 

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[PROPOSED] ORDER PRELIMINARILY

APPROVING SETTLEMENT

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 4 -    San Diego, CA
92101       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

--------------------------------------------------------------------------------

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CTI, the Individual Defendants, and/or the Related Persons may file the
Stipulation and/or the Judgment in any action that may be brought against them
in order to support a defense or counterclaim based on principles of res
judicata, collateral estoppel, release, good faith settlement, judgment bar or
reduction, or any other theory of claim preclusion or issue preclusion or
similar defense or counterclaim.

15.        This order, the Settlement, and any of their terms, and all
negotiations, discussions and proceedings in connection with this order and the
Settlement, shall not be offered or received in evidence or used for any other
purpose in this or any other proceeding in any court, administrative agency,
arbitration tribunal, or other forum of any kind or character in the United
States or any other country except as necessary to enforce the terms of this
order and/or the Settlement.

16.        The Court reserves the right to adjourn the date of the Settlement
Hearing or modify any other dates set forth herein without further notice to the
Current CTI Shareholders, and retains jurisdiction to consider all further
applications arising out of or connected with the Settlement.

 

IT IS SO ORDERED.

DATED:

 

 

    

 

      

  HONORABLE MARSHA J. PECHMAN

      

  UNITED STATES DISTRICT JUDGE

 

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781429

 

[PROPOSED] ORDER PRELIMINARILY

APPROVING SETTLEMENT

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 5 -    San Diego, CA
92101       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

--------------------------------------------------------------------------------

Case 2:10-cv-00564-MJP    Document 73-1    Filed 11/06/12    Page 39 of 63

 

 

 

 

 

Exhibit C

--------------------------------------------------------------------------------

Case 2:10-cv-00564-MJP    Document 73-1    Filed 11/06/12    Page 40 of 63

 

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The Honorable Marsha J. Pechman

 

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

 

 

     

)

 

In re CELL THERAPEUTICS, INC.,    

 

)

 

    Master Docket No. C 10-564 MJP

DERIVATIVE LITIGATION

 

)

 

 

 

)

   

)

 

    NOTICE OF PENDENCY AND

This Document Relates To:

 

)

 

    PROPOSED SETTLEMENT OF ACTION

 

)

 

ALL ACTIONS

 

)

 

 

 

)

 

 

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NOTICE OF PENDENCY AND PROPOSED

SETTLEMENT OF ACTION

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900       San Diego, CA 92111
      Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

--------------------------------------------------------------------------------

Case 2:10-cv-00564-MJP    Document 73-1    Filed 11/06/12    Page 41 of 63

 

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TO:

ALL OWNERS OF CELL THERAPEUTICS, INC. (“CTI” OR THE “COMPANY”) COMMON STOCK AS
OF NOVEMBER 6, 2012 WHO CONTINUE TO HOLD SUCH SHARES (“CURRENT CTI
SHAREHOLDERS”)

 

  

PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. . THIS NOTICE RELATES TO
A PROPOSED SETTLEMENT AND DISMISSAL OF THE ABOVE-CAPTIONED SHAREHOLDERS’
DERIVATIVE ACTION. YOUR RIGHTS MAY BE AFFECTED BY THESE LEGAL PROCEEDINGS. IF
THE COURT APPROVES THE SETTLEMENT, YOU WILL BE FOREVER BARRED FROM CONTESTING
THE APPROVAL OF THE PROPOSED SETTLEMENT AND FROM PURSUING THE RELEASED CLAIMS.

 

  

THE COURT HAS MADE NO FINDINGS OR DETERMINATIONS CONCERNING THE MERITS OF THE
ACTIONS. THE RECITATION OF THE BACKGROUND AND CIRCUMSTANCES OF THE SETTLEMENT
CONTAINED HEREIN DOES NOT CONSTITUTE THE FINDINGS OF THE COURT. IT IS BASED ON
REPRESENTATIONS MADE TO THE COURT BY COUNSEL FOR THE PARTIES.

YOU ARE HEREBY NOTIFIED of the proposed settlement (the “Settlement”) of the
above-captioned shareholder derivative action. This notice (the “Notice”) is
being provided pursuant to an order of the U.S. District Court in the Western
District of Washington (the “Court”). This Notice is not intended to be and
should not be construed as an expression of any opinion by the Court with
respect to the merits of the claims made in the Action, but is merely to advise
you of the pendency of Settlement of the Action and your rights as a CTI
shareholder. This notice should be read in conjunction with, and is qualified in
its entirety by reference to, the text of the Stipulation of Settlement dated
November 6, 2012 (the “Stipulation”), which is available on CTI’s website at
http://investors.celltherapeutics.com.1

 

 

1 The Stipulation may also be inspected at the Office of the Clerk of the U.S.
District Court in the Western District of Washington located at 700 Stewart
Street, Seattle, Washington 98101, during regular business hours of each
business day. The capitalized terms used in this Notice, and not otherwise
defined, are defined in the Stipulation.

 

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NOTICE OF PENDENCY AND PROPOSED

SETTLEMENT OF ACTION

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 1 -    San Diego, CA
92111       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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Please be advised that pursuant to an order of the Court, a hearing (the
“Settlement Hearing”) will be held on                     , 2012 at   :    
  .m., before the Honorable Marsha J. Pechman for the purpose of determining:
(a) whether the Settlement of the Action on the terms and conditions provided
for in the Stipulation is fair, reasonable, and adequate to CTI and Current CTI
Shareholders, and should be finally approved by the Court; (b) whether this
Notice fully satisfied the requirements of Rule 23.1 and the requirements of due
process; (c) whether a Judgment as provided in, and attached as Exhibit E to the
Stipulation should be entered, dismissing the Action with prejudice; (d) whether
all Released Claims against the Released Persons should be fully and finally
released; (e) the amount of attorneys’ fees and expenses to be paid to
Plaintiffs’ Counsel for their efforts in connection with the litigation;
(f) whether, and in what amount, Plaintiffs are entitled to incentive awards for
their efforts in connection with the litigation; and (g) to rule upon such other
matters as the Court may deem appropriate.

The Settling Parties do not agree on the amount of attorneys’ fees and expenses
that should be awarded in the Action, and have agreed to present this matter to
the Court for resolution. Plaintiffs and Plaintiffs’ Counsel intend to petition
the Court for no more than $1.3 million in attorneys’ fees and $75,000 in
reimbursement of expenses (the “Fee and Expense Application”), as well as for an
incentive award in the amount of $1,500 for plaintiff Joseph Shackleton (the
“Incentive Award”).

The Settlement will fully resolve the Action on the terms set forth in the
Stipulation and summarized in this Notice, including the dismissal of the Action
with prejudice. As detailed below, the Settling Parties believe that the
proposed Settlement provides substantial benefits to the Company, and is in the
best interests of the Company and its shareholders. The Stipulation is intended
by the Settling Parties to fully, finally and forever resolve, discharge and
settle the Released Claims (as defined in ¶1.17 of the Stipulation and set forth
herein), upon and subject to the terms and conditions hereof.

 

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NOTICE OF PENDENCY AND PROPOSED

SETTLEMENT OF ACTION

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 2 -    San Diego, CA
92111       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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You may have the right to object to the Settlement, including to the amount of
attorneys’ fees and unreimbursed expenses that should be awarded to Plaintiffs’
Counsel and the Incentive Award, in the manner provided herein. If you fail to
object in the manner provided herein at least twenty-one calendar days prior to
the Settlement Hearing, you will be deemed to have waived your objections and
will be bound by the Judgment to be entered and the release of claims to be
given, unless otherwise ordered by the Court.

There Is No Claims Procedure. This Action was brought as a derivative action on
behalf of and to protect the interests of CTI and its shareholders. This Action
is not a class action and, as such, there is no claims procedure. The Settlement
of this Action will result in certain commitments and changes regarding the
Company’s corporate governance, not in payments to CTI shareholders. In a
factually related securities class action captioned In re Cell Therapeutics,
Inc. Class Action Litigation, Master Docket No. C10-414MJP (the “Securities
Class Action”), the parties reached a settlement that created a fund in the
amount of $19 million that will provide payments, consistent with the
court-approved claims administration procedure, to Persons (as that term is
defined in the Securities Class Action settlement) who purchased or otherwise
acquired CTI common stock between March 25, 2008 and March 22, 2010, inclusive.

 

I.

THE ACTION

On April 1, 2010, plaintiff Joseph Shackleton filed a complaint against the
Individual Defendants and nominal defendant CTI in the U.S. District Court for
the Western District of Washington, captioned Shackleton v. Bauer, Case No. C
2:10-cv-00564-MJP (the “Shackleton Complaint”). The Shackleton Complaint
asserted claims on behalf of CTI, alleging that the CTI Board of Directors
(“Board”), among other things, failed to adequately supervise or exercise
oversight as to the Company’s disclosures related to pixantrone, a treatment for
non-Hodgkin’s lymphoma, and the Company’s disclosures related to communications
with the U.S. Food and Drug Administration (“FDA”) about the FDA approval
process for pixantrone. Specifically, the Shackleton Complaint alleged that the
Company failed to disclose that: (i) a Special Protocol

 

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NOTICE OF PENDENCY AND PROPOSED

SETTLEMENT OF ACTION

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 3 -    San Diego, CA
92111       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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Assessment with the FDA for a pixantrone clinical trial, PIX301, was allegedly
invalidated in March 2008; (ii) PIX301 allegedly enrolled a large number of
patients who did not suffer from aggressive non-Hodgkin’s lymphoma; and
(iii) the results from PIX301 allegedly demonstrated that pixantrone was
cardiotoxic. The Shackleton Complaint also alleged that, as a result of the
foregoing, the Company lacked a reasonable basis for positive statements about
pixantrone and its prospects. Defendants deny all of the allegations made in the
Complaint.

Plaintiffs Terry Marbury and Paul Cyrek thereafter filed substantially similar
complaints: Marbury v. Bianco, No. 2:10-cv-00578-MJP was filed with the Court on
April 5, 2010, and Cyrek v. Bauer, No. 2:10-cv-00625-TSZ was filed with the
Court on April 13, 2010. By order dated May 10, 2010, the Court consolidated
these three derivative complaints as In re Cell Therapeutics, Inc. Derivative
Litigation, Master Docket No. C 10-564 MJP (the “Action” or “Derivative
Action”), and appointed Robbins Umeda LLP and Federman & Sherwood as Co-Lead
Counsel for plaintiffs. The May 10, 2010 order also provided that Defendants did
not need to respond to the complaints filed in the Action, and that the parties
would confer upon a proposed schedule for the filing of an amended complaint and
briefing on any motion to dismiss the amended complaint.

Three additional complaints were thereafter filed and consolidated into the
Action. On June 1, 2010, plaintiff Carey Souda filed a complaint in this Court
captioned Souda v. Bauer, Case No. 2:10-cv-00905-MJP, which was consolidated
with the Action in an order dated July 19, 2010; and on July 27, 2010, plaintiff
Brandon Bohland filed a complaint in this Court captioned Bohland v. Bauer et
al., Case No. 2:10-cv-00564-JCC, which was consolidated into the Action in an
order dated November 16, 2010. On October 4, 2010, plaintiff Lawrence J.
Alexander filed a substantially similar derivative complaint captioned Alexander
v. Bianco, No. 10-2-34849-2 SEA, in the Superior Court of Washington, King
County, which was removed to this Court on October 5, 2010, and assigned as Case
No. 2:10-cv-01597-MJP, and thereafter consolidated into the Action in an order
dated March 1, 2011.

 

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NOTICE OF PENDENCY AND PROPOSED

SETTLEMENT OF ACTION

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 4 -    San Diego, CA
92111       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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On November 23, 2010, the parties in the Derivative Action filed a stipulation
asking the Court to postpone all deadlines in the Action pending the Court’s
ruling on defendants’ motion to dismiss the Securities Class Action. This
stipulation also provided that in the event that the motion to dismiss the
Securities Class Action was denied, the derivative Plaintiffs would receive
copies of all discovery produced in the Securities Class Action, and would file
and serve a consolidated complaint within forty-five days of the close of
discovery in the Securities Class Action. On November 30, 2010, the Court
approved this stipulation. On February 4, 2011, following the denial in large
part of defendants’ motion to dismiss the Securities Class Action, this Court
lifted the stay in the Derivative Action.

After the stay of the Derivative Action was lifted, Plaintiffs received the
discovery produced in the Securities Class Action contemporaneously as it was
produced in that action. To date, Plaintiffs have reviewed and analyzed
approximately 231,000 pages of documents produced by Defendants and third
parties.

The parties to the Derivative Action and Securities Class Action participated in
a day-long mediation with the late Honorable Nicholas H. Politan (Ret.) on
October 26, 2011. In preparation for the mediation, the Plaintiffs in the
Derivative Action prepared a damages analysis and report, and made a settlement
demand proposing, among other things, corporate governance reforms intended to
address the alleged wrongdoing.

The Securities Class Action ultimately settled for $19 million to the class, the
proceeds of which were funded entirely by the Company’s insurers.

Following the October 26, 2011 mediation, the parties to the Derivative Action
continued to engage in arm’s-length settlement negotiations. Plaintiffs in the
Derivative Action prepared and delivered a second, supplemental settlement
demand letter to the Company on January 18, 2012, proposing additional corporate
governance measures.

On April 17, 2012, the parties to the Derivative Action participated in a second
day-long mediation session with the Honorable Howard B. Wiener (Ret.) (“Judge
Wiener”). With

 

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NOTICE OF PENDENCY AND PROPOSED

SETTLEMENT OF ACTION

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 5 -    San Diego, CA
92111       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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assistance from Judge Wiener, the Settling Parties were able to reach agreement
on the majority of the material settlement terms herein.

 

II.

TERMS OF THE SETTLEMENT

The terms and conditions of the proposed Settlement are set forth in the
Stipulation. The Stipulation has been filed with the Court and is also available
for viewing on the website of CTI at http://investors.celltherapeutics.com. The
following is only a summary of its terms.

In connection with the prosecution and settlement of the Action, CTI has agreed
to implement the corporate governance measures (“Corporate Governance Measures”)
set forth in the Stipulation within ninety days after the Effective Date of the
Settlement. The Corporate Governance Measures include procedures for enhanced
Board oversight of disclosures, including the Board’s adoption of a charter for
the Disclosure Committee. The Corporate Governance Measures also include
provisions regarding the composition of the Board, procedures to be utilized by
the Board, and the compensation paid to the Board, as well as measures relating
to the Company’s oversight of its Code of Business Conduct and Ethics, Corporate
Governance Guidelines, Code of Ethics for Senior Officers, Insider Trading
Policy and whistleblower hotline.

The Board will keep such measures in force and effect for a period of no less
than four years, subject to revisions that may be required by changes in
applicable laws and/or regulations, except that this obligation will terminate
if and when there is a change of control of the Company.

Defendants acknowledge that the filing, prosecution, and settlement of this
Action was a material and substantial contributing factor in bringing about the
foregoing changes to the Company’s corporate governance structure that were made
after the filing of this Action. CTI acknowledges that the Settlement is fair,
reasonable, adequate, and in the best interests of CTI and its shareholders.

 

III.

DISMISSAL AND RELEASES

The Settlement is conditioned, among other things, upon entry of an order by the
Court approving the Settlement and dismissing the Action with prejudice. The
Settlement will not

 

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NOTICE OF PENDENCY AND PROPOSED

SETTLEMENT OF ACTION

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 6 -    San Diego, CA
92111       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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become effective until such dismissal has been entered and has become Final and
non-appealable (the “Effective Date”).

Upon the Effective Date, Plaintiffs (acting on their own behalf and derivatively
on behalf of CTI); CTI, its predecessors, successors, subsidiaries, affiliates,
divisions, and assigns; and each of CTI’s shareholders (solely in their capacity
as CTI shareholders) shall be deemed to have, and by operation of the Judgment
shall have, fully, finally, and forever released, relinquished, and discharged
the Released Claims against the Released Persons and any and all claims
(including Unknown Claims) arising out of, relating to, or in connection with
the defense, settlement, or resolution of the Action against the Released
Persons, provided that nothing herein shall in any way impair or restrict the
rights of any Settling Party to enforce the terms of the Stipulation or the
Judgment.

Upon the Effective Date, Plaintiffs (acting on their own behalf and,
derivatively on behalf of CTI); CTI, its predecessors, successors, subsidiaries,
affiliates, divisions, and assigns; and each of CTI’s shareholders (solely in
their capacity as CTI shareholders) will be forever barred and enjoined from
commencing, instituting, or prosecuting any of the Released Claims or any action
or other proceeding against any of the Released Persons based on the Released
Claims or any action or proceeding, arising out of, related to, or in connection
with the Settlement or resolution of the action, provided, that nothing herein
shall in any way impair or restrict the rights of any Settling Party to enforce
the terms of the Stipulation or Judgment.

Upon the Effective Date, each of the Released Persons shall be deemed to have,
and by operation of the Judgment shall have, fully, finally, and forever
released, relinquished, and discharged each and all of the Plaintiffs,
Plaintiffs’ Counsel, CTI, the Related Persons, and all CTI shareholders (solely
in their capacity as CTI shareholders) from all claims (including Unknown
Claims), arising out of, relating to, or in connection with the institution,
prosecution, assertion, settlement, or resolution of the Action or the Released
Claims. Nothing herein shall in any way

 

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NOTICE OF PENDENCY AND PROPOSED

SETTLEMENT OF ACTION

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 7 -    San Diego, CA
92111       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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impair or restrict the rights of any Settling Party to enforce the terms of the
Stipulation or Judgment.

 

IV.

PLAINTIFFS’ CLAIMS AND THE BENEFITS OF SETTLEMENT

Plaintiffs believe that the claims asserted in this Action have merit and that
their investigation supports the claims asserted. Without conceding the merit of
any of the Individual Defendants’ defenses or lack of merit of any of their
allegations, however, Plaintiffs recognize the expense and length of continued
proceedings necessary to prosecute the Action against the Individual Defendants
through trial and through appeals. Plaintiffs have also taken into account the
uncertain outcome and the risk of any litigation, especially in complex actions
such as the Derivative Action, as well as the difficulties and delays inherent
in such litigation. Plaintiffs are also mindful of the inherent problems of
proof and possible defenses to the claims asserted in the Action. Plaintiffs
believe that the settlement set forth in the Stipulation confers substantial
benefits upon CTI and its shareholders. Based on their evaluation, Plaintiffs
believe that the settlement set forth in this Stipulation is in the best
interests of CTI and its shareholders.

 

V.

THE INDIVIDUAL DEFENDANTS’ DENIALS OF WRONGDOING AND LIABILITY

The Individual Defendants deny each and all of the claims and contentions
alleged by Plaintiffs in this Action. The Individual Defendants deny all claims
of wrongdoing or liability against them arising out of any of the conduct,
statements, acts, or omissions alleged, or that could have been alleged, in the
Action. The Individual Defendants also deny, inter alia, the allegations that
Plaintiffs, CTI, or its shareholders have suffered damage, or that Plaintiffs,
CTI, or its shareholders were harmed by the conduct alleged in the Action. The
Individual Defendants further assert that at all relevant times, they acted in
good faith and in a manner they reasonably believed to be in the best interests
of CTI and its shareholders.

Nonetheless, the Individual Defendants have concluded that further conduct of
the Action would be protracted and expensive, and that it is desirable that the
Action be fully and finally settled in the manner and upon the terms and
conditions set forth in this Stipulation. The

 

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NOTICE OF PENDENCY AND PROPOSED

SETTLEMENT OF ACTION

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 8 -    San Diego, CA
92111       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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Individual Defendants agree to the proposed settlement without admitting any
wrongdoing or liability.

 

VI.

PLAINTIFFS’ ATTORNEYS’ FEES AND EXPENSES

The Settling Parties do not agree on the amount of attorneys’ fees and expenses
that should be awarded in the Action, and have agreed to present this matter to
the Court for resolution. Plaintiffs and Co-Lead Counsel intend to petition the
Court for an award of fees and reimbursement of expenses in connection with the
Action of no more than $1.3 million in attorneys’ fees and $75,000 in
reimbursement of expenses. All Settling Parties agree that Plaintiffs are
entitled to an award of reasonable attorneys’ fees reflecting, among other
factors, the benefits conferred by the Settlement and the risks undertaken in
pursuing the Action, as well as compensation for reasonable expenses incurred in
prosecuting the Action.

The Fee and Expense Application shall be Plaintiff” and/or Plaintiffs’ Counsel’s
sole application for an award of fees or expenses in connection with this
Action. Final resolution by the Court of the Fee and Expense Application shall
not be a precondition to the dismissal of the Action in accordance with this
Stipulation, and the Settling Parties agree that the Fee and Expense Application
may be considered separately from the proposed Settlement. Any order or
proceeding relating to the Fee and Expense Application, or any appeal from any
order relating thereto or reversal or modification thereof, shall not operate to
terminate or cancel the Stipulation, or affect or delay the finality of the
Judgment approving the Stipulation and the Settlement of the Action set forth
therein. To date, Plaintiffs’ Counsel have neither received any payment for
their services in conducting the Action, nor have Plaintiffs’ Counsel been
reimbursed for their out-of-pocket litigation expenses.

Co-Lead Counsel also intend to seek Court approval for an Incentive Award in the
amount of $1,500 for plaintiff Shackleton. The Individual Defendants and CTI
agree not to object to a request for Court approval of the Incentive Award. The
Incentive Award will be funded by any fee amount awarded in the Fee and Expense
Application.

 

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NOTICE OF PENDENCY AND PROPOSED

SETTLEMENT OF ACTION

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 9 -    San Diego, CA
92111       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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VII.

THE RIGHT TO OBJECT AND/OR BE HEARD AT THE HEARING

YOU ARE NOT REQUIRED TO PARTICIPATE IN OR ATTEND THE SETTLEMENT HEARING, BUT MAY
DO SO IF YOU WISH. Any Current CTI Shareholder who continues to hold shares of
CTI common stock as of the date of the Settlement Hearing may object and/or
appear and show cause, if he, she, or it has any concern why the Settlement
should not be approved as fair, reasonable, and adequate, or why the Judgment
should not be entered thereon, or as to how much to compensate and reimburse
Plaintiffs’ Counsel; provided that, however, unless otherwise ordered by the
Court, no Current CTI Shareholder shall be heard or entitled to contest the
approval of the terms and conditions of the Settlement, or, if approved, the
Judgment to be entered thereon approving the same, or the Fee and Expense
Application, unless that shareholder has, at least twenty-one calendar days
prior to the Settlement Hearing, filed with the Clerk of the Court, U.S.
District Court in the Western District of Washington, 700 Stewart Street,
Seattle, Washington 98101, a written objection to the Settlement or any of its
terms, including the Fee and Expense Application, setting forth: (a) the nature
of the objection; (b) proof of current ownership of CTI common stock, including
the number of shares of CTI common stock held and the date of purchase; and
(c) any documentation in support of such objection

If a Current CTI Shareholder intends to appear and requests to be heard at the
Settlement Hearing, such shareholder must have, in addition to the requirements
above, filed with the Clerk of the Court: (a) a written notice of such
shareholder’s intention to appear; (b) a statement that indicates the basis for
such appearance; and (c) the identities of any witnesses the shareholder intends
to call or evidence the shareholder intends to present at the Settlement Hearing
and the subjects of their testimony. If a Current CTI Shareholder files a
written objection and/or written notice of intent to appear, such shareholder
must also simultaneously serve copies of such notice, proof, statement, and
documentation, together with copies of any other papers or briefs such

 

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NOTICE OF PENDENCY AND PROPOSED

SETTLEMENT OF ACTION

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 10 -    San Diego,
CA 92111       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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shareholder files with the Court (either by hand delivery or by first class
mail) upon each of the following:

 

ROBBINS UMEDA LLP

  

WILSON SONSINI

Attn: Craig W. Smith

  

  GOODRICH & ROSATI

600 B Street, Suite 1900

  

Attn: Barry M. Kaplan

San Diego, CA 92101

  

701 Fifth Avenue, Suite 5100

  

Seattle, WA 98104

FEDERMAN & SHERWOOD

  

Attn: Sara E. Collier

  

Counsel for CTI and the

10205 North Pennsylvania

  

Individual Defendants

Avenue

  

Oklahoma City, OK 73120

  

Co -Lead Counsel for Plaintiffs

  

Any Current CTI Shareholder who does not make his, her, or its objection in the
manner provided herein shall be deemed to have waived such objection and shall
forever be foreclosed from making any objection to the fairness, reasonableness,
or adequacy of the proposed Settlement as incorporated in the Stipulation,
and/or the Fee and Expense Application, unless otherwise ordered by the Court,
but shall otherwise be bound by the Judgment to be entered and the releases to
be given.

 

XI.

EXAMINATION OF PAPERS AND INQUIRIES

This Notice contains only a summary of the terms of the Settlement. For a more
detailed statement of the matters involved in the Action, the Settlement and the
terms discussed in this Notice, the Stipulation may be viewed on the website of
CTI at http://investors.celltherapeutics.com.

For more information concerning the Settlement, you may also call or write to:
Robbins Umeda LLP, c/o Craig W. Smith, 600 B Street, Suite 1900, San Diego, CA
92101, Telephone: (619) 525-3990.

PLEASE DO NOT TELEPHONE THE COURT OR CTI

REGARDING THIS NOTICE.

 

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781428

 

     

NOTICE OF PENDENCY AND PROPOSED

SETTLEMENT OF ACTION

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 11 -    San Diego,
CA 92111       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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Case 2:10-cv-00564-MJP    Document 73-1    Filed 11/06/12    Page 52 of 63

 

 

 

 

 

 

Exhibit D

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The Honorable Marsha J. Pechman

 

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

 

   

)

    

In re CELL THERAPEUTICS, INC.,

 

)

    

Master Docket No. C 10-564 MJP

DERIVATIVE LITIGATION

 

)

        

)

      

)

    

SUMMARY NOTICE OF PENDENCY

This Document Relates To:

 

)

    

AND PROPOSED SETTLEMENT OF

 

)

    

ACTION

ALL ACTIONS

 

)

        

)

    

 

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SUMMARY NOTICE OF PENDENCY AND

PROPOSED SETTLEMENT OF ACTION

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900       San Diego, CA 92101
      Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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TO:

ALL OWNERS OF CELL THERAPEUTICS, INC. (“CTI”) COMMON STOCK AS OF NOVEMBER 6,
2012 WHO CONTINUE TO HOLD SUCH SHARES (“CURRENT CTI SHAREHOLDERS”)

YOU ARE HEREBY NOTIFIED that the parties to the above-captioned shareholder
derivative action (the “Action”) have entered into a Stipulation of Settlement
dated November 6, 2012 (the “Stipulation”), to resolve the claims raised by the
Action. This notice should be read in conjunction with, and is qualified in its
entirety by reference to, the text of the Stipulation, which is available on
CTI’s website at http://investors.celltherapeutics.com.1

PLEASE BE FURTHER ADVISED that pursuant to an Order of the U.S. District Court
for the Western District of Washington (the “Court”), a hearing (the “Settlement
Hearing”) will be held on                     , 2012, at   :       .m., before
the Honorable Marsha J. Pechman for the purpose of determining, among other
things: (i) whether the settlement of the Action by way of the adoption of
certain corporate governance provisions (as set forth in more detail in the
Stipulation on file with the Court) should be finally approved by the Court as
fair, reasonable, and adequate to CTI and Current CTI Shareholders; (ii) whether
the Action should be dismissed with prejudice; and (iii) the amount of
attorneys’ fees and expenses to be paid to Plaintiffs’ Counsel for their efforts
in connection with the litigation of the Action.

The Settling Parties do not agree on the amount of attorneys’ fees and expenses
that should be awarded in the Action, and have agreed to present this matter to
the Court for resolution. Plaintiffs and Plaintiffs’ Counsel intend to petition
the Court for no more than $1.3 million in attorneys’ fees and $75,000 in
reimbursement of expenses (the “Fee and Expense Application”), as well as for an
incentive award in the amount of $1,500 for plaintiff Joseph Shackleton (the
“Incentive Award”).

 

 

1 The Stipulation may also be inspected at the Office of the Clerk of the U.S.
District Court in the Western District of Washington located at 700 Stewart
Street, Seattle, Washington 98101, during regular business hours of each
business day. The capitalized terms used in this Notice, and not otherwise
defined, are defined in the Stipulation.

 

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SUMMARY NOTICE OF PENDENCY AND

PROPOSED SETTLEMENT OF ACTION

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 1 -    San Diego, CA
92101       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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This Action was brought as a derivative action on behalf of and to protect the
interests of CTI and its shareholders. This Action is not a class action and, as
such, there is no claims procedure. The settlement of this Action will result in
certain commitments and changes regarding the Company’s corporate governance,
not in payments to CTI shareholders. In a factually related securities class
action captioned In re Cell Therapeutics, Inc. Class Action Litigation, Lead
Case No. 10-cv-414-MJP (the “Securities Class Action”), also pending in the
Court, the parties reached a settlement that created a fund in the amount of $19
million that will provide payments, consistent with the Court-approved claims
administration procedure, to Persons (as that term is defined in the Securities
Class Action settlement) who purchased or otherwise acquired CTI securities
between March 25, 2008, and March 22, 2010.

In addition to the Stipulation, a detailed Notice of Pendency and Proposed
Settlement of Action (the “Notice”) describing this Action, the proposed
settlement, and the rights of Current CTI Shareholders with regard to the
settlement may be viewed on CTI’s website at
http://investors.celltherapeutics.com. CTI has also filed copies of the Notice
and the Stipulation with the U.S. Securities and Exchange Commission (“SEC”) in
a Form 8-K, which may be accessed through the SEC’s website at www.sec.gov.

Any Current CTI Shareholder wishing to assert an objection to the settlement or
Plaintiff” Fee and Expense Application and who continues to hold shares of CTI
common stock as of the date of the Settlement Hearing must, no later than
twenty-one calendar days prior to the Settlement Hearing, file with the Clerk of
the Court, U.S. District Court for the Western District of Washington, 700
Stewart Street, Seattle, Washington 98101, a written objection to the settlement
or any of its terms, including the Fee and Expense Application, setting forth:
(i) the nature of the objection; (ii) proof of current ownership of CTI common
stock, including number of shares of CTI common stock and the date of purchase;
and (iii) any documentation in support of such objection.

 

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SUMMARY NOTICE OF PENDENCY AND

PROPOSED SETTLEMENT OF ACTION

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 2 -    San Diego, CA
92101       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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If a Current CTI Shareholder intends to appear and requests to be heard at the
Settlement Hearing, such shareholder must, in addition to the requirements set
forth above, file with the Clerk of the Court: (i) a written notice of such
shareholder’s intention to appear; (ii) a statement that indicates the basis for
such appearance; and (iii) the identities of any witnesses the shareholder
intends to call at the Settlement Hearing and the subjects of their testimony.
If a Current CTI Shareholder files a written objection and/or written notice of
intent to appear, such shareholder must also simultaneously serve copies of such
notice, proof, statement, and documentation, together with copies of any other
papers or briefs such shareholder files with the Court (either by hand delivery
or by first class mail) upon each of the following:

 

ROBBINS UMEDA LLP

  

WILSON SONSINI

Attn: Craig W. Smith

  

  GOODRICH & ROSATI

600 B Street, Suite 1900

  

Attn: Barry M. Kaplan

San Diego, CA 92101

  

701 Fifth Avenue, Suite 5100

  

Seattle, WA 98104

FEDERMAN & SHERWOOD

  

Attn: Sara E. Collier

  

Counsel for CTI and the

10205 North Pennsylvania

  

Individual Defendants

Avenue

  

Oklahoma City, OK 73120

  

Co -Lead Counsel for Plaintiffs

  

Any Current CTI Shareholder who does not timely make his, her, or its objection
in the manner provided herein shall be deemed to have waived such objection and
shall forever be foreclosed from making any objection to the fairness,
reasonableness, or adequacy of the proposed settlement as incorporated in the
Stipulation, and/or the Fee and Expense Application, unless otherwise ordered by
the Court, but shall otherwise be bound by the judgment to be entered and the
releases to be given.

 

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SUMMARY NOTICE OF PENDENCY AND

PROPOSED SETTLEMENT OF ACTION

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 3 -    San Diego, CA
92101       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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For more information concerning the Settlement, you may also call or write to:
Robbins Umeda LLP, c/o Craig W. Smith, 600 B Street, Suite 1900, San Diego, CA
92101, Telephone: (619) 525-3990.

PLEASE DO NOT TELEPHONE THE COURT OR CTI

REGARDING THIS NOTICE

 

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781426

 

     

SUMMARY NOTICE OF PENDENCY AND

PROPOSED SETTLEMENT OF ACTION

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 4 -    San Diego, CA
92101       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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Case 2:10-cv-00564-MJP    Document 73-1    Filed 11/06/12    Page 58 of 63

 

 

 

 

 

 

Exhibit E

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Case 2:10-cv-00564-MJP    Document 73-1    Filed 11/06/12    Page 59 of 63

 

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The Honorable Marsha J. Pechman

 

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

 

   

)

    

In re CELL THERAPEUTICS, INC.,

 

)

    

Master Docket No. C 10-564 MJP

DERIVATIVE LITIGATION

 

)

        

)

      

)

    

[PROPOSED] FINAL JUDGMENT AND

This Document Relates To:

 

)

    

ORDER OF DISMISSAL

 

)

    

ALL ACTIONS

 

)

        

)

    

 

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[PROPOSED] FINAL JUDGMENT AND ORDER

OF DISMISSAL

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900       San Diego, CA 92101
      Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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This matter came before the Court for hearing pursuant to the Order
Preliminarily Approving Settlement and Providing for Notice of this Court, dated
                        , 2012 (“Preliminary Approval Order”), on the
application of the Settling Parties for approval of the Settlement set forth in
the Stipulation of Settlement dated November 6, 2012 (the “Stipulation”). Due
and adequate notice having been provided to Current CTI Shareholders as required
in the Preliminary Approval Order, and the Court having considered all papers
filed and proceedings had herein and otherwise being fully informed in the
premises and good cause appearing therefore, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that:

1.        This Judgment incorporates by reference the definitions in the
Stipulation, and all capitalized terms used herein shall have the same meanings
as set forth in the Stipulation.

2.        This Court has jurisdiction over the subject matter of the Action,
including all matters necessary to effectuate the Settlement.

3.        The Court finds that the Settlement provides substantial benefits to
CTI and is fair, reasonable, and adequate as to each of the Settling Parties,
and hereby finally approves the Settlement in all respects. The Court orders the
Settling Parties to perform the Settlement’s terms to the extent the Settling
Parties have not already done so.

4.        The Action and all claims contained therein, as well as all of the
Released Claims, are dismissed with prejudice against each and all Released
Persons. As between Plaintiffs, CTI, and the Individual Defendants, the Settling
Parties are to bear their own costs, except as otherwise provided in the
Stipulation and this Judgment.

5.        Upon the Effective Date, Plaintiffs (acting on their own behalf and
derivatively on behalf of CTI); CTI, its predecessors, successors, subsidiaries,
affiliates, divisions, and assigns; and each of CTI’s shareholders (solely in
their capacity as CTI shareholders) shall be deemed to have, and by operation of
the Judgment shall have, fully, finally, and forever released, relinquished, and
discharged the Released Claims against the Released Persons and any and all
claims (including Unknown Claims) arising out of, relating to, or in connection
with the defense,

 

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[PROPOSED] FINAL JUDGMENT AND ORDER

OF DISMISSAL

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 1 -    San Diego, CA
92101       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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settlement, or resolution of the Action against the Released Persons, provided
that nothing herein shall in any way impair or restrict the rights of any
Settling Party to enforce the terms of the Stipulation or the Judgment.

6.        Upon the Effective Date, each of the Released Persons shall be deemed
to have, and by operation of the Judgment shall have, fully, finally, and
forever released, relinquished, and discharged each and all of the Plaintiffs,
Plaintiffs’ Counsel, CTI, the Related Persons, and all CTI shareholders (solely
in their capacity as CTI shareholders) from all claims (including Unknown
Claims), arising out of, relating to, or in connection with the institution,
prosecution, assertion, settlement, or resolution of the Action or the Released
Claims. Nothing herein shall in any way impair or restrict the rights of any
Settling Party to enforce the terms of the Stipulation or Judgment.

7.        The Court finds that the Summary Notice of Pendency and Proposed
Settlement of Action published in Investor’s Business Daily, and the Notice of
Pendency and Proposed Settlement of Action posted on the website of CTI and
filed with the U.S. Securities and Exchange Commission by CTI in a Form 8-K,
provided the best notice practicable under the circumstances of these
proceedings and of the matters set forth therein, including the Settlement set
forth in the Stipulation, to all Persons entitled to such notice, and said
notices fully satisfied the requirements of Rule 23.1 of the Federal Rules of
Civil Procedure and the requirements of due process.

8.        The Court finds that during the course of the Action, the Settling
Parties and their counsel at all times complied with Rule 11 of the Federal
Rules of Civil Procedure and all other similar rules and law.

9.        The Court has considered the Fee and Expense Application and finds
that Co-Lead Counsel for Plaintiffs are entitled to $                         in
attorneys’ fees and $                         in reimbursement of expenses.

 

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[PROPOSED] FINAL JUDGMENT AND ORDER

OF DISMISSAL

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 2 -    San Diego, CA
92101       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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10.      The Court hereby approves the Incentive Award of $1,500 for plaintiff
Joseph Shackleton, to be paid from the amount awarded in the Fee and Expense
Application, in recognition of his participation and effort in the prosecution
of the Action.

11.      Neither the Stipulation (including any exhibits attached thereto) nor
the Settlement, nor any act performed or document executed pursuant to or in
furtherance of the Stipulation or the Settlement: (a) is or may be deemed to be,
or may be offered, attempted to be offered, or used in any way by the Settling
Parties as a presumption, a concession, or an admission of, or evidence of, any
fault, wrongdoing, or liability of the Settling Parties or of the validity of
any Released Claims; or (b) is intended by the Settling Parties to be offered or
received as evidence or used by any other person in any other actions or
proceedings, whether civil, criminal, or administrative. The Released Persons
may file the Stipulation and/or the Judgment in any action that may be brought
against them in order to support a defense or counterclaim based on principles
of res judicata, collateral estoppel, full faith and credit, release, standing,
good faith settlement, judgment bar or reduction, or any other theory of claim
preclusion or issue preclusion or similar defense or counterclaim, and any of
the Settling Parties may file the Stipulation and documents executed pursuant
and in furtherance thereto in any action to enforce the Settlement.

12.      Without affecting the finality of this Judgment in any way, this Court
hereby retains continuing jurisdiction over: (i) implementation of the
Settlement; and (ii) the Settling Parties for the purpose of construing,
enforcing, and administering the Stipulation and the Settlement, including, if
necessary, setting aside and vacating this Judgment, on motion of a party, to
the extent consistent with and in accordance with the Stipulation if the
Effective Date fails to occur in accordance with the Stipulation.

13.      No action in regard to Plaintiffs’ Fee and Expense
Application—including any order of this Court or any potential appellate review
of such order—shall affect the finality of any other portion of this Judgment or
delay the Effective Date of the Stipulation. The Fee and

 

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[PROPOSED] FINAL JUDGMENT AND ORDER

OF DISMISSAL

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 3 -    San Diego, CA
92101       Tel: (619) 525-3990 — Fax: (619) 525-3991

 

 

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Expense Application shall be considered separate for the purposes of appellate
review of this Judgment.

14.      Without further order of the Court, the Settling Parties may agree to
reasonable extensions of time to carry out any of the provisions of the
Stipulation.

15.      This Judgment is a final, appealable judgment and should be entered
forthwith by the Clerk in accordance with Rule 58 of the Federal Rules of Civil
Procedure.

IT IS SO ORDERED.

 

 

DATED:

 

 

   

 

     

  HONORABLE MARSHA J. PECHMAN

     

  UNITED STATES DISTRICT JUDGE

 

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781431

 

     

[PROPOSED] FINAL JUDGMENT AND ORDER

OF DISMISSAL

Master Docket No. C 10-564 MJP

      ROBBINS UMEDA LLP       600 B Street, Suite 1900    - 4 -    San Diego, CA
92101       Tel: (619) 525-3990 — Fax: (619) 525-3991