Document:

Security Agreement

 Exhibit 10.3 
  
 SECURITY AGREEMENT 
  
 SECURITY AGREEMENT (as amended, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”) dated as of
December 21, 2004, among CELL THERAPEUTICS, INC., a Washington corporation (the “Debtor”), POLARX BIOPHARMACEUTICALS, INC., a Delaware corporation and wholly-owned subsidiary of the Debtor (the “Subsidiary
Guarantor” and, together with the Debtor, the “Grantors”), and PHARMABIO DEVELOPMENT INC., a North Carolina corporation (the “Secured Party”). 
  
 R E C I T A L S 
  
 A. The Debtor, the Subsidiary Guarantor, and the Secured Party have, in
connection with the execution and delivery of this Agreement, entered into the Financing Agreement, dated as of the date hereof (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Financing
Agreement”). 
  
 B. Pursuant to the Guaranty Agreement,
dated as of the date hereof (the “Guaranty Agreement”), by and between the Subsidiary Guarantor and the Secured Party, the Subsidiary Guarantor has, among other things, unconditionally guarantied certain obligations of the Debtor
under the Financing Agreement. 
  
 C. The Debtor and Subsidiary
Guarantor will receive substantial benefits from the execution, delivery and performance of the obligations under the Financing Agreement and are, therefore, willing to enter into this Agreement. 
  
 D. Each Grantor is or, as to Collateral (as defined in the Financing
Agreement) acquired by such Grantor after the date hereof, will be the legal or beneficial owner of the Collateral pledged by it hereunder. 
  
 E. This Agreement is given by each Grantor for the benefit of the Secured Party to secure the payment and performance of all of the Obligations (as
hereinafter defined). 
  
 NOW THEREFORE, in consideration of the
foregoing and other benefits accruing to each Grantor, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 
  

ARTICLE I 
  
 Definitions 
  
 SECTION 1.01. Definition of Certain Terms Used Herein. Capitalized terms used in this Agreement and not otherwise defined have the meanings given to them in the Financing Agreement and such terms and meanings shall be incorporated by
reference herein from the Financing Agreement. As used herein, the following terms shall have the following meanings: 
  
 “Financing Agreement” shall have the meaning assigned to such term in the Recitals of this Agreement. 

 “Obligations” shall mean any and all obligations (whether or not constituting future
advances, obligatory or otherwise) of the Grantors to the Secured Party from time to time arising under or in respect of the Transaction Documents (including, without limitation, the obligations to pay any and all amounts, royalties, indemnities and
other payments related to or in respect of the obligations contained in the Transaction Documents), in each case whether (i) such obligations are direct or indirect, secured or unsecured, joint or several, absolute or contingent, due or to become
due whether at stated maturity, by acceleration or otherwise, (ii) arising in the regular course of business or otherwise, (iii) for payment or performance or (iv) now existing or hereafter arising (including, without limitation, interest and other
obligations arising or accruing after the commencement of any bankruptcy, insolvency, reorganization or similar proceeding with respect to any Grantor or any other Person, or which would have arisen or accrued but for the commencement of such
proceeding, even if such obligation or the claim therefor is not enforceable or allowable in such proceeding). 
  
 “Operative Agreement” shall mean in the case of any corporation, any charter or certificate of incorporation and by-laws thereof.

  
 “Party” means any Grantor and the Secured
Party. 
  
 “Requirements of Law” shall mean,
collectively, any and all requirements of any Governmental Authority including, without limitation, any and all laws, rules, regulations, or similar statutes or case law. 
  
 “Security Interest” shall have the meaning assigned to such term in Section 2.01(a). 
  
 “UK Subsidiary” means Cell Therapeutics (UK) Limited, a
company formed under the laws of the United Kingdom. 
  
 SECTION
1.02. Rules of Construction. The rules of interpretation specified in Section 10.11 of the Financing Agreement shall be applicable to this Agreement. 
  
 SECTION 1.03. Resolution of Drafting Ambiguities Each Grantor acknowledges and agrees that it was represented by counsel in connection with the
execution and delivery hereof, that it and its counsel reviewed and participated in the preparation and negotiation hereof and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party (i.e., the
Secured Party) shall not be employed in the interpretation hereof. 
  

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 ARTICLE II 
  
 Security Interest 
  
 SECTION 2.01. Security Interest. (a) As security for the punctual and complete payment and performance in full of the Obligations, each Grantor
hereby grants to the Secured Party a security interest of first priority in and lien on, and pledges and hypothecates, all of such Grantor’s right, title and interest in, to and under the Collateral. The security interest granted hereunder to
secure the Obligations is referred to herein as the “Security Interest”. 
  
 (b) Without limiting the foregoing, the Secured Party is hereby authorized to file one or more financing statements, continuation statements, filings with the United States Patent and Trademark Office or United States
Copyright Office (or any successor office or any similar office in any other country within the Territory) or other documents for the purpose of perfecting or continuing the Security Interest granted by each Grantor, without the signature of any
Grantor, and naming any Grantor or the Grantors as debtors and the Secured Party as secured party, or otherwise describing the transactions contemplated by this Agreement; provided, that, so long as no Event of Default has occurred and is
continuing, the Secured Party shall provide copies of all such documents to the Debtor a reasonable time in advance of any such filing (and, in the event that an Event of Default shall have occurred and be continuing, such copy shall be provided to
the Debtor substantially concurrently with the filing thereof); provided, further, that the failure by the Secured Party to provide such copies shall not affect the validity of any such filing. 
  
 (c) (i) The Debtor shall deliver to the Secured Party certificates which
represent all the Pledged Securities. All certificates delivered pursuant to this Section 2.01(c) shall be accompanied by stock powers duly executed in blank. In the event that it is not practicable for the Debtor to deliver such certificates on the
date of this Agreement, the Debtor shall deliver such certificates as soon as practicable but in no event later than (i) with respect to the Pledged Securities of the Subsidiary Grantor, January 7, 2005 and (ii) with respect to the Pledged
Securities of UK Subsidiary, January 14, 2005. 
  
 (ii) Prior to
the occurrence of an Event of Default: 
  
 (1) all dividends and
other amounts due as a result of record ownership of the Pledged Securities shall be paid to the Debtor; and 
  
 (2) to the extent permitted by applicable law, the Debtor shall have the right to vote the Pledged Securities. 
  
 (iii) While an Event of Default has occurred and is continuing, in addition
to the remedies set forth in Article V: 
  
 (1) all dividends
paid on such Pledged Securities, regardless of when such dividends were declared, and all distributions from such Pledged Securities shall form part of the Collateral and, if received by the Debtor, shall be paid to the Secured Party; and

  

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 (2) the Secured Party shall be entitled to vote or not to vote such Pledged Securities received by the
Secured Party as the Secured Party sees fit. 
  
 (iv) In the event
that, during the term of this Agreement, the Debtor acquires additional capital stock of the Subsidiary Guarantor or of the UK Subsidiary, or any stock split, share dividend, reclassification, readjustment or other change is declared or made in the
capital structure of the Subsidiary Guarantor or of the UK Subsidiary, subject to the limitations set forth in the definition of Collateral, all new, substituted and additional shares, or other securities, acquired, or issued in connection with the
Pledged Securities by reason of such change, shall be delivered to and held by the Secured Party, together with stock powers duly executed in blank, under the terms of this Agreement in the same manner as the Pledged Securities originally pledged
hereunder, all of which shall be deemed to be Pledged Securities as defined in this Agreement. 
  
 SECTION 2.02. No Assumption of Liability. The Security Interest is granted as security only and shall not subject the Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor
with respect to or arising out of the Collateral. 
  
 ARTICLE III

  
 Representations and Warranties 
  
 The Grantors jointly and severally represent and warrant to the Secured Party
that: 
  
 SECTION 3.01. Title and Authority. (a) Each
Grantor has good and valid rights in and title to the Collateral with respect to which it has purported to grant a Security Interest hereunder and has full power and authority to grant to the Secured Party the Security Interest in such Collateral
pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person other than any consent or approval which has been obtained. Schedule I, attached
hereto and made a part hereof, sets forth as of the date hereof all contracts, licenses or other agreements under which a Grantor has licensed (i) from another party Patents which constitute Collateral (each, a “Third Party
Agreement” and collectively, the “Third Party Agreements”), and sets forth the Patents that are covered by each such agreement (collectively, the “Third Party Patents”) and (ii) to another party Patents
which constitute Collateral, and sets forth the Patents that are covered by each such agreement. Schedules II and V, each attached hereto and made a part hereof, set forth each of the Patents and Trademarks owned by the Grantors constituting
Collateral as of the date hereof. Schedule III, attached hereto and made a part hereof, sets forth all the Pledged Securities as of the date hereof. Schedule IV, attached hereto and made a part hereof, sets forth all the Product Registrations of the
Grantors constituting Collateral as of the date hereof. 
  
 (b)
Each of the contracts, licenses or other agreements set forth on Schedule I is in full force and effect in all material respects and each of the Grantors has in all material respects performed all its respective obligations required to be performed
by such Grantor under such agreements, has received no notice of default with respect thereto and, to each of their knowledge, no Grantor nor any other party to such agreements is in default under such agreements in any material respect. 

 

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 SECTION 3.02. Filings. (a) Fully completed UCC financing statements or other appropriate filings,
recordings or registrations containing a description of the Collateral have been filed, or delivered to the Secured Party for filing, in each governmental, municipal or other office in which such filings are necessary to perfect the Security
Interest for the benefit of the Secured Party in respect of all Collateral in which the Security Interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof) and its territories and
possessions, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary in any such jurisdiction, except as provided under applicable law with respect to the filing of continuation statements
and as set forth in clause (b) below. 
  
 (b) Fully executed
notices of security interests containing a description of all Collateral consisting of Patents and Trademarks registered with the United States Patent and Trademark Office have been delivered to the Secured Party for filing, registration or
recordation, as applicable, with the United States Patent and Trademark Office pursuant to 35 U.S.C. § 261 or 15 U.S.C. § 1060 and the regulations thereunder, as applicable, in order to protect the validity of and to establish a legal,
valid and perfected security interest in favor of the Secured Party in respect of all Collateral consisting of Patents and Trademarks in which a security interest may be perfected by such filing, recording or registering in the United States (or any
political subdivision thereof) and its territories and possessions, and no further or subsequent filing, refiling, recording, prerecording, registering or preregistering is necessary (other than the filing of UCC financing statements as described in
clause (a) above, UCC continuation statement or such actions as are necessary to perfect the Security Interest with respect to any Collateral consisting of Copyrights, Patents and Trademarks (or registration or application for registration thereof)
acquired or developed after the date hereof). 
  
 SECTION 3.03.
Validity of Security Interest. The Security Interest constitutes (a) a legal and valid security interest in all the Collateral securing the payment and performance of the Obligations, (b) subject to the filings described in Section 3.02
above, a perfected security interest in all Collateral in which a security interest may be perfected by filing, recording or registering a financing statement or analogous document in the United States (or any political subdivision thereof) and its
territories and possessions pursuant to the UCC or other applicable law in such jurisdictions, (c) a security interest that shall be perfected in all Collateral in which a security interest may be perfected upon the receipt and registering or
recording of an appropriate notice of security interest with the United States Patent and Trademark Office, as applicable, and (d) a perfected security interest in all Collateral in which a security interest may be perfected by possession or control
by the Secured Party, in each case, to the extent required pursuant to the provisions hereof. The Security Interest is and shall be prior to any other Lien on any of the Collateral. 
  
 SECTION 3.04. Limitations on and Absence of Other Liens. Except for Permitted Liens, the Collateral is owned by the
Grantors free and clear of any Lien. The Grantors have not filed or consented to the filing of (a) any financing statement or analogous document under the 
  

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 UCC or any other applicable laws covering any Collateral, (b) any assignment in which any Grantor assigns any Collateral
or makes any security agreement or similar instrument covering any Collateral with the United States Patent and Trademark Office or (c) any assignment in which any Grantor assigns any Collateral or makes any security agreement or similar instrument
covering any Collateral with any foreign governmental, municipal or other office within the Territory, which financing statement or analogous document, assignment, security agreement or similar instrument is still in effect. 
  
 SECTION 3.05. Chief Executive Office; Change of Name; Jurisdiction of
Organization. As of the date hereof, the exact legal name, type of organization, jurisdiction of organization, organizational identification number and chief executive office of each Grantor is indicated next to its name in Schedule 3.05
attached hereto and part a made hereof. 
  
 SECTION 3.06.
Corporate Names; Prior Transactions. No Grantor has, during the past five (5) years, been known by or used any other corporate or fictitious name or been a party to any merger or consolidation, or acquired all or substantially all of the
assets of any Person, or acquired any of its property or assets out of the ordinary course of business, except as set forth in Schedule 3.06 attached hereto and made a part hereof. 
  
 SECTION 3.07. No Conflicts, Consents, etc. Neither the execution and delivery hereof by each Grantor nor the
consummation of the transactions herein contemplated nor the fulfillment of the terms hereof (i) violates any Operative Agreement of such Grantor, (ii) violates the terms of any material agreement, contract, indenture, mortgage, deed of trust,
lease, license, instrument or other document to which such Grantor is a party and which is material to such Grantor, or by which it is bound or to which any of its properties or assets are subject, (iii) conflicts with any material Requirement of
Law applicable to any such Grantor or its property or assets, or (iv) results in or requires the creation or imposition of any Lien upon or with respect to any of the property or assets now owned or hereafter acquired by such Grantor other than the
Security Interest. No consent of any party (including, without limitation, equityholders or creditors of such Grantor) and no consent, authorization, approval, license or other action by, and no notice to or filing with, any Governmental Authority
or regulatory body or other Person is required for the grant of a security interest in or pledge by such Grantor of the Collateral pledged by it pursuant to this Agreement or for the execution, delivery or performance hereof by such Grantor other
than as specified in Section 3.02 or those that have been made or obtained. In the event that the Secured Party desires to exercise any remedies, consensual rights or attorney-in-fact powers set forth in this Agreement and determines it necessary to
obtain any approvals or consents of any Governmental Authority or any other Person therefor, then, upon the reasonable request of the Secured Party, such Grantor agrees to use its best efforts to assist and aid the Secured Party to obtain as soon as
practicable any necessary approvals or consents for the exercise of any such remedies, rights and powers. 
  
 SECTION 3.08. No Infringement. To each Grantor’s knowledge, on and as of the date hereof, (i) there is no infringement, misappropriation or
violation by others of any right of such Grantor with respect to any Intellectual Property pledged by such Grantor, (ii) such Grantor’s manufacture, use, sale, offer for sale or importation of the Product in the Territory is not infringing

  

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 upon, misappropriating, or violating any Intellectual Property of any other Person, and (iii) no proceedings have been
instituted or are pending against such Grantor or, to such Grantor’s knowledge, threatened, and no claim against such Grantor has been received by such Grantor, alleging any such infringement, misappropriation or violation. 
  
 The Debtor represents and warrants to the Secured Party that: 
  
 SECTION 3.09. Pledged Securities. (a) As of the date hereof, the
Pledged Securities set forth on Schedule III represent all of the issued and outstanding shares of the capital stock of the Subsidiary Guarantor and 65% of the issued and outstanding shares of the capital stock of the UK Subsidiary; 
  
 (b) The Debtor (i) is and will at all times continue to be the direct owner,
beneficially and of record, of the Pledged Securities, (ii) holds the same free and clear of all Liens, and (iii) has made and will make no assignment, pledge, hypothecation or transfer of, or create or permit to exist any security interest in or
other Lien on, the Pledged Securities, other than pursuant hereto; and 
  
 (c) The Debtor (i) has the power and authority to pledge the Pledged Securities in the manner hereby done or contemplated and (ii) will defend its title or interest thereto or therein against any and all Liens (other than the Lien created
by this Agreement), however arising, of all Persons whomsoever. 
  
 ARTICLE IV 
  
 Covenants 
  
 SECTION 4.01. Change of Name; Location of Collateral; Records; Place of
Business. Each Grantor agrees promptly to notify the Secured Party in writing of any change in (i) its corporate name, (ii) the location of its chief executive office or its principal place of business, or (iii) its organizational identification
number. Each Grantor agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made (or will be made within one (1) business day of such change) under the UCC or otherwise that are required in order
for the Secured Party to continue at all times following such change to have a valid, legal and perfected first priority security interest in all the Collateral subject to no Liens. The Debtor agrees promptly to notify the Secured Party if any
material portion of the Collateral owned or held by the Grantors is damaged or destroyed. 
  
 SECTION 4.02. Protection of Security. Each Grantor shall, at its own cost and expense, take any and all actions necessary to defend title to the Collateral against all Persons and to defend the Security
Interest of the Secured Party in the Collateral and the priority thereof against any Lien. 
  
 SECTION 4.03. Further Assurances. Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents 
  

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 and take all such actions as the Secured Party may from time to time reasonably request to better assure, preserve,
protect and perfect the Security Interest and the rights and remedies created hereby, including the payment of any filing or other similar fees required in connection with the performance of this Agreement, the granting of the Security Interest and
the filing of any financing statements or other documents in connection herewith or therewith. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any promissory note or other instrument, such note
or instrument shall be promptly pledged and delivered to the Secured Party, duly endorsed in a manner satisfactory to the Secured Party. 
  
 SECTION 4.04. Inspection and Verification. The Secured Party and such Persons as the Secured Party may reasonably designate shall have the right,
at all reasonable times and upon reasonable notice under the circumstances, to inspect the Collateral, all records related thereto (and to make extracts and copies from such records) and the premises upon which any of the Collateral is located, to
discuss the Grantors’ affairs with the officers of the Grantors and their independent accountants and to verify under reasonable procedures, the validity, amount, quality, quantity, value, condition and status of, or any other matter relating
to, the Collateral. Notwithstanding anything to the contrary in this Section 4.04, no Grantor shall be required to disclose, permit the inspection, examination, copying or discussion of, any document, information or other matter that (i) in respect
of which disclosure to the Secured Party or its representative is then prohibited by law or any agreement binding on such Grantor or any of its subsidiaries or (ii) is subject to attorney-client or similar privilege or constitutes attorney work
product. 
  
 SECTION 4.05. Taxes; Encumbrances. At its
option, the Secured Party may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Collateral, and may pay for the maintenance and preservation of the Collateral to
the extent any Grantor fails to do so as required by this Agreement, and each Grantor jointly and severally agrees to reimburse the Secured Party on demand for any payment made or any expense incurred by the Secured Party pursuant to the foregoing
authorization; provided, however, that nothing in this Section 4.05 shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Secured Party to cure or perform, any covenants or other promises of such
Grantor with respect to taxes, assessments, charges, fees, liens, security interests or other encumbrances and maintenance as set forth herein or in the other Transaction Documents. 
  
 SECTION 4.06. Continuing Obligations of the Grantors. Each Grantor shall observe and perform in all material respects
all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Collateral, all in accordance with the terms and conditions thereof, and each Grantor jointly and severally agrees to
indemnify and hold harmless the Secured Party from and against any and all liability for such performance. 
  
 SECTION 4.07. No Other Liens. Except for Permitted Liens, none of the Grantors shall make or permit to be made an assignment for security, pledge
or hypothecation of the Collateral or shall grant any other Lien in respect of the Collateral other than the Security Interest securing the Obligations. 
  

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 SECTION 4.08. Insurance. Each Grantor shall maintain insurance of the types and in the amounts
that such Grantor reasonably believes is adequate for its business against such risks customarily insured against by similarly situated companies, including with respect to the Collateral. 
  
 SECTION 4.09. Certain Covenants and Provisions Regarding Patent and
Trademark Collateral. (a) Each Grantor agrees that it will not do any act, or omit to do any act, whereby any Patent constituting Collateral which is material to the conduct of such Grantor’s business may become invalidated or dedicated to
the public, and agrees that it shall continue to mark any products covered by any such Patent with the relevant patent number as necessary and sufficient to establish and preserve its maximum rights under applicable patent laws. 
  
 (b) Each Grantor will, for each Trademark constituting Collateral which is
material to the conduct of such Grantor’s business, use its commercially reasonable efforts to (i) maintain such Trademark in full force free from any claim of abandonment or invalidity for non-use, (ii) maintain the quality of products and
services offered under such Trademark, (iii) display such Trademark with notice of Federal or foreign registration to the extent necessary and sufficient to establish and preserve its rights under applicable law and (iv) not knowingly use or
knowingly permit the use of such Trademark in violation of any third party rights. 
  
 (c) Each Grantor shall notify the Secured Party as soon as practicable if it knows or has reason to know that any Patent or Trademark constituting Collateral which is material to the conduct of its business may become
abandoned, lost or dedicated to the public, or of any adverse determination or development including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office or any court or
similar office of any country within the Territory) regarding such Grantor’s ownership of any such Patent or Trademark, its right to register the same, or to keep and maintain the same. 
  
 (d) In no event shall any Grantor, either itself or through any agent,
employee, licensee or designee, file an application for any Patent or Trademark (or for the registration of any Trademark) constituting Collateral with the United States Patent and Trademark Office or any office or agency in any political
subdivision of the United States or in any other country within the Territory or any political subdivision thereof, unless it promptly informs the Secured Party after such filing and, upon request of the Secured Party, executes and delivers any and
all agreements, instruments, documents and papers as the Secured Party may reasonably request to evidence the Secured Party’s security interest in such Patent or Trademark or application therefor, and each Grantor hereby appoints the Secured
Party as its attorney-in-fact to execute and file such writings solely for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed; such power, being coupled with an interest, is irrevocable while this Agreement is in
effect. 
  
 (e) Each Grantor will take all necessary steps that
are consistent with its reasonable business judgment and the practice in any proceeding before the United States Patent and Trademark Office or any office or agency in any political subdivision of the United States or in any other country within the
Territory or any political subdivision thereof, to maintain and pursue 
  

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 each material application relating to the Patents or Trademarks constituting Collateral (and to obtain the relevant grant
or registration) and to maintain each issued Patent and each registration of Trademarks constituting Collateral that is material to the conduct of any Grantor’s business, including timely filings of applications for renewal, affidavits of use,
affidavits of incontestability and payment of maintenance fees, and, if consistent with good business judgment, to initiate opposition, interference and cancellation proceedings against third parties. 
  
 (f) In the event that any Grantor has reason to believe that any Collateral
consisting of a Patent or Trademark has been infringed, misappropriated or diluted by a third party in any material respect, such Grantor promptly shall notify the Secured Party and shall, if consistent with such Grantor’s reasonable business
judgment, promptly sue for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and take such other actions as are appropriate under the circumstances to protect such
Collateral. 
  
 SECTION 4.10. Limitation on Transfer of Pledged
Securities. The Subsidiary Guarantor agrees that it will not permit a transfer on the Subsidiary Guarantor’s books and records of any shares of the Pledged Securities without first obtaining the Secured Party’s written consent to such
transfer. 
  
 SECTION 4.11. Limitation on Encumbrance of
Product Registration. The Debtor shall not, nor shall it permit the UK Subsidiary to, grant or permit to exist any Lien (other than Permitted Liens) on the Product Registration No. MAA: EU/1/02/204/001 held by the UK Subsidiary. 
  
 ARTICLE V 
  
 Remedies 
  
 SECTION 5.01. Remedies upon Default. Upon the occurrence and during the continuance of an Event of Default, it is agreed that the Secured Party
shall have the right to exercise any and all rights afforded to a secured party under the UCC or other applicable law and to take any of or all the following actions at the same or different times: (a) with respect to any Collateral consisting of
Intellectual Property, on demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Collateral by the applicable Grantors to the Secured Party, or to license or sublicense, whether general, special
or otherwise, and whether on an exclusive or nonexclusive basis, any such Collateral throughout the Territory on such terms and conditions and in such manner as the Secured Party shall determine (other than in violation of any then existing
licensing arrangements to the extent that waivers cannot be obtained), and (b) with or without legal process and with or without prior notice or demand for performance, to take possession of the Collateral and without liability for trespass to enter
any premises where the Collateral may be located for the purpose of taking possession of or removing the Collateral and each Grantor agrees to deliver each item of Collateral to the Secured Party on demand. Without limiting the generality of the
foregoing, each Grantor agrees that the Secured Party shall have the right, subject to the requirements of applicable law, to sell or otherwise dispose of all or any part of the Collateral, at public or private sale, as the Secured Party 

 

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 shall deem appropriate. Each such purchaser at any such sale shall hold the property sold absolutely, free from any claim
or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal which such Grantor now has or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. 
  
 At any public (or, to the
extent permitted by applicable law, private) sale made pursuant to this Section, the Secured Party may bid for or purchase, free (to the extent permitted by law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor
(all said rights being also hereby waived and released to the extent permitted by applicable law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any Obligation then due and payable to the
Secured Party from any Grantor as a credit against the purchase price, and the Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor. For purposes
hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Secured Party shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the
Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Secured Party shall have entered into such an agreement all Events of Default shall have been remedied and the Obligations paid in full; provided that
the Secured Party shall deliver to the Grantors any monies or Proceeds it receives, from the Grantors or otherwise, on account of the Obligations in excess of such amount required to pay in full the Obligations. As an alternative to exercising the
power of sale herein conferred upon it, the Secured Party may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having
competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. 
  
 SECTION 5.02. Grant of License to Use Intellectual Property. For the purpose of enabling the Secured Party to exercise rights and remedies under this Article at such time as the Secured Party shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby grants to the Secured Party an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to the Grantors) to use, license or sublicense any of
the Collateral now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer
software and programs used for the compilation or printout thereof, in each case subject to the terms and conditions and to the extent allowable under any agreement with a third party pursuant to which such Collateral was initially licensed. For
clarity, while an Event of Default exists and to the extent necessary to satisfy the Obligations, the Grantors hereby grant to the Secured Party, a sublicense under all of Grantor’s interest in the Third Party Patents (and any and all
associated Intellectual Property), to the extent allowed pursuant the Third Party Agreements and subject to the terms and conditions therein, solely as required for the manufacture, sale, offer for sale, use or importation of Products in the
Territory. The use of such license by the Secured Party shall be exercised, at the option of the Secured Party, upon the occurrence and during the continuation of an Event of Default; provided that any 
  

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 license, sublicense or other transaction entered into by the Secured Party in accordance herewith shall be binding upon
the Grantors notwithstanding any subsequent cure of an Event of Default. Notwithstanding the foregoing, the Secured Party hereby covenants and agrees only to exercise the rights set forth in this Section 5.02 above solely in the event of an ongoing
Event of Default and to the extent necessary for the manufacture, sale, offer for sale, use or importation of Products in the Territory as required satisfy the Obligations. 
  
 SECTION 5.03. Secured Party Appointed Attorney-in-Fact. Each Grantor hereby appoints the Secured Party the
attorney-in-fact of such Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Secured Party may deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest while this Agreement is in effect. 
  
 ARTICLE VI 
  
 Miscellaneous

  
 SECTION 6.01. Notices. All communications and
notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 10.6 of the Financing Agreement. 
  
 SECTION 6.02. Security Interest Absolute. All rights of the Secured Party hereunder, the Security Interest, and all obligations of the Grantors
hereunder, shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of any other Transaction Document, any agreement with respect to any of the Obligations, or any other agreement or instrument relating to any
of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from any other Transaction Document or any other
agreement or instrument, (c) any exchange, release or nonperfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guaranty, securing or guarantying all or any of the Obligations, or
(d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Grantor in respect of the Obligations or this Agreement. 
  
 SECTION 6.03. Survival of Agreement. All covenants, agreements, representations and warranties made by any Grantor
herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or the Financing Agreement shall be considered to have been relied upon by the Secured Party and shall survive the payment of
any amounts or supply of any services by the Secured Party to the Grantors, regardless of any investigation made by the Secured Party or on its behalf, and shall continue in full force and effect until this Agreement shall terminate. 
  
 SECTION 6.04. Binding Effect. This Agreement shall become effective as
to each Grantor when a counterpart hereof executed on behalf of such Grantor shall have been delivered to the Secured Party and a counterpart hereof shall have been executed on behalf of the Secured 
  

 -12- 

 Party, and thereafter shall be binding upon such Grantor and the Secured Party and their respective successors and
assigns, and shall inure to the benefit of such Grantor and the Secured Party and their respective successors and assigns, except that no Grantor shall have the right to assign or transfer any of its rights or obligations hereunder or any interest
herein (and any such assignment or transfer shall be null and void) except as expressly permitted by the Financing Agreement. 
  
 SECTION 6.05. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any Grantor or the Secured Party that are contained in this Agreement shall bind and inure to the benefit of their respective successors
and assigns, except as specified in Section 6.04. 
  
 SECTION
6.06. Governing Law. This Agreement shall be subject to the laws of the State of Washington, as applied to agreements executed and performed entirely in Washington, without regard to conflicts of law rules. 
  
 SECTION 6.07. Waivers; Amendment; Several Agreement. (a) No failure or
delay of the Secured Party in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Secured Party hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provisions of this Agreement or any other Transaction Document or consent to any departure by any Grantor therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Grantor in any case shall entitle such Grantor or any other Grantor to any other or further notice or demand in similar or
other circumstances. 
  
 (b) Neither this Agreement nor any
provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Secured Party and the Grantor or Grantors with respect to which such waiver, amendment or modification is to apply.

  
 (c) This Agreement shall be construed as a separate agreement
with respect to each Grantor and may be amended, modified, supplemented, waived or released with respect to any Grantor without the approval of any other Grantor and without affecting the obligations of any other Grantor hereunder. 
  
 SECTION 6.08. Dispute Resolution. (a) Any dispute, controversy or
claim arising under, out of or in connection with this Agreement, including any subsequent amendments, or the validity, enforceability, construction, performance or breach hereof shall be first be submitted to the chief executive officers (or a
senior executive direct report) of Debtor and Secured Party for attempted resolution. In such case, the chief executive officers (or their designees) shall meet as soon as practicable, as reasonably requested by either Party to discuss such dispute.

  

 -13- 

 (b) If any dispute is not resolved within thirty (30) days after submission of such dispute for
resolution under Section 6.08(a), either Party may at any time thereafter provide the other Party written notice specifying such dispute in reasonable detail and notifying the other Party of its decision to institute arbitration proceedings pursuant
to this Section 6.08(b). In such case such dispute shall be finally settled under the rules set forth in the Commercial Dispute Resolution Procedures of the Arbitration of American Arbitration Association (the “Rules”) then in force
on the date of commencement of the arbitration by three (3) arbitrators appointed in accordance with those Rules; provided however if the Parties mutually agree, such arbitration may be conducted by a single mutually agreeable arbitrator. The award
rendered shall be final and binding on the Parties. Judgment upon the award may be entered in any court having jurisdiction. The place of arbitration shall be in San Francisco, California. The law of the State of Washington shall be applied as set
forth in Section 6.06. The costs of any arbitration, including administrative fees and fees of the arbitrators, shall be shared equally by the Parties, unless otherwise specified by the arbitrators. Each Party shall bear the cost of its own
attorneys’ and expert fees; provided that the arbitrators may in their discretion award to the prevailing Party the costs and expenses incurred by the prevailing Party in connection with the arbitration proceeding. 
  
 SECTION 6.09. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby (it
being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions to be replaced thereby. It is understood and agreed among the
parties that this Agreement shall create separate security interests in the Collateral securing the Obligations as provided in Section 2.01, and that any determination by any court with jurisdiction that the security interest securing any Obligation
is invalid for any reason shall not in and of itself invalidate the Security Interest securing any other Obligations hereunder. 
  
 SECTION 6.10. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute a single contract and shall become effective as provided in Section 6.04. Delivery of an executed signature page to this Agreement by facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. 
  
 SECTION 6.11. Headings. Article and
Section headings used herein are for the purpose of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement. 
  

 -14- 

 SECTION 6.12. Termination. This Agreement and the Security Interest (i) shall terminate when all
the Obligations have been indefeasibly satisfied in full (at which time the Secured Party shall return the Pledged Securities to the Debtor and shall execute and deliver to the Grantors, at the Grantors’ expense, all UCC termination statements
and similar documents which the Grantors shall reasonably request to evidence such termination) and (ii) shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment in respect of any Obligation is rescinded
or must otherwise be restored by the Secured Party upon any bankruptcy or reorganization of any Grantor or otherwise. Any execution and delivery of termination statements or documents pursuant to this Section 6.12 shall be without recourse to or
warranty by the Secured Party. 
  
 [Remainder of page
intentionally left blank. Signature page follows.] 
  

 -15- 

 [Signature page to Security Agreement] 
  
 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written. 
  

			
	 CELL THERAPEUTICS, INC.

		
	 By:
	 	 /s/ James Bianco

	 Name:
	 	 James Bianco

	 Title:
	 	 President & CEO

	
	 POLARX BIOPHARMACEUTICALS, INC.

		
	 By:
	 	 /s/ James Bianco

	 Name:
	 	 James Bianco

	 Title:
	 	 President

	
	 PHARMABIO DEVELOPMENT INC.

		
	 By:
	 	 /s/ William O. Robb

	 Name:
	 	 William O. Robb

	 Title:
	 	 Vice President

 SCHEDULE I 
  
 CONTRACT RIGHTS 
  
 Cell Therapeutics, Inc. 
  

	1.	Agreements under which Patents are licensed from another party: 

  

	 	•	Cross-License Agreement, entered into as of December 13, 2002, by and between Cell Therapeutics, Inc. and CTI Technology, Inc. 

  

	 	•	Patents covered: 

  

	 	•	Patents constituting Collateral 

  

	 	•	Sublicense Agreement, entered into as of December 13, 2002, by and between Cell Therapeutics, Inc. and PolaRx Biopharmaceuticals, Inc. 

  

	 	•	Patents covered: 

  

	 	•	Patents under the SKI Agreement 

  

	2.	Agreements under which Patents are licensed to another party: 

  

	 	•	Cross-License Agreement, entered into as of December 13, 2002, by and between Cell Therapeutics, Inc. and CTI Technology, Inc. 

  

	 	•	Patents covered: 

  

	 	•	Patents constituting Collateral 

  
 PolaRx Biopharmaceuticals, Inc. 
  

	1.	Agreements under which Patents are licensed from another party: 

  

	 	•	License Agreement, effective as of May 24, 1999, by and between Samuel Waxman Cancer Research Foundation and PolaRx Biopharmaceuticals, Inc. 

  

	 	•	Patents covered: 

  

	 	•	U.S. Patent No. 6,720,011 

  

	 	•	USSN 10/715,166 Filed November 17, 2003 

  

	 	•	Exclusive License Agreement, effective as of February 9, 1998, by and between Sloan-Kettering Institute for Cancer Research and PolaRx Biopharmaceuticals, Inc.

  

	 	•	Patents covered: 

  

	 	•	U.S. Patent No. 6,723,351 

  

	 	•	U.S. Patent No. 6,770,304 

  

	 	•	U.S. Patent Publication No. 20040157182 

	 	•	U.S. Patent Publication No. 20040146583 

  

	 	•	U.S. Patent Publication No. 20040146582 

  

	 	•	U.S. Patent Publication No. 20040146581 

  

	 	•	U.S. Patent Publication No. 20040146580 

  

	 	•	U.S. Patent Publication No. 20040146579 

  

	 	•	U.S. Patent Publication No. 20040146578 

  

	 	•	U.S. Patent Publication No. 20040146577 

  

	 	•	U.S. Patent Publication No. 20040146576 

  

	 	•	U.S. Patent Publication No. 20040146575 

  

	 	•	U.S. Patent Publication No. 20040146574 

  

	 	•	U.S. Patent Publication No. 20040146573 

  

	 	•	U.S. Patent Publication No. 20040146572 

  

	 	•	U.S. Patent Publication No. 20040146571 

  

	 	•	U.S. Patent Publication No. 20040146570 

  

	 	•	U.S. Patent Publication No. 20040146569 

  

	 	•	U.S. Patent Publication No. 20040146568 

  

	 	•	European Patent Application Publication No. EP01037625A1 

  

	2.	Agreements under which Patents are licensed to another party: 

  

	 	•	Sublicense Agreement, entered into as of December 13, 2002, by and between Cell Therapeutics, Inc. and PolaRx Biopharmaceucticals, Inc. 

  

	 	•	Patents covered: 

  

	 	•	Patents under the SKI Agreement 

 SCHEDULE II 
  
 PATENTS 
  
 UNITED STATES PATENTS GRANTED: 
  
 None. 
  
 UNITED STATES PATENT APPLICATIONS: 
  

											
	 COUNTRY

	  	 OWNER

	  	 TITLE

	  	 APP.
 NO.

	  	 APP.
 DATE

	  	STATUS

	 U.S.
	  	PolaRx Biophar-maceuticals, Inc.	  	COMPOSITIONS AND METHODS FOR THE TREATMENT OF PRIMARY AND METASTATIC NEOPLASTIC DISEASES USING ARSENIC COMPOUNDS	  	10/789,628	  	2/27/2004	  	Filed
						
	 U.S.
	  	PolaRx Biophar-maceuticals, Inc.	  	COMPOSITIONS AND METHODS FOR THE TREATMENT OF PRIMARY AND METASTATIC NEOPLASTIC DISEASES USING ARSENIC COMPOUNDS	  	10/698,625	  	11/3/2003	  	Filed
						
	 U.S.
	  	PolaRx Biophar-maceuticals, Inc.	  	COMPOSITIONS AND METHODS FOR THE TREATMENT OF PRIMARY AND METASTATIC NEOPLASTIC DISEASES USING ARSENIC COMPOUNDS	  	10/776,504	  	2/12/2004	  	Filed
						
	 U.S.
	  	PolaRx Biophar-maceuticals, Inc.	  	COMPOSITIONS AND METHODS FOR THE TREATMENT OF PRIMARY AND METASTATIC NEOPLASTIC DISEASES USING ARSENIC COMPOUNDS	  	10/789,604	  	2/27/2004	  	Filed
						
	 U.S.
	  	PolaRx Biophar-maceuticals, Inc.	  	COMPOSITIONS AND METHODS FOR THE TREATMENT OF PRIMARY AND METASTATIC NEOPLASTIC DISEASES USING ARSENIC COMPOUNDS	  	10/640,403	  	8/14/2003	  	Filed
						
	 U.S.
	  	PolaRx Biophar-maceuticals, Inc.	  	COMPOSITIONS AND METHODS FOR THE TREATMENT OF PRIMARY AND METASTATIC NEOPLASTIC DISEASES USING ARSENIC COMPOUNDS	  	10/640,399	  	8/14/2003	  	Filed
						
	 U.S.
	  	PolaRx Biophar-maceuticals, Inc.	  	COMPOSITIONS AND METHODS FOR THE TREATMENT OF PRIMARY AND METASTATIC NEOPLASTIC DISEASES USING ARSENIC COMPOUNDS	  	10/649,944	  	8/28/2003	  	Filed
						
	 U.S.
	  	PolaRx Biophar-maceuticals, Inc.	  	COMPOSITIONS AND METHODS FOR THE TREATMENT OF PRIMARY AND METASTATIC NEOPLASTIC DISEASES USING ARSENIC COMPOUNDS	  	10/649,776	  	8/28/2003	  	Filed
						
	 U.S.
	  	PolaRx Biophar-maceuticals, Inc.	  	COMPOSITIONS AND METHODS FOR THE TREATMENT OF PRIMARY AND METASTATIC NEOPLASTIC DISEASES USING ARSENIC COMPOUNDS	  	09/173,531	  	10/15/1998	  	Filed

 FOREIGN PATENTS GRANTED (WITHIN THE TERRITORY): 
  

											
	 COUNTRY

	  	 OWNER

	  	 TITLE

	  	 APP.
 NO.

	  	 APP.
 DATE

	  	 STATUS

	 Turkey
	  	PolaRx Biophar-maceuticals, Inc.	  	COMPOSITIONS AND METHODS FOR THE TREATMENT OF PRIMARY AND METASTATIC NEOPLASTIC DISEASES USING ARSENIC COMPOUNDS	  	2000/1959	  	10/15/1998	  	 Granted –
 Patent No. TR 2000
01959B

  
 FOREIGN PATENT APPLICATIONS
(WITHIN THE TERRITORY): 
  

											
	 COUNTRY

	  	 OWNER

	  	 TITLE

	  	 APP.
 NO.

	  	 APP.
 DATE

	  	STATUS

	European Patent Convention	  	PolaRx Biophar-maceuticals, Inc.	  	COMPOSITIONS AND METHODS FOR THE TREATMENT OF PRIMARY AND METASTATIC NEOPLASTIC DISEASES USING ARSENIC COMPOUNDS	  	98953552.1	  	10/15/1998	  	Filed
						
	European Patent Convention	  	PolaRx Biophar-maceuticals, Inc.	  	COMPOSITIONS AND METHODS FOR THE TREATMENT OF PRIMARY AND METASTATIC NEOPLASTIC DISEASES USING ARSENIC COMPOUNDS	  	03029713.9	  	10/15/1998	  	Filed
						
	European Patent Convention	  	PolaRx Biophar-maceuticals, Inc.	  	COMPOSITIONS AND METHODS FOR THE TREATMENT OF PRIMARY AND METASTATIC NEOPLASTIC DISEASES USING ARSENIC COMPOUNDS	  	04007847.9	  	10/15/1998	  	Filed
						
	European Patent Convention	  	PolaRx Biophar-maceuticals, Inc.	  	COMPOSITIONS AND METHODS FOR THE TREATMENT OF PRIMARY AND METASTATIC NEOPLASTIC DISEASES USING ARSENIC COMPOUNDS	  	03019594.5	  	10/15/1998	  	Filed
						
	European Patent Convention	  	PolaRx Biophar-maceuticals, Inc.	  	COMPOSITIONS AND METHODS FOR THE TREATMENT OF PRIMARY AND METASTATIC NEOPLASTIC DISEASES USING ARSENIC COMPOUNDS	  	03019595.2	  	10/15/1998	  	Filed
						
	European Patent Convention	  	PolaRx Biophar-maceuticals, Inc.	  	COMPOSITIONS AND METHODS FOR THE TREATMENT OF PRIMARY AND METASTATIC NEOPLASTIC DISEASES USING ARSENIC COMPOUNDS	  	03019629.9	  	10/15/1998	  	Filed
						
	European Patent Convention	  	PolaRx Biophar-maceuticals, Inc.	  	COMPOSITIONS AND METHODS FOR THE TREATMENT OF PRIMARY AND METASTATIC NEOPLASTIC DISEASES USING ARSENIC COMPOUNDS	  	03019628.1	  	10/15/1998	  	Filed

 SCHEDULE III 
  
 PLEDGED SECURITIES 
  
 Guarantor Subsidiary 
  

	 	•	All shares of capital stock, par value $0.001 per share, of PolaRx Biopharmaceuticals, Inc., all of which are owned by Cell Therapeutics, Inc. 

  
 UK Subsidiary 
  

	 	•	65% of shares of capital stock, par value £1 per share, of Cell Therapeutics (UK) Limited, all of which are owned by Cell Therapeutics, Inc. 

 SCHEDULE IV 
  
 PRODUCT REGISTRATIONS 
  
 Cell Therapeutics, Inc. 
  

	 	•	IND: 55,291                     IND Filed 5 Feb 98 

  
   Owner: Cell Therapeutics, Inc. (CTI) 
  

	 	•	NDA: 21-248             Approved for marketing 25 Sep 00 

  
   Owner: Cell Therapeutics, Inc. (CTI) 
  
 PolaRx Biopharmaceuticals, Inc. 

	 	•	None. 

 SCHEDULE V 
  
 TRADEMARKS 
  
 UNITED STATES TRADEMARK REGISTRATIONS: 
  

															
	 COUNTRY

	 	 OWNER

	 	 MARK

	 	 APP.
 NO.

	 	 APP.
 DATE

	 	 REG.
 NO.

	 	 REG.
 DATE

	 	 STATUS

	U.S.	 	 Cell
 Therapeutics,
 Inc.
	 	TRISENOX	 	76/033,973	 	4/26/2000	 	2,509,161	 	11/20/2001	 	Registered

  
 UNITED STATES TRADEMARK
APPLICATIONS: 
  
 None. 
  
 FOREIGN TRADEMARK REGISTRATIONS (WITHIN THE TERRITORY): 
  

															
	 COUNTRY

	 	 OWNER

	 	 MARK

	 	 APP.
 NO.

	 	 APP.
 DATE

	 	 REG.
 NO.

	 	 REG.
 DATE

	 	 STATUS

	Community Trademark	 	Cell Therapeutics, Inc.	 	TRISENOX	 	1,921,550	 	10/25/2000	 	1,921,550	 	5/13/2002	 	Registered
								
	Community Trademark	 	Cell Therapeutics, Inc.	 	TRISENOX (and design)	 	2,435,956	 	11/2/2001	 	2,435,956	 	11/2/2001	 	Registered
								
	Iceland	 	Cell Therapeutics, Inc.	 	TRISENOX	 	3663	 	4/26/2000	 	250/2001	 	3/1/2001	 	Registered
								
	Norway	 	Cell Therapeutics, Inc.	 	TRISENOX	 	2000-12494	 	10/16/2000	 	208,876	 	6/7/2001	 	Registered
								
	Switzerland	 	Cell Therapeutics, Inc.	 	TRISENOX	 	12775/2000	 	10/25/2000	 	484030	 	4/25/2001	 	Registered

  
 FOREIGN TRADEMARK APPLICATIONS
(WITHIN THE TERRITORY): 
  

											
	 COUNTRY

	 	 OWNER

	 	 MARK

	 	 APP.
 NO.

	 	 APP.
 DATE

	 	 STATUS

	 Croatia
	 	Cell Therapeutics, Inc.	 	TRISENOX	 	TBD	 	6/21/2004	 	Cell Therapeutics, Inc.

 SCHEDULE 3.05 
  
 NAME, LOCATION, ETC. 
  
 Cell Therapeutics, Inc. 
  
 Legal Name: Cell Therapeutics, Inc. 
 Type of Organization: Corporation

 Jurisdiction of Organization: Washington 
 Organizational
Identification Number: 601339038 
 Chief Executive Office: 501 Elliott Avenue West, Suite 400, Seattle, WA 98119 
  
 PolaRx Biopharmaceuticals, Inc. 
  
 Legal Name: PolaRx Biopharmaceuticals, Inc. 
 Type of Organization: Corporation 
 Jurisdiction of Organization: Delaware

 Organizational Identification Number: 2720482 
 Chief Executive
Office: 501 Elliott Avenue West, Suite 400, Seattle, WA 98119 

 SCHEDULE 3.06 
  
 PRIOR NAMES 
  
 Cell Therapeutics, Inc. 
  
 None. 
  
 PolaRx Biopharmaceuticals, Inc. 
  
 None.Registration Rights Agreement

 Exhibit 10.4 
  
 CELL THERAPEUTICS, INC. 
  
 REGISTRATION RIGHTS AGREEMENT 
  
 This Registration Rights Agreement (this “Agreement”) is made as of the 21st day of December, 2004, by and between Cell Therapeutics, Inc., a
Washington corporation (the “Company”), and the investor set forth on the signature page hereto (“Investor”). 
  
 RECITALS: 
  
 The Company and the Investor have entered into that certain Financing Agreement (the “Financing Agreement”) of even date herewith pursuant to
which the Company may issue shares of common stock, no par value per share (the “Common Stock”) to the Investor in partial fulfillment of the Company’s obligations under Section 8.5 of the Financing Agreement and on the terms and
conditions set forth therein. In connection with the Financing Agreement, the Company has agreed to enter into this Agreement with the Investor in order to provide the Investor with certain rights to register the shares that may become issuable
under Section 8.5 of the Financing Agreement (the “Shares”). 
  
 AGREEMENT 
  
 The parties hereby agree as follows:

  
 1. Definitions. Capitalized terms used herein,
but not otherwise defined, shall have the meaning ascribed to such terms in the Financing Agreement. As used in this Agreement, the following defined terms shall have the following meanings: 
  
 (a) “Commission” means the United States Securities and Exchange
Commission, or any other federal agency at the time administering the Exchange Act or the Securities Act, whichever is the relevant statute for the particular purpose. 
  
 (b) “Effectiveness Period” has the meaning assigned thereto in Section 2.1(b)(i) hereof. 
  
 (c) “Effective Time” means the date on which the Commission
declares the Registration Statement effective or on which the Registration Statement otherwise becomes effective. 
  
 (d) “Exchange Act” means the United States Securities Exchange Act of 1934, as amended. 
  
 (e) The term “holder” means the record holder of such Common
Stock. 

 (f) “Prospectus” means the prospectus (including, without limitation, any preliminary
prospectus, any final prospectus and any prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Securities Act) included in the
Registration Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement and by all other amendments and supplements
to such prospectus, including all material incorporated by reference in such prospectus and all documents filed after the date of such prospectus by the Company under the Exchange Act and incorporated by reference therein. 
  
 (g) The term “Registrable Securities” means (i) the Shares, and
(ii) any other shares of Common Stock of the Company issued as a dividend or other distribution with respect to, or in exchange for or in replacement of, the Shares; provided, however, that the foregoing definition shall exclude in all cases
any Registrable Securities sold by a person in a transaction in which his or her rights under this Agreement are not assigned. Notwithstanding the foregoing, Common Stock or other securities shall only be treated as Registrable Securities if and so
long as they have not been (A) sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction, or (B) sold in a transaction exempt from the registration and prospectus delivery requirements of the
Securities Act under Section 4(1) thereof so that all transfer restrictions, and restrictive legends with respect thereto, if any, are removed upon the consummation of such sale; 
  
 (h) The term “Registration Statement” has the meaning set forth in Section 2.1(a). 
  
 (i) The term “SEC” means the Securities and Exchange Commission.

  
 (j) The term “Shelf Registration Statement” means a
“shelf” registration statement filed under the Securities Act providing for the registration of, and the sale on a continuous or delayed basis by the holders of, all of the Registrable Securities pursuant to Rule 415 under the Securities
Act and/or any similar rule that may be adopted by the Commission, filed by the Company pursuant to the provisions of Section 2.1 of this Agreement, including the Prospectus contained therein, any amendments and supplements to such registration
statement, including post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement. 
  
 2. Registration Rights. The Company and the Investor covenant and agree as follows: 
  
 2.1 Required Registration. 
  

(a) Unless otherwise instructed in writing by the Investor, the Company shall, on or prior to 45 calendar days after the issuance of the Shares (as
defined in the Financing Agreement), file with the Commission a Shelf Registration Statement (except if the Company is not then eligible to use Form S-3, in which case such registration statement shall be on another appropriate form) (the
“Registration Statement”) relating to the offer and sale of the Registrable Securities and, thereafter, 
  

 -2- 

 shall use its commercially reasonable efforts to cause such Registration Statement to be declared effective under the
Securities Act as soon as practicable and in any event on or prior to 135 calendar days after the issuance of the Shares; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance
pursuant to this Section 2.1 (1) if the Company shall furnish to the Investor a certificate signed by the Chief Executive Officer of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its shareholders for such registration statement to be effected at such time because the filing thereof would require premature disclosure of a potential transaction or transactions (a “Potential
Transaction”), in which event the Company shall have the right to defer the filing of such registration statement for a period of not more than 60 days; provided, however, that the Company shall not utilize this right more than once in
any 270 day period; or (2) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance. Subject to
any modifications that are responsive to comments, rules or regulations of the SEC, the Registration Statement will include a customary plan of distribution. 
  
 (b) The Company shall use its reasonable best efforts to: 
  
 (i) keep the Registration Statement continuously effective in order to permit the Prospectus to be usable by the Investor for resales of Registrable
Securities until the earlier of (A) the sale under the Registration Statement of all the Registrable Securities registered thereunder, and (B) the expiration of the holding period applicable to such Registrable Securities held by persons that are
not affiliates of the Company under Rule 144(k) of the Securities Act or any successor previously subject to specific permitted exceptions (such period being referred to herein as the “Effectiveness Period”); 
  
 (ii) promptly prepare and file with the SEC such amendments and supplements
to the Registration Statement and the Prospectus as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such Registration Statement; 
  
 (iii) register and qualify the Registrable Securities covered by such
Registration Statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Investor, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify
to do business or to file a general consent to service of process in any such states or jurisdictions; 
  
 (iv) furnish to the Investor such number of copies of Prospectuses and such other documents as the Investor from time to time may reasonably request in
order to facilitate the disposition of Registrable Securities owned by the Investor; 
  
 (v) notify the Investor of Registrable Securities covered by such Registration Statement at any time when a Prospectus relating thereto is required to be delivered under the Securities Act of the happening of any
event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing; 
  

 -3- 

 (vi) cause all such Registrable Securities registered pursuant to Section 2.1 to be listed on each
securities exchange on which similar securities issued by the Company are then listed; 
  
 (vii) provide Investor’s counsel a copy of such Registration Statement, prior to filing with the SEC, furnish Investor’s counsel a copy of any amendments and supplements concurrently with filing with the SEC
and as promptly as practicable provide such counsel with any comment letters or similar notices received by the Company from the SEC with respect thereto; and 
  

(viii) provide a transfer agent and registrar for all Registrable Securities registered hereunder a CUSIP number for all such Registrable Securities,
in each case not later than the Effective Time. 
  
 2.2
Restrictions on and Procedure for Sales Pursuant to Registration Statement; Delay of Sale. The Company may suspend the Registration Statement and refuse to permit the Investor to resell any Registrable Securities for a specified period
of time; provided, however, that (a) in order to exercise this right, the Company must deliver a certificate in writing to the Investor to the effect that the Registration Statement in its then current form omits discussion of a Potential
Transaction or contains an untrue statement of material fact or omits to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, and (b) in no event
shall such delay exceed 60 consecutive days. During any suspension as contemplated by this Section 2.2, the Company will not allow any of its officers or directors to buy or sell shares of the Company’s securities. 
  
 2.3 Information. It shall be a condition precedent to the obligations
of the Company to take any action pursuant to this Section 2 with respect to the Registrable Securities of the Investor that the Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the
intended method of disposition of such securities as shall be required to effect the registration of such Investor’s Registrable Securities. 
  
 2.4 Registration Expenses. All expenses incurred in connection with a Registration Statement pursuant to Section 2.1, including (without
limitation) all registration, filing, qualification, printers’ and accounting fees, and the reasonable fees and disbursements of one counsel for the Investor selected by Investor with the approval of the Company, which approval shall not be
unreasonably withheld, and counsel for the Company shall be borne by the Company. The Company shall pay such Investor’s counsel reasonable fees and disbursements within 30 days after receiving the Investor’s written demand therefor, which
shall include a copy of any related invoice(s) from Investor’s counsel. 
  

 -4- 

 2.5 Indemnification. In the event any Registrable Securities are included in a Registration
Statement under Section 2: 
  
 (a) To the extent permitted by
law, the Company will indemnify and hold harmless Investor and each person, if any, who controls Investor within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a “Violation”): (i) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, including any Prospectus contained therein or any amendments or
supplements thereto, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; and the Company will pay to each such Investor or controlling
person, as incurred, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this
subsection 2.5(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable to any Investor or controlling person for any such loss, claim, damage, liability, or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by any such Investor or controlling person. 
  
 (b) To the extent permitted by law, the Investor will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed
the Registration Statement, each person, if any, who controls the Company within the meaning of the Securities Act and any controlling person of any Investor, against any losses, claims, damages, or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by Investor expressly for use in connection with such Registration Statement; and Investor will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this subsection 2.5(b), in connection with investigating or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this subsection 2.5(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Investor,
which consent shall not be unreasonably withheld; provided, that in no event shall any indemnity under this subsection 2.5(b) exceed $2,500,000, except in the case of willful fraud by Investor. 
  
 (c) Promptly after receipt by an indemnified party under this Section 2.5 of
notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.5, deliver to the indemnifying party a written
notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so 
  

 -5- 

 desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the
reasonable fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.5 but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have
to any indemnified party otherwise than under this Section 2.5. 
  
 (d) If the indemnification provided for in this Section 2.5 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense as well as
any other relevant equitable considerations; provided, that in no event shall any contribution by Investor under this subsection 2.5(d) exceed $2,500,000, except in the case of willful fraud by Investor. The relative fault of the indemnifying party
and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying
party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. 
  
 (e) The obligations of the Company and Investor under this Section 2.5 shall survive the completion of any offering of
Registrable Securities in a Registration Statement under this Section 2, and otherwise. 
  
 2.6 Reports under the Securities Exchange Act of 1934. With a view to making available to the Investor the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC
that may at any time permit a Investor to sell securities of the Company to the public without registration or pursuant to a Registration Statement, the Company agrees to use its best commercial efforts to: 
  
 (a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times so long as the Company remains subject to the periodic reporting requirements under Sections 13 or 15(d) of the Exchange Act; 
  
 (b) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act
and the Exchange Act; and 
  

 -6- 

 (c) furnish to Investor, so long as Investor owns any Registrable Securities, forthwith upon request (i)
a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (ii) such other information as may be reasonably requested in availing any Investor of any rule or regulation of
the SEC which permits the selling of any such securities without registration or pursuant to such form. 
  
 2.7 Termination of Registration Rights. (a) With respect to shares of Registrable Securities issued to the Investor, (i) the Investor shall not be
entitled to exercise any right provided for in Section 2.1 after such time as Rule 144(k) under the Securities Act is available for the sale of all of such Investor’s shares that were issued, and (ii) the Company shall have no further
obligations under Section 2.1 following the Effectiveness Period, and (b) if the Shares are not issued or issuable under the terms of Section 8.6B(1) of the Financing Agreement, and in any event if the Shares have not been issued by March 31, 2006,
this Agreement shall become null and void. 
  
 3.
Miscellaneous. 
  
 3.1 Successors and Assigns.
Except as otherwise provided in this Agreement, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any of the Common Stock).
Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement. 
  
 3.2
Amendments and Waivers. Any term of this Agreement may be amended or waived only with the written consent of the Company and the holders of a majority of the Registrable Securities then outstanding. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any Registrable Securities then outstanding, each future holder of all such Registrable Securities, and the Company. 
  
 3.3 Notices. Unless otherwise provided, any notice required or permitted by this Agreement shall be in writing and
shall be deemed sufficient upon delivery, when delivered personally or by overnight courier or sent by telegram or fax, or forty-eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and
addressed to the party to be notified at such party’s address or fax number as set forth on the signature page hereto or as subsequently modified by written notice, and if to CTI, with a copy to Wilson Sonsini Goodrich & Rosati,
Professional Corporation, One Market, Spear Tower, Suite 3300, San Francisco, CA 94118, Tel: (415) 947-2008, Fax: (415) 947-2099, Attn: Michael Kennedy, Esq. 
  
 3.4 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (c) the balance of the Agreement shall be enforceable in accordance with its terms. 
  

 -7- 

 3.5 Governing Law. This Agreement and all acts and transactions pursuant hereto shall be governed,
construed and interpreted in accordance with the laws of the State of New York, without giving effect to principles of conflicts of laws. 
  
 3.6 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. 
  
 3.7 Titles
and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 
  
 [Signature Page Follows] 
  

 -8- 

 The parties have executed this Registration Rights Agreement as of the date first above written. 
  

							
	 CELL THERAPEUTICS, INC.
	 	INVESTOR: PHARMABIO DEVELOPMENT, INC.
				
	 By:
	 	 /s/ James Bianco

	 	By:	 	 /s/ William O. Robb

	 Name:
	 	James Bianco	 	Name:	 	William O. Robb
	 Title:
	 	Chief Executive Officer	 	Title:	 	Vice President
				
	 Address:
	 	 501 Elliott Avenue West, Suite 400
 Seattle, Washington
98119
	 	Address:	 	 4709 Creekstone Drive
 Riverbirch Bldg., Suite
200
 Durham, NC 27703

				
	 	 	 	 	Tel:	 	(919) 998-2000
				
	 	 	 	 	Fax:	 	(919) 998-2090
			
	 	 	 	 	Soc. Sec. or Tax I.D.

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