Document:

Separation Agreement

 EXHIBIT 10.1 
 SEPARATION AGREEMENT AND 
 GENERAL RELEASE OF ALL CLAIMS 
 This Separation Agreement and General Release (the “Agreement”) is made between Joseph E. Cross and Nanophase Technologies Corporation
(“NTC”). 
 Whereas, since December 1998, Mr. Cross has served as President and Chief Executive Officer of NTC pursuant to
agreements most recently including that certain Employment Agreement between Mr. Cross and NTC dated and effective as of November 9, 1999, as amended (“Employment Agreement”); and 
 Whereas, Mr. Crass resigned his employment with NTC effective August 13, 2008; and 
 Whereas, Mr. Cross and NTC wish both to provide for an orderly transition that serves their mutual interests, and to resolve any past, present or
future disputes between them. 
 Now, therefore, in consideration of the release, covenants, representations and obligations stated below,
Mr. Cross and NTC agree as follows: 
 1. Separation Benefits. Subject to Mr. Cross complying with all his obligations
under Paragraphs 2, 3, 5, 7, 8, 9 and 11 of this Agreement, NTC will provide him with the following benefits (collectively, the “Separation Benefits”): 
 A. Severance Pay, in the aggregate gross amount of $366,923.07, subject to tax, withholding and all other required deductions, paid in
twenty-six equal bi-weekly installments of $14,112.43 each. The preceding installments shall begin on NTC’s first regular payday for salaried employees that occurs five days after the end of the “Revocation Period” (as defined in
Paragraph 3.E of this Agreement), provided that NTC, in its discretion, may accelerate any or all installments of the Severance Pay. 
 B. Notice Pay, in the aggregate gross amount of $29,589.04, subject to tax, withholding and all other required deductions, paid in full on NTC’s first regular payday for salaried employees that occurs five days after the end of the
Revocation Period. 
 C. If Mr. Cross and his dependents elect to continue participating in NTC’s group health
insurance plan (the “Plan”) through COBRA, NTC will pay the monthly insurance premiums for such participation by Mr. Cross and his dependants for so long as the Severance Pay continues, provided that: (i) Mr. Cross and his
dependants remain eligible to participate in the Plan, subject to all the terms and conditions of the Plan as may be in effect from time to time; and (ii) Mr. Cross pays a bi-weekly contribution of $169.00 toward the cost of the premiums
for COBRA coverage under the Plan. In the absence of Mr. Cross and his dependants electing to continue participating in NTC’s Plan through COBRA, coverage of Mr. Cross and his dependants under the Plan will end on August 31,
2008. 
 D. NTC will pay to the aggregate gross amount of $10,000, subject to tax, withholding and all other required
deductions, for outplacement services provided to, and outplacement expenses incurred by, Mr. Cross. This amount will be paid in full on NTC’s first regular payday for salaried employees that occurs five days after the end of the
Revocation Period. 

 E. All unvested stock options previously granted to Mr. Cross will become fully
vested and will become immediately exercisable, with such exercise continuing to be governed by all the terms and conditions of the respective grant instruments and the applicable stock option or equity compensation plan under which such options
were awarded to Mr. Cross, provided that Mr. Cross shall have until August 13, 2009 to exercise any or all such stock options. All unexercised previously vested stock options that have been granted to Mr. Cross will continued to
be governed by all the terms and conditions of the respective grant instruments and the applicable stock option or equity compensation plan under which such options were awarded to Mr. Cross, provided that Mr. Cross shall have until
August 13, 2009 to exercise any or all such stock options. 
 F. NTC will not contest any claim for unemployment
insurance benefits that Mr. Cross may file with the Illinois Department of Employment Security by September 15, 2008. 
 G. Mr. Cross acknowledges that NTC has made no representations to him concerning the tax consequences, if any, of the Separation Benefits to be provided to Mr. Cross under Paragraph 1 of this Agreement. 
 2. General Release. In consideration of the preceding Separation Benefits provided by NTC to Mr. Cross, which Separation Benefits are
hereby acknowledged by Mr. Cross to be sufficient, just and adequate, Mr. Cross, for himself and his heirs, executors, administrators, legal representatives, agents, attorneys, successors and assigns, irrevocably and unconditionally hereby
releases and forever discharges NTC, all its respective officers, directors, shareholders, predecessors, successors, affiliates, employees, insurers, benefit plans, equity compensation plans, legal representatives, agents, attorneys and assigns, of
and from any and all administrative, judicial or other claims, actions, charges, suits, debts, dues, accounts, contracts, plans, controversies, agreements, promises, representations, warranties, damages and judgments, in law or equity, which
Mr. Cross had, has or may hereafter have, whether known or unknown, from the beginning of time through the date Mr. Cross signs this Agreement, arising out of, relating to, or in any manner connected with any of the following: 

A. All matters relating to Mr. Cross’ employment with, or termination as an officer, director and employee of, NTC.

 B. All rights or claims to any compensation or benefits from NTC (specifically including any claim for severance pay or
notice pay as provided under Sections 6(b) and 7(b) of the Employment Agreement), except as otherwise expressly provided in this Agreement. 
 C. All suits, claims, charges or causes of action arising under or in connection with: (i) Title VII of the Civil Right Act of 1964 as amended (42 U.S.C. §§ 2000e et seq.), the Civil Rights Acts
of 1991, 1866 and 1871 as amended, the Americans With 

  

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Disabilities Act of 1990 (42 U.S.C. §§ 12101 et seq.), the National Labor Relations Act as amended (29 U.S.C. §§ 151 et
seq.), the Employee Retirement Income Security Act of 1974 as amended (29 U.S.C. §§ 1001 et seq.), the Occupational Safety and Health Act of 1970 as amended (29 U.S.C. §§ 651 et seq.), the Fair Labor Standards
Act as amended (29 U.S.C. §§ 201 et seq.), the Family and Medical Leave Act of 1993 as amended (29 U.S.C. §§ 2601 et seq., or the Illinois Human Rights Act as amended. (775 ILCS 5/1 et seq.); (ii) any
federal, state or local law, statute, ordinance, regulation, order or public policy affecting or relating to the claims and rights of employees, directors, officers and shareholders, or any claims arising out of or in relation to any contract or
common law right including without limitation any claim in tort or contract relating to the breach of an oral, written or implied contract, breach of an implied covenant of good faith and fair dealing, misrepresentation, defamation, interference
with contract, interference with prospective economic advantage, retaliation, harassment, conspiracy, wrongful termination, intentional or negligent infliction of emotional or psychological injury, mental or emotional distress, mental anguish,
negligence, humiliation, embarrassment, pain and suffering, loss of personal or professional reputation, loss of career opportunities, stigmatization or loss of job status or satisfaction; (iii) any employment-related claims for compensatory,
consequential or punitive damages, equitable relief, attorneys’ fees or litigation costs, back-pay, front-pay, past or prospective benefits from individual, group or other insurance coverage or any other source, loss of salary, net
accumulations, wages, expense reimbursements, vacations, earnings, interest or loss of any other incidents, terms or conditions of employment; and (iv) any claim for attorneys’ fees. 
 Mr. Cross and NTC agree that nothing in Paragraphs 2 or 3 of this Agreement waives any claims or rights that Mr. Cross may have
which are not subject to his unilateral waiver under applicable law. 
 3. Age Claim Release. Mr. Cross specifically
agrees that: 
 A. He is releasing any and all claims under the Age Discrimination in Employment Act of 1967 (29 U.S.C.
§§ 621 et seq.), as amended by the Older Workers Benefit Protection Act (and any comparable state or local laws), arising up to the date that he signs this Agreement. 
 B. The consideration he will receive is greater than normally provided by NTC’s policies to a person of his length of service and
responsibility. 
 C. He has had an opportunity to consult with an attorney of his choice before he executed this instrument.

 D. He has been given twenty-one days from the date he received this Agreement (or until September 5,2008) to decide
whether to sign the document. 
 E. He has seven days after he signs this Agreement to revoke its execution (the
“Revocation Period”). Mt. Cross agrees that if he revokes his execution of this 

  

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Agreement, he will immediately provide Nancy Baldwin, Director of Human Resources of NTC, with written notice of the revocation, transmitted to NTC by
overnight delivery. In the event of such revocation, all obligations of NTC under this Agreement shall immediately cease. In the absence of such revocation, this Agreement will become effective on the eighth day after Mr. Cross signs it.

 4. Resignation as Director. Pursuant to Section 7(c) of the Employment Agreement, Mr. Cross confirms that upon the
conclusion of the Term of the Employment Agreement on August 13, 2008, he concurrently tendered his resignation as a director of NTC. NTC acknowledges that it has accepted Mr. Cross’ resignation as a director of NTC. 
 5. No Re-employment. Mr. Cross waives all claims to employment, re-employment or engagement with NTC. Mr. Cross affirmatively
agrees not to seek employment, re-employment or engagement with NTC. Mr. Cross releases NTC from any future claims concerning any application for employment or engagement he makes in breach of this Agreement. 
 6. No Admissions. Mr. Cross acknowledges that the Separation Benefits provided by NTC, and its execution of this Agreement, are not an
admission of wrongdoing of any kind on the part of the entities and persons hereby released, by whom wrongdoing of any kind is expressly denied. 
 7. Continued Obligations. Mr. Cross confirms the existence and enforceability of all his obligations to NTC, including those: (a) under Section 8 of the Employment Agreement; (b) under that certain
Confidential Information and Proprietary Rights Agreement between NTC and Mr. Cross entered into on or about October 26, 1998; (c) under the Illinois Trade Secrets Act; (d) under NTC’s Insider Trading Policy and practices;
and (e) under applicable law concerning his fiduciary duties to NTC as an officer and director possessing material insider information. Mr. Cross further agrees that: (x) if he is ever required by subpoena or order of any court or
administrative agency to disclose any information concerning NTC, including its confidential or proprietary information of any kind, he will first notify NTC in writing immediately upon his receiving any such subpoena or order and before making any
disclosure; and (y) upon NTC’s request, Mr. Cross will cooperate in any legal proceedings which in whole or part relate to any events or matters occurring while he was employed by NTC and/or about which he has relevant information,
provided that NTC will reimburse Mr. Cross for the reasonable travel, lodging and food expenses that he incurs in connection with providing such cooperation, subject to NTC’s policy governing Employee Expense Reimbursement for Corporate
Expenditures in effect on August 13, 2008. 
 8. Non-Disparagement. Mr. Cross agrees that he will not directly or
indirectly make or cause to be made any statement or other form of communication that could be reasonably interpreted as disparaging the reputation or business interests of NTC or any of its respective officers, directors, shareholders, employees,
customers, vendors or their representatives. 
  

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 9. Return of NTC Property. Mr. Cross shall immediately return to NTC all its property
in his possession or control, including without limitation: (a) keys, (b) all electronically-stored information created by or on behalf of NTC, or otherwise belonging to NTC, including all such information contained in any hard drive or
computer owned by Mr. Cross; (c) all notes, documents and other written materials, including any copies, excerpts, summaries or compilations thereof; and (d) the 2008 Audi A6 car leased by NTC. 
 10. Integration, No Other Promises and Voluntary Signing. Mr. Cross acknowledges that: all the Separation Benefits provided by NTC are
described in this Agreement; no other promise or agreement of any kind has been made to or with him by any person or entity whatsoever to cause him to execute this Agreement; this instrument (and the other documents referenced herein) constitutes
the entire agreement between the parties; and he has knowingly signed this Agreement of his own free will, intending to be legally bound by it. 
 11. No Assignment. Mr. Cross warrants that he has not assigned any claim, action, cause of action, suit, contract, plan, controversy, promise, damages, award or judgments which he had, has or hereafter may have arising
from any matters connected in any way with his employment by, or offices or directorship with, NTC or any claims released in this instrument. 
 12. Governing Law. This Agreement shall be construed in accord with and governed by the laws of the State of Illinois. 
  

							
	 /S/ JOSEPH E. CROSS
	 		 	NANOPHASE TECHNOLOGIES CORPORATION
	JOSEPH E. CROSS	 		 		 	
				
	8/17/08	 		 	By:	 	 /s/ Nancy Baldwin

	Date	 		 		 	Nancy Baldwin
		 		 		 	Director of Human Resources
				
		 		 		 	8/18/08
		 		 		 	Date

  

 5Agreement to Provide Escrow and Paying Agent Services, dated June 12, 2008

 Exhibit 10.1 
 AGREEMENT TO PROVIDE 
 ESCROW AND PAYING AGENT SERVICES 
 FOR CELL THERAPEUTICS, INC 
 THIS
AGREEMENT TO PROVIDE ESCROW AND PAYING AGENT SERVICES (this “Agreement”) is entered into by and between CELL THERAPEUTICS, INC., a Washington corporation (herein called the “Issuer”) and U.S. BANK
NATIONAL ASSOCIATION (herein called “U.S. Bank”) as of June 12, 2008. Terms not otherwise defined herein shall have the meaning set forth in the Indenture (as defined below). 
 WHEREAS, the Issuer has agreed to issue $23,000,000 aggregate principal amount of its 15% Convertible Notes due 2011 (the
“Securities”) pursuant to that certain Series B Unit Purchase Warrant dated as of April 30, 2008, as amended June 10, 2008 (the “Purchase Warrant”), issued by the Issuer to the purchaser
identified therein (including its successors and assigns, the “Holder”); 
 WHEREAS, the Securities are issued
pursuant to the terms and conditions of an Indenture (the “Indenture”), dated June 12, 2008, between the Company and U.S. Bank, as trustee (the “Trustee”); 
 WHEREAS, upon the closing of the exercise of a portion of the Purchase Warrant, the Holder shall deposit with U.S. Bank funds equal to $10,350,000 (the
“Escrow Amount”) pursuant to the wire instructions attached hereto as Exhibit A; 
 WHEREAS, pursuant to the
terms and conditions of the Indenture, semi-annual interest payments (each an “Interest Payment”) will be made on May 15 and November 15 of each year or, if not a Business Day, the next Business Day thereafter to
the Holder, payable from the Escrow Amount; and 
 WHEREAS, pursuant to the terms and conditions of the Indenture, upon the voluntary
conversion of the Securities by the Holder prior to June 12, 2011, the converting Holder shall receive up to $450 per $1,000 of Securities so converted (the “Make-Whole Payment”), payable from the Escrow Amount; and

 WHEREAS, the Issuer has appointed U.S. Bank to act as Paying Agent for payments from the Escrow Amount to the Holders. 
 NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the
Issuer and U.S. Bank agree as follows: 
 1. U.S. Bank is hereby appointed, and hereby accepts such appointment, to serve as paying agent
hereunder solely in accordance with the terms and subject to the conditions of this Agreement. 
 2. The Issuer shall deliver the Escrow
Amount to U.S. Bank by wire transfer to the account designated in Exhibit A, attached hereto. U.S. Bank shall hold and safeguard the Escrow Amount and shall hold the Escrow Amount in a separate escrow account and dispose of the Escrow
Amount only in accordance with the terms of this Agreement. 
 3. Unless in receipt of a properly executed notice(s) of conversion (the
“Conversion Notice(s)”), on May 15 and November 15 of each year, U.S. Bank shall cause payment of the Interest Payment to be delivered to each requisite Holder or DTC on behalf of such requisite Holder on the
Interest Payment Date. Such payment shall be calculated pursuant to the Indenture. Following delivery of a Make-Whole Payment as set forth in Section 4 below, the Company shall no longer be obligated to provide for payment of additional
Interest Payments as set forth herein. 
  

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 4. Subject to the automatic conversion provisions of the Indenture or the receipt of a Conversion Notice
for any requisite Holder on or prior to the Termination Date (such notice to be in a form reasonably satisfactory to U.S. Bank and also to be sent by the Holder to the Issuer so that the Issuer can determine and, if applicable, inform the Conversion
Agent whether, upon issuance of shares to the Holder upon such Holder’s conversion of Securities, such Holder would comply with the requirements of Section 10.2 of the Indenture), U.S. Bank shall cause the Make-Whole Payment to be
delivered to each requisite Holder or DTC on behalf of such requisite Holder within 5 business days of receiving the Conversion Notice(s). Such payment shall be calculated pursuant to the Indenture. As contemplated by Section 10.2 of the
Indenture, U.S. Bank may assume without inquiry that each Holder’s purported conversion of Securities is in full compliance with the requirements of such Section unless and until U.S. Bank has received notice from the Issuer in the form of an
Officers’ Certificate notifying U.S. Bank of a Holder’s non-compliance with the requirements of such Section and instructing U.S. Bank as to specific actions it should take to address the situation. 
 5. Any Escrow Amount remaining undistributed after the Termination Date, and any accrued interest on the Escrow Amount, shall be paid to the Issuer and
all liability of U.S. Bank shall thereupon cease. In any event, U.S. Bank shall return to the Issuer any funds held by it pursuant to this Agreement not later than thirty (30) days before those funds would escheat to the State of California
under any law now or hereafter enacted. Issuer has no interest in the Escrow Amount other than as set forth in this Section 5 and, with respect to interest and investment earnings on the Escrow Amount, in Section 7. 
 6. Upon instruction from the Issuer accompanied by the specific documents to be provided, U.S. Bank will provide any required notices to Holders at the
expense of the Issuer. 
 7. The Escrow Amount will be invested in U.S. Bank’s “FDIC Insured Money Market Deposit Account” or,
at the election of the Issuer, in another account listed on Exhibit B hereto. Such investments shall be made in accordance with the provisions of such Exhibit B. For tax reporting and withholding purposes, all interest
and investment earnings shall be allocated to the Issuer. 
 8. This Agreement shall remain in effect until the earlier of (a) twelve
months from the date of this Agreement and (b) the date upon which the entire Escrow Amount has been released (the “Termination Date”). 
 9. The Issuer will compensate U.S. Bank for its services as part of its compensation for U.S. Bank’s services as Trustee. 
 10. The recitals of facts, agreements and covenants contained herein shall be taken as statements, agreements and covenants of the Issuer, and U.S. Bank does not assume any responsibility for the correctness of the
same and does not make any representation as to the sufficiency or validity thereof or of the payment to be made to the Holders under the Indenture, and shall not incur any responsibility in respect thereof other than in connection with the rights
and obligations assigned to or imposed upon it by this Agreement or the Indenture. 
 11. The Issuer shall furnish U.S. Bank with such
documents pertaining to this appointment as U.S. Bank may reasonably request. 
  

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 12. The Issuer agrees to indemnify U.S. Bank, its officers, agents and attorneys for, and to hold each of
them harmless against, any loss, liability or expense incurred without negligence or bad faith on their part, arising out of or in connection with acceptance of the appointment as Paying Agent hereunder, including the costs and expenses of defending
any one or more of them against any claim or liability in connection with the exercise or performance of any of U.S. Bank’s duties as Paying Agent. This Issuer’s obligation hereunder shall remain valid and binding notwithstanding
termination of this Agreement or U.S. Bank’s valid resignation or removal as Paying Agent. 
 13. U.S. Bank shall be protected and shall
incur no liability in acting or proceeding in good faith upon any resolution, notice, request, consent, waiver, certificate, statement, affidavit, voucher, bond, requisition or other paper or documents which it shall in good faith believe to be
genuine and to have been prepared and furnished by the Issuer regarding this Agreement, and U.S. Bank shall be under no duty to make any investigation or inquiry as to any statements contained or matter referred to in any such instrument, but may,
in the absence of bad faith on its part, accept and rely upon the same as conclusive evidence of the truth and accuracy of such statements. U.S. Bank may consult with legal counsel, who may be counsel to the Issuer, with regard to legal questions
and the opinion of such counsel shall be full and complete authorization and protection in respect to any action taken or suffered by it as Paying Agent in good faith in accordance therewith. 
 14. This Agreement shall be construed and governed in accordance with the laws of the State of California. 
 15. This Agreement may be executed in several counterparts each of which shall constitute one and the same document. 
 16. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. No party may, without the
prior express written consent of the other party, assign this Agreement or their rights or obligations hereunder in whole or in part. 
 17.
Any and all notices, requests, demands or other communications required or permitted to be given hereunder shall be deemed to have been duly given when personally delivered, on the next business day if sent by overnight courier, or the next business
day if sent by facsimile after the close of business, addressed to the parties at the addresses set forth below: 
 (a) If to U.S. Bank, to:

 U.S. Bank National Association 
 633 West Fifth Street, 24th Floor 
 Los Angeles, CA 90071 
 Attn: Corporate Trust Services 
 (Paying
Agency: Cell Therapeutics, Inc. 15% Convertible Notes due 2011) 
 Telephone: (213) 615-6043 
 Facsimile: (213) 615-6197 
 (b) If to
the Issuer, to: 
 Cell Therapeutics, Inc. 
 501 Elliot Avenue West, Suite 400 
 Seattle, Washington 98119 
 Attn: Dr. James Bianco 
 Telephone:
(206) 284-5774 
 Facsimile: (206) 272-4397 
  

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 with a copy to: 
 Heller Ehrman LLP 
 333 Bush Street 
 San Francisco, CA 94104 
 Attention: Karen
Dempsey, Esq. 
 Telephone: (415) 772-6540 
 Facsimile: (415) 772-6268 
 Notwithstanding the foregoing, notices addressed to U.S. Bank shall be
effective only upon actual receipt. U.S. Bank may assume without inquiry that any notice or other document required to be delivered to U.S. Bank and any other person was delivered to such other person on the date on which it was received by U.S.
Bank. 
 18. Any waiver of any rights hereunder, of any failure to perform hereunder, or of any breach hereof shall not constitute or be
deemed a waiver of any other right or failure to perform hereunder or breach hereof, whether of a similar or dissimilar nature. 
 19. USA
Patriot Act Compliance. To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.
For a non-individual person such as a business entity, a charity, a trust or other legal entity U.S. Bank will ask for documentation to verify its formation and existence as a legal entity. U.S. Bank may also ask to see financial statements,
licenses, identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation. Issuer and the Holders each agree to provide all such information and documentation as to themselves as
requested by U.S. Bank to ensure compliance with federal law. 
 20. This Agreement contains the entire agreement between the parties with
respect to the subject matter hereof, and no waiver, alteration or modification of any of the provisions hereof or rights to act hereunder shall be binding unless made in writing and signed by both parties, provided, however that this
Agreement is intended for the benefit of the Holders and this Agreement, or any similar agreement with a successor paying agent, shall not be amended, prior to the one year anniversary hereof, to adversely affect their rights of the Holders to
receive the Make-Whole Payment without the written consent of a majority-in-interest of the Holders of the Securities. 
 * * * 
  

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 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed on the 12th day of June,
2008. 
  

			
	CELL THERAPEUTICS, INC.
	
	/s/ James A. Bianco, M.D.
	NAME:	 	James A. Bianco, M.D.
	TITLE:	 	President & Chief Executive Officer
	
	U.S. BANK NATIONAL ASSOCIATION
	
	/s/ Paula M Oswald
	NAME:	 	Paula M. Oswald
	TITLE:	 	Vice President

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