8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report: (Date of earliest event reported): April 1, 2009

CELL THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Washington	001-12465	91-1533912
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

501 Elliott Avenue West, Suite 400

Seattle, Washington 98119

(Address of principal executive offices)

Registrant’s telephone number, including area code: (206) 282-7100

Not applicable

(Former name or former address, if changed since last report).

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement

Cell Therapeutics, Inc. (the “Company”) entered into an Exchange Agreement dated April 7, 2009 with Milfam I L.P. Pursuant to such Exchange Agreement, on April 7, 2009 the Company issued to Milfam I L.P. 288,517 shares of newly-issued Common Stock of the Company in exchange for 100 shares of outstanding Series A 3% Convertible Preferred Stock and outstanding warrants to purchase 747 shares of Company Common Stock.

In addition, in a separate transaction, the Company entered into an Exchange Agreement dated April 8, 2009 with CD Investment Partners, Ltd. Pursuant to such Exchange Agreement, on April 17, 2009 the Company issued to CD Investment Partners, Ltd. 3,452,493 shares of newly-issued Common Stock of the Company in exchange for 1,000 shares of outstanding Series D 7% Convertible Preferred Stock and outstanding warrants to purchase 19,138 shares of Company Common Stock. (The number of shares issued was derived by a formula, set forth in such Exchange Agreement, based on the average of the volume-weighted average prices of the Company’s Common Stock for the three trading days following the Company’s public announcement of an issuance of securities pursuant to its Form S-3 shelf registration statement, which resulted in using the trading prices of the Company’s Common Stock on April 14, 15 and 16, 2009.)

The description of the terms and conditions of the two Exchange Agreements set forth herein does not purport to be complete and is qualified in its entirety by reference to the full text of the two Exchange Agreements, which are attached hereto as Exhibits 10.1 and 10.2, respectively.

The offer and issuance of the Common Stock pursuant to the two Exchange Agreements were exempted by Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”) from the Securities Act’s registration requirement.

Item 3.02 Unregistered Sales of Equity Securities

The information provided in Item 1.01 and 8.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 8.01 Other Events

On April 1 and 2, 2009, the holders of all 6,702 outstanding shares of the Company’s Series F Preferred Stock converted their Series F Preferred Stock into an aggregate of 47,871,425 shares of the Company’s Common Stock, pursuant to the terms of the Series F Preferred Stock. The issuance of the Common Stock upon such conversions was exempted by Securities Act Section 3(a)(9) from the Securities Act’s registration requirement.

On April 13, 14, 15 and 16, 2009, Cranshire Capital, L.P., the holder of all of the 15,000 outstanding shares of the Company’s Series 1 Preferred Stock, converted all shares of such Series 1 Preferred Stock into an aggregate of 50,000,000 shares of the Company’s Common Stock, pursuant to the terms of the Series 1 Preferred Stock. The issuance of the Common Stock upon such conversions was exempted by Securities Act Section 3(a)(9) from the Securities Act’s registration requirement.

From time to time the Company makes public announcements regarding the number of issued and outstanding shares of its Common Stock. As of the close of business on April 17, 2009, the Company had 433,181,335 shares of Common Stock issued and outstanding.

From time to time the Company makes public announcements regarding the number of issued and outstanding shares of its Preferred Stock. As of the close of business on April 17, 2009, the Company had no shares of any series of the Company’s Preferred Stock issued and outstanding.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit No.	Description
10.1	Exchange Agreement, dated April 7, 2009, by and between Cell Therapeutics, Inc. and Milfam I L.P.
10.2	Exchange Agreement, dated April 8, 2009, by and between Cell Therapeutics, Inc. and CD Investment Partners, Ltd.

-2-

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CELL THERAPEUTICS, INC.
Date: April 17, 2009	By:	/s/ Louis A. Bianco
		Louis A. Bianco
		Executive Vice President, Finance and Administration

-3-

EXHIBIT INDEX

Exhibit No.	Description
10.1	Exchange Agreement, dated April 7, 2009, by and between Cell Therapeutics, Inc. and Milfam I L.P.
10.2	Exchange Agreement, dated April 8, 2009, by and between Cell Therapeutics, Inc. and CD Investment Partners, Ltd.

-4-

EX-10.1

Exhibit 10.1

EXCHANGE AGREEMENT

This EXCHANGE AGREEMENT (this “Agreement”) is dated as of April 7, 2009 between CELL THERAPEUTICS, INC., a Washington corporation (the “Company”), and MILFAM I L.P. (the “Holder”).

WHEREAS, the Holder holds 100 shares of the Company’s Series A 3% Convertible Preferred Stock (“Preferred Stock”) and associated warrants (the “Associated Warrants”) to purchase shares of the Company’s common stock, no par value (“Common Stock”);

WHEREAS, the Company wishes to issue 288,517 shares of newly-issued shares of Common Stock to the Holder in exchange for such 100 shares of Preferred Stock and such Associated Warrants; and

WHEREAS, the Holder wishes to surrender such 100 shares of Preferred Stock and such Associated Warrants to the Company in exchange for such 288,517 shares of newly-issued Common Stock.

NOW, THEREFORE, the Company and the Holder agree as follows:

1. EXCHANGE. Simultaneously with the execution of this Agreement, the Company shall and hereby does issue to the Holder 288,517 unlegended and freely tradable shares of newly-issued Common Stock (such 288,517 shares of Common Stock are referred to herein as the “Shares”) in exchange for the Holder’s 100 shares of Preferred Stock and such Associated Warrants, and the Holder shall and hereby does surrender such 100 shares of Preferred Stock and such Associated Warrants to the Company in exchange for such Shares. It is expressly understood and agreed that such exchange is made under Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”). The Company shall not issue any stop-transfer order, instruction or other restriction with respect to any of the Shares.

(a) Delivery of Preferred Stock. The Holder agrees to, within three business days after the date of this Agreement, deliver to the Company the share certificate representing all 100 shares of the Holder’s Preferred Stock and the warrant instrument representing the Associated Warrants.

(b) Delivery of Shares. The Company agrees to credit the number of Shares to the balance account with The Depository Trust Company specified by the Holder through its Deposit Withdrawal Agent Commission system, to the Holder within two business days after the date of this Agreement.

2. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to the Holder (on the date hereof and on the date of the delivery of the Shares) that:

(a) The offer and issuance of the Shares is and will be exempt from registration under the Securities Act, pursuant to the exemption provided by Section 3(a)(9) thereof. As a result of the foregoing, the Shares shall be freely tradable by the Holder.

1.

(b) The Company has the requisite power and authority to enter into and perform its obligations under this Agreement and to issue the Shares in accordance with the terms hereof and thereof. The execution and delivery of this Agreement by the Company, and the consummation by the Company of the transactions contemplated hereby, including, without limitation, the issuance of the Shares, have been duly authorized by the Company’s board of directors, and (other than any filings as may be required by any federal and state securities agencies) no further filing, consent or authorization is required by the Company, its board of directors or its shareholders. This Agreement has been duly executed and delivered by the Company, and constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies. The execution, delivery and performance by the Company of this Agreement and the offer and issuance of the Shares requires no consent of, action by or in respect of, or filing with, any person or entity, governmental body, agency, or official.

(c) The Shares, when issued pursuant to the terms hereof, will be validly issued, fully paid and nonassessable and free from all taxes, liens, charges and other encumbrances with respect to the issue thereof.

(d) The execution and delivery by the Company of this Agreement and the performance by the Company of its obligations hereunder, and the issuance and delivery of the Shares, will not (i) violate any provision of law, any order of any court or other agency of government, (ii) violate the articles of incorporation or the bylaws of the Company, each as amended, (iii) violate any provision of any indenture, agreement or other instrument to which the Company or any of its properties or assets is bound, or (iv) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any such indenture, agreement or other instrument.

(e) The authorized capital stock of the Company which is common stock consists of 800,000,000 shares of Common Stock, no par value per share. As of the date of this Agreement, 379,440,863 shares of Common Stock were validly issued and outstanding, fully paid and nonassessable. All outstanding securities of the Company are validly issued, fully paid and nonassessable. No stockholder of the Company is entitled to any preemptive rights with respect to the purchase of or sale of any securities of the Company.

(f) The Company has not, nor has any subsidiary of the Company, nor has any person acting on its or their behalf, directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would cause the exchange and issuance of the Shares pursuant to this Agreement or any related agreements to be integrated with prior offerings by the Company or any subsidiary of the Company for purposes of the Securities Act which would prevent the Company from delivering the Shares to the Holder pursuant to Section 3(a)(9) of the Securities Act, nor will the Company, nor any subsidiary of the Company take any action or steps that would cause the exchange, issuance and delivery of the Shares to be integrated with other offerings to the effect that the delivery of the Shares to the Holder would be seen not to be exempt pursuant to Section 3(a)(9) of the Securities Act.

2.

(g) Upon the issuance and delivery of the Shares to the Holder by the Company, such Shares shall be listed upon each such national securities exchange upon which the Common Stock is then listed and the Company shall maintain such listing of all of the Shares on such national securities exchange to the extent that the listing of any other shares of Common Stock is so maintained there.

(h) The representations and warranties made by the Company in this Agreement, taken as a whole, do not contain and will not contain, any misstatements of material fact or omit to state any material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which they were made, not misleading.

3. ENTIRE AGREEMENT. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior and/or contemporaneous agreements and understandings, oral or written, with respect to such matters.

4. COUNTERPARTS. This Agreement may be executed in counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered (by fax, email or otherwise) to the other party, it being understood that both parties need not sign the same counterpart.

5. INDEMNIFICATION. The Company agrees to indemnify, hold harmless, reimburse and defend the Holder, each of the Holder’s officers, directors, agents, affiliates, employees, control persons, partners and principal shareholders, against any claim, cost, expense, liability, obligation, loss or damage (including reasonable legal fees and expenses) of any nature, incurred by or imposed upon the Holder which results, arises out of or is based upon: (i) any misrepresentation by the Company or breach of any warranty by the Company in this Agreement; or (ii) any breach or default in performance by the Company of any covenant or undertaking to be performed by Company hereunder.

6. AMENDMENTS AND WAIVERS. No amendment of any provision of this Agreement shall be effective unless it is in writing and signed by the parties hereto, and no waiver of any provision of this Agreement, nor consent to any departure by either party from it, shall be effective unless it is in writing and signed by the affected party, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No failure on the part of a party to exercise, and no delay in exercising, any right or remedy under this Agreement shall operate as a waiver by such party, nor shall any single or partial exercise of any right or remedy under the Agreement preclude any other or further exercise thereof or the exercise of any other right or remedy.

7. SURVIVAL OF AGREEMENT. All covenants, agreements, representations and warranties made in this Agreement will survive the execution and delivery of this Agreement and the issuance and delivery of the Shares.

8. GOVERNING LAW. This Agreement will be governed by and construed in accordance with the substantive laws of the State of New York without regard for conflicts of laws or choice of laws principles.

3.

9. FURTHER ASSURANCES. Each party hereto agrees to (i) execute and deliver, or cause to be executed and delivered, all such other and further agreements, documents and instruments and (ii) take or cause to be taken all such other and further actions as the other party hereto may reasonably request to effectuate the intent and purposes, and carry out the terms, of this Agreement.

[signature page follows]

4.

IN WITNESS WHEREOF, the parties hereto have caused this Exchange Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

CELL THERAPEUTICS, INC.		MILFAM I L.P.
		By:	Milfam LLC
		Its:	General Partner
By:	/s/ James A. Bianco, M.D.	By:	/s/ Lloyd I. Miller
	James A. Bianco, M.D.		Lloyd I. Miller, Manager
	CEO

5.

EX-10.2

Exhibit 10.2

EXCHANGE AGREEMENT

This EXCHANGE AGREEMENT (this “Agreement”) is dated as of April 7, 2009 between CELL THERAPEUTICS, INC., a Washington corporation (the “Company”), and CD INVESTMENT PARTNERS LTD. (the “Holder”).

WHEREAS, the Holder holds (i) 1,000 shares of the Company’s Series D 7% Convertible Preferred Stock (the “Preferred Stock”) and (ii) a warrant to purchase up to 191,387 shares of Common Stock (as defined below) (the “Warrant”), in each case, purchased and issued on December 3, 2007;

WHEREAS, the Preferred Stock is convertible pursuant to its terms at any time at the option of Holder into shares of the Company’s common stock, no par value (the “Common Stock”); and

WHEREAS, the Company desires that the Holder exchange its shares of Preferred Stock and its Warrant on the terms set forth herein.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, the Company and the Holder irrevocably agree as follows:

1. EXCHANGE. The Holder shall exchange its shares of Preferred Stock and Warrants with the Company for, and the Company shall exchange and issue to the Holder, a number of unlegended and freely tradable shares of Common Stock equal to the quotient of (i) $1,001,361.11 divided by (ii) the price which shall be computed as 90% of the arithmetic average of the daily dollar volume-weighted average price of the Common Stock for each of the three trading days immediately following the date of a public announcement by the Company of any issuance of securities pursuant to Registration Statement No. 333-158272 (such date of announcement being the “Announcement Date”) (such number of shares of Common Stock are referred to herein as the “Shares”). It is expressly understood and agreed that the exchange of the shares of Preferred Stock and the Warrant for the Shares to be issued by the Company simultaneously therewith is being undertaken pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended. The exchange shall be deemed to be effected on and as of the fourth business day after the Announcement Date. The Company shall not issue any stop-transfer order, instruction or other restriction with respect to any of the Shares.

(a) Delivery of Preferred Stock and Warrant. The Holder agrees to, within three business days after the Announcement Date, deliver to the Company (i) the share certificate representing all 1,000 shares of the Holder’s Preferred Stock and (ii) the Warrant.

(b) Delivery of Shares. The Company agrees to credit the number of Shares to the balance account with The Depository Trust Company specified by the Holder through its Deposit Withdrawal Agent Commission system, to the Holder within five business days after the Announcement Date.

1.

2. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to the Holder that:

(a) The offer and issuance of the Shares is and will be exempt from registration under the Securities Act of 1933, as amended, pursuant to the exemption provided by Section 3(a)(9) thereof. As a result of the foregoing, the Shares shall be freely tradable by the Holder.

(b) The Company has the requisite power and authority to enter into and perform its obligations under this Agreement and to issue the Shares in accordance with the terms hereof and thereof. The execution and delivery of this Agreement by the Company, and the consummation by the Company of the transactions contemplated hereby, including, without limitation, the issuance of the Shares, have been duly authorized by the Company’s board of directors, and (other than any filings as may be required by any federal and state securities agencies) no further filing, consent or authorization is required by the Company, its board of directors or its shareholders. This Agreement has been duly executed and delivered by the Company, and constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies. The execution, delivery and performance by the Company of this Agreement and the offer and issuance of the Shares requires no consent of, action by or in respect of, or filing with, any person or entity, governmental body, agency, or official.

(c) The Shares, when issued pursuant to the terms hereof, will be validly issued, fully paid and nonassessable and free from all taxes, liens, charges and other encumbrances with respect to the issue thereof.

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

3. MARKET SHORTING STANDSTILL. The Holder covenants that neither it nor any affiliate acting on its behalf or pursuant to any understanding with it will execute any Short Sales during the period beginning on the Announcement Date and ending on the earlier to occur of (i) such time as the Holder has sold all of the Shares or (ii) 90 days following the Announcement Date. For the purposes of this section, “Short Sales” shall mean all “short sales” as defined in Rule 200 of Regulation SHO under the Securities Exchange Act of 1934, as amended (but shall not be deemed to include the location and/or reservation of borrowable shares of common stock, which is expressly permissible).

4. ENTIRE AGREEMENT. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior and/or contemporaneous agreements and understandings, oral or written, with respect to such matters. The parties acknowledge that all such prior and/or contemporaneous agreements and understandings, oral or written, with respect to such matters have been merged into this Agreement. Notwithstanding the foregoing, for clarification purposes, nothing contained in this Section 4 shall have any effect on any rights of the Holder under any agreements the Holder has entered into with the Company or any of its subsidiaries prior to January 2008.

2.

5. GOVERNING LAW. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.

6. COUNTERPARTS. This Agreement may be executed in counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered (by fax, email or otherwise) to the other party, it being understood that both parties need not sign the same counterpart.

7. DISCLOSURE. The Company shall, on or before 8:30 a.m., New York time, on the first (1st) business day after the Announcement Date file a Current Report on Form 8-K describing all the material terms of the transactions contemplated by this Agreement in the form required by the Securities Exchange Act of 1934, as amended. The Company shall promptly secure the listing of all of the Shares upon each national securities exchange upon which the Common Stock is then listed (subject to official notice of issuance) and shall maintain such listing of all of the Shares on such national securities exchange to the extent that the listing of any other shares of Common Stock is so maintained there.

[signature page follows]

3.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

CELL THERAPEUTICS, INC.		CD INVESTMENT PARTNERS, LTD.
		By:	CD Capital Management LLC
By:	/s/ James A. Bianco, M.D.	Its:	Investment Manager
	James A. Bianco, M.D.
	CEO
			By:	/s/ John D. Ziegelman
				John D. Ziegelman, President

4.