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): February 24, 2011 (February 17, 2011)

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.

On February 17, 2011, Cell Therapeutics, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional investor (the “Initial Purchaser”) pursuant to which the Company agreed to issue to the Initial Purchaser in a registered offering (i) up to 24,957 shares of the Company’s Series 10 Non-Convertible Preferred Stock, no par value per share (the “Series 10 Preferred Stock”), (ii) warrants (the “Warrants”) to purchase up to approximately 25.9 million shares of the Company’s common stock (the “Common Stock”), and (iii) an additional investment right (the “Additional Investment Right”) to purchase up to 24,957 shares of the Company’s Series 11 Convertible Preferred Stock, no par value per share (the “Series 11 Preferred Stock”), for an aggregate offering price of approximately $25.0 million (the “Offering”). The closing of the Offering is subject to certain conditions as described more fully below. A copy of the form of the Purchase Agreement is attached hereto as Exhibit 10.1 and incorporated herein by reference.

The shares of Series 10 Preferred Stock will accrue annual dividends at the rate of 10% from the date of issuance, payable in the form of additional shares of Series 10 Preferred Stock. The shares of Series 10 Preferred Stock will be redeemable at the option of the Company at any time after issuance, in whole or in part, either in cash or by offset against recourse notes fully secured with marketable securities (“Notes”), which may be issued by the Initial Purchaser to the Company in connection with the exercise of the Warrants and the Additional Investment Right. A copy of the form of the Series 10 Preferred Stock Certificate is attached hereto as Exhibit 4.1 and incorporated herein by reference.

Each Warrant has an initial exercise price of $0.337 per share of Common Stock. The Warrants are exercisable immediately and expire two years from the date of issuance, provided that the Warrants must be exercised simultaneously with the exercise of the Additional Investment Right so that the percentage of the Warrants that have been exercised will always equal or exceed the percentage of the Additional Investment Right that has been exercised. The exercise price for the Warrants may be paid in cash or through the issuance by the Initial Purchaser to the Company of Notes. The Warrants are subject to mandatory exercise and cancellation, in whole or in part, as described more fully below. A copy of the form of the Warrants is attached hereto as Exhibit 4.2 and incorporated herein by reference.

The Additional Investment Right has an exercise price of $1,000 per share of Series 11 Preferred Stock. The Additional Investment Right is exercisable immediately and must be exercised no later than March 19, 2011. The exercise price of the Additional Investment Right may be paid in cash or through the issuance by the Initial Purchaser to the Company of Notes. The Additional Investment Right is subject to cancellation, in whole or in part, as described more fully below.

Each share of Series 11 Preferred Stock is convertible at the option of the holder, at any time during its existence, into approximately 2,967 shares of Common Stock at a conversion price of $0.337 per share of Common Stock, for a total of approximately 74.1 million shares of Common Stock. A copy of the form of the Series 11 Preferred Stock Certificate is attached hereto as Exhibit 4.3 and incorporated herein by reference.

The closing of the issuance and sale of the Series 10 Preferred Stock is expected to occur on the 10^th trading day following the date of the Purchase Agreement (the “Closing Date”), and is conditioned upon customary closing conditions and upon the closing bid price of the Common Stock remaining at or above $0.2528 during the nine trading days following the date of the Purchase Agreement. In the event that the closing bid price of the Common Stock falls below $0.2528 prior to the Closing Date (the “Early Termination Date”) and none of the Warrants or the Additional Investment Right have been exercised, the closing will be cancelled and the Warrants and the Additional Investment Right will automatically terminate on the Early Termination Date. In the event that all or any portion of the Warrants and/or the Additional Investment Right have been exercised prior to the Early Termination Date, the Company may elect to: (i) require the Initial Purchaser to purchase shares of Series 10 Preferred Stock at the closing in an amount equal to 24,957 multiplied by the larger of (a) the percentage of the Warrants so exercised and (b) the percentage of the Additional Investment Right so exercised (such larger percentage, the

“Adjustment Factor”), in which case the number of shares of Common Stock that must be purchased by the Initial Purchaser upon exercise of the Warrants and the number of shares of Series 11 Preferred Stock that must be purchased by the Initial Purchaser upon exercise of the Additional Investment Right will also be adjusted by the Adjustment Factor (with the balance of the unexercised Warrants in excess of the adjusted number of Warrants and the balance of the Additional Investment Right in excess of the adjusted number of shares of Series 11 Preferred Stock automatically terminating on the Early Termination Date); or (ii) hold the consideration received upon exercise of the Warrants and/or the Additional Investment Right and otherwise cancel the closing, in which case no shares of Series 10 Preferred Stock will be issued and the unexercised Warrants and Additional Investment Right will automatically terminate on the Early Termination Date.

In connection with the Offering, the Initial Purchaser agreed to deposit up to approximately $12.5 million of the purchase price for the shares of Series 10 Preferred Stock into an escrow account upon any exercise of the Warrants and the Additional Investment right. The amount of the purchase price to be deposited by the Initial Purchaser into the escrow account will equal $24,957,000 multiplied by the Adjustment Factor at the time of the applicable exercise of the Warrants and/or the Additional Investment Right. The funds in the escrow account will be released to the Company in connection with the closing or partial closing of the Offering. In the event that the closing is cancelled, the funds in the escrow account will be released to the Initial Purchaser.

Prior to February 24, 2011, the Initial Purchaser exercised 40% of the Warrants to purchase approximately 10.4 million shares of Common Stock and 40% of the Additional Investment Right to purchase 9,991 shares of Series 11 Preferred Stock (the “Initial Exercises”). The Initial Purchaser elected to convert all 9,991 shares of Series 11 Preferred Stock into approximately 29.6 million shares of Common Stock, for a total of approximately 40.0 million shares of Common Stock issued to the Initial Purchaser as a result of the Initial Exercises. In connection with the Initial Exercises, the Initial Purchaser deposited $9,991,000 into the escrow account described above.

The shares of Series 10 Preferred Stock, the Warrants, the Additional Investment Right, the shares of Series 11 Preferred Stock and the shares of Common Stock issuable upon exercise of the Warrants and conversion of the Series 11 Preferred Stock, as the case may be, were offered and sold by the Company under its registration statement on Form S-3 (File No. 333-161442), as supplemented by the prospectus supplement dated February 17, 2011 and filed with the Securities and Exchange Commission on February 18, 2011.

The above descriptions of the Purchase Agreement, the Series 10 Preferred Stock, the Warrants, the Additional Investment Right and the Series 11 Preferred Stock are qualified in their entirety by reference to Exhibits 10.1, 4.1, 4.2 and 4.3 attached hereto, respectively.

Item 3.03 Material Modification to Rights of Security Holders.

In connection with the closing of the Offering, the Company expects to file Articles of Amendment (the “Series 10 Articles of Amendment”) to its Amended and Restated Articles of Incorporation (the “Amended Articles”) with the Secretary of State of the State of Washington to establish the Series 10 Preferred Stock on or prior to the Closing Date. The Series 10 Preferred Stock will be entitled to annual dividends at a rate of 10% per annum from the date of issuance, payable in the form of additional shares of Series 10 Preferred Stock. The Series 10 Preferred Stock will rank pari passu with the Company’s outstanding shares of Series 8 Non-Convertible Preferred Stock (the “Series 8 Preferred Stock”) and senior to the Series 11 Preferred Stock as to dividends. Each share of Series 10 Preferred Stock will be entitled to a liquidation preference equal to the initial stated value of $1,000 per share of Series 10 Preferred Stock, plus any accrued and unpaid dividends, before any distribution of assets may be made to holders of capital stock ranking junior to the Series 10 Preferred Stock. The Series 10 Preferred Stock will rank pari passu with the outstanding shares of Series 8 Preferred Stock and the Series 11 Preferred Stock as to liquidation. The Series 10 Preferred Stock will not be convertible into Common Stock but will be redeemable, at the Company’s option, at any time after issuance, either in cash or by offset against Notes. In the event that the Company elects to redeem shares of Series 10 Preferred Stock by

offset against Notes, each share of Series 10 Preferred Stock (plus accrued dividends thereon, if any) shall be fully offset by $1,350 principal amount of Notes (plus accrued interest thereon, if any), regardless of the issuance date of the shares of Series 10 Preferred Stock and Notes. The Series 10 Preferred Stock will have no voting rights except as otherwise expressly provided in the Amended Articles or as otherwise required by law. However, so long as at least 7,986 or more originally issued shares of Series 10 Preferred Stock are outstanding, the Company cannot amend its Amended Articles, Amended and Restated Bylaws (the “Amended Bylaws”) or other charter documents so as to materially, specifically and adversely affect the rights of the Series 10 Preferred Stock or authorize or create any class of senior preferred stock, in each case without the affirmative written consent of holders of a majority of the outstanding shares of Series 10 Preferred Stock. A copy of the form of Series 10 Articles of Amendment is attached hereto as Exhibit 3.1 and incorporated herein by reference. The above description of the Series 10 Articles of Amendment is qualified in its entirety by reference to Exhibit 3.1 attached hereto.

On February 18, 2011, the Company filed Articles of Amendment (the “Series 11 Articles of Amendment”) to its Amended Articles with the Secretary of State of the State of Washington to establish the Series 11 Preferred Stock. The Series 11 Preferred Stock is not entitled to dividends except to share in any dividends actually paid on the Common Stock or any pari passu or junior securities. The Series 11 Preferred Stock ranks junior to the outstanding shares of Series 8 Preferred Stock and will rank junior to the Series 10 Preferred Stock upon filing of the Series 10 Articles of Amendment as to dividends. Each share of Series 11 Preferred Stock is entitled to a liquidation preference equal to the initial stated value of $1,000 per share of Series 11 Preferred Stock, plus any accrued and unpaid dividends, before any distribution of assets may be made to holders of capital stock ranking junior to the Series 11 Preferred Stock. The Series 11 Preferred Stock ranks pari passu with the outstanding shares of Series 8 Preferred Stock and will rank pari passu with the Series 10 Preferred Stock upon filing of the Series 10 Articles of Amendment as to liquidation. The Series 11 Preferred Stock is convertible into Common Stock, at the option of the holder, at an initial conversion price of $0.337 per share of Common Stock, subject to a 9.99% blocker provision. In addition, the Series 11 Preferred Stock will automatically convert into Common Stock on the first to occur of: (i) the date on which 1,000 or less shares of Series 11 Preferred Stock remain outstanding; or (ii) the date on which the Company’s board of directors determines in good faith to do a reverse stock split with respect to the Common Stock in order to achieve compliance with the listing rules of The NASDAQ Capital Market or for other good faith business reasons. In the event of automatic conversion, the blocker provision referred to above will increase to 19.99% with no further action by the holder. The Series 11 Preferred Stock has no voting rights except as otherwise expressly provided in the Amended Articles or as otherwise required by law. However, so long as at least 20% of the aggregate originally issued shares of Series 11 Preferred Stock are outstanding, the Company cannot amend its Amended Articles, Amended Bylaws or other charter documents so as to materially, specifically and adversely affect the rights of the Series 11 Preferred Stock, repay, repurchase or offer to repay or repurchase or otherwise acquire any shares of Common Stock or junior securities, except in limited circumstances, or authorize or create any class of senior preferred stock (other than the Series 10 Preferred Stock), in each case without the affirmative written consent of holders of a majority of the outstanding shares of Series 11 Preferred Stock. A copy of the Series 11 Articles of Amendment is attached hereto as Exhibit 3.2 and incorporated herein by reference. The above description of the Series 11 Articles of Amendment is qualified in its entirety by reference to Exhibit 3.2 attached hereto.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Changes in Fiscal Year.

In connection with the closing of the Offering, the Company expects to file the Series 10 Articles of Amendment on or prior to the Closing Date, a copy of which is attached hereto as Exhibit 3.1 and incorporated herein by reference. The Series 10 Articles of Amendment, which are expected to be effective as of March 4, 2011, will establish and designate the Series 10 Preferred Stock and the rights, preferences and privileges thereof.

On February 18, 2011, the Company filed the Series 11 Articles of Amendment, a copy of which is attached hereto as Exhibit 3.2 and incorporated herein by reference. The Series 11 Articles of Amendment, which are effective as of February 18, 2011, establish and designate the Series 11 Preferred Stock and the rights, preferences and privileges thereof.

The descriptions of the Series 10 Articles of Amendment and the Series 11 Articles of Amendment contained in Item 3.03 are incorporated herein by reference.

Item 7.01 Regulation FD Disclosure.

A copy of the Company’s press release, dated February 18, 2011, entitled “Cell Therapeutics, Inc. Announces Single Institutional Investor Purchases up to Approximately $25.0 Million of Non-Convertible Preferred Stock and Warrants and Additional Investment Right Exercisable at Market Price,” is furnished and not filed pursuant to Item 7.01 as Exhibit 99.1 hereto. Such information shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.

Item 8.01 Other Events.

A copy of the opinion of Karr Tuttle Campbell related to the legality of the Series 10 Preferred Stock, the Warrants, the Series 11 Preferred Stock and the shares of Common Stock issuable upon exercise of the Warrants and conversion of the Series 11 Preferred Stock is attached hereto as Exhibit 5.1.

Item 9.01 Financial Statements and Exhibits.

(d)   Exhibits.

Exhibit Number	Description
3.1	Form of Articles of Amendment to Amended and Restated Articles of Incorporation of Cell Therapeutics, Inc. (Series 10 Preferred Stock).
3.2	Articles of Amendment to Amended and Restated Articles of Incorporation of Cell Therapeutics, Inc. (Series 11 Preferred Stock).
4.1	Form of Series 10 Preferred Stock Certificate.
4.2	Form of Common Stock Purchase Warrant.
4.3	Form of Series 11 Preferred Stock Certificate.
5.1	Opinion of Karr Tuttle Campbell.
10.1	Form of Securities Purchase Agreement.
99.1	Press Release, dated February 18, 2011, entitled “Cell Therapeutics, Inc. Announces Single Institutional Investor Purchases up to Approximately $25.0 Million of Non-Convertible Preferred Stock and Warrants and Additional Investment Right Exercisable at Market Price.”

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: February 24, 2011	By:	/s/ James A. Bianco
		James A. Bianco, M.D.
		Chief Executive Officer

EXHIBIT INDEX

Exhibit Number	Description
3.1	Form of Articles of Amendment to Amended and Restated Articles of Incorporation of Cell Therapeutics, Inc. (Series 10 Preferred Stock).
3.2	Articles of Amendment to Amended and Restated Articles of Incorporation of Cell Therapeutics, Inc. (Series 11 Preferred Stock).
4.1	Form of Series 10 Preferred Stock Certificate.
4.2	Form of Common Stock Purchase Warrant.
4.3	Form of Series 11 Preferred Stock Certificate.
5.1	Opinion of Karr Tuttle Campbell.
10.1	Form of Securities Purchase Agreement.
99.1	Press Release, dated February 18, 2011, entitled “Cell Therapeutics, Inc. Announces Single Institutional Investor Purchases up to Approximately $25.0 Million of Non-Convertible Preferred Stock and Warrants and Additional Investment Right Exercisable at Market Price.”

EX-3.1

Exhibit 3.1

ARTICLES OF AMENDMENT TO

AMENDED AND RESTATED ARTICLES OF

CELL THERAPEUTICS, INC.

DESIGNATION OF PREFERENCES,

RIGHTS AND LIMITATIONS

OF

SERIES 10 PREFERRED STOCK

Pursuant to the Washington Business Corporation Act, Chapter 23B.10, the undersigned officer of Cell Therapeutics, Inc., a Washington corporation (the “Corporation”), does hereby submit for filing these Articles of Amendment:

FIRST: The name of the Corporation is Cell Therapeutics, Inc.

SECOND: This amendment to the Corporation’s Amended and Restated Articles of Incorporation, as amended to date (the “Restated Articles”), was adopted by the Board of Directors of the Corporation (the “Board”) on February 17, 2011. Shareholder action was not required on this amendment pursuant to Article II.2 of the Restated Articles.

THIRD: A new Section 2(q) of Article II is added to the Restated Articles to add the designations, rights and preferences of a new series of preferred stock as follows, such Section to be effective as of March 4, 2011:

“(q) Series 10 Preferred Stock

TERMS OF PREFERRED STOCK

Section 1. Definitions. For the purposes hereof, the following terms shall have the following meanings:

“Business Day” means any day except Saturday, Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“Change of Control Transaction” means the occurrence after the date hereof of any of (i) an acquisition by an individual, legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Corporation, by contract or otherwise) of in excess of 33% of the voting securities of the Corporation, (ii) the Corporation merges into or consolidates with any other person, or any person merges into or consolidates with the Corporation and, after giving effect to such transaction, the shareholders of the Corporation immediately before such transaction own less than 66% of the aggregate voting power of the Corporation or the successor entity of such transaction, (iii) the Corporation sells or transfers all or substantially all of its assets to another person and the shareholders of the Corporation immediately before such transaction own less than 66% of the aggregate voting power of the acquiring entity immediately after the transaction, (iv) a replacement at one time or within a one-year period of more than one-half of the members of the Board which is not approved by a majority of those individuals who are members of the Board on the date hereof (or by those individuals who are serving as members of the Board on any date whose nomination to the Board was approved by a majority of the members of the Board who are members on the date hereof), or (v) the execution by the Corporation of an agreement to which the Corporation is a party or by which it is bound, providing for any of the events set forth in clauses (i)

1

through (iv) above.

“Common Stock” means the Corporation’s common stock, no par value per share, and stock of any other class of securities into which such securities may hereafter be reclassified or changed into.

“Common Stock Equivalents” means any securities which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock; provided, however, that Common Stock Equivalents shall not include any debt securities of the Corporation.

“Dividends” has the meaning set forth in Section 3.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Fundamental Transaction” means, at any time while the Series 10 Preferred Stock is outstanding, (i) the Corporation effects any merger or consolidation of the Corporation with or into another person, (ii) the Corporation effects any sale of all or substantially all of its assets in one transaction or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Corporation or another person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange a material portion of the Corporation’s shares for other securities, cash or property, or (iv) the Corporation effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property; provided, however, that for the purposes of clause (ii) above, a “Fundamental Transaction” shall not include the Corporation entering into a license or other agreement that licenses any intellectual property to an unaffiliated and unrelated person so long as the Corporation and its subsidiaries continue to have bona fide, substantial and continuing business operations and activities after such license or other agreement is entered into.

“Holder” shall mean a holder of shares of Series 10 Preferred Stock.

“Issuance Date” means, with respect to a particular share of Series 10 Preferred Stock, the date of original issuance of such share.

“Junior Securities” means (i) the Common Stock and all other Common Stock Equivalents of the Corporation other than those securities which are explicitly senior to or pari passu with the Series 10 Preferred Stock as to dividend rights or liquidation preference and (ii) the Series ZZ Junior Participating Cumulative Preferred Stock of the Corporation. For the avoidance of doubt, the Series 8 Preferred Stock and the Series 11 Preferred Stock shall not be Junior Securities.

“Liquidation” has the meaning set forth in Section 5.

“Note” means any outstanding note payable to the Corporation that was issued to the Corporation in connection with the exercise of any warrants, rights or options initially issued or granted to [—], in connection with the issuance of shares of Series 10 Preferred Stock. For the avoidance of doubt, no outstanding note payable to the Corporation that was issued to the Corporation in connection with the exercise of any warrants, rights or options initially issued or granted to [—] in connection with the issuance of shares of Series 8 Preferred Stock shall be considered a “Note” for purposes hereof.

2

“Redemption Notice” has the meaning set forth in Section 7(b)(i).

“Securities Purchase Agreement” means that certain securities purchase agreement, dated February 17, 2011, by and between the Corporation and [—], entered into in connection with the issuance of Series 10 Preferred Stock.

“Series 8 Preferred Stock” means shares of the Corporation’s Series 8 Preferred Stock.

“Series 10 Preferred Stock” shall have the meaning set forth in Section 2.

“Series 11 Preferred Stock” means shares of the Corporation’s Series 11 Preferred Stock issued or to be issued after the date hereof.

“Stated Value” has the meaning set forth in Section 2.

“Transfer” has the meaning set forth in Section 9.

Section 2. Designation, Amount, Par Value and Rank. The series of preferred stock shall be designated as the Corporation’s Series 10 Preferred Stock (the “Series 10 Preferred Stock”) and the number of shares so designated shall be 40,000. Each share of Series 10 Preferred Stock shall have no par value per share and a stated value equal to $1,000 (the “Stated Value”). The Series 10 Preferred Stock shall rank pari passu with the Series 8 Preferred Stock and senior to the Series 11 Preferred Stock as to dividends, and pari passu with the Series 8 Preferred Stock and the Series 11 Preferred Stock as to liquidation.

Section 3. Dividends. Commencing on the Issuance Date, the Holder of a share of Series 10 Preferred Stock shall be entitled to receive annual dividends on such share of Series 10 Preferred Stock (“Dividends”), which shall accrue in arrears, in the form of additional shares of Series 10 Preferred Stock at a rate equal to 10.0% per annum from such Issuance Date. Accrued Dividends shall be payable upon redemption of the Series 10 Preferred Stock in accordance with Section 7. Any calculation of the amount of such Dividends payable pursuant to the provisions of this Section 3 shall be made based on a 365-day year and on the number of days actually elapsed during the applicable period, compounded annually, and shall be rounded down to the nearest $1,000. Other than as set forth in this Section 3, no other dividends shall be paid on the shares of Series 10 Preferred Stock.

Section 4. Voting Rights. Except as otherwise expressly provided herein or as otherwise required by law, Holders of shares of Series 10 Preferred Stock shall have no voting rights.

Section 5. Liquidation. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”), the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation an amount equal to the Stated Value for each outstanding share of Series 10 Preferred Stock before any distribution or payment shall be made to the holders of any Junior Securities, and if the assets of the Corporation shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the Holders shall be ratably distributed among the Holders and the holders of all securities which are pari passu with the Series 10 Preferred Stock as to liquidation in accordance with the respective amounts that would be payable on all such securities if all amounts payable thereon were paid in full. A Fundamental Transaction or Change of Control Transaction shall not be deemed a Liquidation unless the Corporation expressly declares that such Fundamental Transaction or Change of Control Transaction shall be treated as if it were a Liquidation. The Corporation shall mail written notice of any such Liquidation, not less than 25 days before the payment date stated therein, to each Holder.

3

Section 6. Automatic Cancellation. Notwithstanding any other provision herein to the contrary, if [—] or its transferees, successor or assigns shall fail to exercise in full and on time and deliver to the Corporation on time the full required consideration for any warrants, rights or options initially issued or granted to [—] in connection with the issuance of shares of Series 10 Preferred Stock for any reason (other than those warrants, rights and options as may be eliminated in accordance with Section 2.4 of the Securities Purchase Agreement), the shares of Series 10 Preferred Stock (including any shares of Series 10 Preferred Stock representing accrued and unpaid Dividends) shall be automatically cancelled and the Holder shall be required to forthwith surrender the certificate(s) representing such shares of Series 10 Preferred Stock; provided, however, that a failure by the Holder to surrender to the Corporation the certificate(s) representing cancelled shares of Series 10 Preferred Stock shall not prevent the Corporation from cancelling such shares for all purposes hereunder.

Section 7. Redemption.

(a) Corporation’s Redemption Option. The Corporation shall have the right, in its sole and absolute discretion, at any time and from time to time, to redeem all or any portion of the shares of Series 10 Preferred Stock then outstanding, including any shares of Series 10 Preferred Stock representing accrued and unpaid Dividends, in cash or by offset against outstanding Notes. In the event the Corporation elects to redeem outstanding shares of Series 10 Preferred Stock by offset against outstanding Notes, each share of Series 10 Preferred Stock plus accrued Dividends on such share of Series 10 Preferred Stock, if any, shall be fully offset by $1,350 initial principal amount of Notes plus accrued interest, if any, regardless of the Issuance Date of shares of Series 10 Preferred Stock and the initial issuance date of Notes.

(b) Mechanics of Redemption.

(i) If the Corporation elects to redeem any of the Series 10 Preferred Stock then outstanding, it shall do so by delivering written notice thereof via facsimile and overnight courier to each Holder (a “Redemption Notice”), which Redemption Notice shall indicate (A) the number of shares of Series 10 Preferred Stock that the Corporation is electing to redeem, (B) the accrued and unpaid Dividends on each share of Series 10 Preferred Stock, and (C) whether such shares are being redeemed in cash or by offset against outstanding Notes.

(ii) Upon receipt by any Holder of a Redemption Notice, such Holder shall promptly submit to the Corporation such Holder’s Series 10 Preferred Stock certificate(s).

(iii) Upon receipt of such Holder’s Series 10 Preferred Stock certificate(s), the Corporation shall deliver the applicable aggregate redemption consideration to the Holder; provided, however, that, in the discretion of the Corporation, a failure by any Holder to submit to the Corporation its Series 10 Preferred Stock certificate(s) shall not prevent the Corporation from issuing the applicable aggregate redemption consideration for such certificates and, upon receipt of such consideration by such Holder, such shares of Series 10 Preferred Stock shall be deemed to be redeemed for all purposes hereunder.

Section 8. Negative Covenants. So long as at least 7,986 or more shares of Series 10 Preferred Stock are outstanding, the Corporation shall not, without the Corporation obtaining the affirmative written consent of Holders of a majority of the then outstanding shares of Series 10 Preferred Stock:

(a) amend these articles of incorporation, its bylaws or other charter documents so as to materially, specifically and adversely affect any rights of any Holder with respect to Series 10 Preferred Stock;

4

(b) authorize or create any class or series of stock ranking senior to the Series 10 Preferred Stock as to dividend rights in respect of additional shares of Series 10 Preferred Stock or liquidation preference; or

(c) enter into any agreement or understanding with respect to any of the foregoing.

Notwithstanding the foregoing, this Section 8 shall not prohibit (i) the issuance of (A) additional shares of Series 8 Preferred Stock in the form of dividends on outstanding shares of Series 8 Preferred Stock, (B) additional shares of Series 10 Preferred Stock, (C) shares of Series 11 Preferred Stock, and/or (D) additional series of preferred stock that do not rank senior to the Series 10 Preferred Stock as to dividend rights or liquidation preference, and/or (ii) the redemption of shares of Series 8 Preferred Stock in accordance with its terms.

Section 9. Transferability. The Series 10 Preferred Stock may only be sold, transferred, assigned, pledged or otherwise disposed of (“Transfer”) in accordance with state and federal securities laws. The Corporation shall keep at its principal office, or at the offices of the transfer agent, a register of the Series 10 Preferred Stock. In connection with any such permitted Transfer, upon the surrender of any certificate representing Series 10 Preferred Stock at such place, the Corporation, at the request of the record Holder of such certificate, shall execute and deliver (at the Corporation’s expense) a new certificate or certificates in exchange therefor representing in the aggregate the number of shares represented by the surrendered certificate; provided that the Corporation shall not be required to pay any tax that may be payable in respect of any such Transfer involved in the issuance and delivery of any such new certificate in a name other than that of Holder and the Corporation shall not be required to issue or deliver such new certificate or certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid. Each such new certificate shall be registered in such name and shall represent such number of shares as is requested by the Holder of the surrendered certificate and shall be substantially identical in form to the surrendered certificate.

Section 10. Miscellaneous.

(a) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder shall be in writing and delivered personally, by facsimile, by e-mail, or sent by a nationally recognized overnight courier service, addressed to the Corporation, at 501 Elliott Avenue, Suite 400, Seattle, Washington 98119, facsimile number (206) 272-4302, Attention: James Bianco, or such other facsimile number, email address or street address as the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section 10(a). Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number, email address or street address of such Holder appearing on the books of the Corporation, or if no such facsimile number, email address or street address appears on the books of the Corporation, at the principal place of business of the Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile or email to the facsimile number or email address specified in this Section 10(a) before 5:30 p.m. (New York City time) on any date, (ii) the date immediately following the date of transmission, if such notice or communication is delivered via facsimile or email to the facsimile number or email address specified in this Section 10(a) between 5:30 p.m. and 11:59 p.m. (New York City time) on any date, (iii) the second Business Day following the date of dispatch, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.

5

(b) Lost or Mutilated Series 10 Preferred Stock Certificate. If a Holder’s Series 10 Preferred Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of Series 10 Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such certificate, and of the ownership hereof reasonably satisfactory to the Corporation.

(c) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this instrument shall be governed by and construed and enforced in accordance with the internal laws of the State of Washington, without regard to the principles of conflict of laws thereof.

(d) Waiver. Any waiver by the Corporation or a Holder of a breach of any provision of this instrument shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this instrument or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherence to any term of this instrument on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this instrument. Any waiver by the Corporation or a Holder must be in writing.

(e) Severability. If any provision of this Article II.2(q) is invalid, illegal or unenforceable, the balance of this Article II.2(q) shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.

(f) Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

(g) Headings. The headings contained herein are for convenience only, do not constitute a part of this Article II.2(q) and shall not be deemed to limit or affect any of the provisions hereof.

(h) Status of Redeemed Series 10 Preferred Stock. If any shares of Series 10 Preferred Stock are redeemed or reacquired by the Corporation, such shares shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series 10 Preferred Stock.

(i) Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided herein shall be cumulative and in addition to all other remedies available hereunder, at law or in equity (including a decree of specific performance and/or other injunctive relief), and no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy. Nothing herein shall limit a Holder’s right to pursue actual damages for any failure by the Corporation to comply with the terms hereof. The Corporation covenants to each Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by a Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Corporation (or the performance thereof). The Corporation acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holders and that the remedy at law for any such breach may be inadequate. The Corporation therefore agrees that, in the event of any such breach or threatened breach, the Holders shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

6

I certify that I am a duly appointed and incumbent officer of the above named Corporation and that I am authorized to execute these Articles of Amendment on behalf of the Corporation.

EXECUTED, this      day of March, 2011.

CELL THERAPEUTICS, INC.,
a Washington corporation
By:
	Name: James A. Bianco, M.D.
	Title: Chief Executive Officer

7

EX-3.2

Exhibit 3.2

ARTICLES OF AMENDMENT TO

AMENDED AND RESTATED ARTICLES OF

CELL THERAPEUTICS, INC.

DESIGNATION OF PREFERENCES,

RIGHTS AND LIMITATIONS

OF

SERIES 11 PREFERRED STOCK

Pursuant to the Washington Business Corporation Act, Chapter 23B.10, the undersigned officer of Cell Therapeutics, Inc., a Washington corporation (the “Corporation”), does hereby submit for filing these Articles of Amendment:

FIRST: The name of the Corporation is Cell Therapeutics, Inc.

SECOND: This amendment to the Corporation’s Amended and Restated Articles of Incorporation, as amended to date (the “Restated Articles”), was adopted by the Board of Directors of the Corporation (the “Board”) on February 17, 2011. Shareholder action was not required on this amendment pursuant to Article II.2 of the Restated Articles.

THIRD: A new Section 2(r) of Article II is added to the Restated Articles to add the designations, rights and preferences of a new series of preferred stock as follows, such Section to be effective as of February 18, 2011:

“(r) Series 11 Preferred Stock

TERMS OF PREFERRED STOCK

Section 1. Definitions. For the purposes hereof, the following terms shall have the following meanings:

“Alternate Consideration” has the meaning set forth in Section 7(d).

“Business Day” means any day except Saturday, Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“Change of Control Transaction” means the occurrence after the date hereof of any of (i) an acquisition by an individual, legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Corporation, by contract or otherwise) of in excess of 33% of the voting securities of the Corporation (other than by means of conversion of shares of Series 11 Preferred Stock), or (ii) the Corporation merges into or consolidates with any other person, or any person merges into or consolidates with the Corporation and, after giving effect to such transaction, the shareholders of the Corporation immediately before such transaction own less than 66% of the aggregate voting power of the Corporation or the successor entity of such transaction, or (iii) the Corporation sells or transfers all or substantially all of its assets to another person and the shareholders of the Corporation immediately before such transaction own less than 66% of the aggregate voting power of the acquiring entity immediately after the transaction, or (iv) a replacement at one time or within a one-year period of more than one-half of the

1

members of the Board which is not approved by a majority of those individuals who are members of the Board on the date hereof (or by those individuals who are serving as members of the Board on any date whose nomination to the Board was approved by a majority of the members of the Board who are members on the date hereof), or (v) the execution by the Corporation of an agreement to which the Corporation is a party or by which it is bound, providing for any of the events set forth in clauses (i) through (iv) above.

“Common Stock” means the Corporation’s common stock, no par value per share, and stock of any other class of securities into which such securities may hereafter be reclassified or changed into.

“Common Stock Equivalents” means any securities which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock; provided, however, that Common Stock Equivalents shall not include any debt securities of the Corporation.

“Conversion Amount” means the sum of the Stated Value at issue.

“Conversion Date” has the meaning set forth in Section 6(a).

“Conversion Price” has the meaning set forth in Section 6(c).

“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Series 11 Preferred Stock in accordance with the terms hereof.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Fundamental Transaction” means, at any time while the Series 11 Preferred Stock is outstanding, (i) the Corporation effects any merger or consolidation of the Corporation with or into another person, (ii) the Corporation effects any sale of all or substantially all of its assets in one transaction or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Corporation or another person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange a material portion of the Corporation’s shares for other securities, cash or property, or (iv) the Corporation effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property; provided, however, that for the purposes of clause (ii) above, a “Fundamental Transaction” shall not include the Corporation entering into a license or other agreement that licenses any intellectual property to an unaffiliated and unrelated person so long as the Corporation and its subsidiaries continue to have bona fide, substantial and continuing business operations and activities after such license or other agreement is entered into.

“Holder” means a holder of shares of Series 11 Preferred Stock.

“Junior Securities” means (i) the Common Stock and all other Common Stock Equivalents of the Corporation other than those securities which are explicitly senior to or pari passu with the Series 11 Preferred Stock as to dividend rights or liquidation preference and (ii) the Series ZZ Junior Participating Cumulative Preferred Stock of the Corporation.

“Liquidation” has the meaning set forth in Section 5.

2

“Non-Senior Securities” means (i) the Common Stock and all other Common Stock Equivalents of the Corporation other than those securities which are explicitly senior to the Series 11 Preferred Stock as to dividend rights or liquidation preference and (ii) the Series ZZ Junior Participating Cumulative Preferred Stock of the Corporation. For the avoidance of doubt, the Series 8 Preferred Stock and the Series 10 Preferred Stock are senior to the Series 11 Preferred Stock as to dividends.

“Notice of Conversion” has the meaning set forth in Section 6(a).

“Original Issue Date” means the date of the first issuance of any shares of Series 11 Preferred Stock regardless of the number of transfers of any particular shares of Series 11 Preferred Stock and regardless of the number of certificates which may be issued to evidence such Series 11 Preferred Stock.

“Series 8 Preferred Stock” means shares of the Corporation’s Series 8 Preferred Stock.

“Series 10 Preferred Stock” means shares of the Corporation’s Series 10 Preferred Stock issued or to be issued after the date hereof.

“Series 11 Preferred Stock” has the meaning set forth in Section 2.

“Trading Day” means a day on which the New York Stock Exchange is open for business.

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: The NYSE Amex, The Nasdaq Capital Market, The Nasdaq Global Market, The Nasdaq Global Select Market or the New York Stock Exchange.

“Transfer” has the meaning set forth in Section 9.

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (i) if the Common Stock is then listed or quoted on a national securities exchange, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the national securities exchange on which the Common Stock is then listed or quoted for trading as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)); (ii) if the Common Stock is then listed or traded on the OTC Bulletin Board and the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (iii) if the Common Stock is not then quoted for trading on a national securities exchange or the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (iv) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by a majority in interest of the Holders and reasonably acceptable to the Corporation, the fees and expenses of which shall be paid by the Corporation.

Section 2. Designation, Amount, Par Value and Rank. The series of preferred stock shall be designated as the Corporation’s Series 11 Preferred Stock (the “Series 11 Preferred Stock”) and the number of shares so designated shall be 24,957. Each share of Series 11 Preferred Stock shall have no par value per share and a stated value equal to $1,000, subject to increase as set forth in Section 3(a) below (the “Stated Value”). The Series 11 Preferred Stock shall rank junior to the Series 8 Preferred

3

Stock and the Series 10 Preferred Stock as to dividend rights and pari passu with the Series 8 Preferred Stock and the Series 10 Preferred Stock as to liquidation rights.

Section 3. Dividends.

(a) Dividends. Holders shall be entitled to receive, and the Corporation shall pay, dividends on shares of Series 11 Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends (other than dividends in the form of Common Stock) actually paid on shares of the Common Stock or other Non-Senior Securities when, as and if such dividends (other than dividends in the form of Common Stock) are paid on shares of the Common Stock or other Non-Senior Securities. Other than as set forth in the previous sentence, no other dividends shall be paid on shares of Series 11 Preferred Stock, and the Corporation shall pay no dividends (other than dividends in the form of Common Stock) on shares of the Common Stock or other Non-Senior Securities unless it simultaneously complies with the previous sentence. All accrued but unpaid dividends on shares of Series 11 Preferred Stock shall increase the Stated Value of such shares, but when such dividends are actually paid any such increase in the Stated Value shall be rescinded. For the avoidance of doubt, (i) nothing in this Section 3 shall prohibit the Corporation from paying dividends on shares of Series 8 Preferred Stock or Series 10 Preferred Stock, and (ii) dividends paid on shares of Series 8 Preferred Stock or Series 10 Preferred Stock shall not give rise to any obligation of the Corporation to pay dividends on shares of Series 11 Preferred Stock.

(b) So long as any Series 11 Preferred Stock remains outstanding, neither the Corporation nor any subsidiary thereof shall redeem, purchase or otherwise acquire any material amount of Non-Senior Securities except as expressly permitted by Section 8(b). For the avoidance of doubt, nothing in this Section 3(b) shall be construed as limiting the Corporation’s ability to redeem shares of Series 8 Preferred Stock and/or shares of Series 10 Preferred Stock in accordance with the terms thereof.

Section 4. Voting Rights. Except as otherwise expressly provided herein or as otherwise required by law, Holders of shares of Series 11 Preferred Stock shall have no voting rights.

Section 5. Liquidation. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”), the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation an amount equal to the Stated Value for each outstanding share of Series 11 Preferred Stock before any distribution or payment shall be made to the holders of any Junior Securities, and if the assets of the Corporation shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the Holders shall be ratably distributed among the Holders and the holders of all securities which are pari passu with the Series 11 Preferred Stock as to liquidation in accordance with the respective amounts that would be payable on all such securities if all amounts payable thereon were paid in full. A Fundamental Transaction or Change of Control Transaction shall not be deemed a Liquidation unless the Corporation expressly declares that such Fundamental Transaction or Change of Control Transaction shall be treated as if it were a Liquidation. The Corporation shall mail written notice of any such Liquidation, not less than 25 days before the payment date stated therein, to each Holder.

Section 6. Conversion and Exchange Rights.

(a) Conversions at Option of Holder. Each share of Series 11 Preferred Stock shall be convertible at any time and from time to time from and after the Original Issue Date, at the option of the Holder thereof, into that number of shares of Common Stock (subject to the limitations set forth in Section 6(d)) determined by dividing the Stated Value of such share of Series 11 Preferred Stock by the Conversion Price. Holders shall effect conversions by providing the Corporation with the form attached

4

hereto as Annex A (a “Notice of Conversion”), which may be delivered before the date of conversion. Each Notice of Conversion shall specify the number of shares of Series 11 Preferred Stock to be converted, the number of shares of Series 11 Preferred Stock owned before the conversion at issue, the number of shares of Series 11 Preferred Stock owned subsequent to the conversion at issue and the date on which such conversion is to be effected, which date must be on or after the Original Issue Date and may not be before the date the applicable Holder delivers such Notice of Conversion to the Corporation in accordance with Section 10(a) (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion to the Corporation is deemed delivered hereunder (or the first date thereafter that conversion is permitted pursuant to this Section 6(a)). The calculations and entries set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error. To effect conversions of shares of Series 11 Preferred Stock, a Holder shall be required to (and by delivering a Notice of Conversion shall thereby be deemed to agree to) forthwith surrender the certificate(s) representing such shares of Series 11 Preferred Stock to the Corporation. Notwithstanding anything to the contrary set forth herein, upon conversion of shares of Series 11 Preferred Stock in accordance with the terms hereof, no Holder thereof shall be required to physically surrender the certificate representing such Holder’s shares of Series 11 Preferred Stock to the Corporation unless (i) the full or remaining number of shares of Series 11 Preferred Stock represented by such certificate are being converted or (ii) such Holder has provided the Corporation with prior written notice (which notice may be included in a Notice of Conversion) requesting reissuance of a certificate representing the remaining shares of Series 11 Preferred Stock upon physical surrender of any certificate representing the shares of Series 11 Preferred Stock being converted. Each Holder and the Corporation shall maintain records showing the number of shares of Series 11 Preferred Stock so converted by such Holder and the dates of such conversions or shall use such other method, reasonably satisfactory to such Holder and the Corporation, so as not to require physical surrender of the certificate representing the shares of Series 11 Preferred Stock upon each such conversion. In the event of any dispute or discrepancy, such records of the Corporation establishing the number of shares of Series 11 Preferred Stock to which the record holder is entitled shall be controlling and determinative in the absence of manifest error.

(b) Automatic Conversion. On the first to occur of (i) the date on which 1,000 or less shares of Series 11 Preferred Stock remain outstanding or (ii) the date on which the Board determines in good faith to do a reverse stock split with respect to the Common Stock in order to achieve compliance with the listing rules of The NASDAQ Capital Market or for other good-faith business reasons, each outstanding share of Series 11 Preferred Stock shall automatically convert into that number of shares of Common Stock (subject to the limitations set forth in Section 6(d) determined by dividing the Stated Value of such share of Series 11 Preferred Stock by the Conversion Price). In the case of an automatic conversion pursuant to this Section 6(b), the “Conversion Date” shall be the first to occur of the dates set forth in clauses (i) and (ii) above, and a Holder shall be required to forthwith surrender the certificate(s) representing such shares of Series 11 Preferred Stock to the Corporation within two Trading Days of the date established for such conversion and set forth in a written notice from the Corporation; provided, however, that the failure by a Holder to surrender the certificate(s) representing such converted shares of Series 11 Preferred Stock shall not prevent the Corporation from delivering the shares of Common Stock issuable upon automatic conversion thereof and, upon receipt of such consideration by such Holder, such shares of Series 11 Preferred Stock shall be converted for all purposes hereunder

(c) Conversion Price. The conversion price for the Series 11 Preferred Stock shall equal $0.337, subject to adjustment as provided herein (the “Conversion Price”)

(d) Beneficial Ownership Limitation. Notwithstanding anything to the contrary contained herein, the shares of Series 11 Preferred Stock held by a Holder shall not be convertible by such Holder, and the Corporation shall not effect any conversion of any shares of Series 11 Preferred Stock held by

5

such Holder, to the extent (but only to the extent) that such Holder or any of its affiliates would beneficially own 9.99% or more (the “Maximum Percentage”) of the Common Stock; provided, however, that the Maximum Percentage shall increase to 19.99% in the event of an automatic conversion pursuant to Section 6(b) without any further action on the part of such Holder. To the extent the above limitation applies, the Holder shall first be required to convert outstanding shares of Series 11 Preferred Stock, subject to such Maximum Percentage limitation, until the Holder no longer owns any shares of Series 11 Preferred Stock. No prior inability of a Holder to convert shares of Series 11 Preferred Stock pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of convertibility or issuance (as the case may be). For purposes of this paragraph, beneficial ownership and all determinations and calculations (including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. The provisions of this paragraph shall be implemented in a manner otherwise than in strict conformity with the terms of this paragraph to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation. The limitations contained in this paragraph shall apply to a successor Holder. The holders of Common Stock shall be third party beneficiaries of this paragraph and the Corporation may not waive this paragraph without the consent of holders of a majority of its Common Stock. For any reason at any time, upon the written or oral request of a Holder, the Corporation shall within two Business Days confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding, including by virtue of any prior conversion or exercise of convertible or exercisable securities into Common Stock.

(e) Mechanics of Conversion.

(i) Delivery of Certificate upon Conversion. Subject to the immediately following sentence of this clause, not later than three Trading Days after each Conversion Date, whether pursuant to Section 6(a) or (b), the Corporation shall deliver, or cause to be delivered, to the converting Holder a certificate or certificates, which shall be free of restrictive legends and issuer-imposed trading restrictions (provided that a registration statement covering resales of the Conversion Shares is then in effect), representing the number of shares of Common Stock being acquired upon the conversion of shares of Series 11 Preferred Stock. The Corporation shall use its best efforts to, if the Holder is not an affiliate of the Corporation, deliver any certificate or certificates required to be delivered by the Corporation under this Section 6 electronically through the Depository Trust Company or another established clearing corporation performing similar functions (provided that a registration statement covering resales of the Conversion Shares is then in effect), in which case the Corporation covenants to use its commercially reasonable efforts to deliver shares of Common Stock being acquired upon the conversion of shares of Series 11 Preferred Stock prior to three Trading Days after each Conversion Date. If, in the case of any Notice of Conversion, such certificate or certificates are not delivered to or as directed by the applicable Holder by the seventh Trading Day after the Conversion Date, in the case of physical delivery of such certificate or certificates, or by the fourth Trading Day, in the case of electronic delivery through the Depository Trust Company or another established clearing corporation performing similar functions, then (without limiting Holder’s other rights and remedies hereunder for the Corporation’s failure to comply with its obligations under the preceding portion of this paragraph) the applicable Holder shall be entitled to elect to rescind such Conversion Notice by written notice to the Corporation at any time on or before its receipt of such certificate or certificates, in which event the Corporation shall promptly return to such Holder any original Series 11 Preferred Stock certificate delivered to the Corporation and such Holder shall promptly return any Common Stock certificates representing the shares of Series 11 Preferred Stock tendered for conversion to the Corporation.

6

(ii) Obligation Absolute. The Corporation’s obligation to issue and deliver the Conversion Shares upon conversion of shares of Series 11 Preferred Stock in accordance with the terms hereof is absolute and unconditional, irrespective of any action or inaction by a Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by such Holder or any other person of any obligation to the Corporation or any violation or alleged violation of law by such Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to such Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Corporation of any such action that the Corporation may have against such Holder. In the event a Holder shall elect to convert any or all of the Stated Value of its Series 11 Preferred Stock, the Corporation may not refuse conversion based on any claim that such Holder or anyone associated or affiliated with such Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and/or enjoining conversion of all or part of the Series 11 Preferred Stock of such Holder shall have been sought and obtained. In the absence of such an injunction, the Corporation shall issue Conversion Shares upon a properly noticed conversion. Nothing herein shall limit a Holder’s right to pursue actual damages for the Corporation’s failure to deliver Conversion Shares within the period specified herein and such Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit a Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

(iii) Reservation of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times use reasonable best efforts to reserve and keep available out of its authorized and unissued shares of Common Stock, for the sole purpose of issuance upon conversion of the Series 11 Preferred Stock, as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holders of the Series 11 Preferred Stock, not less than such aggregate number of shares of the Common Stock as shall be issuable (taking into account the adjustments and restrictions of Section 7) upon the conversion of all outstanding shares of Series 11 Preferred Stock. The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.

(iv) Fractional Shares. Upon a conversion of the Series 11 Preferred Stock hereunder, the Corporation shall not be required to issue fractions of shares of Common Stock, but shall instead, if otherwise permitted, round the total number of Conversion Shares for such conversion up or down to the nearest whole number of shares of Common Stock.

(v) Transfer Taxes. The issuance of certificates for shares of the Common Stock issued upon conversion of shares of Series 11 Preferred Stock shall be made without charge to any Holder for any documentary stamp, issuance or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of such shares of Series 11 Preferred Stock so converted and the Corporation shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.

7

Section 7. Certain Adjustments.

(a) Stock Dividends and Stock Splits. If the Corporation, at any time while the Series 11 Preferred Stock is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any other Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion of the Series 11 Preferred Stock); (ii) subdivides outstanding shares of Common Stock into a larger number of shares; (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares; or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Corporation, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event and any other adjustments to the Holders’ conversion rights necessary to reflect such event shall be made. Any adjustment made pursuant to this Section 7(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification.

(b) Subsequent Rights Offerings. If the Corporation, at any time while the Series 11 Preferred Stock is outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not proportionately to Holders) entitling them to subscribe for or purchase shares of Common Stock at a price per share that is lower than the VWAP on the record date referenced below, then the Conversion Price shall be multiplied by a fraction of which the denominator shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered (assuming delivery to the Corporation in full of all consideration payable upon exercise of such rights, options or warrants) would purchase at such VWAP. Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of shareholders entitled to receive such rights, options or warrants.

(c) Pro Rata Distributions. If the Corporation, at any time while the Series 11 Preferred Stock is outstanding, distributes (other than as a dividend) to all holders of Common Stock (and not proportionately to Holders) evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase any security (other than Common Stock, which shall be subject to Section 7(b)), then in each such case the Conversion Price shall be adjusted by multiplying such Conversion Price in effect immediately before the record date fixed for determination of shareholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then fair market value at such record date of the portion of such assets, evidence of indebtedness or rights or warrants so distributed applicable to one outstanding share of the Common Stock as determined by the Board in good faith. In either case the adjustments shall be described in a statement delivered to the Holders describing the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above. For the avoidance of doubt, distributions that are stock dividends shall be subject to Section 7(a) and not subject to this Section 7(c).

(d) Fundamental Transaction. If, at any time while the Series 11 Preferred Stock is outstanding, a Fundamental Transaction occurs, then, upon any subsequent conversion of the Series 11

8

Preferred Stock, the Holders shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately before the occurrence of such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately before such Fundamental Transaction, the holder of one share of Common Stock (the “Alternate Consideration”); and the Holders shall no longer have the right to receive Conversion Shares per se upon such conversion. For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Corporation shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holders shall be given the same choice as to the Alternate Consideration it receives upon any conversion of the Series 11 Preferred Stock following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Corporation or surviving entity in such Fundamental Transaction shall adopt articles of incorporation or an amendment to its articles of incorporation with the same terms and conditions and issue to the Holders new preferred stock consistent with the foregoing provisions and evidencing the Holders’ right to convert such preferred stock into Alternate Consideration. Unless the Corporation elects to treat such Fundamental Transaction as a Liquidation, the terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 7(d) and ensuring that the Series 11 Preferred Stock (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

(e) Calculations. All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.

(f) Notice to the Holders.

(i) Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 7, the Corporation shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

(ii) Notice to Allow Conversion by Holder. If (A) the Corporation shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Corporation shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any shareholders of the Corporation shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Corporation is a party, any sale or transfer of all or substantially all of the assets of the Corporation, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Corporation shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation, then, in each case, the Corporation shall cause to be filed at each office or agency maintained for the purpose of conversion of the Series 11 Preferred Stock, and shall cause to be delivered to each Holder at its last address as it shall appear upon the stock books of the Corporation, at least 20 calendar days before the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock

9

of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Corporation or any of its subsidiaries, the Corporation shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder is entitled to convert the Stated Value of its Series 11 Preferred Stock during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice.

Section 8. Negative Covenants. So long as at least 20% of the aggregate number of originally issued shares of Series 11 Preferred Stock are outstanding (as appropriately adjusted for share splits and similar transactions), the Corporation shall not, without the Corporation obtaining the affirmative written consent of Holders of a majority of the then outstanding shares of Series 11 Preferred Stock:

(a) amend the articles of incorporation, its bylaws or other charter documents so as to materially, specifically and adversely affect any rights of any Holder with respect to Series 11 Preferred Stock;

(b) repay, repurchase or offer to repay, repurchase or otherwise acquire any material amount of its Junior Securities (other than securities described in clause (ii) of the definition of “Junior Securities”); provided, however, that this restriction shall not apply to the repurchase of up to 30,000,000 shares of Common Stock in any 12-month period (subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the Original Issue Date) from employees, officers, directors, consultants or other persons performing services for the Corporation or any subsidiary pursuant to agreements approved by a majority of the Board of Directors or under which the Corporation has the option to repurchase such shares at cost or at cost upon the occurrence of certain events, such as termination of employment;

(c) authorize or create any class or series of stock ranking senior to the Series 11 Preferred Stock as to dividend rights or liquidation preference (other than the Series 10 Preferred Stock in respect of dividend rights); or

(d) enter into any agreement or understanding with respect to any of the foregoing.

Notwithstanding anything to the contrary set forth herein, (i) nothing herein shall be construed as limiting the Corporation’s ability to redeem shares of Series 8 Preferred Stock or Series 10 Preferred Stock in accordance with the terms thereof, and (ii) this Section 9 shall not prohibit the issuance of additional series of preferred stock that do not rank senior to the Series 11 Preferred Stock as to dividend rights or liquidation preference.

Section 9. Transferability. The Series 11 Preferred Stock may only be sold, transferred, assigned, pledged or otherwise disposed of (“Transfer”) in accordance with state and federal securities laws. The Corporation shall keep at its principal office, or at the offices of the transfer agent, a register of the Series 11 Preferred Stock. In connection with any such permitted Transfer, upon the surrender of any certificate representing Series 11 Preferred Stock at such place, the Corporation, at the request of the record Holder of such certificate, shall execute and deliver (at the Corporation’s expense) a new

10

certificate or certificates in exchange therefor representing in the aggregate the number of shares represented by the surrendered certificate; provided that the Corporation shall not be required to pay any tax that may be payable in respect of any such Transfer involved in the issuance and delivery of any such new certificate in a name other than that of Holder and the Corporation shall not be required to issue or deliver such new certificate or certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid. Each such new certificate shall be registered in such name and shall represent such number of shares as is requested by the Holder of the surrendered certificate and shall be substantially identical in form to the surrendered certificate.

Section 10. Miscellaneous.

(a) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, by e-mail, or sent by a nationally recognized overnight courier service, addressed to the Corporation, at 501 Elliott Avenue, Suite 400, Seattle, Washington 99119, facsimile number (206) 272-4302, Attention: James Bianco, or such other facsimile number, email address or street address as the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section 10(a). Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number, email address or street address of such Holder appearing on the books of the Corporation, or if no such facsimile number, email address or street address appears on the books of the Corporation, at the principal place of business of the Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile or email to the facsimile number or email address specified in this Section 10(a) before 5:30 p.m. (New York City time) on any date, (ii) the date immediately following the date of transmission, if such notice or communication is delivered via facsimile or email to the facsimile number or email address specified in this Section 10(a) between 5:30 p.m. and 11:59 p.m. (New York City time) on any date, (iii) the second Business Day following the date of dispatch, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.

(b) Lost or Mutilated Series 11 Preferred Stock Certificate. If a Holder’s Series 11 Preferred Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of Series 11 Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such certificate, and of the ownership hereof reasonably satisfactory to the Corporation.

(c) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this instrument shall be governed by and construed and enforced in accordance with the internal laws of the State of Washington, without regard to the principles of conflict of laws thereof.

(d) Waiver. Any waiver by the Corporation or a Holder of a breach of any provision of this instrument shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this instrument or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherence to any term of this instrument on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder) of the right

11

thereafter to insist upon strict adherence to that term or any other term of this instrument. Any waiver by the Corporation or a Holder must be in writing.

(e) Severability. If any provision of this Article II.2(r) is invalid, illegal or unenforceable, the balance of this Article II.2(r) shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.

(f) Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

(g) Headings. The headings contained herein are for convenience only, do not constitute a part of this Article II.2(r) and shall not be deemed to limit or affect any of the provisions hereof.

(h) Status of Converted or Redeemed Series 11 Preferred Stock. If any shares of Series 11 Preferred Stock are converted, redeemed or reacquired by the Corporation, such shares shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series 11 Preferred Stock.”

(i) Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided herein shall be cumulative and in addition to all other remedies available hereunder, at law or in equity (including a decree of specific performance and/or other injunctive relief), and no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy. Nothing herein shall limit a Holder’s right to pursue actual damages for any failure by the Corporation to comply with the terms hereof. The Corporation covenants to each Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by a Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Corporation (or the performance thereof). The Corporation acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holders and that the remedy at law for any such breach may be inadequate. The Corporation therefore agrees that, in the event of any such breach or threatened breach, the Holders shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

[Signature page follows]

12

I certify that I am a duly appointed and incumbent officer of the above named Corporation and that I am authorized to execute these Articles of Amendment on behalf of the Corporation.

EXECUTED, this 17^th day of February, 2011.

CELL THERAPEUTICS, INC.,
a Washington corporation
By:	/s/ James A. Bianco
	Name: James A. Bianco, M.D.
	Title: Chief Executive Officer

13

ANNEX A

NOTICE OF CONVERSION

(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER

TO CONVERT SHARES OF SERIES 11 PREFERRED STOCK)

The undersigned hereby elects to convert the number of shares of Series 11 Preferred Stock, no par value per share (the “Preferred Stock”), of Cell Therapeutics, Inc., a Washington corporation (the “Corporation”), indicated below into shares of common stock, no par value per share (the “Common Stock”), of the Corporation, according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as may be reasonably required by the Corporation. No fee will be charged to the Holders for any conversion of Preferred Stock, except for any such transfer taxes.

Conversion calculations:

Date to Effect Conversion:                                                                                                                                                                                                        

Number of shares of Preferred Stock owned before Conversion:                                                                                                                                 

Number of shares of Preferred Stock to be Converted:                                                                                                                                                    

Stated Value of shares of Preferred Stock to be Converted:                                                                                                                                           

Number of shares of Common Stock to be Issued:                                                                                                                                                            

Applicable Conversion Price:                                                                                                                                                                                                    

Number of shares of Preferred Stock subsequent to Conversion:                                                                                                                                 

Address for Delivery:                                                                                                                                                                                                                   

 or

 DWAC Instructions:

Number of shares of Common Stock for DWAC:                                                                                                                                                    

Name and Contact for Broker:                                                                                                                                                                                        

Broker no:                                                                                                                                                                                                                              

Account no:                                                                                                                                                                                                                           

Account holder:                                                                                                                                                                                                                    

HOLDER:

By:
	Name:
	Title:

EX-4.1

Exhibit 4.1

Number P10-	CELL THERAPEUTICS, INC.	*                    * Shares
	A Washington Corporation	Series 10 Preferred Stock

THIS CERTIFIES THAT *                                                                                                                          * is the record holder of *                                                                                                      (                                                         )* shares of Series 10 Preferred Stock of Cell Therapeutics, Inc. (the “Corporation”) transferable only on the share register of the Corporation by the holder, in person or by such holder’s duly authorized attorney, upon surrender of this certificate properly endorsed or assigned.

This certificate and the shares represented hereby shall be held subject to all of the provisions of the Amended and Restated Articles of Incorporation and the Second Amended and Restated Bylaws of the Corporation and any amendments thereto, a copy of each of which is on file at the office of the Corporation and made a part hereof as fully as though the provisions of said Amended and Restated Articles of Incorporation and Second Amended and Restated Bylaws were imprinted in full on this Certificate, to all of which the holder of this Certificate, by acceptance hereof, assents and agrees to be bound.

The Corporation will furnish without charge to each shareholder who so requests, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences or rights.

IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by its duly authorized officers this      day of             , 2011.

James A. Bianco, Chief Executive Officer Louis A. Bianco, Executive Vice President, Finance and Administration

FOR VALUE RECEIVED, THE UNDERSIGNED HEREBY SELLS, ASSIGNS AND TRANSFERS UNTO                                                                                                                                   SHARES REPRESENTED BY THE WITHIN CERTIFICATE AND DOES HEREBY IRREVOCABLY CONSTITUTE AND APPOINT                                  ATTORNEY TO TRANSFER THE SAID SHARES ON THE SHARE REGISTER OF THE WITHIN NAMED CORPORATION WITH FULL POWER OF SUBSTITUTION IN THE PREMISES.

DATED                    

(Signature)

NOTICE: THE SIGNATURE ON THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THIS CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.

EX-4.2

Exhibit 4.2

COMMON STOCK PURCHASE WARRANT

To Purchase 25,919,733 Shares of Common Stock of

CELL THERAPEUTICS, INC.

Initial Issuance Date: February 17, 2011 Warrant No. WC-10,118

THIS COMMON STOCK PURCHASE WARRANT (this “Warrant”) certifies that, for value received, [—], the initial holder hereof (“[—]”), or its permitted designees or assigns (the “Holder”), is obligated, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time commencing on the Initial Issuance Date (the “Initial Exercise Date”) and on or before the close of business of the Company (as defined below) on the two (2) year anniversary of the Initial Issuance Date (the “Expiration Date”) but not thereafter, to subscribe for and purchase from Cell Therapeutics, Inc., a Washington corporation (the “Company”), up to 25,919,733 shares (the “Warrant Shares”) of common stock, no par value per share (the “Common Stock”), of the Company. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price (as defined in Section 2(d) of this Warrant). This Warrant is issued pursuant to the Securities Purchase Agreement dated as of February 17, 2011 (the “Purchase Agreement”), by and between the Company and [—].

Section 1. Definitions. In addition to the terms defined elsewhere in this Warrant, (a) capitalized terms used and not otherwise defined herein shall have the meanings given to such terms in the Purchase Agreement, and (b) the following term shall have the meaning set forth in this Section 1:

“Fundamental Transaction” means, at any time while this Warrant is outstanding, (a) the Company effects any merger or consolidation of the Company into another person whereby the Company is not the surviving entity, (b) the Company effects any sale of all or substantially all of its assets in one transaction or a series of related transactions, (c) any tender offer or exchange offer (whether by the Company or another person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange a material portion of the Company’s shares for other securities, cash or property, or (d) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property; provided, however, that for the purposes of clause (b) above, a “Fundamental Transaction” shall not include the Company entering into a license or other agreement that licenses any intellectual property to an unaffiliated and unrelated person so long as the Company and its subsidiaries continue to have bona fide, substantial and continuing business operations and activities after such license or other agreement is entered into; provided, further, however, that a “Fundamental Transaction” shall not include a reverse stock split with respect to the Common Stock.

“Termination Date” means the first to occur of (a) the Early Termination Date and (b) the Expiration Date.

1

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: The NYSE Amex, The Nasdaq Capital Market, The Nasdaq Global Market, The Nasdaq Global Select Market or the New York Stock Exchange.

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted for trading as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)); (b) if the Common Stock is then listed or quoted on the OTC Bulletin Board and the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

Section 2. Exercise.

(a) Exercise at the Option of Holder. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by (i) delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of a Notice of Exercise in the form attached to this Warrant as Appendix 1 (the “Notice of Exercise”) (provided, however, within five (5) Trading Days of the date said Notice of Exercise is delivered to the Company, if this Warrant is exercised in full, the Holder shall have surrendered this Warrant to the Company) and (ii) payment to the Company of the aggregate Exercise Price (as defined in Section 2(d) of this Warrant) of the shares thereby purchased (as well as all taxes required to be paid by the Holder, if any, pursuant to Section 2(f)(vi) of this Warrant) at the Holder’s option, (A) by wire transfer of immediately available funds or cashier’s check drawn on a United States bank or (B) provided that [—] is Solvent on the applicable exercise date, by a recourse note fully secured with marketable securities, issued by [—] to the Company, substantially in the form attached hereto as Appendix 2. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and this Warrant has been exercised in full. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall

2

deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. In the event of any dispute or discrepancy, the records of the Company shall be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph (a), following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face of this Warrant.

(b) Mandatory Exercise. Regardless of the identity of the Holder, this Warrant must be exercised simultaneously with the exercise of the Additional Investment Right issued to [—] pursuant to the Purchase Agreement such that the percentage of this Warrant that has been exercised will always equal or exceed the percentage of the Additional Investment Right that has been exercised.

(c) Cancellation. Notwithstanding anything to the contrary contained in this Warrant or otherwise, this Warrant shall be cancelled to the extent of any unexercised Warrant Shares on the Termination Date.

(d) Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $0.337, subject to adjustment hereunder (the “Exercise Price”).

(e) Exercise Limitation; Activity Restrictions.

(i) Exercise Limitation. Notwithstanding anything to the contrary contained in this Warrant or otherwise, this Warrant shall not be exercisable by the Holder to the extent (but only to the extent) that the Holder or any of its affiliates would beneficially own 9.99% or more (the “Maximum Percentage”) of the Common Stock. To the extent the Maximum Percentage limitation applies, the Holder shall first be required to convert outstanding shares of Series 9 Preferred Stock into Common Stock, subject to such Maximum Percentage limitation, until the Holder no longer owns any shares of Series 9 Preferred Stock prior to exercising this Warrant. No prior inability to exercise this Warrant pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of exercisability, subject to the Maximum Percentage limitation. For the purposes of this paragraph, beneficial ownership and all determinations and calculations (including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder. The provisions of this paragraph shall be implemented by the Company in a manner otherwise than in strict conformity with the terms of this paragraph to correct this paragraph (or any portion of this Warrant) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation. The limitations contained in this paragraph shall apply to a successor Holder of this Warrant. The holders of Common Stock shall be third

3

party beneficiaries of this paragraph and the Company may not waive this paragraph without the consent of holders of a majority of its Common Stock. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding, including by virtue of any prior conversion or exercise of convertible or exercisable securities into Common Stock, including, without limitation, pursuant to this Warrant or securities issued pursuant to the Purchase Agreement.

(ii) Activity Restrictions. For so long as the Holder or any of its affiliates holds this Warrant or any Warrant Shares, neither the Holder nor any affiliate will, without the prior written consent of the Company, (A) vote any shares of Common Stock owned or controlled by it, solicit any proxies, or seek to advise or influence any Person with respect to any voting securities of the Company, (B) engage or participate in any actions, plans or proposals which relate to or would result in (1) acquiring from any Person other than the Company additional securities of the Company, alone or together with any other Person, which would result in exceeding the Maximum Percentage limitation, (2) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving Company or any of its subsidiaries, (3) a sale or transfer of a material amount of assets of the Company or any of its subsidiaries, (4) any change in the present board of directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board or directors, (5) any material change in the present capitalization or dividend policy of the Company, (6) any other material change in the Company’s business or corporate structure, including, but not limited to, if the Company is a registered closed-end investment company, any plans or proposals to make any changes in its investment policy for which a vote is required by Section 13 of the Investment Company Act of 1940, as amended, (7) changes in the Company’s amended and restated articles of association, amended and restated bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any Person, (8) causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association, (9) a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act, or (10) any action, intention, plan or arrangement similar to any of those enumerated above, (C) request the Company or its directors, officers, employees, agents or representatives to amend or waive any provision of this Section 2(e)(ii), or (D) directly or indirectly, on its or their own behalf or pursuant to any understanding with any Person, execute or agree to execute any Short Sales of the securities or derivatives of the Company or any transaction that would have the effect of any Short Sales of the securities or derivatives of the Company.

(f) Mechanics of Exercise.

4

(i) Authorization of Warrant Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment of the Exercise Price therefor, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

(ii) Delivery of Certificates upon Exercise. Certificates representing Warrant Shares shall be transmitted by the transfer agent of the Company to the Holder by crediting the account of the Holder’s prime broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is a participant in such system and there is an effective registration statement permitting the issuance of the Warrant Shares to, or resale of the Warrant Shares by, the Holder, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise, in each case within three (3) Business Days from the delivery to the Company of the Notice of Exercise, surrender of this Warrant (if required) and payment of the aggregate Exercise Price as set forth above (the “Warrant Share Delivery Date”); provided, however, that in the event electronic delivery, the Company covenants to use its commercially reasonable efforts to deliver Warrant Shares prior to the Warrant Share Delivery Date. If all or any portion of this Warrant is exercised at a time when there is an effective registration statement to cover the issuance or resale of the Warrant Shares or if the legend is not required under applicable securities laws, such Warrant Shares shall be issued free of all legends on or before the Warrant Share Delivery Date. This Warrant shall be deemed to have been exercised on the first date on which the Notice of Exercise has been properly delivered to the Company, the Company has received the Exercise Price in full and all taxes required to be paid by the Holder, if any, pursuant to Section 2(f)(vi) of this Warrant before the issuance of such shares have been paid. The Warrant Shares shall be deemed to have been issued, and the Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, on the first date on which the Notice of Exercise has been properly delivered to the Company, the Company has received the Exercise Price (or documentation of cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(f)(vi) of this Warrant before the issuance of such shares have been paid.

(iii) Delivery of New Warrants upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the right of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical to this Warrant.

5

(iv) Compensation for Buy-In on Failure to Timely Deliver Certificates upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date pursuant to Section 2(f)(ii) of this Warrant, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount by which (1) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (2) the amount obtained by multiplying (x) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (y) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of this Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of this Warrant as required pursuant to the terms of this Warrant.

(v) No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

(vi) Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant

6

when surrendered for exercise shall be accompanied by the Assignment Form in the form attached hereto as Appendix 3 (the “Assignment Form”) duly executed by the Holder or its agent or attorney; provided, further, however, that the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

(vii) Closing of Books. The Company will not close its shareholder books or records in any manner which prevents the timely exercise of this Warrant pursuant to its terms.

Section 3. Certain Adjustments.

(a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for the avoidance of doubt, shall not include any shares of Common Stock issued by the Company pursuant to this Warrant or upon conversion of shares of Series 11 Preferred Stock, or any shares of Series 8 Preferred Stock or Series 10 Preferred Stock issued as dividends on the Series 8 Preferred Stock or Series 10 Preferred Stock, as the case may be), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock-split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction, of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(b) Subsequent Rights Offerings. If the Company, at any time while this Warrant is outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the VWAP at the record date for the determination of shareholders entitled to receive such rights, options or warrants, then the Exercise Price shall be multiplied by a fraction, of which the denominator shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights, options or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights, options or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered (assuming receipt by the Company in full of all consideration payable

7

upon exercise of such rights, options or warrants) would purchase at such VWAP. Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of shareholders entitled to receive such rights, options or warrants.

(c) Pro Rata Distributions. If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common Stock (and not to Holders of the Warrants) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 3(b) of this Warrant), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately before the record date fixed for determination of shareholders entitled to receive such distribution by a fraction, of which the denominator shall be the VWAP determined as of such record date, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors of the Company in good faith. In either case, the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after such record date.

(d) Fundamental Transaction. If, at any time while this Warrant is outstanding, the Company effects a Fundamental Transaction, then the Company shall make appropriate provision to ensure that the Holder will thereafter receive upon an exercise of this Warrant at any time after the consummation of a Fundamental Transaction but before the Termination Date, in lieu of the Warrant Shares (or other stock, securities, cash, assets or other property whatsoever) issuable upon the exercise of this Warrant immediately prior to such Fundamental Transaction, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction had this Warrant been exercised immediately before such Fundamental Transaction (without regard to any limitations on the exercise of this Warrant). If any holder of Common Stock is given any choice as to the stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to what it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(d) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to the Fundamental Transaction. The provisions of this paragraph shall apply similarly and equally to successive Fundamental Transactions and shall be applied as if this Warrant (and any subsequent warrants) were fully exercisable and without regard to any

8

limitations on the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit of the Maximum Percentage, applied however with respect to shares of capital stock registered under the Exchange Act and thereafter receivable upon exercise of this Warrant (or any such other warrant)).

(e) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

(f) Notice to Holder.

(i) Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

(ii) Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any holders of Common Stock shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register (as defined below) of the Company, at least twenty (20) calendar days before the applicable record or effective date hereinafter specified, a notice stating (1) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (2) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of its subsidiaries, the Company shall forthwith file such notice with the Commission pursuant to a Current Report on Form 8-

9

K. The Holder is entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice.

Section 4. Transfer of Warrant.

(a) Transferability. Subject to compliance with applicable state and federal securities laws, this Warrant and all rights hereunder may be transferred, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with the Assignment Form properly endorsed and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.

(b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation of this Warrant at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a) of this Warrant, as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date set forth on the first page of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

(c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner of this Warrant for the purpose of any exercise of this Warrant or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

Section 5. Miscellaneous.

(a) Title to Warrant. Before the Termination Date and subject to compliance with applicable laws and Section 4 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form properly endorsed.

(b) No Rights as Shareholder until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company before the exercise of this Warrant.

(c) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of

10

the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which shall not include the posting of any bond), and upon surrender and cancellation of such Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of such Warrant.

(d) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

(e) Authorized Shares. The Company covenants that during the period this Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Markets.

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately before such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

11

(f) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

(g) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not issued to the Holder pursuant to an effective registration statement, will have restrictions upon resale imposed by state and federal securities laws. Notwithstanding anything to the contrary contained in this Warrant or otherwise, this Warrant may not be exercised by means of a “cashless exercise.”

(h) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which failure results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

(i) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company, or vice versa, shall be delivered in accordance with the notice provisions of the Purchase Agreement.

(j) Limitation of Liability. No provision of this Warrant, in the absence of any affirmative action by the Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

(k) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

(l) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of the Holder. The provisions of this Warrant are intended to be for the benefit of all holders from time to time of this Warrant and shall be enforceable by any such holder or holder of Warrant Shares.

12

(m) Amendment. This Warrant may be modified or amended or the provisions of this Warrant waived with the written consent of the Company and the Holder.

(n) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

(o) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

[Signature page follows.]

13

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: February 17, 2011

CELL THERAPEUTICS, INC.

Louis A. Bianco

Executive Vice President, Finance and Administration

14

APPENDIX 1

NOTICE OF EXERCISE

TO: Cell Therapeutics, Inc.

(1) The undersigned hereby elects to purchase              Warrant Shares of the Company pursuant to the terms of the attached Warrant (original Warrant if exercised in full, otherwise a copy thereof), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2) Payment shall take the form of (check applicable box):

[    ]   lawful money of the United States; or

[    ]   recourse promissory note(s).

(3) Please issue (check applicable box):

[    ]   a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other   name as is specified below:

[    ]   said Warrant Shares in electronic form to the following DWAC Account:

Name and Contact for Broker:                                                          

Broker no:                                                                                           

Account no:                                                                                        

Account holder:                                                                                

[—]

By:                                                                                            

Name:

Title:

APPENDIX 2

RECOURSE PROMISSORY NOTE

(See attached)

APPENDIX 3

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

                                                                                                                                                    whose address is

                                                                                                                                                                                                      .

Dated:             ,         

Holder’s Signature:

Holder’s Address:

Signature Guaranteed:                                                                                                                          

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

EX-4.3

Exhibit 4.3

Number P11-	CELL THERAPEUTICS, INC.	*                                     * Shares
	A Washington Corporation	Series 11 Preferred Stock

THIS CERTIFIES THAT *                                                                                                                                                                                * is the record holder of *                                                                                                               (                                                 )* shares of Series 11 Preferred Stock of Cell Therapeutics, Inc. (the “Corporation”) transferable only on the share register of the Corporation by the holder, in person or by such holder’s duly authorized attorney, upon surrender of this certificate properly endorsed or assigned.

This certificate and the shares represented hereby shall be held subject to all of the provisions of the Amended and Restated Articles of Incorporation and the Second Amended and Restated Bylaws of the Corporation and any amendments thereto, a copy of each of which is on file at the office of the Corporation and made a part hereof as fully as though the provisions of said Amended and Restated Articles of Incorporation and Second Amended and Restated Bylaws were imprinted in full on this Certificate, to all of which the holder of this Certificate, by acceptance hereof, assents and agrees to be bound.

The shares represented by this Certificate are convertible into shares of Common Stock as set forth in the Amended and Restated Articles of Incorporation of the Corporation.

The Corporation will furnish without charge to each shareholder who so requests, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences or rights.

IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by its duly authorized officers this      day of         , 2011.

  James A. Bianco, Chief Executive Officer   Louis A. Bianco, Executive Vice President, Finance and Administration

FOR VALUE RECEIVED, THE UNDERSIGNED HEREBY SELLS, ASSIGNS AND TRANSFERS UNTO                                                                                                                                                                              SHARES REPRESENTED BY THE WITHIN CERTIFICATE AND DOES HEREBY IRREVOCABLY CONSTITUTE AND APPOINT                              ATTORNEY TO TRANSFER THE SAID SHARES ON THE SHARE REGISTER OF THE WITHIN NAMED CORPORATION WITH FULL POWER OF SUBSTITUTION IN THE PREMISES.

DATED                     

(Signature)

NOTICE: THE SIGNATURE ON THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THIS CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.

EX-5.1

Exhibit 5.1

KARR TUTTLE CAMPBELL

A PROFESSIONAL SERVICE CORPORATION

ATTORNEYS AT LAW

1201 Third Avenue, Suite 2900

Seattle, Washington 98101

TELEPHONE: (206) 223-1313

FACSIMILE: (206) 682-7100

February 18, 2011

Cell Therapeutics, Inc.

501 Elliott Avenue West, Suite 400

Seattle, WA 98119

Re: Registration of Securities of Cell Therapeutics, Inc.

Ladies and Gentlemen:

This opinion is furnished to Cell Therapeutics, Inc., a Washington corporation (the “Company”), in connection with the proposed offer and sale by the Company of (a) up to 24,957 shares of the Company’s Series 10 Non-Convertible Preferred Stock (the “Non-Convertible Preferred Stock”) issued pursuant to Articles of Amendment to the Company’s amended and restated articles of incorporation, to be filed with the Secretary of State of the state of Washington (the “Series 10 Certificate of Designation”), (b) the additional investment right (the “Additional Investment Right”) to purchase up to 24,957 shares of the Company’s Series 11 Convertible Preferred Stock (the “Convertible Preferred Stock”) issued pursuant to Articles of Amendment to the Company’s amended and restated articles of incorporation, filed with the Secretary of State of the state of Washington on February 18, 2011 (the “Series 11 Certificate of Designation”), (c) the shares of the Company’s common stock issuable upon conversion of the Convertible Preferred Stock (the “Underlying Shares”), (d) warrants to purchase up to 25,919,733 shares of the Company’s common stock (the “Warrants”), and (e) the shares of the Company’s common stock issuable upon the exercise of the Warrants (the “Warrant Shares” and, together with the Underlying Shares, the Non-Convertible Preferred Stock, the Convertible Preferred Stock, and the Warrants, the “Securities”) pursuant to that certain Securities Purchase Agreement, dated February 17, 2011 (the “Agreement”), between the Company and the purchaser thereunder. The Securities are being issued pursuant to a Registration Statement on Form S-3 (File No. 333-161442), which was automatically effective upon filing with the Securities and Exchange Commission (the “Commission”) on August 19, 2009 (the “Registration Statement”) under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “Securities Act”),

as amended by Post-Effective Amendment No. 1 to the Registration Statement on Form S-3, which was automatically effective upon filing with the SEC on February 15, 2011, and the base Prospectus dated February 15, 2011 and the Prospectus Supplement dated February 17, 2011, filed with the Commission on February 18, 2011.

We have reviewed, among other things, (i) the Agreement, (ii) the Amended and Restated Articles of Incorporation of the Company, as in effect as of the date hereof, including the Series 10 Certificate of Designation and the Series 11 Certificate of Designation, (iii) the Second Amended and Restated Bylaws of the Company, as in effect as of the date hereof, (iv) the form of the Warrants, (vi) a Certificate of Existence/Authorization relating to the Company, issued by the Secretary of State of the State of Washington on February 18, 2011, and (v) the records of the corporate proceedings and other actions taken or proposed to be taken by the Company in connection with the authorization, issuance and sale of the Securities. We have also examined the originals, or copies identified to our satisfaction, of such corporate records of the Company, certificates of public officials, officers of the Company and other persons, and such other documents, agreements and instruments as we have deemed relevant and necessary for the basis of our opinions hereinafter expressed. In such review and examination, we have assumed the following: (a) the legal capacity of all natural persons; (b) the authenticity of original documents and the genuineness of all signatures; (c) the conformity to the originals of all documents submitted to us as copies; (d) the truth, accuracy and completeness of the information, representations and warranties contained in the records, documents, instruments and certificates we have reviewed; (e) that each party to agreements or instruments relevant hereto other than the Company has satisfied those legal requirements that are applicable to it to the extent necessary to make such agreements or instruments enforceable against it; (f) that each party to agreements or instruments relevant hereto other than the Company has complied with all legal requirements pertaining to its status as such status relates to its rights to enforce such agreements or instruments against the Company; (g) that there has not been any mutual mistake of fact or misunderstanding, fraud, duress or undue influence; (h) that all statutes, judicial and administrative decisions, and rules and regulations of governmental agencies, constituting the law of the opining jurisdictions, are publicly available to lawyers practicing in Washington; (i) that the conduct of the parties having rights under the agreements or instruments relevant hereto has complied with any requirement of good faith, fair dealing and conscionability; and (j) that all parties to the transaction will act in accordance with, and will refrain from taking any action that is forbidden by, the terms and conditions of the agreements and instruments relevant hereto.

Based upon the foregoing and our examination of such questions of law as we have deemed necessary or appropriate for the purpose of our opinion, and subject to the assumptions, limitations and qualifications expressed herein, it is our opinion that:

1. The Non-Convertible Preferred Stock, when sold and delivered in accordance with the Agreement and after receipt of payment therefor, will be validly issued, fully paid and non-assessable.

2. The Convertible Preferred Stock, when sold and delivered in accordance with the Agreement and after receipt of payment therefor, will be validly issued, fully paid and non-assessable.

3. The Underlying Shares, when issued upon valid conversion of the Convertible Preferred Stock in accordance with the terms of the Agreement and the Series 11 Certificate of Designation, will be validly issued, fully paid, and non-assessable.

4. The Warrant Shares, when issued upon valid exercise of the Warrants in accordance the terms of the Agreement and the Warrants, and after receipt of payment therefor, will be validly issued, fully paid and non-assessable.

5. The Warrants have been duly authorized by all necessary corporate action on the part of the Company, executed and delivered by the Company and constitute legally valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting creditors’ rights generally, and by general principles of equity including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance or injunctive relief, regardless of whether considered in a proceeding in equity or at law.

Without limiting any other assumptions, limitations and qualifications set forth herein, the opinions expressed herein are subject to the following assumptions, limitations and qualifications:

a. We have assumed that (i) the Registration Statement, and any amendments thereto, will remain effective during the period when the Securities are offered, sold or issued, including upon the conversion of the Convertible Preferred Stock and exercise of the Warrants and (ii) the Warrants will be issued in the form we have reviewed and will have been signed by a duly authorized signatory.

b. We have assumed that the Warrants will be governed by the laws of the State of New York. Our opinions in paragraph 5, to the extent governed by the laws of the State of New York, are based exclusively on the assumption that New York law is identical to Washington State law. We advise you that we do not practice in New York or New York law, and that, accordingly, we provide no opinions as to the laws of the State of New York, except as expressly set forth herein subject to the foregoing assumption. We express no opinion as to laws other than the laws of the State of New York with respect to the opinions set forth in paragraph 5 above, subject to foregoing assumption, and the Washington Business Corporation Act with respect to the opinions set forth in paragraphs 1, 2, 3, 4 and 5 above, and we express no opinion with respect to the applicability thereto, or the effect thereon, of the laws of any other jurisdiction or, in the case of Washington, any other laws, or as to any matters of municipal law or the laws of any local agencies within any state.

c. As noted, the enforceability of the Warrants is subject to the effect of general principles of equity. As applied to the Warrants, these principles will require the parties thereto to not invoke penalties for defaults that bear no reasonable relation to the damage suffered or that would otherwise work a forfeiture.

d. The effectiveness of indemnities, rights of contribution, exculpatory provisions, choice of venue or jurisdiction provisions, waiver of jury trials, and waivers of the benefits of statutory provisions may be limited on public policy grounds.

e. Provisions of the Warrants requiring that waivers must be in writing may not be binding or enforceable if a non-executory oral agreement has been created modifying any such provision or an implied agreement by trade practice or course of conduct has given rise to a waiver.

f. We have assumed, for purposes of providing the opinion contained in paragraph 5, that each of the Agreement and other agreements and instruments relevant hereto, other than the Warrants, constitutes the legal, valid and binding obligation of the parties thereto, enforceable against each such party accordance with its terms.

g. This opinion letter is rendered as of the date first written above and we disclaim any obligation to advise you of facts, circumstances, events or developments which hereafter may be brought to our attention and which may alter, affect or modify the opinion expressed herein. Our opinion is expressly limited to the matters set forth above and we render no opinion, whether by implication or otherwise, as to any other matters relating to the Company, the Agreement, the Securities or the Registration Statement.

h. This opinion letter is based on the customary practice of lawyers who regularly give, and lawyers who regularly advise opinion recipients regarding, opinions of the kind involved, including customary practice as described in bar association reports.

We hereby consent to the filing of this opinion as an exhibit to the current report on Form 8-K to be filed with the Commission on the date hereof for incorporation by reference into the Registration Statement and to the reference to this firm under the heading “Legal Matters” in the Prospectus Supplement filed February 17, 2011, pertaining to this transaction. In giving such consent, we do not believe that we are “experts” within the meaning of such term as used in the Securities Act or the rules and regulations of the Commission issued thereunder with respect to any part of the Registration Statement, including this opinion as an exhibit or otherwise.

Very truly yours,

/s/ KARR TUTTLE CAMPBELL,

a professional service corporation

EX-10.1

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of February 17, 2011 (the “Effective Date”), between Cell Therapeutics, Inc., a Washington corporation (the “Company”), and [—] (including its permitted designees, successors and assigns, the “Purchaser”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to an effective registration statement filed pursuant to the Securities Act (as defined below), the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company, (i) shares of Series 10 Preferred Stock (as defined below), (ii) shares of Series 11 Preferred Stock (as defined below) upon exercise of the Additional Investment Right (as defined below), and (iii) Warrants (as defined below), in each case as more fully described in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows:

ARTICLE 1

DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings set forth in this Section 1.1:

“Additional Investment Right” means the right of the Purchaser to purchase up to 24,957 shares of Series 11 Preferred Stock (subject to adjustment as set forth in Section 2.4 of this Agreement) at a purchase price of $1,000 per share of Series 11 Preferred Stock, which right is exercisable commencing on the Effective Date and must be exercised in full on or before the thirtieth (30^th) day thereafter. Subject to the terms and conditions of this Agreement, the Additional Investment Right may be exercised by the Purchaser in whole or in part in one or more tranches during such period, at such times as may be determined by the Purchaser.

“Additional Investment Right Notice” means a notice issued under this Agreement to exercise the Additional Investment Right in order to purchase shares of Series 11 Preferred Stock, substantially in the form of Exhibit F-1 attached hereto.

“Additional Investment Right Note” means a recourse note fully secured with marketable securities, which note is issued by the Purchaser to the Company in order to exercise the Additional Investment Right, substantially in the form of Exhibit F-2 attached hereto.

1

“Adjustment Factor” has the meaning ascribed to such term in Section 2.4(b) of this Agreement.

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person. With respect to the Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as the Purchaser will be deemed to be an Affiliate of the Purchaser.

“Agreement” has the meaning ascribed to such term in the preamble to this Agreement.

“Articles of Incorporation” means the Company’s Amended and Restated Articles of Incorporation, as amended from time to time.

“Bloomberg” means Bloomberg Financial Markets, L.P.

“Business Day” means any day except Saturday, Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“Certificate of Designation – Series 10” means the Articles of Amendment to the Articles of Incorporation establishing the Series 10 Preferred Stock filed by the Company with the Secretary of State of the State of Washington on or prior to the Closing Date, substantially in the form of Exhibit A attached hereto.

“Certificate of Designation – Series 11” means the Articles of Amendment to the Articles of Incorporation establishing the Series 11 Preferred Stock filed by the Company with the Secretary of State of the State of Washington on or prior to the Effective Date, substantially in the form of Exhibit B attached hereto.

“Closing” means the closing of the purchase and sale of the Series 10 Preferred Stock on the Closing Date pursuant to Section 2.2 of this Agreement, and shall include any Closing as modified pursuant to Section 2.4 of this Agreement.

“Closing Bid Price” means, for any security as of any date, the last closing bid price for such security on the U.S. Market, as reported by Bloomberg on such date.

“Closing Date” means the tenth (10^th) Trading Day after the date hereof.

“Commission” means the U.S. Securities and Exchange Commission.

“Commitment Fee” means a fee equal to 5.0% of the aggregate cash proceeds actually received by the Company from the Purchaser for the purchase and sale of the Series 10 Preferred Stock at the Closing, payable by the Company to the Purchaser by deduction from such proceeds.

2

“Common Stock” means the common stock of the Company, no par value per share, and any other class of securities into which such securities may hereafter be reclassified or changed into.

“Company” has the meaning ascribed to such term in the preamble to this Agreement.

“Conversion Notice” means the Notice of Conversion, substantially in the form of Annex A attached to the Certificate of Designation – Series 11.

“Conversion Shares” means the shares of Common Stock issuable upon conversion of the Series 11 Preferred Stock.

“DTC” means The Depository Trust Company, or any successor performing substantially the same function for the Company.

“DWAC Shares” means, except as expressly stated otherwise in this Agreement, all shares of Common Stock issued or issuable to the Purchaser, any Affiliate of the Purchaser, or any permitted successor or assign of the Purchaser pursuant to any of the Transaction Documents, including, without limitation, any Warrant Shares and any Conversion Shares, all of which shall be (a) issued in electronic form, (b) freely tradable and without restriction on resale, and (c) timely credited by the Company to the specified Deposit/Withdrawal at Custodian (DWAC) account with DTC under its Fast Automated Securities Transfer (FAST) Program or any similar program hereafter adopted by DTC performing substantially the same function, which DWAC account shall be specified in writing by the Purchaser to the Company on the Effective Date. In the event that the Purchaser changes the DWAC account, it shall provide at least one (1) Trading Day’s notice in advance of the required delivery date.

“Early Termination Date” has the meaning ascribed to such term in Section 2.4 of this Agreement.

“Effective Date” has the meaning ascribed to such term in the preamble to this Agreement.

“Escrow Account” means the escrow account established pursuant to the terms of the Escrow Agreement.

“Escrow Agent” means JPMorgan Chase Bank, National Association.

“Escrow Agreement” means the Escrow Agreement to be entered into on the Trading Day immediately following the Effective Date, by and among the Company, the Purchaser and the Escrow Agent, substantially in the form of Exhibit G attached hereto.

“Escrow Amount” means cash or immediately available funds in amounts equal to the aggregate purchase price for the number of shares of Series 10 Preferred Stock equal to the Adjustment Factor (as defined in Section 2.4(b) of this Agreement) multiplied by 24,957, to be deposited by the Purchaser into the Escrow Account to be

3

retained and released by the Escrow Agent solely in accordance with the terms of the Escrow Agreement; provided, however, that the Escrow Amount shall in no event be greater than $12,478,500.

“Evaluation Date” has the meaning ascribed to such term in Section 3.1(r) of this Agreement.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Form 8-K” has the meaning ascribed to such term in Section 4.5 of this Agreement.

“Form S-3” means a registration statement on Form S-3.

“GAAP” means United States generally accepted accounting principles applied on a consistent basis during the periods involved.

“Indebtedness” means (a) any liabilities for borrowed money or amounts owed in excess of $500,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of Indebtedness of others, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, and (c) the present value of any lease payments in excess of $500,000 due under leases required to be capitalized in accordance with GAAP.

“Intellectual Property Rights” has the meaning ascribed to such term in Section 3.1(o) of this Agreement.

“Investment Company Act” means the Investment Company Act of 1940, as amended.

“Italian Market” means the Borsa Italiana S.p.A. (MTA International) trading market for the Common Stock.

“Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction (other than, in the case of the Securities and the Additional Investment Right, restrictions provided in the Transaction Documents or as otherwise agreed or imposed by the Purchaser).

“Material Adverse Effect” means any material adverse effect on (a) the enforceability of any Transaction Document, (b) the results of operations, assets, business or financial condition of the Company and its Subsidiaries, taken as a whole, or (c) the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document to be performed as of the date of determination, other than any such change, effect, event or circumstance that resulted exclusively from (i) any change in the United States or foreign economies or securities or financial markets in

4

general that does not have a disproportionate effect on the Company and its Subsidiaries, (ii) any change that generally affects the industry in which the Company and its Subsidiaries operate that does not have a disproportionate effect on the Company and its Subsidiaries, taken as a whole, (iii) any change arising in connection with earthquakes, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material worsening of any such hostilities, acts of war, sabotage or terrorism or military actions existing as of the date hereof, (iv) any action taken by the Purchaser, its Affiliates or its or their successors and assigns with respect to the transactions contemplated by this Agreement, (v) the effect of any changes in applicable laws or accounting rules that does not have a disproportionate effect on the Company and its Subsidiaries, taken as a whole, or (vi) any change resulting from compliance with terms of this Agreement or the consummation of the transactions contemplated by this Agreement.

“Material Agreement” has the meaning ascribed to such term in Section 2.3(c)(vii).

“Material Permits” has the meaning ascribed to such term in Section 3.1(m) of this Agreement.

“Maximum Percentage” has the meaning ascribed to such term in Section 3.2(g) of this Agreement.

“Mintz Levin” means Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel to the Purchaser.

“Officer’s Certificate” means a certificate executed by a duly appointed officer of the Company, substantially in the form of Exhibit E-1 attached hereto.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Press Release” has the meaning ascribed to such term in Section 4.5 of this Agreement.

“Prior Agreement” means the Securities Purchase Agreement dated as of January 12, 2011, by and between the Purchaser and the Company.

“Prospectus” means the final prospectus filed for the Registration Statement, including the documents incorporated by reference in the Registration Statement, and the documents incorporated by reference in such final prospectus.

“Prospectus Supplement” means the supplement to the Prospectus complying with Rule 424(b) of the Securities Act that is filed with the Commission and delivered by the Company to the Purchaser prior to the execution and delivery of this Agreement, including the documents incorporated by reference therein.

5

“Purchaser” has the meaning ascribed to such term in the preamble to this Agreement.

“Purchaser Party” has the meaning ascribed to such term in Section 4.8 of this Agreement.

“Registration Statement” means the registration statement on Form S-3 (Commission File No. 333-161442) filed by the Company with the Commission pursuant to the Securities Act for the registration of the Securities, as such Registration Statement may be amended and supplemented from time to time (including pursuant to Rule 462(b) of the Securities Act), including all documents filed as part thereof or incorporated by reference therein, and including all information deemed to be a part thereof at the time of effectiveness pursuant to Rule 430B of the Securities Act.

“Required Approvals” has the meaning ascribed to such term in Section 3.1(e) of this Agreement.

“Required Consents” means the consent of each of (a) the holders of Series 8 Preferred Stock to the filing of the Certificate of Designation – Series 10 and the Certificate of Designation – Series 11, and (b) the Purchaser to this Agreement and the transactions contemplated hereby, as required pursuant to Section 4.13 of the Prior Agreement, which consents have been made and obtained on or prior to the Effective Date.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“SEC Reports” means all reports, schedules, forms, statements and other documents required to be filed by the Company pursuant to the Securities Act and the Exchange Act, including, without limitation, pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material), including the exhibits thereto and documents incorporated by reference therein, together with the Prospectus and the Prospectus Supplement; provided, however, that “SEC Reports” shall not include any registration statements, prospectuses or prospectus supplements filed by the Company pursuant to the Securities Act that are unrelated to the transactions contemplated by this Agreement.

“Secretary’s Certificate” means a certificate executed by the duly appointed Secretary of the Company, substantially in the form of Exhibit E-2 attached hereto.

“Securities” means the Series 10 Preferred Stock, the Series 11 Preferred Stock, the Warrants, the Warrant Shares and the Conversion Shares.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

6

“Series 8 Preferred Stock” means the Series 8 Preferred Stock of the Company, no par value per share.

“Series 10 Preferred Stock” means up to 40,000 shares of Series 10 Preferred Stock issued hereunder and having the rights, preferences and privileges set forth in the Certificate of Designation – Series 10.

“Series 11 Preferred Stock” means up to 24,957 shares of Series 11 Preferred Stock to be issued upon exercise of the Additional Investment Right and having the rights, preferences and privileges set forth in the Certificate of Designation – Series 11.

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO of the Exchange Act (but shall be deemed to not include the location and/or reservation of borrowable shares of Common Stock).

“Solvent” means, with respect to any Person, that as of the date of determination both (a)(i) the then fair value and fair saleable value of the property of such Person is (A) greater than the total amount of debts and liabilities (including unliquidated liabilities, unmatured liabilities, contingent liabilities and liabilities that would not be required to be reported under GAAP) of such Person and (B) not less than the amount that will be required to pay the probable liabilities on such Person’s then existing debts and liabilities (including unliquidated liabilities, unmatured liabilities, contingent liabilities and liabilities that would not be required to be reported under GAAP) as they become absolute and due considering all financing alternatives and potential asset sales reasonably available to such Person, (ii) such Person’s capital is not unreasonably small in relation to its business or any contemplated or undertaken transaction and (iii) such Person does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due, and (b) such Person is “solvent” within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

“Subsidiary” means any Person the Company wholly-owns or controls, or in which the Company, directly or indirectly, owns a majority of the voting stock or similar voting interest, in each case that would be disclosable pursuant to Regulation S-K, Item 601(b)(21).

“Trading Day” means a day on which the Common Stock is traded on the U.S. Market for a full trading day and the Italian Market for a full trading day.

“Trading Markets” means the Italian Market and the U.S. Market.

“Transaction Documents” means this Agreement, the Escrow Agreement, the Certificate of Designation – Series 10, the Certificate of Designation – Series 11, the Warrants and the exhibits and schedules hereto and thereto.

7

“Transfer Agent” means Computershare Investor Services or any successor transfer agent for the Common Stock.

“U.S. Market” means the NYSE Amex, The NASDAQ Capital Market, The NASDAQ Global Market, The NASDAQ Global Select Market, the New York Stock Exchange or the OTC Bulletin Board, whichever is at the time the principal U.S. trading system, exchange or market for the Common Stock, but does not include the Pink Sheets inter-dealer electronic quotation and trading system.

“Washington Counsel” means Karr Tuttle Campbell.

“Warrants” means the Common Stock purchase warrants delivered to the Purchaser on the Effective Date, giving the holder thereof the right to purchase up to 25,919,733 shares of Common Stock (subject to adjustment as set forth in Section 2.4 of this Agreement) at an exercise price per share equal to $0.337 (subject to adjustment as set forth therein), and with an exercise period commencing on the Effective Date and terminating two (2) years thereafter, substantially in the form of Exhibit C attached hereto.

“Warrant Note” has the meaning ascribed to such term in Section 2.5(a) of this Agreement.

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.

ARTICLE 2

PURCHASE AND SALE

2.1 Purchase and Sale of Securities and Additional Investment Right; Escrow.

(a) Purchase and Sale of Securities and Additional Investment Right. Upon the terms and subject to the conditions set forth in this Agreement, the Company shall issue and sell to the Purchaser, and the Purchaser shall purchase from the Company, for the consideration set forth in Section 2.2 of this Agreement (subject to adjustment pursuant to Section 2.4 of this Agreement):

(i) $24,957,000 of Series 10 Preferred Stock at a purchase price of $1,000 per share of Series 10 Preferred Stock; and

(ii) the Warrants, which may be exercised by the Purchaser commencing on the Effective Date; provided, however, that the Warrants must be exercised simultaneously with the exercise by the Purchaser of the Additional Investment Right such that the percentage of the Warrants that have been exercised will always equal or exceed the percentage of the Additional Investment Right that has been exercised.

In addition, upon the terms and subject to the conditions set forth in this Agreement, the Purchaser shall receive the Additional Investment Right on the Effective Date, which may be exercised by the Purchaser commencing on the Effective Date and must be

8

exercised in full on or before the thirtieth (30^th) day thereafter. Subject to the terms and conditions of this Agreement, the Additional Investment Right may be exercised by the Purchaser in whole or in part in one or more tranches during such period, at such times as may be determined by the Purchaser.

(b) Escrow.

(i) The parties agree to enter into the Escrow Agreement on the Trading Day immediately following the Effective Date.

(ii) No later than 10:00 a.m., San Francisco time, on each date that the Purchaser exercises the Warrants and/or the Additional Investment Right, the Purchaser shall deliver the Escrow Amount (without demand, deduction, offset or delay and without duplication of amounts previously paid into the Escrow Account), by wire transfer of immediately available funds, to the Escrow Agent, for deposit into the Escrow Account. The Escrow Amount shall be available to satisfy amounts owing to the Company pursuant to Section 2.2 of this Agreement. Any disputes relating to the distribution of the Escrow Amount shall be subject to the terms set forth in the Escrow Agreement

2.2 Closing. At the Closing, upon the terms and subject to the conditions set forth in this Agreement, the Company shall issue and sell to the Purchaser, and the Purchaser shall purchase from the Company, $24,957,000 of Series 10 Preferred Stock at a purchase price of $1,000 per share of Series 10 Preferred Stock. The aggregate number of shares of Series 10 Preferred Stock sold hereunder shall be 24,957, subject to adjustment as set forth in Section 2.4 of this Agreement (and in the case of such an adjustment, the aggregate purchase price shall be adjusted proportionately). Upon the terms and subject to the conditions of this Agreement (and, as applicable, the Escrow Agreement), (a) the Purchaser shall deliver to the Company, via wire transfer of immediately available funds, $24,957,000 less (i) the Escrow Amount and (ii) the Commitment Fee, (b) the Escrow Agent shall release the Escrow Amount from the Escrow Account and deliver the Escrow Amount to the Company via wire transfer of immediately available funds, and (c) the Company shall deliver to the Purchaser the shares of Series 10 Preferred Stock and the other items set forth in Section 2.3 of this Agreement deliverable at the Closing on the Closing Date, in each case subject to adjustment pursuant to Section 2.4 of this Agreement. The Closing shall occur at 7:00 a.m., San Francisco time, at the offices of O’Melveny & Myers, LLP, Two Embarcadero Center, 28th Floor, San Francisco, California or such other time and location as the parties shall mutually agree; provided, however, that if, through no fault of the Purchaser or its Affiliates, either (i) any Warrant Shares are not timely delivered in accordance with Section 2(f)(ii) of the Warrants, with respect to any portion of the Warrants properly exercised at least three (3) Trading Days before the initial Closing Date, or (ii) any Conversion Shares are not timely delivered in accordance with Section 6(e)(i) of the Certificate of Designations – Series 11, with respect to any shares of Series 11 Preferred Stock properly converted at least three (3) Trading Days before the initial Closing Date, then the Closing Date shall be extended one (1) Trading Day for each Trading Day that such delivery is not made; provided, further, however, that if any Warrant Shares or Conversion Shares required to be delivered prior to the initial Closing Date are not DWAC Shares upon delivery through no fault of the Purchaser (e.g., fault of the Purchaser would include failing to provide the Company

9

with its DWAC account), then such Warrant Shares or Conversion Shares shall be deemed not timely delivered for the purposes of the immediately preceding proviso.

2.3 Deliveries at Closing; Conditions to Closing.

(a) At or prior to the Closing, the Company shall deliver or cause to be delivered to the Purchaser the following documents:

(i) a certificate evidencing 24,957 shares of Series 10 Preferred Stock registered in the name of the Purchaser (subject to adjustment as set forth in Section 2.4 of this Agreement);

(ii) the Officer’s Certificate;

(iii) the Secretary’s Certificate; and

(iv) a legal opinion of Washington Counsel, substantially in the form of Exhibit D attached hereto.

(b) At the Closing, the Purchaser shall deliver or cause to be delivered to the Company $24,957,000 less (i) the Escrow Amount and (ii) the Commitment Fee, via wire transfer of immediately available funds to the account as specified in writing by the Company, subject to adjustment pursuant to Section 2.4 of this Agreement.

(c) At the Closing, the Escrow Agent shall deliver to the Company the Escrow Amount via wire transfer of immediately available funds to the account as specified in the Escrow Agreement.

(d) The respective obligations of the Company, on the one hand, and the Purchaser, on the other hand, hereunder in connection with the Closing are subject to the following conditions being met at or prior to the Closing Date:

(i) the accuracy in all material respects on the Closing Date (unless made as of a specified date therein) of the representations and warranties contained herein of the Company (with respect to the obligations of the Purchaser) and the Purchaser (with respect to the obligations of the Company);

(ii) all obligations, covenants and agreements of the Company (with respect to the obligations of the Purchaser) and the Purchaser (with respect to the obligations of the Company) required to be performed at or prior to the Closing Date shall have been performed in all material respects;

(iii) to the extent that (A) the Additional Investment Right (or any portion thereof) has been properly exercised at least three (3) Trading Days prior to the initial Closing Date, all shares of Series 11 Preferred Stock required to be delivered pursuant to the exercise of the Additional Investment Right shall have been timely delivered in accordance with the terms of the Additional Investment Right on or prior to the Closing Date, (B) the Warrants have been properly exercised at least three (3) Trading Days prior to the initial Closing Date, all

10

Warrant Shares required to be delivered pursuant to the exercise of the Warrants shall have been timely delivered in accordance with the terms of the Warrants on or prior to the Closing Date, and (C) the shares of Series 11 Preferred Stock have been properly converted at least three (3) Trading Days prior to the initial Closing Date, all Conversion Shares required to be delivered upon the conversion of the shares of Series 11 Preferred Stock shall have been timely delivered in accordance with the terms of the Certificate of Designation – Series 11;

(iv) to the extent that the Warrants have been properly exercised (or deemed to have been exercised) and the Additional Investment Right (or any portion thereof) has been properly exercised (or deemed to have been exercised), the Company shall have received the full consideration therefor;

(v) all delivered or deliverable Warrant Shares and all delivered or deliverable Conversion Shares are DWAC Shares and are DTC eligible;

(vi) there shall have been no Material Adverse Effect with respect to the Company and its Subsidiaries, taken as a whole, since the date hereof;

(vii) from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended on The NASDAQ Capital Market and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, on the U.S. Market;

(viii) the Company is not, and will not be as a result of the Closing, in default of any Transaction Document or other agreement filed as an exhibit to the SEC Reports (the “Material Agreements”), which default has a Material Adverse Effect;

(ix) the Company has a current, valid and effective Registration Statement permitting the sale and/or resale (as the case may be) of all Securities that are issuable pursuant to this Agreement (including, without limitation, all Warrant Shares issuable upon exercise of the Warrants and all Conversion Shares issuable upon conversion of the Series 11 Preferred Stock); and

(x) the Company has a sufficient number of duly authorized shares of Common Stock reserved for issuance upon exercise of the Warrant and conversion of the Series 11 Preferred Stock.

2.4 Limitation on Purchase and Sale. Notwithstanding any other provision of this Agreement to the contrary, in the event that the Closing Bid Price of the Common Stock during any one or more of the nine (9) Trading Days following the Effective Date is below seventy-five percent (75.0%) of the Closing Bid Price of the Common Stock on the Effective Date (such date, the “Early Termination Date”), then the Closing shall be cancelled or modified as set forth below:

(a) in the event that none of the Warrants and the Additional Investment Right have been exercised on or prior to the Early Termination Date, then the Closing shall not occur

11

and the Warrants and the Additional Investment Right shall be automatically cancelled in their entirety on the Early Termination Date without any further action by either party;

(b) in the event that all or any portion of the Warrants and/or the Additional Investment Right have been exercised prior to the Early Termination Date, then (i) the total number of shares of Series 10 Preferred Stock to be issued and sold by the Company, and purchased by the Purchaser, on the Closing Date, and the total number of shares of Series 11 Preferred Stock to be issued and sold by the Company, and purchased by the Purchaser, upon exercise by the Purchaser of the Additional Investment Right (which total number shall include such shares of Series 11 Preferred Stock issued and sold by the Company to the Purchaser pursuant to the exercise of the Additional Investment Right on or prior to the Early Termination Date) shall be adjusted in each case to equal the product obtained by multiplying 24,957 by the greater of (A) the percentage of the Warrants so exercised and (B) the percentage of the Additional Investment Right so exercised (such greater percentage, the “Adjustment Factor”), and (ii) the total number of Warrant Shares to be purchased by the Purchaser upon exercise of the Warrants shall be adjusted to equal the product obtained by multiplying 25,919,733 by the Adjustment Factor (which total number shall include such Warrant Shares issued and sold by the Company to the Purchaser pursuant to the exercise of the Warrants on or prior to the Early Termination Date). For example, if the Purchaser exercises 30% of the Warrants and 25% of the Additional Investment Right prior to the Early Termination Date, then the Adjustment Factor shall be 30%, the total number of shares of Series 10 Preferred Stock to be issued and sold by the Company, and purchased by the Purchaser, on the Closing Date, shall be adjusted to 7,487 shares of Series 10 Preferred Stock (24,957 x .30), the total number of shares of Series 11 Preferred Stock to be issued and sold by the Company, and purchased by the Purchaser, upon exercise by the Purchaser of the Additional Investment Right, shall be adjusted to 7,487 shares of Series 11 Preferred Stock (24,957 x .30) (of which only 1,248 shares of Series 11 Preferred Stock shall remain subject to the Additional Investment Right on or after the Early Termination Date), and the total number of Warrants Shares to be purchased by the Purchaser upon exercise of the Warrants shall be adjusted to 7,775,920 (25,919,733 x .30). In the event of any adjustment as described in the first sentence of this clause (b), the Company shall elect to either (i) (A) sell to the Purchaser, and the Purchaser shall be required to purchase, the adjusted number of shares of Series 10 Preferred Stock at the Closing on the Closing Date, require the Purchaser to purchase, and the Purchaser shall be required to purchase, the adjusted number of shares of Series 11 Preferred Stock pursuant to the Additional Investment Right (which adjusted number shall include such shares of Series 11 Preferred Stock issued and sold by the Company to the Purchaser pursuant to the exercise of the Additional Investment Right on or prior to the Early Termination Date), and require the Purchaser to purchase, and the Purchaser shall be required to purchase, the adjusted number of Warrant Shares upon exercise of the Warrants (which adjusted number shall include such Warrant Shares issued and sold by the Company to the Purchaser pursuant to the exercise of the Warrants on or prior to the Early Termination Date), in each case irrespective of whether the conditions set forth in Section 2.3(d) have been satisfied, in which case the balance of the unexercised Warrants in excess of the adjusted number of Warrant Shares required to be purchased by the Purchaser and the balance of the unexercised Additional Investment Right in excess of the adjusted number of shares of Series 11 Preferred Stock required to be purchased by the Purchaser shall be cancelled on the Early Termination Date without any further action by either party, or (ii) (A) hold the consideration delivered upon exercise of the Warrants and/or the Additional Investment Right, as the case may be, and

12

(B) otherwise cancel the Closing, in which case the balance of the unexercised Warrants in excess of the adjusted number of Warrant Shares required to be purchased by the Purchaser and the balance of the unexercised Additional Investment Right in excess of the adjusted number of shares of Series 11 Preferred Stock required to be purchased by the Purchaser shall be cancelled on the Early Termination Date without any further action by either party; and

(c) if the Closing is modified in accordance with Section 2.4(b) above, as consideration for the shares of Series 10 Preferred Stock delivered in accordance with Section 2.4(b) above, (i) the Purchaser shall deliver to the Company, via wire transfer of immediately available funds, an amount equal to the Adjustment Factor multiplied by $24,957,000, less the sum of (A) the Escrow Amount and (B) the Commitment Fee, and (ii) the Escrow Agent shall release the Escrow Amount from the Escrow Account and deliver the Escrow Amount to the Company via wire transfer of immediately available funds.

2.5 Exercise of Warrants and Additional Investment Right.

(a) The Purchaser shall exercise the Warrants by delivering to the Company an executed Warrant Exercise Notice, substantially in the form attached to the Warrants as Appendix 1, and shall pay the full exercise price for the Warrant Shares (i) in cash, or (ii) provided that the Purchaser is Solvent on the applicable exercise date, through the issuance by the Purchaser to the Company of a recourse note fully secured with marketable securities, substantially in the form attached to the Warrants as Appendix 2 (the “Warrant Note”), which shall mature in four (4) years so long as all of the shares of Series 10 Preferred Stock have been redeemed, and shall accrue interest annually at 2.0%; provided, however, that the maturity of the Warrant Note is subject to acceleration upon the occurrence of a “default” (as defined in the Warrant Note) by the Borrower (as defined in the Warrant Note) under the Warrant Note; provided, further, however, that the Warrant Note shall become due and payable immediately in the event that the Purchaser defaults on its obligations to purchase shares of Series 10 Preferred Stock at the Closing and/or to exercise the Warrants or the Additional Investment Right in full in accordance with the terms of this Agreement.

(b) The Purchaser shall exercise the Additional Investment Right by delivering to the Company an executed Additional Investment Right Notice and shall pay the full exercise price for the shares of Series 11 Preferred Stock (i) in cash, or (ii) provided that the Purchaser is Solvent on the applicable exercise date, through the issuance of an Additional Investment Right Note, which shall mature in four (4) years so long as all of the shares of Series 10 Preferred Stock have been redeemed, and shall accrue interest annually at 2.0%; provided, however, that the maturity of the Additional Investment Right Note is subject to acceleration upon the occurrence of a “default” (as defined in the Additional Investment Right Note) by the Borrower (as defined in the Additional Investment Right Note) under the Additional Investment Right Note; provided, further, however, that the Additional Investment Right Note shall become due and payable immediately in the event that the Purchaser defaults on its obligation to exercise the Warrants or the Additional Investment Right in full in accordance with the terms of this Agreement.

13

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. Except as set forth in the SEC Reports as set forth below, which shall qualify any representation or warranty otherwise made herein to the extent of such disclosure, the Company hereby represents and warrants to the Purchaser as of the Effective Date and as of the Closing Date:

(a) Subsidiaries. All of the direct and indirect Subsidiaries of the Company are set forth in the Company’s most recently filed Annual Report on Form 10-K. The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary, and all of such directly or indirectly owned capital stock or other equity interests are owned free and clear of any Liens, except for such Liens as would not reasonably be expected to result in a Material Adverse Effect. All of the issued and outstanding shares of capital stock of each Subsidiary are duly authorized, validly issued, fully-paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities of the Company.

(b) Organization and Qualification. Each of the Company and each Subsidiary is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, as applicable, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and each Subsidiary is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not reasonably be expected to result in a Material Adverse Effect and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification except where the revocation, limitation or curtailment would not reasonably be expected to result in a Material Adverse Effect.

(c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder or thereunder. The execution and delivery of each of the Transaction Documents by the Company to which it is a party and the consummation by it of the transactions contemplated hereby or thereby have been duly authorized by all necessary corporate action on the part of the Company and no further corporate consent or action is required to be obtained by the Company. Each of the Transaction Documents to which it is a party has been, or upon delivery will be, duly executed by the Company and, when delivered in accordance with their terms, will constitute the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of

14

specific performance, injunctive relief or other equitable remedies, and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(d) No Conflicts. The execution, delivery and performance of the Transaction Documents to which it is a party by the Company, the issuance and sale of the Securities and the consummation by the Company of the other transactions contemplated thereby do not and will not (i) after giving effect to the Required Consents, conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, articles of association, bylaws, or other organizational or charter documents, or (ii) after giving effect to the Required Consents, conflict with, violate the terms of, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as would not reasonably be expected to result in a Material Adverse Effect.

(e) Filings, Consents and Approvals. Except as disclosed in the SEC Reports and except where the failure to obtain any such consent, waiver, authorization or order, give any such notice or make any such filing or registration would not reasonably be expected to result in a Material Adverse Effect, neither the Company nor any Subsidiary is required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than the filing of the Certificate of Designation – Series 10 and the Certificate of Designation – Series 11, required federal and state securities filings and such filings and approvals as are required to be made or obtained under the rules of the applicable Trading Markets in connection with the transactions contemplated hereby (collectively, the “Required Approvals”), each of which has been, or (if not yet required to be filed) shall be, timely filed.

(f) Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens created by the Company.

(g) Capitalization. The capitalization of the Company is as described in the Company’s most recently filed periodic SEC Report on Form 10-K, except for issuances pursuant to the Prior Agreement, this Agreement, stock option exercises, issuances pursuant to equity incentive plans, conversions of outstanding notes or exercises of warrants. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except for various outstanding series of convertible debt, options and warrants described in the SEC Reports and

15

except as contemplated by this Agreement, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or securities convertible into or exercisable for shares of Common Stock. The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than pursuant to the Transaction Documents) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange, or reset price under such securities or the number of shares of Common Stock or other securities issuable upon the exercise, conversion or exchange of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities that was not waived. Other than the Required Consents, no further approval or authorization of any shareholder or the Board of Directors of the Company is required for the issuance and sale of the Securities. Except as disclosed in the SEC Reports and except as contemplated by the Prior Agreement and this Agreement, there are no shareholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s shareholders.

(h) SEC Reports; Financial Statements. The Company has filed all required SEC Reports for the two years preceding the date hereof (or such shorter period as the Company was required by law to file such SEC Reports) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports, together with the related notes and schedules thereto, comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements, together with the related notes and schedules, have been prepared in accordance with GAAP, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

(i) Material Changes. Except as disclosed in the SEC Reports and except as contemplated by this Agreement, since the date of the latest audited financial statements included within the SEC Reports, (i) there has been no event, occurrence or development that has had, or that could reasonably be expected to result in, a Material Adverse Effect, (ii) the Company has

16

not incurred any material liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice, and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company equity incentive and incentive compensation plans.

(j) Litigation. Except as disclosed in the SEC Reports, there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign), which (i) challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities, or (ii) would, if there were an unfavorable decision, reasonably be expected to result in a Material Adverse Effect. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

(k) Labor Relations. Except as disclosed in the SEC Reports, no material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect.

(l) Compliance. Except as disclosed in the SEC Reports, neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other similar agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business, except in each case as would not reasonably be expected to have a Material Adverse Effect.

(m) Regulatory Permits. Except as disclosed in the SEC Reports, the Company and each Subsidiary possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.

17

(n) Title to Assets. The Company and each Subsidiary have good and marketable title in fee simple to all real property owned by them that is material to the business of the Company and each Subsidiary and good and marketable title in all personal property owned by them that is material to the business of the Company and each Subsidiary, in each case free and clear of all Liens, except for Liens that do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and each Subsidiary and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties or for taxes that are being contested in good faith and by appropriate proceedings, and except for Liens which would not reasonably be expected to result in a Material Adverse Effect. Any real property and facilities held under lease by the Company and each Subsidiary are held by them under valid, subsisting and enforceable leases of which the Company and each Subsidiary are in compliance.

(o) Patents and Trademarks. The Company and each Subsidiary have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar intellectual property rights currently employed by them in connection with the business currently operated by them that are necessary for use in the conduct of their respective businesses as described in the SEC Reports and which the failure to so have would not reasonably be expected to have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). Neither the Company nor any Subsidiary has received a written notice that the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person, except for such as would not reasonably be expected to have a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights of the Company or any Subsidiary.

(p) Insurance. The Company and each Subsidiary are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and each Subsidiary are engaged, including but not limited to directors and officers insurance coverage. To the Company’s knowledge, such insurance contracts and policies are accurate and complete. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost, except for such renewals or failures to obtain similar coverage from similar insurers as would not reasonably be expected to have a Material Adverse Effect.

(q) Transactions with Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors) that is required to be disclosed and is not disclosed, including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting fees for services

18

rendered, (ii) reimbursement for expenses incurred on behalf of the Company, and (iii) other employee benefits, including restricted stock programs and stock option agreements under any equity incentive plan of the Company.

(r) Sarbanes-Oxley; Internal Accounting Controls. The Company is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002, which are applicable to it as of the date hereof. The Company and each Subsidiary maintain a system of “internal control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that comply with the requirements of the Exchange Act and are sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as disclosed in each of the SEC Reports, the Company is not aware of any material weakness or significant deficiency in the Company’s or any Subsidiary’s internal controls. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company, including its Subsidiaries, is made known to the certifying officers by others within those entities, particularly during the period in which the Company’s most recently filed periodic report under the Exchange Act, as the case may be, is being prepared. The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date.

(s) Certain Fees. Except as contemplated by this Agreement, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement or the other Transaction Documents. The Purchaser shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section 3.1(s) that may be due in connection with the transactions contemplated by this Agreement or the other Transaction Documents.

(t) Investment Company. The Company is not, and immediately after receipt of payment for the Securities, will not be, an “investment company” within the meaning of the Investment Company Act.

(u) Registration Rights. Except as disclosed in the SEC Reports, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company, which rights will interfere with the transactions contemplated hereunder.

19

(v) Listing and Maintenance Requirements. Except as disclosed in the SEC Reports, the Common Stock is registered pursuant to Section 12 of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. The Common Stock is listed for and currently trading or quoted on The Nasdaq Capital Market and the Italian Market. Except as disclosed in the SEC Reports, the Company has not, in the twelve (12) months preceding the date hereof, received notice from The Nasdaq Capital Market or the Italian Market to the effect that the Company is not in compliance with the listing or maintenance requirements of such market. Except as disclosed in the SEC Reports, the Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all applicable listing and maintenance requirements.

(w) Disclosure; Non-Public Information. Except with respect to the information regarding the transactions contemplated by this Agreement, the Transaction Documents, and the exhibits, appendices and schedules hereto and thereto, that will be, and to the extent that it actually is, timely publicly disclosed by the Company, and notwithstanding any other provision in this Agreement or the other Transaction Documents, neither the Company nor any other Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that it believes constitutes or might constitute material, non-public information unless prior thereto the Purchaser shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that the Purchaser will rely on the foregoing representation in effecting transactions in securities of the Company. All disclosure provided to the Purchaser regarding the Company, its business and the transactions contemplated hereby, furnished by or on behalf of the Company and at its direction with respect to the representations and warranties made herein are true and correct in all material respects and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

(x) No Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2 of this Agreement, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company in a manner that would required shareholder approval pursuant to the rules of the Trading Markets on which any of the securities of the Company are listed or designated. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Markets.

(y) Tax Status. Except as disclosed in the SEC Reports, the Company and each of its Subsidiaries has made or filed (or requested valid extensions thereof) all material federal, state and foreign income and all other material tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such

20

returns, reports and declarations, except those being contested in good faith. Neither the Company nor any Subsidiary has executed a waiver with respect to the statute of limitations relating to the assessment or collection of any foreign, federal, statue or local tax.

(z) Foreign Corrupt Practices. Neither the Company or any Subsidiary, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company or any Subsidiary and at its direction, has (i) directly or indirectly, used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

(aa) Acknowledgment Regarding the Purchaser’s Purchase of Securities. The Company acknowledges and agrees that the Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that the Purchaser is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any statement made by the Purchaser or any of its representatives or agents in connection with this Agreement and the transactions contemplated hereby is not advice or a recommendation and is merely incidental to the Purchaser’s purchase of the Securities. The Company further represents to the Purchaser that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation of the Company and its representatives.

(bb) Accountants. The Company’s accountants are set forth in the SEC Reports and, to the knowledge of the Company, such accountants are an independent registered public accounting firm as required by the Securities Act.

(cc) Registration Statements and Prospectuses.

(i) The Company has not, directly or indirectly, used or referred to any “free writing prospectus” (as defined in Rule 405 under the Securities Act) except in compliance with Rules 164 and 433 under the Securities Act.

(ii) The Company is not an “ineligible issuer” (as defined in Rule 405 under the Securities Act) as of the eligibility determination date for purposes of Rules 164 and 433 under the Securities Act with respect to the offering of the Securities contemplated by any Registration Statement filed or to be filed, without taking into account any determination by the Commission pursuant to Rule 405 under the Securities Act that it is not necessary under the circumstances that the Company be considered an “ineligible issuer.”

3.2 Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants to the Company as of the date hereof and as of the Closing Date:

21

(a) Organization; Authority. The Purchaser is an entity duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, company power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents, the Warrant Note and the Additional Investment Right Note and otherwise to carry out its obligations thereunder. The execution and delivery of this Agreement and performance by the Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary company or similar action on the part of the Purchaser. Each Transaction Document, Warrant Note and Additional Investment Right Note to which it is a party has been (or will be) duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies, and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(b) No Intent to Take Over. The Purchaser has no present actual intent to seek to effect, or to assist others in effecting, a hostile acquisition of the Company.

(c) Purchaser Status. At the time the Purchaser was offered the Securities, it was, as of the date hereof, it is, and on the Closing Date, it will be, an “accredited investor” as defined in Rule 501(a) under the Securities Act, and is not an entity formed for the sole purpose of acquiring the Securities. The Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.

(d) Experience of the Purchaser. The Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. The Purchaser has had access to such information as it deemed necessary in order to conduct any due diligence it has determined it wants to do in connection with the purchase and sale of the Securities and its decision to participate in such purchase and sale. The Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment. The Purchaser understands that nothing in this Agreement or any other materials presented to the Purchaser in connection with the purchase and sale of the Securities constitutes legal, tax or investment advice, and the Purchaser acknowledges that it must rely on legal, tax and investment advisors of its own choosing in connection with its purchase of the Securities.

(e) Short Sales and Confidentiality. Other than consummating the transactions contemplated hereunder, the Purchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with the Purchaser, executed any purchases or sales, including Short Sales, of the securities or derivatives of the Company during the period commencing as of the time that the Purchaser first learned of the specific purchase and sale transaction being effected pursuant to this Agreement and ending immediately prior to the execution and delivery hereof. Other than to other Persons party to this Agreement and to its

22

counsel, the Purchaser has maintained the confidentiality of all disclosures made to it in connection with the transaction expressly contemplated by this Agreement (including the existence and terms of this transaction).

(f) No Government Review. The Purchaser understands that no U.S. federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Securities to be purchased hereunder.

(g) Beneficial Ownership. Immediately prior to executing this Agreement, the Purchaser, together with its Affiliates, does not beneficially own any shares of Common Stock or other voting securities of the Company. Immediately following the Purchaser’s purchase of the Securities hereunder, the Purchaser, together with its Affiliates, will not beneficially own or be deemed the beneficial owner of more than 9.99% of all of such Common Stock and other voting securities of the Company as would be outstanding on the date of conversion of the shares of Series 11 Preferred Stock and/or the exercise of the Warrants (the “Maximum Percentage”). For the purposes of this clause (g), beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.

(h) Compliance with Italian Laws. The Purchaser acknowledges its obligation to comply with all Italian laws and regulations applicable to the transactions contemplated hereby, including without limitation the requirement to notify the Company and Commissione Nazionale per le Societa e la Borsa (i.e., “CONSOB”) within five (5) Trading Days in the event its shareholdings exceed each of two percent (2.0%) and five percent (5.0%) of the Company’s share capital (as well as reductions below such thresholds).

The Company acknowledges and agrees that the Purchaser does not make and has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 of this Agreement.

ARTICLE 4

OTHER AGREEMENTS OF THE PARTIES

4.1 Warrant Shares. The Company shall have an effective registration statement to cover the issuance or resale of the Warrant Shares at all times from the Effective Date through the Closing Date. If all or any portion of the Warrants are exercised at a time after the Closing Date when there is an effective registration statement to cover the issuance or resale of the Warrant Shares, the Warrant Shares issued pursuant to any such exercise shall be issued free of all legends. If at any time following the Closing Date the Registration Statement (or any subsequent registration statement registering the Warrant Shares) is not effective or is not otherwise available for the sale or resale of the Warrant Shares, the Company shall immediately notify the holders of the Warrants in writing that such registration statement is not then effective and thereafter shall promptly notify such holders when the registration statement is effective again and available for the sale or resale of the Warrant Shares. The Company shall use commercially reasonable best efforts to keep a registration statement (including the Registration Statement) registering the issuance or resale of the Warrant Shares effective during the term of the Warrants.

23

4.2 Conversion Shares. The Company shall have an effective registration statement to cover the issuance or resale of the Conversion Shares at all times from the Effective Date through the Closing Date. If all or any portion of the Additional Investment Right is exercised at a time after the Closing Date when there is an effective registration statement to cover the issuance or resale of the shares of Series 11 Preferred Stock or the Conversion Shares, as the case may be, the shares of Series 11 Preferred Stock or the Conversion Shares, as the case may be, issued pursuant to any such exercise shall be issued free of all legends. If at any time following the Closing Date the Registration Statement (or any subsequent registration statement registering the shares of Series 11 Preferred Stock and the Conversion Shares) is not effective or is not otherwise available for the sale or resale of the shares of Series 11 Preferred Stock or the Conversion Shares, as the case may be, the Company shall immediately notify the Purchaser in writing that such registration statement is not then effective and thereafter shall promptly notify the Purchaser when the registration statement is effective again and available for the sale or resale of the shares of Series 11 Preferred Stock or the Conversion Shares, as the case may be. The Company shall use commercially reasonable best efforts to keep a registration statement (including the Registration Statement) registering the issuance or resale of the shares of Series 11 Preferred Stock or the Conversion Shares effective during the term of the Additional Investment Right.

4.3 Furnishing of Information. Until the earlier of the time that (a) the Purchaser does not own Securities, (b) the Warrants have expired or (c) the Additional Investment Right has expired, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. As long as the Purchaser owns Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchaser and make publicly available in accordance with Rule 144(c)(1) of the Securities Act such information as is required for the Purchaser to sell the Securities under Rule 144 of the Securities Act. The Company further covenants that it will take such further action as any holder of Securities may reasonably request, to the extent required from time to time to enable such Person to sell such Securities without registration pursuant to the Securities Act within the requirements of the exemption provided by Rule 144 of the Securities Act. The Company represents and warrants that it is in material compliance with all of the requirements (including, without limitation, the reporting, submission and posting requirements) of Rule 144(c)(1) of the Securities Act and Rule 405 of Regulation S-T, each as in effect and amended as of the date hereof.

4.4 Integration. After this transaction, the Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) of the Company that would be integrated with the offer or sale of the Securities such that the rules of the Trading Markets would require shareholder approval of this transaction prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

4.5 Securities Laws Disclosure; Publicity. The Company shall (a) issue a press release disclosing the material terms of the transactions contemplated hereby simultaneously with the execution and delivery hereof (the “Press Release”), and (b) by 8:30 a.m. (New York City time) on the fourth (4^th) Trading Day following the Effective Date, file a Current Report on

24

Form 8-K disclosing the material terms of the transactions contemplated hereby and including the Transaction Documents as exhibits thereto (the “Form 8-K”). From and after the issuance of the Press Release, the Purchaser shall not be in possession of any material, non-public information received from the Company, any of its Subsidiaries or any of their respective officers, directors or employees that is not disclosed in the Press Release. The Company and the Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and, except as may be required by law, neither the Company nor any Purchaser shall issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of the Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of the Purchaser, or include the name of the Purchaser in any filing with the Commission or any regulatory agency or the Trading Markets, without the prior written consent of the Purchaser, except (i) as required by federal securities law in connection with the Prospectus Supplement or the filing of final Transaction Documents (including signature pages thereto) with the Commission and (ii) to the extent such disclosure is required by law or the regulations of the Trading Markets, in which case the Company shall provide the Purchaser with prior notice of such disclosure permitted under this subclause (ii).

4.6 Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants and agrees that neither it nor any other Person acting on its behalf will provide the Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto the Purchaser shall have executed a written agreement regarding the confidentiality and use of such information. Notwithstanding the foregoing (but subject to the terms of any such written agreement), to the extent the Company delivers any material, non-public information to the Purchaser without the Purchaser’s consent, the Company hereby covenants and agrees that the Purchaser shall not have any duty of confidentiality with respect to, or a duty not to trade on the basis of, such material, non-public information. The Company understands and confirms that the Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

4.7 Use of Proceeds. The Company will use the net proceeds from the offering as described in the Prospectus Supplement.

4.8 Indemnification of the Purchaser. Subject to the provisions of this Section 4.8, the Company will indemnify and hold the Purchaser, its Affiliates, and their respective directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls the Purchaser or any of its Affiliates (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling Persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses,

25

including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents, or (b) any action instituted against the Purchaser, or its Affiliates, by any shareholder of the Company who is not an Affiliate of the Purchaser or any governmental or regulatory agency, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a material breach of the Purchaser’s representations, warranties or covenants of the Transaction Documents or any agreements or understandings the Purchaser may have with any such shareholder or any material violations by the Purchaser of state or federal securities laws or any conduct by the Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to such Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (x) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed or (y) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents.

4.9 Prospectus Availability and Changes. The Company will make available to the Purchaser upon request, and thereafter from time to time will furnish to the Purchaser, as many copies of the Prospectus (or of the Prospectus as amended or supplemented if the Company shall have made any amendments or supplements thereto after the effective date of the Registration Statement) as the Purchaser may reasonably request for the purposes contemplated by the Securities Act within the time during which a Prospectus relating to the Securities is required to be delivered pursuant to the Securities Act. The Company will advise the Purchaser promptly of the happening of any event within the time during which a Prospectus relating to the Securities is required to be delivered under the Securities Act which could require the making of any change in the Prospectus then being used so that the Prospectus would not include an untrue statement of material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading, and to advise the Purchaser promptly if, during such period, it shall become necessary to amend or supplement the Prospectus to cause the Prospectus to comply with the requirements of the Securities Act, and in each case, during such time, to promptly prepare and furnish to the Purchaser, at the Company’s expense, such amendments or supplements to the Prospectus as may be necessary to reflect any such change or to effect such compliance. The Company shall have no obligation to separately

26

advise the Purchaser of, or deliver copies to the Purchaser of, the SEC Reports, all of which the Purchaser shall be deemed to have notice of.

4.10 Reservation and Registration of Securities. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of (a) shares of Series 10 Preferred Stock for the purpose of enabling the Company to issue 24,957 shares of Series 10 Preferred Stock at the Closing, plus any shares of Series 10 Preferred Stock issuable in accordance with the terms of the Certificate of Designation – Series 10, (b) shares of Series 11 Preferred Stock for the purpose of enabling the Company to issue 24,957 shares of Series 11 Preferred Stock issuable upon exercise of the Additional Investment Right, (c) Warrant Shares for the purpose of enabling the Company to issue the shares of Common Stock issuable upon exercise of the Warrants in full, and (d) Conversion Shares for the purpose of enabling the Company to issue the shares of Common Stock issuable upon conversion of the shares of Series 11 Preferred Stock.

4.11 Listing of Common Stock. The Company hereby agrees to use commercially reasonable efforts to maintain the listing of the Common Stock on the Trading Markets applicable as of the date of this Agreement, and the Company shall list all of the Warrant Shares and the Conversion Shares on each of the Trading Markets applicable as of the date of this Agreement no later than the Effective Date. The Company further agrees that if the Company applies to have the Common Stock traded on any trading market other than the Trading Markets applicable as of the date of this Agreement, it will include in such application all of the Warrant Shares and the Conversion Shares and will take such other action as is necessary to cause all of the Warrant Shares and the Conversion Shares to be listed on such other trading market as promptly as possible. The Company will take all action reasonably necessary to continue the listing and trading of its Common Stock on the Trading Markets, other than in connection with a Fundamental Transaction (as defined in the Warrants) in which the Company is not the surviving entity or in which all of the capital stock of the Company is acquired by an unaffiliated and unrelated Person, and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Markets.

4.12 Activity Restrictions. For so long as the Purchaser or any of its Affiliates holds any Securities, neither the Purchaser nor any of its Affiliate will, without the prior written consent of the Company, (a) vote any shares of Common Stock owned or controlled by it, solicit any proxies, or seek to advise or influence any Person with respect to any voting securities of the Company, or (b) engage or participate in any actions, plans or proposals which relate to or would result in (i) acquiring from any Person (including the Company) additional securities of the Company, alone or together with any other Person, which would result in exceeding the Maximum Percentage limitation, (ii) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its Subsidiaries, (iii) a sale or transfer of a material amount of assets of the Company or any of its Subsidiaries, (iv) any change in the present Board of Directors of the Company or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the Board of Directors of the Company, (v) any material change in the present capitalization or dividend policy of the Company, (vi) any other material change in the Company’s business or corporate structure, including, without limitation, if the Company is a registered closed-end investment company, any plans or proposals to make any changes in its investment policy for

27

which a vote is required by Section 13 of the Investment Company Act, (vii) changes in the Articles of Incorporation, Amended and Restated Bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any Person, (viii) causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association, (ix) a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Act, or (x) any action, intention, plan or arrangement similar to any of those enumerated above, (c) request the Company or its directors, officers, employees, agents or representatives to amend or waive any provision of this Section 4.12, or (d) directly or indirectly, on its or their own behalf or pursuant to any understanding with any Person, execute or agree to execute any Short Sales of the securities or derivatives of the Company or any transaction that would have the effect of any Short Sales of the securities or derivatives of the Company.

4.13 Additional Issuance of Securities. The Company agrees that for the period commencing on the date hereof and ending on the sixtieth (60^th) day after the date hereof, neither the Company nor any of its Subsidiaries shall, without the prior written consent of the Purchaser, (a) directly or indirectly, issue, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of any share of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or file any registration statement under the Act (other than a Registration Statement on Form S-8) with respect to any of the foregoing, or (b) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Common Stock, whether any such swap or transaction described in clauses (a) or (b) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise; provided, however, that nothing in the foregoing clauses (a) and (b) shall be construed as limiting the Company’s ability to negotiate and/or otherwise prepare to consummate a transaction following the expiration of the restricted period so long as such transaction is not publicly announced prior to the expiration of the restricted period. The provisions of this Section 4.13 shall not apply to (i) the Securities to be issued and sold hereunder or issuable upon conversion or exercise of the Securities, (ii) issuances of shares of Common Stock issuable upon conversion or exchange of currently outstanding convertible notes, (iii) issuances of shares of Common Stock upon the exercise of currently outstanding warrants or amendments to the warrant agreements related thereto, (iv) granting options or other securities under the Company’s incentive compensation plans existing on the date hereof or issuances of shares of Common Stock issuable in connection with outstanding awards thereunder as of the date hereof, (v) issuances of shares of Common Stock issuable pursuant to agreements in effect as of the date hereof or amendments related thereto, (vi) issuances of shares of Common Stock in connection with strategic acquisitions, or (vii) issuances of shares of Common Stock subject to shareholder approval; provided, however, that in the case of clauses (ii) and (iii) above, no shares of Common Stock shall be issued as a result of an amendment to such securities after the date hereof and prior to the expiration of the restricted period.

4.14 Reverse Stock Split. The Company agrees that for the period commencing on the date hereof and through and including March 31, 2011, the Company shall not, without the prior written consent of the Purchaser, combine (including by way of reverse stock-split) the

28

outstanding shares of the Common Stock into a smaller number of shares or publicly announce its intention to effect such a combination, either in a press release, proxy or other regulatory filing or similar notification to the public.

4.15 Future Transaction. The Purchaser acknowledges that it has expressed interest to the Company that it could invest up to an additional $10,000,000 on terms and conditions to be negotiated at a later date between the Company and the Purchaser. The Company acknowledges that the expression of interest is not a binding commitment or obligation on the part of the Purchaser to invest in the Company and any such future investment will be subject to the negotiation of mutually satisfactory terms and conditions and related definitive documents. In addition, any such future offer and sale of securities would be commenced, negotiated and completed in accordance with applicable securities laws.

ARTICLE 5

MISCELLANEOUS

5.1 Termination. The Purchaser may elect to terminate this Agreement by delivering written notice to the Company if the Closing has not been consummated on or before March 31, 2011, through no fault of the Purchaser; provided, however, that no such termination will affect the right of any party to sue for any breach by the other party; provided, further, however, that the termination of this Agreement shall have no effect on any Securities previously issued, delivered or credited, or on any then-existing rights of any holder thereof.

5.2 Fees and Expenses. The Company shall pay on behalf of the Purchaser, subject to a maximum amount of $40,000.00, the reasonable and documented legal fees and costs incurred by the Purchaser in connection with the Transaction Documents and the transactions contemplated thereby. Any additional amounts above $40,000.00 incurred by the Purchaser for legal fees and costs shall be the responsibility of the Purchaser. The Company agrees to a cap of $40,000.00 on legal fees and costs for its own counsel in connection with the Transaction Documents and the transactions contemplated thereby. Except for the foregoing, each party shall pay the fees and expenses of its own advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of the Transaction Documents. The Company acknowledges and agrees that Mintz Levin solely represents the Purchaser, and does not represent the Company or its interests, in connection with the Transaction Documents or the transactions contemplated thereby. The Company shall pay any stamp and other taxes and duties levied in connection with the initial sale of the Securities to the Purchaser, if any.

5.3 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such subject matter, which the parties acknowledge have been merged into such documents, exhibits and schedules.

5.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via

29

facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Business Day, (b) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Business Day or later than 5:30 p.m. (New York City time) on any Business Day, (c) the second (2^nd) Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto or such other address as may be designated in writing hereafter in the manner set forth in this Section 5.4.

5.5 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchaser or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

5.6 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser (other than by merger). The Purchaser may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Company.

5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

5.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents 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. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is

30

improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

5.10 Survival. The representations, warranties and covenants contained herein shall survive the Closing and the delivery of the shares of Series 10 Preferred Stock and for a period of one year thereafter.

5.11 Execution. This Agreement may be executed in two or more 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 to each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

5.12 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

5.13 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity or bond, if requested. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable costs and expenses associated with the issuance of such replacement Securities.

5.14 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Purchaser and the Company will be entitled to specific performance pursuant to the Transaction Documents. The parties agree that monetary

31

damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

5.15 Time of the Essence. Time is of the essence with respect to all provisions of this Agreement that specify a time for performance.

5.16 Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto.

5.17 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, EACH PARTY KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

(Signature Pages Follow)

32

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

CELL THERAPEUTICS, INC.	Address for Notice:
	501 Elliott Avenue West, Suite 400
	Seattle, Washington 98119
James A. Bianco, M.D.	Facsimile: (206) 272-4302
Chief Executive Officer	Attention: Louis A. Bianco
	With a copy to (which shall not constitute notice):
	O’Melveny & Myers, LLP Two Embarcadero Center 28th Floor San Francisco, California 94111 Facsimile: (415) 984-8701 Attn: C. Brophy Christensen, Jr., Esq.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;

PURCHASER SIGNATURE PAGE FOLLOWS]

33

[PURCHASER SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase Agreement to be duly executed by its respective authorized signatories as of the date first indicated above.

[—]	Address for Notice:
	[—]
Name:	[Address]
Title:	Fax No.:
	Email:
	With a copy to (which shall not constitute notice):
	[—]
	[Address]
	Fax No.:
	Email:

Address for Delivery of Securities for Purchaser (if not same as address for notice):

To be provided separately

[Signature page to Securities Purchase Agreement]

34

EXHIBIT A

CERTIFICATE OF DESIGNATION – SERIES 10

(See attached).

A-1

EXHIBIT B

CERTIFICATE OF DESIGNATION – SERIES 11

(See attached).

B-1

EXHIBIT C

FORM OF WARRANT

(See attached)

C-1

EXHIBIT D

OPINION OF WASHINGTON COUNSEL

The opinion of Karr Tuttle Campbell, Washington counsel for the Company, to be delivered pursuant to Section 2.3(a)(iv) of the Agreement shall be limited to Washington law and to the effect that:

It is our opinion that:

1. The Company is a corporation validly existing under the laws of the State of Washington with corporate power and authority to conduct its business as described in the Prospectus Supplement.

2. The Company has all requisite corporate power and authority to execute, deliver and perform the Transaction Documents, and (ii) the Transaction Documents have been duly executed and delivered on behalf of the Company.

3. No approval, consent, order or authorization of, filing with, notice to, or registration with, any Washington State court, Washington State governmental body or Washington State regulatory agency, is required to be obtained by the Company, (i) to enter into and perform its obligations under the Transaction Documents, or (ii) for the issuance and sale of the Securities contemplated by the Transaction Documents.

4. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated thereby do not and will not (i) conflict with or result in a violation of any of the provisions of the Articles of Incorporation or Bylaws of the Company, or (ii) violate in any material respect, or subject the Company to the imposition of a fine, penalty or other similar sanction for violation of, any Washington State statutory law or regulation applicable to the Company.

5. When issued pursuant to the Registration Statement and according to the terms of the Transaction Documents, and assuming that (i) the Registration Statement, and any amendments thereto, will remain effective during the period when the Securities are offered, sold or issued, including upon the conversion of the Series 11 Preferred Stock and exercise of the Warrants and Additional Investment Right, and (ii) the Warrants will be issued in the form we have reviewed and will have been signed by a duly authorized signatory, (a) the Series 10 Preferred Stock, when sold and delivered in accordance with the Purchase Agreement and after receipt of payment therefor, will be duly authorized, validly issued, fully paid and non-assessable, (b) the Series 11 Preferred Stock, when issued upon valid exercise of the Additional Investment Right in accordance the terms of the Transaction Documents and after receipt of payment therefor, will be duly authorized, validly issued, fully paid and non-assessable (c) the Conversion Shares, when issued upon valid conversion of the Series 11 Preferred Stock in accordance with the terms of the Transaction Documents and the Certificate of Designation – Series 11, will be duly authorized, validly issued, fully paid, and non-assessable, and (d) the Warrant Shares, when issued upon valid exercise of the Warrants in accordance the terms of

D-1

Transaction Documents and after receipt of payment therefor, will be duly authorized, validly issued, fully paid and non-assessable. None of the shares of the Company’s common stock are subject to preemptive rights of the stockholders under the Washington Business Corporation Act.

D-2

EXHIBIT E-1

OFFICER’S CERTIFICATE

March     , 2011

The undersigned, Louis A. Bianco, hereby certifies that:

1. He is the Executive Vice President, Finance and Administration, of Cell Therapeutics, Inc., a Washington corporation (the “Company”).

2. This Officer’s Certificate (this “Certificate”) is being delivered to [—] (the “Purchaser”), by the Company pursuant to Section 2.3(a)(ii) of the Securities Purchase Agreement, dated as of February 17, 2011, between the Purchaser and the Company (the “Purchase Agreement”). Terms used and not defined in this Certificate have the meanings set forth in the Purchase Agreement.

3. The representations and warranties of the Company set forth in the Purchase Agreement are true and correct in all material respects as if made on the above date (except for any representations and warranties that are expressly made as of a particular date, in which case such representations and warranties shall be true and correct as of such particular date).

4. Other than losses incurred in the ordinary course of business, there has been no Material Adverse Effect on the Company since the Effective Date.

5. The Company is not, and will not be as a result of the Closing, in default of any Transaction Document or Material Agreement, which default could have a Material Adverse Effect.

IN WITNESS WHEREOF, the undersigned has executed this Officer’s Closing Certificate as of the date set forth above.

By:
Name:	Louis A. Bianco
Title:	Executive Vice President, Finance and Administration

E-1-1

EXHIBIT E-2

SECRETARY’S CERTIFICATE

March     , 2011

The undersigned, Louis A. Bianco, hereby certifies that:

1. He is the duly appointed Secretary of Cell Therapeutics, Inc., a Washington corporation (the “Company”).

2. This Secretary’s Certificate (this “Certificate”) is being delivered to [—] (the “Purchaser”), by the Company, pursuant to Section 2.3(a)(iii) of the Securities Purchase Agreement, dated as of February 17, 2011, between the Company and the Company (the “Purchase Agreement”). Terms used and not defined in this Certificate have the meanings set forth in the Purchase Agreement.

3. Attached hereto as Exhibit A is a true, correct and complete copy of the Articles of Incorporation, as amended to, and in effect as of, the Closing Date.

4. Attached hereto as Exhibit B is a true, correct and complete copy of the Amended and Restated Bylaws of the Company, as amended to, and in effect as of, the Closing Date.

5. Attached hereto as Exhibit C is a true, correct and complete copy of the Certificate of Designation – Series 10, as filed with the Secretary of State of the State of Washington and in effect as of the Closing Date.

6. Attached hereto as Exhibit D is a true, correct and complete copy of the Certificate of Designation – Series 11, as filed with the Secretary of State of the State of Washington and in effect as of the Closing Date.

7. Attached hereto as Exhibit E is a true, correct and complete copy of the resolutions of the Board of Directors of the Company authorizing the Purchase Agreement and the Transaction Documents and the transactions contemplated thereby. Such resolutions have not been amended or rescinded and remain in full force and effect as of the Closing Date.

8. Each person who, as an executive officer of the Company, signed (a) the Purchase Agreement, or (b) any other document delivered in connection with the issuance and sale of the Securities by the Company, or the closing related thereto, was duly elected or appointed, qualified and acting as such executive officer at the respective times of the signing and delivery thereof and was duly authorized to sign and deliver such document on behalf of the Company, and the signature of each such person appearing on each such document is the genuine signature of such executive officer.

E-2-1

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the date set forth above.

By:
Name:	Louis A. Bianco
Title:	Secretary

E-2-2

EXHIBIT F-1

ADDITIONAL INVESTMENT RIGHT NOTICE

The undersigned, [—] (the “Purchaser”), hereby exercises the right to purchase          shares of Series 11 Convertible Preferred Stock (the “Series 11 Preferred Stock”) of Cell Therapeutics, Inc., a Washington corporation (“Company”), pursuant to the Additional Investment Right contained in the Securities Purchase Agreement, dated as of February 17, 2011, between the Company and the Purchaser (the “Purchase Agreement”), as required by the Purchase Agreement. Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Purchase Agreement.

(1) Payment shall take the form of (check applicable box):

[    ] lawful money of the United States; or

[    ] recourse promissory note(s).

(2) Please issue a certificate or certificates representing said shares of Series 11 Preferred Stock in the name of the undersigned or in such other name as is specified below:

[—]

By:                                                                                           

Name:                                                                                     

Title:                                                                                       

F-1-1

EXHIBIT F-2

ADDITIONAL INVESTMENT RIGHT NOTE

(See attached)

F-1-2

EXHIBIT G

ESCROW AGREEMENT

(See attached)

G-1

EX-99.1

Exhibit 99.1

501 Elliott Ave. W. #400 Seattle, WA 98119 T 206.282.7100 F 206.272.4010

Cell Therapeutics, Inc. Announces Single Institutional Investor Purchases

Up To Approximately $25.0 Million of Non-Convertible Preferred Stock and Warrants

and Additional Investment Right Exercisable at Market Price

SEATTLE, February 18, 2011—Cell Therapeutics, Inc. (Nasdaq and MTA:CTIC) (the “Company”) today announced that it has entered into a securities purchase agreement (the “Purchase Agreement”) to sell, subject to certain closing conditions, securities in a registered offering to a single life sciences institutional investor (the “Investor”). The Company may use a portion of the net proceeds to fund possible investments in, or acquisitions of, complementary businesses, technologies or products. The Company has recently engaged in limited discussions with third parties regarding such investments or acquisitions, but has no current agreements or commitments with respect to any investment or acquisition. The Company may also use a portion of the net proceeds from the offering for general corporate purposes, which may include, among other things, paying interest on and/or retiring portions of its outstanding debt, funding research and development, preclinical and clinical trials, the preparation and filing of new drug applications and general working capital.

Pursuant to the Purchase Agreement, the Company has agreed to sell up to approximately $25.0 million of shares of its Series 10 Non-Convertible Preferred Stock (the “Series 10 Preferred Stock”), warrants to purchase up to approximately 25.9 million shares of common stock (the “Warrants”) and an additional investment right (the “Additional Investment Right”) to purchase up to approximately $25.0 million of shares of its Series 11 Convertible Preferred Stock (the “Series 11 Preferred Stock”), in a registered offering to the Investor.

The shares of Series 10 Preferred Stock will accrue annual dividends at the rate of 10% from the date of issuance, payable in the form of additional shares of Series 10 Preferred Stock. The shares of Series 10 Preferred Stock are redeemable at the option of the Company at any time after issuance, in whole or in part, either in cash or by offset against recourse notes fully secured with marketable securities, which may be issued by the Investor to the Company (the “Notes”) in connection with the exercise of the Warrants and the Additional Investment Right.

The Warrants have an exercise price of $0.337 per share of common stock. The Warrants are exercisable immediately and expire two years from the date of the Purchase Agreement. The exercise price of the Warrants may be paid in cash or by the issuance of Notes. The Warrants are subject to cancellation and mandatory exercise under certain conditions, in whole or in part. The total potential additional proceeds to the Company upon exercise of the Warrants for cash are approximately $8.7 million.

The Additional Investment Right has an exercise price of $1,000 per share of Series 11 Preferred Stock. The Additional Investment Right is exercisable immediately and must be exercised no later than March 19, 2011. The exercise price of the Additional Investment Right may be paid in cash or through the issuance of Notes. The Additional Investment Right is subject to cancellation under certain conditions, in whole or in

part. The total potential additional proceeds to the Company upon exercise of the Additional Investment Right for cash are approximately $25.0 million.

Each share of Series 11 Preferred Stock is convertible at the option of the holder, at any time during its existence, into approximately 2,967 shares of common stock at a conversion price of $0.337 per share of common stock, for a total of approximately 74.1 million shares of common stock.

The closing of the issuance and sale of the Series 10 Preferred Stock is expected to occur on the 10^th trading day following the date of the Purchase Agreement, subject to certain closing conditions. Additional details regarding the offering can be found in the prospectus supplement relating to the offering to be filed with the Securities and Exchange Commission (the “SEC”) on February 18, 2011.

A shelf registration statement relating to the shares of Series 10 Preferred Stock, the Warrants, the Additional Investment Right and the shares of Series 11 Preferred Stock issued in the offering (and the shares of common stock issuable upon exercise of the Warrants and conversion of the Series 11 Preferred Stock) has been filed with the SEC. A prospectus supplement under Rule 424 of the Securities Act of 1933, as amended, relating to the offering will be filed with the SEC on February 18, 2011. Copies of the prospectus supplement and accompanying prospectus may be obtained directly from the Company by contacting the Company at the following address: Cell Therapeutics, Inc., 501 Elliott Avenue West, Suite 400, Seattle, Washington 98119, and also on the SEC’s website at www.sec.gov. This press release does not constitute an offer to sell or a solicitation of an offer to buy shares of Series 10 Preferred Stock, the Warrants, the Additional Investment Right and the shares of Series 11 Preferred Stock issued in the offering (or the shares of common stock issuable upon exercise of the Warrants and conversion of the Series 11 Preferred Stock). No offer, solicitation or sale will be made in any jurisdiction in which such offer, solicitation or sale is unlawful.

This press release includes forward-looking statements that involve a number of risks and uncertainties, the outcome of which could materially and/or adversely affect actual future results and the trading prices of the Company’s securities. The risks and uncertainties include the risk that the purchase and sale of the Series 10 Preferred Stock might not be consummated, the Investor might not exercise the Additional Investment Right or the Warrants, the Company might receive Notes instead of cash upon exercise of the Additional Investment Right or the Warrants, the Company might not be able to continue to raise additional capital as needed to fund its operations, the Company’s intentions regarding the use of proceeds, and other risk factors listed or described from time to time in the Company’s filings with the SEC, including, without limitation, its most recent filings on Forms 10-K and 8-K. Except as required by law, the Company does not intend to update any of the statements in this press release upon further developments.

* * *

Media Contact:

Dan Eramian

T: 206.272.4343

C: 206.854.1200

E: media@ctiseattle.com

www.CellTherapeutics.com/press_room

Investors Contact:

Ed Bell

T: 206.272.4345

Lindsey Jesch Logan

T: 206.272.4347

F: 206.272.4434

E: invest@ctiseattle.com

www.CellTherapeutics.com/investors