Case 2:10-cv-00414-MJP Document 99-1 Filed 02/14/12 Page...

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THE HONORABLE MARSHA J. PECHMAN

UN ITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

10 In re CELL THERAPEUTICS, INC.,

II CLASS ACTION LlTIGA nON

Master Docket No. C I 0-4 14 MJP

(Consolidated with Nos. C I O-480 MJP and C I 0-559 MJP)

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This Document Relates To: All Actions

STIPl lLATION OF SETTLEM ENT Master Docket No. C 1 0-4 14 MJ P - 1

CLASS ACTION

STIPULATION OF SETTLEMENT

Case 2:10-cv-00414-MJP Document 99-1 Filed 02/14/12 Page 2 of 66

This Stipulation of Settlement dated as of February 13, 20 12 (the "Stipula tion"), is made

2 and entered into by and among the following Settling Parties (as defined further in Section IV

3 hereof) to the above-entitl ed action (the "Action"): (i) Lead Plaintiffs Satish Shah, David Gipson,

4 and Xavian L. Draper (on behalf of themselves and each of the Class Members) , by and through

5 their counsel of record in the Action; and (ii) Defendants Ce ll Therapeutics, Inc. ("CTI" or the

6 "Company") , James A. Bianco , M.D., Louis A. Bianco, and Craig W. Philips, by and through

7 their counse l of record in the Action. The Stipulation is intended by the Settling Parties to fu ll y,

8 finally, and forever resol ve, di scharge, and settle the Released Claims (as defined herein), subject

9 upon and to the approva l of the Court and the terms and conditions set fort h in thi s Stipulation.

lOIn connection with seeking the Court 's approval of the settlement, the Settling Parties

11 wi ll seek the Court 's conditional certification, for settl ement purposes only, o f the Class (as

12 defined further in 1.4 below).

13 l. THE LITIGATION

14 On March 12, 2010, plaintifl' Cyril Sabbagh fi led a complaint in the United States District

15 Court for the Western Di strict of Washington, captioned Cyril Sabbagh v. Cell Therapeutics,

16 inc., Dr. James A. Bianco, M.D. , and Dr. Jack W Singer, M.D., No. C I0-414 MJP. By Court

17 Order dated August 2, 20 I 0, the above-referenced case was consolidated with all other related

18 acti ons then pending, and ordered to proceed under the caption In re Cell Therapeutics, Inc.

19 Class Action Litigation, No. C I 0-4 14 MJP. By the same Order, Plaintiffs Sati sh Shah, Dav id

20 Gipson, and Xavian L. Draper (also referred to as the "CTIC Investor Group") were appointed

21 Lead Plaintiffs, Brower Piven was appointed Lead Counse l, and Zwerling, Schachter &

22 Zwerling, LLP was appointed Liaison Counsel.

23 On September 27, 20 10, Lead Plaintiffs fil ed their Consolidated Amended Class Action

24 Complaint for Violation of the Federal Securities Laws all eging fa lse and misleading statements

25 by Defendants in connection with, inter alia, the approval process for one of CTI 's drugs,

26 Pixantrone. Defendants filed their motion to dismiss Lead Plaintiffs' Complaint on October 27,

27 2010; the Court denied Defendants' motion in large part on February 4, 2011.

STIPULATION OF SETrLEMENT Master Docket No. C t 0-414 MJP - 2


On October 26, 20 II, the parties participated in mediation with the Honorable Nicholas

2 H. Politan (Ret.) presiding. During the course of this mediation, the parties reached an

3 agreement-in-principle to resolve this Action. Subsequent ly, the Settling Parties continued

4 negotiations, resulting in the terms and conditions set forth in this Stipulation.

5 n. DEFENDANTS' DENIALS OF WRONGDOING AND LIABILITY

6 Defendants, individuall y and collective ly, have denied and continue to deny each and all

7 of the claims alleged by Lead Plaintiffs in the Action. Defendants expressly have denied and

8 continue to deny all charges of wrongdoing or liability against them arising out of any of the

9 conduct, statements, acts or omissions alleged, or that cou ld have been all eged, in the Action.

10 Defendants also have denied and continue to deny, among other allegations, the allegations that

11 the Lead Plaintiffs or the Class have suffered any damage, that the price of CTI common stock

12 was artificially inflated by reasons of alleged misrepresentations, non-disclosures or otherwise,

13 or that the Lead Plaintiffs or the Class were harmed by the conduct alleged in the Action.

14 Defendants believe that the evidence developed to date supports their position that they acted

15 properly at all times and that the Action is without merit.

16 Nonethe less, Defendants have concluded that further conduct of the Action would be

17 protracted and expensive, and that it is desirable that the Action be fu ll y and finally settled in the

18 manner and upon the terms and conditions set forth in this Stipulation. Defendants also have

19 taken into account the uncertainty and risks inherent in any litigation, especiall y in complex

20 cases like the Action. Defendants have, therefore, determined that it is desirable and beneficial

2 1 to them that the Action be settled in the manner and upon the terms and conditi.ons set fotth in

22 this Stipulation.

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24 III. CLAIMS OF LEAD PLAINTIFFS AND BENEFITS OF SETTLEMENT

25 Lead Plaintiffs believe that the claims asserted in the Action have merit and that the

26 evidence developed to date supports the claims. However, Lead Plaint iffs and their counsel

27 recogn ize and acknowledge the expense and length of continued proceedings necessary to

STIPlJLi-\TION OF SElTLEMENT Master Docket No. Cl0-414 M1P-3


prosecute the Action against Defendants through trial and through appeals. Lead Plaintiffs and

2 their counsel also have taken into account the uncertain outcome and the risk of any litigation,

3 especially in complex actions such as the Action, as well as the difficulties and delays inherent in

4 such litigation. Lead Plaintiffs and their counsel also are mindful of the inherent problems of

5 proof, and possible defenses to the securities law violations asserted in the Action. Lead

6 Plaintiffs and their counse l believe that the settlement set forth in the Stipulation confers

7 substantial benefits upon the Class. Based on their evaluation, Lead Plaintiffs and their counsel

8 have determined that the settlement set forth in the StipUlation is in the best interests of the Lead

9 Plaintiffs and the Class.

10 IV. TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT

11 NOW, THEREFORE, IT IS HEREB Y STIPULATED AND AGREED by and among the

12 Lead Plaintiffs (for themselves and the Class Members) and the Defendants, by and through their

\3 respective counselor attorneys of record, that, subject to the approval of the Court, the Action

14 and the Released Claims, and all matters encompassed with in the scope of the releases set forth

15 or referenced in this Stipulation shall be tinally, fully , and forever compromis,ed, settled, and

16 released, and the Action shall be dismissed with prejudice, as to all Settling Parties, upon and

17 subject to the terms and conditions of the StipUlation, as follows.

18 1. Definitions

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

20 1.1 "Action" means the case captioned In re Cell Therapeulics, Inc. Class Action

21 Litigation, Case No. C I 0-414 MJP.

22 1.2 "Authorized Claimant" means any Class Member whose claim for recovery has

23 been allowed pursuant to the terms of the Stipulation.

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1.4

"Claims Administrator" means the firm of The Garden City Group., Inc.

"C lass" means all Persons (other than those Persons who timely and validly

26 request exclusion from the Class) who purchased the common stock of CTI between March 25,

27 2008 and March 22, 2010, inclusive. Excluded from the Class are Defendants, members of the

STIPULATION 01: SE'[TLEMENT Master Docket No. C I 0-414 MJP - 4


Individual Defendants ' immediate fam ilies, the directors, officers, subsidiaries, and affil iates of

2 CTI, any person, firm, trust, corporation, officer, director or other individual or entity in which

3 any Defendant has a controll ing interest, and the legal representati ves, affiliates, heirs,

4 successors-in-interest or assigns of any such excluded person.

5 1. 5 "Class Member" or "Member of the Class" mean a Person who fa ll s within the

6 definition of the Class as set forth in ~ 1.4 above.

7 1.6 "Class Period" means the period commenclllg on or about March 25, 2008

8 through March 22, 2010, inclusive.

9 1.7 "Complaint" means the Consolidated Amended Class Action Complaint For

10 Violations Of The Federal Securities Laws in Cyril Sabbagh v. Cell Therapeutics, Inc., Dr.

I I James A. Bianco, MD. , and Dr. Jack W. Singer. MD., No. C I 0-414 M.lP, which was

12 conso lidated with other related acti ons under the caption In re Cell Therapeutics, Inc. Class

13 Action Litigation, No. C10-414 MJP, and which is the operative complaint in the Action.

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"CIT' or the "Company" means Cell Therapeutics, Inc.

"Defendants" means CT!, James A. Bianco, M.D. , Louis A. Bianco, and Craig W.

16 Philips.

17 1. 10 "Effecti ve Date," or the date upon which this settlement becomes "effective,"

18 means three (3) business days after the date by which all of the events and conditions specified in

19 ' 17. 1 of the Stipulation have been met and have occurred.

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1. I I "Escrow Agent" means Lead Counsel.

1. 12 "Final" means when the last of the following with respect to the Judgment

22 approving the Stipulation, substantiall y in the form of Exhibit B attached hereto, shall occur: (i)

23 the expiration of the time to file a motion to alter or amend the Judgment under Federal Rule of

24 Civil Procedure 59(e) without any such motion having been filed or, if such a motion is filed , the

25 Judgment is not altered or amended; (i i) the time in which to appeal the Judgment has passed

26 without any appeal having been taken; and (iii) if an appeal is taken, immediatel y after (a) the

27 date of final di smissal of any appeal or the final di smissal of any proceeding on certiorari, or (b)

STII' llLATION OF SETflE1\'IENT Master Docket No. C 1 0-414 MJ P - 5


the date of affirmance of the Judgment on appeal and the expiration of time for any further

2 judicial review whether by appeal, reconsideration or a petition for a writ of certiorari and, if

3 certiorari is granted, the date of final affirmance of the Judgment following review pursuant to

4 the grant. For purposes of thi s paragraph, an "appeal" shall include any petition for a writ of

5 certiorari or other writ that may be filed in connection with approval or disapproval of thi s

6 settlement, but shall not include any appeal wh ich concerns only the issue of attorneys' fees

7 andlor expenses, the Plan of Allocation of the Settlement Fund, as hereinafter defined, or the

8 procedures for determining Authorized Claimants' recognized claims and any such appeal shall

9 not in any way delay or affect the time set forth above for the Judgment to become Final , or

10 otherwise preclude the Judgment fi'om becoming Final.

I I 1.13 "Individual Defendants" means James A. Bianco, M.D., Louis A. Bianco, and

12 Craig W. Philips.

13 1.14 "Judgment" means the Final Judgment and Order of Dismissal with Prejudice to

14 be rendered by the Court, substantially in the form attached hereto as Exhibit B.

15 1.1 5 "Lead Counsel" means Brower Piven, A Professional Corporation and David A.P.

16 Brower, 488 Madison Avenue, Eighth Floor, New York, NY 10022.

17 1.16 "Lead Plaintiffs" means Satish Shah, David Gipson, and Xavian L. Draper, also

18 referred to as the CTIC Investor Group.

19 1.17 "Net Settlement Fund" means the Settlement Fund less (i) any Court-awarded

20 attorneys ' fees, costs, and expenses; (ii) any Court-approved award to Lead Plaintiffs; (iii) notice

21 and administration costs; (iv) Taxes and Tax Expenses; and (v) other Court-approved deductions

22 that occur before distribution of the proceeds of the settlement to the Class.

23 1.18 "Person" means an individual , corporation, partnership, limited partnership,

24 association, joint stock company, joint venture, limited liability company, professional

25 corporation, estate, legal representative, trust, heir, unincorporated assoc iation, government or

26 any political subd ivision or agency thereof, and any business or legal entity, and their

27 predecessors, successors, representatives, or assignees.

STIPULATION OF SETrLEMENT Master Docket No. C I 0-414 MJP - 6


1.19 "Plaintiffs' Counsel" means any counsel who has appeared for Lead Plaintiffs in

2 the Action.

3 1.20 "Plan of Allocation" means a plan or formula of allocation of the Settlement Fund

4 whereby the Settlement Fund shall be distributed to Authorized Claimants after payment of

5 expenses of notice and administration of the settlement, Taxes and Tax Expenses, and such

6 attorneys' fees, costs, expenses, and interest, as well as Lead Plaintiffs' expenses, if any, as may

7 be awarded by the Court. Any Plan of Allocation is not part of the Stipulation and neither

8 Defendants nor their Related Parties shall have any responsibility or liability with respect thereto.

9 1.21 "Related Parties" means each of a Defendant's past or present directors, officers,

10 employees, partners, insurers, co-insurers, reinsurers, controlling shareholders, attorneys,

11 accountants or auditors, advisors, investment advisors, personal or legal representatives,

12 predecessors, successors, parents, subsidiaries, divisions, joint ventures, agents, assigns, spouses,

13 marital communities, heirs, executors, estates, administrators, related or affiliated persons or

14 entities, any entity in which a Defendant has a controlling interest, any members of any

1 S Individual Defendant ' s immediate family, or any trust of which any Individual Defendant is the

16 settlor or which is for the benefit of any Individual Defendant's family.

17 1.22 "Released Claims" means any and all claims, debts, demands, rights, liabilities,

18 and causes of action of every nature and description whatsoever (including, but not limited to,

19 any claims for damages, interest, attorneys ' fees, expert or consulting fees , and any other costs,

20 expenses or liability whatsoever), whether based on federal , state, local, statutory or common

21 law or any other law, rule or regulation, whether fixed or contingent, accrued or un-accrued,

22 liquidated or unliquidated, at law or in equity, matured or umnatured, including, without

23 limitation, claims arising under Sections lOeb) or 20(a) of the Securities Exchange Act of 1934

24 and claims for control person liability, whether class or individual in nature, including both

2S known claims and Unknown Claims (as defined in ~ 1.27), whether or not concealed or hidden

26 that (i) have been asserted in this Action or in the Complaint by the Lead Plaintiffs against any of

27 the Released Persons (as defined below), or (ii) could have been asserted in the Action or any

STII'ULATION 01; SCrrLEMENT Master Docket No. CIO-414 MJP-7


other forum by the Lead Plaintiffs or any Class Members against any of the Re leased Persons

2 which arise out of, or are based upon or related in any way to, the allegati ons, transactions, facts,

3 matters or occurrences, representations or omissions involved in the Action, or set fo rth or

4 referred to in the Complaint, and that relate to the purchase of CTI common stock during the

5 Class Period.

6 1.23 " Released Persons" means each and all of the Defendants and their Related

7 Parties.

8 1.24 "Settlement Amount" means Nineteen Million Dollars ($19,000,000) in cash to be

9 paid by wire transfer to the Escrow Agent, or as directed by the Esc row Agent, pursuant to ~ 2.1

10 of thi s St ipulation.

I 1 1.25 "Settlement Fund" means the Settlement Amount plus all interest and accretions

12 thereto, and which may be reduced by payments or deductions as provided herein or by Court

13 order.

14 1.26 "Settling Parties" means, collecti vely, the Defendants and the Lead Plaintiffs on

15 behal f of themselves and the Class.

16 1.27 "Unknown Claims" means any Released Claims which Lead Plaintiffs or any

17 Class Member does not know or suspect to ex ist in hi s, her, or its favor at the time of the release

18 of the Released Persons which, if known by him, her, or it, might have affected hi s, her, or its

19 settlement with and release of the Released Persons, or might have affected hi s, her, or its

20 deci sions with respect to thi s settlement. With respect to any and all Released Claims, the

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Settling Parties stipulate and agree that, upon the Effective Date, Lead Plaintiffs shall expressly

waive and relinquish, and each of the Class Members shall be deemed to have, and by operation

of the Judgment shal l have, express ly waived and relinquished, the provisions, rights, and

benefits of California Civil Code § 1542, which provides:

A general release does not extend to claims which the cred itor does not know or suspect to exist in hi s or her favor at the time of executing the release, which if known by him or her must have materi all y affected hi s or her sett lement with the debtor.

STIPULATION OF SETrLEMENT Master Docket No. C IO-414 M1P-8


Lead Plaintiffs shall expressly waive and relinquish, and each of the Class Members shall be

2 deemed to have, and by operation of the Judgment shall have, expressly waived and

3 relinquished, any and all provisions, rights, and benefits conferred by any law of any state or

4 territory of the United States, or principle of common law, which is similar, comparable or

5 equivalent to California Civil Code § 1542. Lead Plaintiffs and Class Members may hereafter

6 discover facts in addition to or different from those which he, she, or it now knows or believes to

7 be true with respect to the subject matter of the Released Claims, but Lead Plaintiffs upon the

8 Effective Date shall expressly, fully, tinally, and forever settle and release and each Class

9 Member, upon the Effective Date, shall be deemed to have, and by operation of the Judgment

10 shall have, fully, finally , and forever settled and released any and all Released Claims, known or

I I unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or

12 hidden, which now exist, or heretofore have existed, upon any theory of law or equity now

13 existing or coming into existence in the future, including, but not limited to, conduct which is

14 negligent, intentional , with or without malice, or a breach of any duty, law or rule, without

15 regard to the subsequent discovery or existence of such different or additional facts. Lead

16 Plaintiffs acknowledge, and the Class Members shall be deemed by operation of the Judgment to

17 have acknowledged , that the foregoing waiver was separately bargained for and a key element of

18 the settlement of which this release is a part.

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2_ The Settlement

The Settlement Fund

2.1 CTI and/or its tnsurance carriers shall payor cause to be paid the principal

22 amount of $19,000,000, as directed by the Escrow Agent, no later than twenty-one (21) days

23 after preliminary approval of the settlement by the Court. If the entire Settlement Amount is not

24 timely transferred to the Escrow Agent, Lead Counsel may terminate the settlement only if (i)

25 Lead Counsel has notified Defendants' counsel in writing of Lead Counsel's intention to

26 terminate the settlement, and (ii) the entire Settlement Amount is not transferred to the Escrow

27 Agent within ten (10) days after Lead Counsel has provided such written notice.

STII)lJLATION OF S£.TTLEMENT Master Docket No. C 1 0-414 MJP - 9


The Escrow Agent

2 2.2 The Escrow Agent shall invest the Settlement Amount deposited pursuant to ~ 2.1

3 hereof in short term United States Agency or Treasury Securities or other instruments backed by

4 the Full Faith & Credit of the United States Government or an Agency thereof, or fu ll y insured

5 by the United States Government or an Agency thereof, and shall reinvest the proceeds of these

6 instruments as they mature in similar instruments at their then-current market rates. All ri sks

7 related to the investment of the Sett lement Fund in accordance with the investment guidelines set

8 forth in this paragraph shall be borne by the Settlement Fund and the Released Persons shall have

9 no responsibility for, interest in , or liability whatsoever with respect to investment decisions or

10 the actions of the Escrow Agent, or any transactions executed by the Escrow Agent.

I I 2.3 The Escrow Agent shall not disburse the Settlement Fund except as provided in

12 the Stipulation, by an order of the Court, or with the written agreement of counsel for

13 Defendants.

14 2.4 Subject to further order(s) andlor directions as may be made by the Court, or as

15 provided in the Stipulation, the Escrow Agent is authorized to execute such transactions as are

16 consistent with the terms of the Stipulation.

17 2.5 All funds held by the Escrow Agent shall be deemed and considered to be in

18 custodia legis of the Court, and shall remain subject to the jurisdiction of the Court, until such

19 time as such funds shall be di stributed pursuant to the Stipulation andlor further order(s) of the

20 Court.

21 2.6 Without further order of the Court, the Settlement Fund may be used by Lead

22 Counsel to pay reasonable costs and expenses actually incurred in connection with providing

23 notice to the Class, locating Class Members, so liciting claims, assisting with the filing of claims,

24 administering and distributing the Net Settlement Fund to Authorized Claimants, processing

25 Proof of Claim and Release forms, and paying escrow fees and costs, if any. In no event shall

26 Defendants have any responsibility for or liability with respect to the Escrow Agent or its

27 actions, the Settlement Fund, or the administration of the Sett lement Fund.

STIPULATION OF SUTI .EMENT Master Docket No. C IO-414 M1P-IO


Taxes

2 2.7 (a) The Settling Parties and the Escrow Agent agree to treat the Settlement

3 Fund as being at all times a "qualified settlement fund" within the meaning of Treas. Reg.

4 § 1.468B-l. In addition, the Escrow Agent shall timely make such elections as necessary or

5 advisable to carry out the provisions of this ~ 2.7, including the "relation-back election" (as

6 defined in Treas. Reg. § 1.468B-l) back to the earliest permitted date. Such elections shall be

7 made in compliance with the procedures and requirements contained in such regulations. It shall

8 be the responsibility of the Escrow Agent to timely and properly prepare and deliver the

9 necessary documentation for signature by all necessary parties, and thereafter to cause the

10 appropriate filing to occur.

11 (b) For the purpose of § 1.468B of the Internal Revenue Code of 1986, as

12 amended, and the regulations promulgated thereunder, the "admini strator" shall be the Escrow

13 Agent. The Escrow Agent shall timely and properly fil e all informational and other tax returns

14 necessary or advisable with respect to the Settlement Fund (including, without limitation, the

15 returns described in Treas. Reg. § 1.468B-2(k)). Such returns (as well as the election described

16 in ~ 2.7(a) hereof) shall be consistent with this ~ 2.7 and in all events shall reflect that all Taxes

17 (including any estimated Taxes, interest or penalties) on the income earned by the Settlement

18 Fund shall be paid out of the Settlement Fund as provided in'i 2.7(c) hereof.

19 (c) All (i) Taxes (including any estimated Taxes, interest or penalties) arising

20 with respect to the income earned by the Settlement Fund, including any Taxes Or tax detriments

21 that may be imposed upon the Defendants or their Related Parties or their counsel with respect to

22 any income earned by the Settlement Fund for any period during which the Settlement Fund does

23 not qualify as a "qualified settlement fund" for federal or state income tax purposes ("Taxes"),

24 and (ii) expenses and costs incurred in connection with the operation and implementation of this

25 ~ 2.7 (including, without limitation, expenses of tax attorneys and/or accountants and mailing

26 and distribution costs and expenses relating to filing (or failing to file) the returns described in

27 this ~ 2.7) ("Tax Expenses"), shall be paid out of the Settlement Fund; in all events the

STII)l ILAT ION OF SETI'LEMENT Master Docket No. C I0-414 MJP-II


Defendants and their Related Parties and their counsel shall have no liability or responsibility for

2 the Taxes or the Tax Expenses. The Escrow Agent, through the Settlement Fund, shall

3 indemnify and hold each of the Defendants and their Related Parties and their counsel harmless

4 for Taxes and Tax Expenses (including, without limitation, Taxes payable by reason of any such

5 indemnification). Further, Taxes and Tax Expenses shall be treated as, and considered to be, a

6 cost of administration of the Settlement Fund and shall be timely paid by the Escrow Agent out

7 of the Settlement Fund without prior order from the Court and the Escrow Agent shall be

8 authorized (notwithstanding anything herein to the contrary) to withhold from distribution to

9 Authori zed Claimants any funds necessary to pay such amounts, including the establishment of

10 adequate reserves for any Taxes and Tax Expenses (as well as any amounts that may be required

II to be withheld under Treas. Reg. § 1.468B-2(1)(2)); neither the Defendants nor their Related

12 Parties nor their counsel are responsible nor shall they have any liability for any Taxes or Tax

13 Expenses. The parties hereto agree to cooperate with the Escrow Agent, each other, and their tax

14 attorneys and accountants to the extent reasonably necessary to carry out the provisions of this ~

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16 Termination of Settlement

17 2.8 In the event that the Stipulation is not approved or the Stipulation is terminated,

18 canceled, or fails to become effective for any reason, the Settlement Fund (including accrued

19 interest) less expenses paid, incurred or due and owing in connection with the settlement

20 provided for herein, shall be refunded pursuant to written instructions from counsel to the

21 Defendants (in accordance with ~ 7.4 herein).

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23 3. Preliminary Approval Order and Settlement Hearing

24 3.1 Promptly after execution of the StipUlation, the Settling Parties shall submit the

25 Stipulation together with its Exhibits to the Court, and Lead Counsel shall apply for entry of an

26 order on the earliest available date (the "Preliminary Approval Order"), substantially in the form

27 of Exhibit A attached hereto, requesting, inter alia, the preliminary approval of the settlement set

STlI)ULATION OF SETTLEMENT Master Docket No. C 1 0-414 MJP - 12


forth in the Stipulation, and approval for the mailing of a settlement notice (the "Notice"),

2 publication of a summary notice, substantially in the forms of Exhibits A-I and A-2 attached

3 hereto . The Notice shall include the general terms of the settlement set forth in the Stipulation,

4 the proposed Plan of Allocation, the general terms of the Fee and Expense Application, as

5 defined in ~ 6.1 hereof, and the date of the Settlement Hearing as defined below.

6 3.2 Lead Counsel shall request that after notice is given, the Court hold a hearing (the

7 "Settlement Heari ng") and approve the settlement of the Action as set forth herein. At or after

8 the Settlement Hearing, Lead Counsel also will request that the Court approve the proposed Plan

9 of Allocation and the Fee and Expense Application.

10 4. Re leases

I I 4.1 Upon the Effective Date, as defined in ~ 1.10 hereof, the Lead Plaintiffs and each

12 and every Class Member shall be deemed to have, and by operation of the Judgment shall have,

13 fully , tinally, and forever waived, released, relinquished, discharged, and dismissed each and

14 everyone of the Released Claims against each and everyone of the Released Persons, whether

15 or not such Class Member executes and delivers the Proof of Claim and Release, and whether or

16 not such Class Member shares in the Settlement Fund.

17 4.2 The Proof of Claim and Release to be executed by Class Members shall release all

18 Released Claims against the Released Persons and shall be substantially in the form contained in

19 Exhibit A-3 attached hereto.

20 4.3 Upon the Effective Date, as defined in '1 1.10 hereof, each and every Class

21 Member and anyone claiming through or on behalf of any of them, will be forever barred and

22 enjoined from commencing, instituting, prosecuting or continuing to prosecute any action or

23 other proceeding in any court of law or equity, arbitration tribunal, or administrative forum,

24 asserting the Released Claims against any of the Released Persons.

25 4.4 Upon the Effective Date, as defined in ~ 1.10 hereof, each of the Released Persons

26 shall be deemed to have, and by operation of the Judgment shall have, fully , finally , and forever

27 released, relinquished, and discharged Lead Plaintiffs, each and all of the Class Members, Lead

STII'ULATION OF SETrU:MENT Master Docket No. C10-414 MJP- 13


Counsel, and Plaintiffs' Counsel from a ll claims (inc luding Unknown Claims) aris ing out of,

2 relating to, or in connecti on with the institution, prosecution, assert ion, settlement or reso lution

3 of the Action or the Released C laims.

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5. Administration and Calculation of Claims, Final Awards, and Supervision and Distribution of the Settlement Fund

5.1 The C laims Admi ni strator, subject to such supervI sion and direction of Lead

Counsel as may be necessary or as circumstances may require, shall administer and calcul ate the

claims submitted by C lass Members and shall oversee di stribution of the Net Sett lement Fund to

Authori zed Claimants.

5.2 The Settlement Fund shall be app li ed as follows:

(a) to pay a ll the fees, costs, and ex penses reasonably and actually incurred in

connection wi th providing notice, locating Class Members, solici ting C lass claims, ass isting wi th

the tiling of claims, administering and distributing the Net Sett lement Fund to Authorized

C la imants, processing Proof of C laim and Release forms, and paying escrow fees and costs, if

any;

(b) to pay the Taxes and Tax Ex penses described in ~ 2.7 hereof;

(c) after entry of the Judgment, to pay Lead Counsel's attorneys' fees and

expenses (the "Fee and Expense Award"), if and to the extent allowed by the Court; and

(d) after the Effective Date, to di stribute the balance of the Settlement Fund

(i.e., the " et Sett lement Fund") to Authorized Cla imants as allowed by the Stipu lati on, the Plan

of A llocation, or the Court.

5.3 Afte r the Effective Date, and in accordance wi th the terms of the Stipulation, the

Plan of A llocation, or such further approval and fu rther order(s) of the Court as may be

necessary or as c ircumstances may require, the Net Settlement Fund shall be d istri buted to

Authori zed C laimants, subject to and in accordance w ith the following.

5.4 Within one hundred twenty (120) days after the mailing of the Notice or such

other time as may be set by the Court, each Person claiming to be an Authorized C la imant shall

be required to submit to the C la ims Admini strator a completed Proof of Claim and Release,

STIPULATION OF SElTLE:l\,IENT Masler Docket No. C IO-414 MJP- 14


substantially in the form of Exhibi t A-3 at tached hereto, signed under penalty of perjury and

2 supported by such documents as are specified in the Proof of Claim and Release.

3 5.5 Except as otherwise ordered by the Court, a ll Class Members who fai l to timely

4 submit a valid Proof of Claim and Release wi thin such period, or such other period as may be

5 ordered by the Court, or otherwise all owed, shall be forever barred from rece iving any payments

6 pursuant to the Stipulation and the settlement set f0l1h herein , but will in all other respects be

7 subject to and bound by the provisions of the Stipulation, the releases contained herein , and the

8 Judgment. Notwithstanding the foregoing, Lead Counsel shall have the di scretion to accept late-

9 submitted claims for processing by the Claims Admini strator so long as the distribution of the

10 Settlement Fund is not materiall y delayed thereby.

I I 5.6 The Net Settlement Fund shall be di stributed to the Authorized Claimants

12 substantially in accordance w ith the Plan of All ocation set forth in the Notice and approved by

13 the Court. [fthere is any balance remaining in the Net Settlement Fund after six (6) months from

14 the initial date of distribution of the Net Settlement Fund (whether by reason of tax refunds,

15 uncashed checks or otherwise), Lead Counsel shall , if feas ible, reallocate such balance among

16 Authorized Claimants in an equitable and economic fash ion. Thereafter, any ba lance wh ich still

17 remains in the Net Settlement Fund shall , subject to the payment of any addi ti onal, previously

18 unreimbursed fees, costs, and expenses related to the admini stration of the sett lement, be donated

19 to an appropriate non-profit organi zation.

20 5.7 The Defendants and their Related Parties shall have no responsibility fo r, interest

2 1 in, 0 1' li ability whatsoever with respect to , the distribution of the Net Sett lement Fund, the Plan of

22 A llocation, the determination, admi ni stratio n, 01' calculation of claims, the payment or

23 withholding of Taxes, 01' any losses incurred in connection therewith. No Person shall have any

24 claim of any kind against the Defendants or their Related Parties with respect to the matters set

25 forth in" 5.1-5 .9 hereof; and the Class Members, Lead Plaintiffs, and Lead Counsel release the

26 Defendants and their Related Parties fro m any and all liabi li ty and claims arising from or with

27 respect to the investment or di stribution of the Settlement Fund.

STII'lJLAT ION OF SETTLEMENT Master Docket No. CI0-414 MJP- 15


5.8 No Person shall have any claim against the Lead Plaintiffs, Lead Counsel or the

2 Claims Administrator, or any other Person designated by Lead Counsel, based on determinations

3 and/or di stributions made substanti ally in accordance with the Stipulation and the sel1lement

4 contained herein , the Plan of Allocation, or further order(s) of the Courl.

5 5.9 It is understood and agreed by the Settling Parties that any proposed Plan of

6 Allocation of the Net Settlement Fund including, but not limited to, any adj ustments to an

7 Authorized Claimant's claim set forth therein, is not a part of the Stipulation and tS to be

8 considered by the Court separately from the Court ' s consideration of the fairness,

9 reasonableness, and adequacy of the settlement set forth in the Stipulation, and any order or

10 proceeding relating to the Plan of Allocation shall not operate to terminate or cancel the

II Stipulat ion or affect the finality of the Court' s Judgment approving the Stipulation and the

12 settlement set forth therein, or any other orders entered pursuant to the Stipulation.

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6. 1

Lead Plaintiffs' Counsel's Attorneys' Fees and Expenses

Lead Counsel may submit an application or applications (the "Fee and Expense

15 Appli cation") for an award of attorneys ' fees not to exceed one-third (33.33%) of the Settlement

16 Amount, plus expenses incurred in connection with prosecuting the Action, plus any interest on

17 such attorneys' fees and expenses at the same rate and for the same peri ods as earned by the

18 Sett lement Fund (unti l paid) as may be awarded by the Court. Lead Counsel reserves the right to

19 make additional applications for fees and expenses incurred in connection with t.he preservation

20 of the Settlement Fund and/or the administration of the settlement.

2 1 6.2 The fees and expenses, as awarded by the Court, shall be paid to Lead Counse l, as

22 ordered, immediate ly after the Court executes an order award ing such fees and expenses and

23 enters the Judgment. Lead Counsel may thereafter allocate the attorneys' fees among other

24 Plaintiffs' Counsel in a maImer in which they in good faith believe reflects the contributions of

25 such counsel to the initiation, prosecution, and resolution of the Action.

26 6.3 In the event that the Effective Date does not occur, or the Judgment or the order

27 making the Fee and Expense Award is reversed or modified, or the Stipulation is canceled or

STIPl lLATION OF SETrLE i\'IENT Master Docket No. C 1 0-414 MJP - 16


terminated for any other reason, and in the event that the Fee and Expense Award has been paid

2 to any extent, then such of Plaintiffs ' Counsel who have received any portion of the Fee and

3 Expense Award shall within five (5) business days from receiving notice from the Defendants'

4 counselor from a court of appropriate jurisdiction , refund to the Settlement Fund such fees and

5 expenses previously paid to them from the Settlement Fund, plus interest thereon at the same rate

6 as earned on the Sett lement Amount in an amount consistent with such reversal or modification.

7 Each such Plaintiffs ' Counsel's law firm receiving fees and expenses, as a condition of receiving

8 such fees and expenses, on behalf of itself and each partner and/or shareholder of it, agrees that

9 the law finn and its partners and/or shareholders are subject to the jurisdiction of the Court for

10 the purpose of enforcing the provisions of this paragraph.

I I 6.4 The procedure for and the allowance or disallowance by the Court of any

12 applications by any Plaintiffs ' Counsel for attorneys' fees and expenses, to be paid out of the

13 Settlement Fund, are not part of the settlement set forth in the Stipulation, and are to be

14 considered by the Court separately from the Court's consideration of the fairness,

15 reasonableness, and adequacy of the settlement set fOl1h in the Stipulation, and any order or

16 proceeding relating to the Fee and Expense App li cation, or any appeal from any order relating

17 thereto or reversal or modification thereof, shall not operate to terminate or cancel the

18 Stipulation, or affect or delay the finality of the Judgment approving the Stipu lation and the

19 settlement of the Act ion set forth therein.

20 6.5 Defendants and their Related Pat1ies shall have no responsibility for any payment

21 of attorneys' fees and expenses to Plaintiffs' Counsel over and above payment out of the

22 Settlement Fund.

23 6.6 Defendants and their Related Parties shall have no responsibility for the al location

24 among Plaintiffs' Counsel, and/or any other Person who may assert some claim thereto, of any

25 Fee and Expense Award that the Court may make in the Action, and the Defendants and their

26 Related Parties take no position with respect to such matters.

27 7. Conditions of Settlement, Effect of Disapproval, Cancellation or Termination

STIPULATION OF SE1TLEi\lENT Master Docket No. C I 0-414 MJP - 17


7. 1 The Effecti ve Date of the Stipulation shall be the date when all of the fo llowing

2 shall have occurred and is condit ioned on the occurrence of all of the fo llowing events :

3 (a) CTI and/or its insurance carriers ti mely made or caused to be made the

4 contribution to the Settlement Fund, as requ ired by ~ 2. 1 hereof;

5 (b) the Court has entered the Preliminary Approva l Order, as described in ~

6 3. 1 hereof;

7 (c) no option to temlinate the Stipulati on has been exercised or, if exercised,

8 has been retracted, pursuant to ~ 7.3 hereof;

9 (d) the Court has entered the Judgment, or a j udgment subs tanti a ll y til the

10 fo rm of Exhibit B attached hereto; and

11 (e) the Judgment has become Fina l, as de fined in ~ 1.1 2 hereof.

12 7.2 Upon the occurrence of all of the events referenced in ~ 7. 1 hereof, any and all

13 remaining interest or ri ght of the De fendants or the Defendants' insurers in or to the Settl ement

14 Fund, if any, shall be abso lutely and forever ex tingui shed. If it becomes clear that a ll of the

IS condi tions spec ified in 7. 1 hereof cannot or will not be met, then the Stipulation shall be

16 canceled and terminated subject to " 7.5 hereof unless Lead Counsel and counsel fo r the

17 Defendants mutuall y agree in writing to otherwise proceed with the settl ement.

18 7.3 CTJ shall have the option to term inate the settl ement in the event that Class

19 Members who purchased in the aggregate more than a certain number of shares of CTI common

20 stock during the Class Period choose to exclude themselves fro m the Class, as set forth in a

2 1 separate agreement (the "Supplemental Agreement") executed between Lead Counsel and CTI's

22 counsel. The Supplemental Agreement will not be fi led wi th the Court unless requested by the

23 Court or unless a dispute among the Settling Parties conceming its interpretat ion or application

24 ari ses and in that event, the parti es shall request that the Supplementa l Agreement be fil ed and

25 maintained by the Court under sea l.

26 7.4 Unless otherwise ordered by the Court, in the event the Stipulation shall

27 tenninate, or be canceled, or shall not become effecti ve fo r any reason, within ten (10) business

STiPlllA TION OF SE'IT LEM ENT Master Docket No. C IO-4 14 Ml P-18


days after written noti fication of such event is made by counsel for the Defendants or Lead

2 Counsel to the other party, the Settlement Fund, less expenses which have either been di sbursed

3 pursuant to ~'Il 2.6 and 2.7 hereof, or are determined to be chargeable to the Sett lement Fund,

4 shall be re funded by Lead Counsel directly to the entity or entities that prov ided the fund s, based

5 on the ir pro rala contribution to the Settlement Fund, as indicated in writing to L,ead Counse l by

6 Defendants' counsel. The Escrow Agent or its designee shall appl y for any tax refund owed on

7 the Settlement Fund and pay the proceeds, after deduction of any fees or expenses incurred in

8 connecti on wi th such application(s) for refund, in a similar pro rata manner, pursuant to written

9 instructi ons from Defendants' counsel.

10 7.5 In the event that the Stipulation is not approved by the Court or the settlement set

II fo rth in the Stipulation is terminated or fai ls to become effective in accordance with its terms: (i)

12 the Sett ling Parties shall be restored to their respective positions in the Acti on as of October 26,

13 20 11. In such event, the terms and prov isions of the Stipulation, with the exception onl'll l. l-

14 1.27,2.6-2.8, 6.3-6.5,7.4-7.6,8.3, and 8.4 hereof, shall have no further force and effect with

15 respect to the Settling Parties and shall not be used in thi s Action or in any other proceeding for

16 any purpose, and any judgment or order entered by the Court in accordance wi th the terms of the

17 Stipulation shall be treated as vacated, nunc pro lunc. No order of the Court or modification or

18 reversal on appeal of any order of the Court concerning the Plan of Allocation OT the amount of

19 any attorneys' fees, costs, expenses, and interest awarded by the Court to any of Plaintiffs'

20 Counse l shall constitute grounds for cancellation or termination of the StipUlation ..

2 1 7.6 If the Effective Date does not occur, or if the Stipulation is terminated pursuant to

22 its terms, neither Lead Plaintiffs nor any o f their counsel shall have any obligati on to repay any

23 amounts actuall y and properly di sbursed pursuant to 'Il'll 2.6 or 2.7. In addition, any expenses

24 already incurred pursuant to 'Il' l 2.6 or 2.7 hereof at the time of such termination or cancellation

25 but which have not been paid , shall be paid by the Escrow Agent in accordance w ith the terms of

26 the Stipulation prior to the balance being refunded in accordance with 'Il'll2. 8 and 7.4 hereof.

27 8. M iscella neous Provisions

STlIl l1LATION OF SE'IT LEMENT Master Docket No. CI0-4 14 MJP- 19


8.1 The Lead Plaintiffs have assel1ed that the Action should be certified as a class

2 action pursuant to the Federal Rules of Civi l Procedure. For settl ement purposes on ly, and for no

3 other purpose than as set forth in and to effectuate this Stipulation, Defendants wi ll not object to

4 such certification on the terms set forth in th is St ipulation. The Settling Parties fu rther agree that

5 if the Effective Date does not occur, or if the Stipulati on is terminated pursuant to its terms, then

6 no Class wi ll be deemed to have been certified by or as a result of thi s Stipulation, and the

7 Action wi ll for all purposes wit h respect to the Settling Parties revert to its status as of the day

8 immediately before the Stipulation was fully executed. In such event, (i) Defendants wi ll not be

9 deemed to have consented to the certification of any class, (ii) the Sti pu lation concerning class

10 definition or class cert ification shall not be used as evidence or argum ent in support of class

II defin ition or class certifi cation , and (i ii) Defendants will retain all rights to oppose class

12 certi fication.

13 8.2 The Settling Parties (i) acknowledge that it is their intent to consummate this

14 agreement ; and (i i) agree to cooperate to the extent reasonably necessary to effectuate and

15 implement all tenns and conditions of the Stipulation and to exercise thei r best efforts to

16 accompli sh the forego ing terms and conditions of the Stipulation.

17 8.3 The Settling Parti es intend this settlement to be a final and complete reso lution of

18 all disputes between them with respect to the Action. The settlement compromises claims which

19 are contested and shall not be deemed an admission by any Settling Party as to the merits of any

20 claim or defense. The Fina l Judgment wi ll contain a finding that, during the course of the

21 Action, the parties and their respective counsel at all times complied with the requirements of

22 Federal Rule of Civi l Procedure II . The Settl ing Parties agree that the Settlement Amount and

23 the other terms of the settlement were negotiated in good fa ith by the Settl ing Parties, and reflect

24 a settl ement that was reached vo luntarily after consultation with competent lega l counsel. The

25 Settling Parties reserve their right to rebut, in a manner that such party reasonabl y determines to

26 be appropriate, any contention made by any of the Settl ing Parties in any public forum that the

27 Action was brought or defended in bad faith or without a reasonable basis.

STIPULATION OF SEn 'LEMENT Master Docket No, C I O-4 14 M1P-20


8.4 either the Stipulation nor the settlement contained therein, nor any act

2 performed or document executed pursuant to or in furtherance of the St ipulation or the

3 settlement: (i) is or may be deemed to be or may be used as an admission of, or evidence of, the

4 valid ity of any Released Claim, or of any wrongdo ing or liability of the Defendants; or (ii) is or

5 may be deemed to be or may be used as an admi ssion of, or evidence of, any fau lt: or omission of

6 any of the Defendants in any civil , criminal or administrati ve proceeding in any court,

7 administrative agency or other tribunal. The Defendants may file the Stipulation and/or the

8 Judgment in any action that may be brought against them in order to support a defense or

9 counterclaim based on principles of res j udicata, collateral estoppel, release, good fa ith

10 settlement, j udgment bar or reduction, or any other theory of claim preclusion or issue preclusion

II or similar defense or counterclaim.

12 8.5 All agreements made and orders entered during the course of the Action relating

13 to the confidentiality of information shall su rvi ve this Stipulation.

14 8.6 All of the Exhibits to the Stipulation are material and integral parts hereof and are

15 fully incorporated herein by this reference.

16 8.7 The Stipulation may be amended or modi fi ed only by a written instrument signed

17 by or on behalf of all Settling Parties or their respective successors-in-interest.

18 8.8 The Stipulation and the Exhibits attached hereto and the Supplemental Agreement

19 const itute the entire agreement among the parties hereto and no representations, warranties or

20 inducements have been made to any party concern ing the Stipulation or its Exhibits other than

21 the representations, warranties, and covenants contained and memoriali zed in such documents.

22 Except as otherwise provided herein, each party shal l bear its own costs.

23 8.9 Lead Counsel , on behalf of the Class, is expressly authorized by Lead Plaintitfs to

24 take all appropri ate action required or permitted to be taken by the C lass pursuant to the

25 St ipulation to effectuate its terms and also is expressly authori zed to enter into any moditications

26 or amendments to the Stipulation on behal f of the Class which it deems appropria te.

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STIPULATION 01:" SEn'LEMENT Master Docket No. C10-414 MJP- 2 1


8. 10 Each counse l or other Person executing the Stipulation or any of its Exhi bits on

2 behalf o f any party hereto hereby warrants that such Person has the full authority to do so.

3 8.11 The Stipulati on may be executed in one or more counterparts. All executed

4 counterparts and each of them shall be deemed to be one and the same instrument. A complete

5 set of executed counterparts shall be fil ed with the Court.

6 8. 12 The Stipulati on shall be binding upon, and inure to the benefit of, the successors

7 and ass igns of the parties hereto.

8 8.13 The Court shall retain jurisdi ction with respect to implementation and

9 enfo rcement of the terms of the Stipulation, and all parti es hereto submit to the j uri sdiction of the

10 Court fo r purposes of implementing and enfo rcing the settl ement embodied in the Stipulati on.

I I 8. 14 Thi s Stipulat ion and the Exhibits hereto shall be considered to have been

12 negotiated, executed and deli vered, and to be wholl y perfo rmed, in the State of Washington, and

13 the ri ghts and obligations of the parties to the Stipul ation shall be construed and enforced in

14 accordance with, and governed by, the internal, substanti ve laws of the State of Washington

15 without giving effect to that State's choice-of-l aw principles .

16 IN WITNESS WH EREOF, the parti es hereto have caused the Stiiulatj.on to be executed,

17 by their dul y authori zed attorneys.

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STII)l IIATION OF SErrLEMENT MaSier Docket No. C I 0-414 MJ P - 22

DOL@as J. Clark , admitted pro hac vice WILSO N SONSINI GOODRIC H & ROSATI Pro fess ional Corporation 650 Page Mi ll Road Palo Alto, CA 94304 Te lephone: (650) 493-9300 Facs imile: (650) 493 -6811 Email : dcl [email protected]

Barry Kaplan, WSBA #866 1 Claire Loebs Davis, WSBA #39 81 2 WILSON SONSINI GOODRICl-I & ROSATI Professional Corporati on 70 1 Fifth Avenue, Suite 5100 Seattl e, W A 98 104-703 6 Te lephone: (206) 883-2500 Facsimile: (206) 883-2699 Email: bkaplan@wsgr. com Email : c1dav is@wsgr. com


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STIPULATION OF SETTLEMENT Master Docket No. CI0-414 MJP - 23

Attorneys for Defendants Cell Therapeutics, Inc., Dr. James Bianco, Louis Bianco, and Craig Philips

avid A.P. Brower BROWER PIVEN

A Professional Corporation 488 Madison Avenue, Eighth Floor New York, NY 10022 Telephone: (212) 501-9000 Facsimile: (212) 501-0300

Attorney for the CTIC Investor Group and Lead Counsel for the Class

Dan Drachler, WSBA #27728 ZWERLING, SCHACHTER & ZWERLING, LLP 1904 Third Avenue, Suite 1030 Seattle, W A 98101-11 70 Telephone: (206) 223-2053 Facsimile: (206) 343-9636 Email: [email protected]

Attorney for the CTIC Investor Group and Liaison Counsel for the Class


EXHIBIT A


[PROPOSED] ORDER GRANTING PRELIMINARY APPROVAL OF SETTLEMENT, GRANTING CONDITIONAL CLASS CERTIFICATION, AND PROVIDING FOR NOTICE

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UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON

AT SEATTLE In re CELL THERAPEUTICS, INC. CLASS ACTION LITIGATION

Master Docket No. C10-414 MJP (consolidated with Nos. C10-480 MJP and C10-559MJP) CLASS ACTION [PROPOSED] ORDER GRANTING PRELIMINARY APPROVAL OF SETTLEMENT, GRANTING CONDITIONAL CLASS CERTIFICATION, AND PROVIDING FOR NOTICE



[PROPOSED] ORDER GRANTING PRELIMINARY APPROVAL OF SETTLEMENT, GRANTING CONDITIONAL CLASS CERTIFICATION, AND PROVIDING FOR NOTICE 1

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This class action comes before the Court on the Lead Plaintiffs’ Unopposed Motion for

Preliminary Approval of Class Action Settlement, Conditional Class Certification, and Approval

of Notice (“Motion”) and on the Stipulation of Settlement dated February 13, 2012 (the

“Stipulation”) entered into by the Lead Plaintiffs and Defendants. The Court has reviewed the

Motion and the Stipulation, and attached exhibits, which set forth the terms and conditions for a

proposed settlement of and for dismissal of the Action with prejudice, upon the terms and

conditions of the Stipulation, and finds that the Motion is due to be granted.

All defined terms used in this Order shall have the same meanings as set forth in the

Stipulation.

NOW, THEREFORE, the Court hereby ORDERS:

1. For purposes of settlement only, pursuant to Fed. R. Civ. P. 23(a) and (b)(3), the

Court hereby conditionally certifies a Class consisting of all Persons (other than those Persons

who timely and validly request exclusion from the Class) who purchased the common stock of

CTI between March 25, 2008 and March 22, 2010, inclusive. Excluded from the Class are

Defendants, members of the Individual Defendants’ immediate families, the directors, officers,

subsidiaries, and affiliates of CTI, any person, firm, trust, corporation, officer, director or other

individual or entity in which any Defendant has a controlling interest, and the legal

representatives, affiliates, heirs, successors-in-interest or assigns of any such excluded person.

Solely for the purposes of effectuating the settlement, the Court finds and concludes that the

requirements of Fed. R. Civ. P. 23(a) and 23(b)(3) of the Federal Rules of Civil Procedure have

been satisfied, as follows:

(a) the members of the Class are so numerous that joinder of all members

is impracticable;

(b) there are questions of law and fact common to the Class;

(c) the claims and defenses of the representative parties are typical of the

Class;



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(d) the representative parties will fairly and adequately protect the

interests of the Class; and

(e) the Action satisfies the requirements of Fed. R. Civ. P. 23(b)(3) in that

there are questions of law and fact common to the members of the

Class that predominate over any questions affecting only individual

members, and that a class action is superior to other available methods

for the fair and efficient adjudication of the controversy.

2. For purposes of settlement only, the Court finds that Satish Shah, David Gipson,

and Xavian L. Draper possess claims that are typical of the claims of Class Members and that

they have and will adequately represent the interest of Class Members, and the Court appoints

them as the representatives of the Class and appoints Lead Counsel, Brower Piven, A

Professional Corporation as counsel for the Class.

3. If for any reason the Effective Date, as defined in ¶ 1.10 of the Stipulation, does

not occur, this conditional certification of the Class shall be deemed null and void without the

need for further action by the Court or any of the Settling Parties. In such circumstances, each of

the Settling Parties shall retain its currently existing rights to seek or to object to the certification

of this litigation as a class action under Fed. R. Civ. P. 23, or any state or federal rule, statute,

law, or provision, and to contest and appeal any grant or denial of certification in this litigation

or in any other litigation on any other grounds.

4. The Court does hereby preliminarily approve the Stipulation and the settlement,

subject to further consideration at the Settlement Hearing described below. Therefore, it

GRANTS the motion for preliminary approval of the proposed class settlement.

5. A hearing (the “Settlement Hearing”) shall be held before this Court on

___________________ at ___ a.m. [proposed date: 120 days after date of order] for the

following purposes:



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(a) to determine whether the Court should grant certification to the Class

pursuant to Fed. R. Civ. P. 23(a) and (b)(3);

(b) to determine whether the proposed settlement of the Action on the terms

and conditions provided for in the Stipulation is fair, reasonable, and

adequate to the Class and should be approved by the Court;

(c) to determine whether a Judgment as provided in ¶ 1.14 of the Stipulation

should be entered;

(d) to determine whether the proposed Plan of Allocation for the proceeds of

the settlement is fair and reasonable, and should be approved by the Court;

(e) to determine whether any applications for attorneys’ fees or expenses to

Plaintiffs’ Counsel should be approved; and

(f) to rule upon such other matters as the Court may deem appropriate.

6. The Court approves, as to form and content, the Notice of Proposed Settlement of

Class Action (the “Notice”), the Summary Notice (as defined below) for publication, and the

Proof of Claim Form and Release (“Proof of Claim”) annexed as Exhibits A-1 to A-3 hereto, and

finds that the mailing and distribution of the Notice and publishing of the Summary Notice

substantially in the manner and form set forth in ¶¶ 7-8 of this Order meet the requirements of

Fed. R. Civ. P. 23, the Securities Exchange Act of 1934, 15 U.S.C. §78u-4(a)(7), as amended,

including the Private Securities Litigation Reform Act of 1995, and due process, and is the best

notice practicable under the circumstances, and shall constitute due and sufficient notice to all

Persons entitled to notice.

7. The firm of Garden City Group, Inc. (“Claims Administrator”), is hereby

appointed to supervise and administer the notice procedure as well as the processing of claims as

more fully set forth below:



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(a) CTI shall cooperate, to the extent necessary, in making its transfer records

and shareholder information available to the Claims Administrator for the

purpose of identifying and giving notice to the Class;

(b) No later than fifteen (15) days after entry of this Order, Lead Counsel shall

cause a copy of the Notice, substantially in the form annexed as Exhibit A-

1, to be mailed by first class mail to all potential Class Members who can

be identified with reasonable effort;

(c) Lead Counsel shall cause the summary notice, in substantially the form

annexed as Exhibit A-2 (the “Summary Notice”), to be published three (3)

separate times, with no less than four (4) business days between each

publication, over the PR Newswire, with such publication completed no

later than twenty-eight (28) days after the entry of this Order; and

(d) At least ten (10) days prior to the Settlement Hearing, Lead Counsel shall

cause to be served on counsel for Defendants and filed with the Court

proof, by affidavit or declaration, of such mailing and publishing.

8. Nominees who purchased the common stock of CTI for the beneficial ownership

of Class Members during the Class Period shall send the Notice to all beneficial owners of such

CTI securities within seven (7) days after receipt thereof, or send a list of the names and

addresses of such beneficial owners to the Claims Administrator within seven (7) days of receipt

thereof, in which event the Claims Administrator shall promptly mail the Notice to such

beneficial owners. The Claims Administrator shall, if requested, reimburse banks, brokerage

houses or other nominees solely for their reasonable out-of pocket expenses incurred in

providing notice to beneficial owners who are potential Class Members out of the Settlement

Fund, which expenses would not have been incurred except for the sending of such Notice,

subject to further order of this Court with respect to any dispute concerning such compensation.



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9. In order to be entitled to participate in the Net Settlement Fund, in the event the

settlement is effected in accordance with the terms and conditions set forth in the Stipulation,

each Class Member shall take the following actions and be subject to the following conditions:

(a) A properly executed Proof of Claim, substantially in the form attached

hereto as Exhibit A-3, must be submitted to the Claims Administrator, at

the Post Office Box indicated in the Notice, postmarked not later than one

hundred twenty (120) days after the initial mailing of the Notice. Such

deadline may be further extended by Court Order. Each Proof of Claim

shall be deemed to have been submitted when postmarked (if properly

addressed and mailed by first class mail, postage prepaid) provided such

Proof of Claim is actually received prior to the motion for an order of the

Court approving distribution of the Net Settlement Fund. Any Proof of

Claim submitted in any other manner shall be deemed to have been

submitted when it was actually received at the address designated in the

Notice. Any Class Member who does not submit a Proof of Claim within

the time provided for shall be barred from sharing in the distribution of the

proceeds of the Net Settlement Fund, unless otherwise ordered by the

Court. Notwithstanding the foregoing, Lead Counsel shall have discretion

to accept late-submitted claims for processing by the Claims

Administrator so long as the distribution of the Net Settlement Fund is not

materially delayed thereby.

(b) The Proof of Claim submitted by each Class Member must satisfy the

following conditions: (i) it must be properly completed, signed and

submitted in a timely manner in accordance with the provisions of the

preceding subparagraph; (ii) it must be accompanied by adequate

supporting documentation as are specified in the Proof of Claim and as are



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reasonably available to the Authorized Claimant for the transactions

reported therein, in the form of broker confirmation slips, broker account

statements, an authorized statement from the broker containing the

transactional information found in a broker confirmation slip, or such

other documentation as is deemed adequate by Lead Counsel; (iii) if the

person executing the Proof of Claim is acting in a representative capacity,

a certification of his current authority to act on behalf of the Class

Member must be included in the Proof of Claim; and (iv) the Proof of

Claim must be complete and contain no material deletions or

modifications of any of the printed matter contained therein and must be

signed under penalty of perjury.

(c) As part of the Proof of Claim, each Class Member shall submit to the

jurisdiction of the Court with respect to the claim submitted, and shall

(subject to effectuation of the settlement) release all Released Claims as

provided in the Stipulation.

10. All Class Members shall be bound by all determinations and judgments in this

Action, whether favorable or unfavorable, except those who are found by the Court to have

previously timely and validly requested exclusion from the Class. The persons and entities who

request exclusion from the Class will be excluded from the Class and shall have no rights under

the Stipulation, shall not be entitled to submit any Proof of Claim forms, shall not share in the

distribution of the Net Settlement Fund as described in the Stipulation and in the Notice, and

shall not be bound by the Stipulation or the Judgment entered as to Defendants in the Action.

11. To request exclusion from the Class, a putative Class Member must send a letter,

postmarked no later than _________________, 2012 [proposed date: ninety (90) days after the

entry of this Order], sent to the Claims Administrator. For a request for exclusion to be valid, the

putative Class Member’s request for exclusion must include the Class Member’s name, current



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address, and day-time and evening telephone numbers; the dates of all such Class Member’s

purchases and/or sales of CTI common stock during the Class Period; the number of shares

purchased and/or sold on each such date; the prices paid and/or received for all such shares on

each such date; and a clear and unambiguous statement that such putative Class Member wished

to be excluded from the Class. No further opportunity to request exclusion will be given in this

Action. A Class Member’s failure to comply with the foregoing requirements for requesting

exclusion from the Class will result in such request being invalid and ineffective. Lead Plaintiffs

shall serve upon Defendants’ counsel and the Court copies of all such requests for exclusion no

later than fifteen (15) days before the date of the Settlement Hearing.

12. Pending final determination of whether the Stipulation should be approved, Lead

Counsel, Liaison Counsel, Lead Plaintiffs, and Class Members are barred and enjoined from

commencing or prosecuting any action asserting any Released Claims against any Released

Persons.

13. Any Class Member may enter an appearance in the Action, individually or, at

their own expense, through counsel of their own choice, in which case such counsel must file

with the Clerk of the Court and deliver to Lead Counsel and counsel for Defendants a notice of

such appearance no later than ninety (90) days after entry of this Order. If they do not enter an

appearance, they will be represented by Lead Counsel.

14. All papers in support of the request for attorneys’ fees and expenses shall be filed

and served no later than sixty (60) days after entry of this Order. All papers in support of the

settlement shall be filed and served no later than sixty (60) days after entry of this Order.

15. Any Class Member may appear and show cause, if he, she, or it has any, why the

proposed settlement with Defendants should not be approved as fair, reasonable, and adequate,

why the Plan of Allocation should not be approved as fair and equitable, and/or why Plaintiffs’

Counsel’s application for an award of attorneys’ fees and reimbursement of expenses should not

be granted; provided, however, that no Person shall be heard or entitled to contest such matters,



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unless that Person has delivered by hand or sent by first class mail written objections and copies

of all papers and briefs any such Person wishes to submit in support of any such objection

delivered or post-marked no later than _____________________, 2012, [proposed date: ninety

(90) days after entry of this Order] to each of the following: Clerk of the Court

Western District of Washington U.S. Courthouse, Lobby Level

700 Stewart Street Seattle, Washington 98101

Brower Piven

A Professional Corporation David A.P. Brower

488 Madison Avenue New York, NY 10022

Attorney for the CTIC Investor Group and

Lead Counsel for the Class

Wilson Sonsini Goodrich & Rosati Barry M. Kaplan

701 Fifth Avenue, Suite 5100 Seattle, Washington 98104

Attorneys for Defendants

Cell Therapeutics, Inc., Dr. James Bianco, Louis Bianco, and Craig Philips

Any Person who does not make his, her, or its objection in the manner provided in the Notice

shall be deemed to have waived such objection and shall forever be foreclosed from making any

objection to the fairness or adequacy of the proposed settlement as set forth in the Stipulation,

unless otherwise ordered by the Court. Any papers, in response to any such objections, in further

support of the above-noted motions shall be served and filed no later than seven (7) days prior to

the Settlement Hearing.

16. All funds held by the Escrow Agent shall be deemed and considered to be in

custodia legis of the Court, and shall remain subject to the jurisdiction of the Court, until such

time as such funds shall be distributed pursuant to the Stipulation and/or further order(s) of the

Court.

17. All reasonable costs and expenses incurred in identifying and notifying Class

Members, as well as administering the Settlement Fund, shall be paid as set forth in the

Stipulation. In the event the settlement is not approved by the Court, or otherwise fails to become



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effective, neither the Lead Plaintiffs nor Lead Counsel nor Liaison Counsel shall have any

obligation to repay any amounts reasonably incurred or disbursed pursuant to ¶¶ 2.4, 2.6, or 2.7

of the Stipulation for costs and expenses of providing notice and administration of the settlement.

18. The Court reserves the right to adjourn the date of the Settlement Hearing without

further notice to Class Members, and retains jurisdiction to consider all further applications

arising out of or connected with the proposed settlement. The Court may approve the settlement,

with such modifications as may be agreed to by the Lead Plaintiffs and Defendants, if

appropriate, without further notice to the Class.

IT IS SO ORDERED. Dated: _____________________, 2012 ________________________________ Marsha J. Pechman UNITED STATES DISTRICT JUDGE



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Presented By: David A.P. Brower (admitted pro hac vice) E-mail: [email protected] BROWER PIVEN A Professional Corporation 488 Madison Avenue New York, NY 10022 Tel: (212) 501-9000 Fax: (212) 501-0300 Attorney for the CTIC Investor Group and Lead Counsel for the Class Dan Drachler (WSBA #27728) E-mail: [email protected] ZWERLING, SCHACHTER & ZWERLING, LLP 1904 Third Avenue, Suite 1030 Seattle, WA 98101-1170 Tel: (206) 223-2053 Fax: (206) 343-9636 Attorney for the CTIC Investor Group and Liaison Counsel for the Class Douglas J. Clark, admitted pro hac vice WILSON SONSINI GOODRICH & ROSATI Professional Corporation 650 Page Mill Road Palo Alto, CA 94304 Telephone: (650) 493-9300 Facsimile: (650) 493-6811 Email: [email protected] Barry M. Kaplan, WSBA #8661 Email: [email protected] Claire Loebs Davis, WSBA #39812 Email: [email protected] WILSON SONSINI GOODRICH & ROSATI Professional Corporation 701 Fifth Avenue, Suite 5100 Seattle, WA 98104-7036 Telephone: (206) 883-2500 Facsimile: (206) 883-2699 Attorneys for Defendants Cell Therapeutics, Inc., Dr. James Bianco, Louis Bianco, and Craig Philips


EXHIBIT A-1


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AT SEATTLE

In re CELL THERAPEUTICS, INC. CLASS ACTION LITIGATION

Master Docket No. C10-414 MJP (consolidated with Nos. C10-480 MJP and C10-559MJP) CLASS ACTION


NOTICE OF PROPOSED SETTLEMENT OF CLASS ACTION To: All persons and entities who purchased the common stock of Cell Therapeutics, Inc. between March 25,

2008 and March 22, 2010, both dates inclusive.

PLEASE READ THIS NOTICE CAREFULLY.

YOUR RIGHTS WILL BE AFFECTED BY A CLASS ACTION LAWSUIT PENDING IN THIS COURT. PLEASE NOTE THAT IF YOU ARE A CLASS MEMBER, YOU MAY BE ENTITLED TO SHARE IN THE PROCEEDS OF THE SETTLEMENT DESCRIBED IN THIS NOTICE. TO CLAIM YOUR SHARE, YOU MUST TIMELY SUBMIT A VALID PROOF OF CLAIM POSTMARKED NO LATER THAN {CLAIM DATE}, IN CONNECTION WITH THIS SETTLEMENT. A PROOF OF CLAIM ACCOMPANIES THIS NOTICE. IF YOU NEED AN ADDITIONAL PROOF OF CLAIM YOU MAY REQUEST ONE FROM THE CLAIMS ADMINISTRATOR, AS EXPLAINED BELOW.

I. SUMMARY OF THIS NOTICE

This Notice has been sent to you pursuant to Rule 23 of the Federal Rules of Civil Procedure and an Order of the United States District Court for the Western District of Washington (the “Court”). The purpose of this Notice is to inform you of the proposed settlement of a class action lawsuit (the “Action”), as set forth in the Stipulation of Settlement (“Stipulation” or “Settlement”), and of the hearing to be held by the Court to consider the fairness, reasonableness, and adequacy of the Settlement. This Notice is not intended to be, and should not be understood as, an expression of any opinion by the Court concerning the merits of the Action. This Notice describes the rights you may have in connection with the Settlement and what steps you may take in relation to the Settlement. The proposed Settlement creates a fund in the amount of $19,000,000 in cash before deductions of attorneys’ fees, costs, and expenses. Lead Plaintiffs Satish Shah, David Gipson, and Xavian L. Draper (“Lead Plaintiffs” or “CTIC Investor Group”) and defendants Cell Therapeutics, Inc. (“CTI”), James A. Bianco, M.D., Louis A. Bianco, and Craig W. Philips (“Defendants”) disagree on the potential liability of Defendants and they do not agree on the average amount of damages per share, if any, that would be recoverable if Lead Plaintiffs were to have prevailed at trial on each claim alleged. Lead Plaintiffs and Lead Counsel (as defined below) believe that the proposed Settlement is an excellent recovery and is in the best interests of the Class (as defined below) in light of the risks associated with continuing to litigate and proceeding to trial. The Class, as certified by the Court for the purposes of settlement on {ORDER DATE} consists of all Persons (as defined on page 2) (other than those Persons who timely and validly request exclusion from the Class) who purchased the common stock of Cell Therapeutics, Inc. between March 25, 2008 and March 22, 2010 (the “Class Period”), both dates inclusive, excluding Defendants, members of the immediate families of James A. Bianco, M.D., Louis A. Bianco, and Craig W. Philips (the “Individual Defendants”), the directors, officers, subsidiaries, and affiliates of CTI, any person, firm, trust, corporation, officer, director or other individual or entity in which any Defendant has a controlling interest, and the legal representatives, affiliates, heirs, successors-in-interest or assigns of any such excluded person (the “Class”). If the Settlement is approved by the Court, Brower Piven, A Professional Corporation, 488 Madison Ave., 8th Floor, New York, NY 10022 (“Lead Counsel”) and Zwerling, Schachter & Zwerling, LLP, 1904 Third Avenue, Suite 1030, Seattle, WA 98101-1170 (“Liaison Counsel”) (collectively, “Plaintiffs’ Counsel”) will apply to the Court for an award of attorneys’ fees not to exceed 33.33% of the Settlement Fund (as defined below) and reimbursement of out-of-pocket expenses as compensation for successfully prosecuting the Action. You may contact the claims administrator, the firm The Garden City Group, Inc. (“Claims Administrator”), or a representative of Lead Counsel for further information about the Settlement; see below under “Further Information” for the contact information.


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Statement of Lead Plaintiffs’ Recovery – The proposed Settlement with Defendants creates a fund in the amount of $19,000,000 in cash, which will include interest that accrues prior to distribution (the “Settlement Fund”). Based on Lead Counsel’s estimate of the number of shares of stock that may have been damaged by the alleged fraud, and assuming that all those shares participate in the Settlement, Lead Plaintiffs estimate that the average recovery would be approximately $0.0475 per share. Your recovery from this fund, however, will depend on a number of variables, including the number of shares of CTI common stock you purchased during the Class Period, the timing of your purchases and any sales, the number and amount of claims actually filed, and the estimate of recoverable losses based on the analysis of Lead Plaintiffs’ damages consultant. You are advised to review the Plan of Allocation set forth on pages 5 to 7 below in the Notice, which provides the actual formulas that will be applied to claims submitted by each eligible individual, corporation, partnership, limited partnership, association, joint stock company, joint venture, limited liability company, professional corporation, estate, legal representative, heir, trust, unincorporated association, government or any political subdivision or agency thereof, and any business or legal entity, and their predecessors, successors, representatives, or assignees (“Person”) who falls within the definition of the Class (“Class Member”). This estimate above is also before deduction of any Court-awarded expenses, such as attorneys’ fees and out-of-pocket expenses, and the cost of sending this Notice and administering the distribution of the settlement proceeds. Statement of Potential Outcome of Case – Lead Plaintiffs and Defendants disagree on the potential liability of Defendants and they do not agree on the average amount of damages per share, if any, that would be recoverable if Lead Plaintiffs were to have prevailed at trial on each claim alleged. Defendants deny that they are liable in any respect or that Lead Plaintiffs suffered any injury. The issues on which the parties disagree include: (1) whether any Defendant engaged in any conduct subject to challenge under the federal securities laws; (2) the amount by which CTI common stock was allegedly artificially inflated (if at all) during the Class Period (as defined below); (3) the effect of various market forces influencing the trading price of CTI common stock at various times during the Class Period; (4) the extent to which the various matters that Lead Plaintiffs alleged were materially false or misleading influenced (if at all) the trading price of CTI common stock during the Class Period; (5) the extent to which the various allegedly adverse material facts that Lead Plaintiffs alleged were omitted influenced (if at all) the trading price of CTI common stock during the Class Period; (6) whether the statements made or facts allegedly omitted were material, false, misleading, or otherwise actionable under the securities laws; and (7) whether, even if liability could be proven, total damages would be greater than $0. Statement of Attorneys’ Fees and Costs Sought – Plaintiffs’ Counsel have committed a substantial amount of time prosecuting claims against Defendants on behalf of Lead Plaintiffs and the Class. In addition, they have not been reimbursed for out-of-pocket expenses. If the Settlement is approved by the Court, Plaintiffs’ Counsel will apply to the Court for an award of attorneys’ fees not to exceed 33.33% of the Settlement Fund and reimbursement of out-of-pocket expenses not to exceed $100,000, to be paid from the Settlement Fund. If the amounts described above are requested and approved by the Court, the average cost per share will be less than $0.0161 per share. In addition, Plaintiffs’ Counsel may apply to the Court, from time to time, for their fees and expenses, including hourly time billing incurred solely for administration of the Settlement. Reasons for Settlement – Lead Plaintiffs believe that the proposed settlement with Defendants is an excellent recovery and is in the best interests of the Class. Because of the risks associated with continuing to litigate and proceeding to trial, there was a danger that the Class would not have prevailed on their claims against Defendants, in which case the Class would receive nothing from Defendants. The amount of damages recoverable by the Class was and is challenged by Defendants. Recoverable damages in this case are limited to losses caused by conduct actionable under applicable law and, had the Action gone to trial, Defendants would have asserted that all or most of the losses of Class Members were caused by non-actionable conduct or market, industry, or general economic factors. Defendants would also assert, among other things, that their conduct complied with all applicable legal standards and that they did not act with the required state of mind to be liable for any violations of the federal securities laws. Further Information – You may contact a representative of Lead Counsel for further information about the Settlement by calling the following toll-free number: 877-519-0810. You also may email Lead Counsel at the following email address: [email protected]. Any written inquiries about the Action should be addressed to Lead Counsel at:

In re Cell Therapeutics, Inc., Class Action c/o GCG

PO Box 9861 Dublin, OH 43017-5764

II. NOTICE OF HEARING ON PROPOSED SETTLEMENT

A settlement hearing will be held on {DATE}, at {TIME}, before the Hon. Marsha J. Pechman, United States District Judge, at the United States Courthouse, 700 Stewart Street, Seattle, Washington 98101 (the “Settlement


mailto:[email protected]

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Hearing”). The purpose of the Settlement Hearing will be: (1) to determine whether the Court should grant certification to the Class pursuant to Fed. R. Civ. P. 23(a) and (b)(3); (2) to determine whether the Settlement consisting of $19,000,000 in cash should be approved as fair, reasonable, and adequate to the Class and the proposed Judgment (as defined on page 8) entered; (3) to determine whether the proposed Plan of Allocation for the proceeds of the settlement is fair and reasonable, and should be approved by the Court; (4) to determine whether any applications for attorneys’ fees or expenses to Plaintiffs’ Counsel should be approved; and (5) to rule upon such other matters as the Court may deem appropriate. The Court may adjourn or continue the Settlement Hearing without further notice to the Class.

III. THE LITIGATION

Currently pending before the United States District Court for the Western District of Washington is a consolidated action on behalf of all persons who purchased the common stock of Cell Therapeutics, Inc. during a defined period of time. The defendants named in the Action are Cell Therapeutics, Inc.; James A. Bianco, M.D., CTI’s Chief Executive Officer; Craig W. Philips, CTI’s President; and Louis A. Bianco, CTI’s Executive Vice President, Finance and Administration. On March 12, 2010, plaintiff Cyril Sabbagh filed a complaint in the United States District Court for the Western District of Washington captioned Cyril Sabbagh v. Cell Therapeutics, Inc., Dr. James A. Bianco, M.D., and Dr. Jack W. Singer, M.D., No. C10-414 MJP. By Court Order dated August 2, 2010, the above-referenced case was consolidated with all other related actions then pending, and ordered to proceed under the caption In re Cell Therapeutics, Inc. Class Action Litigation, No. C10-414 MJP. By the same Order, dated August 2, 2010, Satish Shah, David Gipson, and Xavian L. Draper were appointed as Lead Plaintiff pursuant to the Private Securities Litigation Reform Act of 1995 (“PSLRA”). By the same Order of the Court, dated August 2, 2010, David A.P. Brower of Brower Piven, A Professional Corporation, was appointed as Lead Counsel for the Class, and Zwerling, Schachter & Zwerling, LLP was appointed as Liaison Counsel for the Class. On September 27, 2010, Lead Plaintiffs filed their Consolidated Amended Class Action Complaint for Violation of the Federal Securities Laws (“Complaint”) alleging, inter alia, false and misleading statements by Defendants in connection with the approval process for one of CTI’s drugs, Pixantrone. The Complaint is the currently operative complaint in this Action. On October 27, 2010, Defendants filed their motion to dismiss Lead Plaintiffs’ Complaint. On February 4, 2011, the Court denied Defendants’ motion in large part. During the course of litigation, Lead Plaintiffs conducted extensive discovery. Defendants produced to Lead Plaintiffs for their review more than 245,000 pages of documents. In addition, Lead Plaintiffs issued subpoenas to over a dozen third-parties, and received and reviewed more than 40,000 pages of documents in response to these subpoenas. Lead Plaintiffs also reviewed extensive collections of audio and video files produced by Defendants. On October 26, 2011, the parties participated in a full-day mediation with the Honorable Nicholas H. Politan (Ret.) presiding. During the course of this mediation, the parties reached an agreement-in-principle to resolve this Action. Subsequently, the parties continued negotiations and reached an agreement to settle the Action on the terms set forth in the Stipulation.

IV. CLAIMS OF THE CLASS AND BENEFITS OF SETTLEMENT

Lead Plaintiffs believe that the claims asserted in the Action against Defendants have merit and that the evidence developed to date supports those claims. However, Lead Plaintiffs recognize and acknowledge the expense and length of continued proceedings necessary to prosecute the Action against Defendants through trial and through appeals. Lead Plaintiffs also have taken into account the uncertain outcome and the risk of any litigation, especially in complex actions such as this Action, as well as the difficulties and delays inherent in such litigation. Lead Plaintiffs also are mindful of the inherent difficulties of proof under and possible defenses to the securities law violations asserted in the Action. The Lead Plaintiffs believe that the settlement set forth in the Stipulation confers substantial benefits upon the Class. Based on their evaluation, the Lead Plaintiffs have determined that the settlement set forth in the Stipulation is in the best interests of the Class.

V. DEFENDANTS’ DENIALS OF WRONGDOING AND LIABILITY

Defendants expressly have denied and continue to deny all charges of wrongdoing or liability against them arising out of any of the conduct, statements, acts, or omissions alleged, or that could have been alleged, in the Action. Defendants also continue to believe the claims asserted against them in the Complaint are without merit. Defendants also have denied and continue to deny, among other things, the allegations that the Lead Plaintiffs or the Class have suffered damages, that the prices of CTI securities were artificially inflated by reasons of alleged misrepresentations, non-disclosures or otherwise, and that the Lead Plaintiffs or the Class were harmed by the conduct alleged in the Complaint or


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its predecessor complaints. Nonetheless, Defendants have agreed to enter into the Settlement solely to avoid the expense, distraction, and time associated with continuing the Action. Defendants have concluded that further conduct of the Action would be protracted and expensive and that it is desirable that the Action be fully and finally settled in the manner and upon the terms and conditions set forth in this Stipulation. Defendants also have taken into account the uncertainty and risks inherent in any litigation, especially in complex cases such as this Action. Defendants have, therefore, determined that it is desirable and beneficial to them that the Action be settled in the manner and upon the terms and conditions set forth in this Stipulation.

VI. TERMS OF THE PROPOSED SETTLEMENT

CTI has paid, or caused to be paid, cash in the amount of $19,000,000 into an escrow account, which will earn interest for the benefit of the Class, pursuant to the terms of the Stipulation. In exchange for such payment, the Released Claims (as defined on page 8) will be released, discharged, and dismissed with prejudice as against each of the Released Persons (as defined on page 8). A portion of the Settlement Fund will be used for certain administrative expenses, including the costs of printing and mailing this Notice, the cost of publishing newspaper notices, payment of any taxes assessed against the Settlement Fund and costs associated with the processing of claims submitted. In addition, as explained herein, a portion of the Settlement Fund may be awarded by the Court to award Plaintiffs’ Counsel attorneys’ fees and expenses. The Settlement Fund less (i) any Court-awarded attorneys’ fees, costs, and expenses; (ii) notice and administration costs; (iii) taxes and tax expenses; and (iv) other Court-approved deductions that occur before distribution of the proceeds of the settlement to the Class (“Net Settlement Fund”), will be distributed to any Class Member whose claim for recovery has been allowed pursuant to the terms of the Stipulation (“Authorized Claimant”) according to the Plan of Allocation described below.

VII. REQUESTING EXCLUSION FROM THE CLASS

If you do not wish to be included in the Class and you do not wish to participate in the proposed settlement described in this Notice you may request to be excluded. To do so, you must send a letter, postmarked no later than {OPT OUT DATE}. In this letter, you must set forth: (a) your name, current address, and day-time and evening telephone numbers; (b) the dates of all your purchases and/or sales of CTI common stock during the Class Period; (c) the number of shares purchased and/or sold on each such date; (d) the prices paid and/or received for all such shares on each such date; and (e) a clear and unambiguous statement that you wish to be excluded from the Class. The request for exclusion should be addressed as follows:


PO Box 9861 Dublin, OH 43017-5764

NO REQUEST FOR EXCLUSION WILL BE CONSIDERED VALID UNLESS ALL OF THE INFORMATION DESCRIBED ABOVE IS INCLUDED IN ANY SUCH REQUEST. NO FURTHER OPPORTUNITY TO REQUEST EXCLUSION WILL BE GIVEN IN THIS ACTION. If you validly request exclusion from the Class: (a) you will be excluded from the Class; (b) you shall have no rights under the Stipulation; (c) you shall not be entitled to submit any Proof of Claim forms; (d) you will not share in the proceeds of the settlement described herein; (e) you will not be bound by any judgment entered in the Action; and (f) you will not be precluded, by reason of your decision to request exclusion from the Class, from otherwise prosecuting an individual claim, if timely, against the Defendants based on the matters complained of in the Action.

VIII. THE RIGHTS OF CLASS MEMBERS

If you are a Class Member, you may receive the benefit of, and you will be bound by, the terms of the proposed settlement described in this Notice, upon the Court’s approval of it. If you are a Class Member, you have the following options:

1. You may file a Proof of Claim. If you submit a Proof of Claim, you will share in the proceeds of the proposed settlement if your claim is valid and if the proposed settlement is finally approved by the Court. In addition, you will be bound by the Judgment and release described below.

2. You may object to the Settlement, unless you have previously requested to be excluded from the Class. (See

Section XIV, below). However, if your objection is rejected, you will be bound by the Settlement and the Judgment just as if you had not objected.


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3. You may do nothing at all. If you choose this option, you will not share in the proceeds of the Settlement, but you

will be bound by any judgment entered by the Court in connection with the Settlement, and you shall be deemed to have, and by operation of the Judgment shall have, fully released all of the Released Claims against the Released Persons.

4. If you are a Class Member, you may, but are not required to, enter an appearance through counsel of your own

choosing at your own expense. If you do not do so, you will be represented by Lead Counsel, who are:

David A.P. Brower Daniel I. Wolf Brower Piven

A Professional Corporation 488 Madison Avenue New York, NY 10022

You will not be charged personally for the services of Lead Counsel.

IX. PLAN OF ALLOCATION

The Net Settlement Fund will be distributed to Class Members who submit valid and timely Proofs of Claim in connection with this Settlement, and have an allowable loss under the Plan of Allocation described below. You will be eligible to participate in the distribution only to the extent you had a net loss on your overall transactions in shares of CTI common stock during the Class Period. If you had a net gain from your overall transactions in CTI common stock during the Class Period, the value of the Recognized Loss will be zero. If you suffered a net loss on your overall transactions in CTI common stock during the Class Period, but that loss was less than the Recognized Loss calculated below, then the Recognized Loss shall be limited to the amount of the actual loss. For purposes of determining whether you had a net gain or suffered a net loss from your overall transactions in CTI common stock that will receive payment under this Plan of Allocation during the Class Period, the Claims Administrator shall: (i) total the amount paid for all CTI common stock purchased during the Class Period by the claimant (the “Total Purchase Amount”); (ii) match any sales of CTI common stock purchased during the Class Period first against the Class Member’s opening position in such common stock (the proceeds of those sales will not be considered for purposes of calculating gains or losses); (iii) total the amount received for sales of the remaining shares of CTI common stock sold during the Class Period (the “Sales Proceeds”); and (iv) ascribe a $0.56 per common share holding value for the number of shares of CTI common stock purchased during the Class Period and still held at the end of the Class Period (“Holding Value”). The Holding Value is based upon the closing price of CTI common stock on March 23, 2010 – the first full trading day after the end of the Class Period. The difference between (i) the Total Purchase Amount and the (ii) sum of the Sales Proceeds and Holding Value, will be deemed your net gain or net loss on your overall transactions in CTI common stock during the Class Period. In the event that a Class Member made more than one purchase or sale of CTI common stock, all purchases and sales shall be matched on a First-In-First-Out (“FIFO”) basis. Class Period sales will be matched first against any CTI common stock held at the beginning of the Class Period and then against purchases during the Class Period in chronological order. For all purposes, the transaction date and not the settlement date shall be used as the date for determining eligibility to file a claim. Gifts and transfers of securities are not eligible purchases. The covering purchase of a “short” sale is not an eligible purchase. No distributions will be made to Authorized Claimants who would otherwise receive a distribution of less than $10.00. For purposes of determining the amount an Authorized Claimant may recover under the Plan of Allocation, Lead Counsel have consulted with their damages expert. The Court may modify the Plan of Allocation without further notice to the Class. The Court has also reserved jurisdiction to allow, disallow or adjust the claim of any Class Member on equitable grounds. Payment pursuant to the Plan of Allocation set forth below shall be conclusive against all Authorized Claimants. No Person shall have any claim against the Defendants and the Lead Plaintiffs on behalf of themselves and the Class (collectively the “Settling Parties”), Plaintiffs’ Counsel, or the Claims Administrator or other Person designated by Lead Counsel based on distributions made substantially in accordance with the Stipulation and the settlement contained therein, the Plan of Allocation, or further orders of the Court. All Class Members who have failed to complete and file a valid and timely Proof of Claim in this Settlement shall be barred from participating in distributions from the Net Settlement Fund (unless otherwise ordered by the Court), but otherwise shall be bound by all of the terms of the Stipulation, including the terms of the Judgment entered and the releases given.


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Subject to the foregoing, under the Plan of Allocation, each Authorized Claimant shall be paid the percentage of the Net Settlement Fund that each Authorized Claimant’s Recognized Loss bears to the total of the Recognized Loss of all Authorized Claimants (“pro rata share”). Calculation of Recognized Loss for Cell Therapeutics, Inc. Common Stock Purchases:

A. For each share of common stock of Cell Therapeutics, Inc. acquired between March 25, 2008 and February 7, 2010 and held on June 18, 2010, the Recognized Loss for each such share shall be the lesser of:

i. $0.59; or

ii. The price paid less $0.52.

B. For each share of common stock of Cell Therapeutics, Inc. acquired between March 25, 2008 and February 7, 2010 and sold between February 8, 2010 and March 21, 2010, the Recognized Loss for each such share shall be the lesser of:

i. $0.42; or

ii. The price paid less the price received; or

iii. The price paid less the price on the date of sale set forth in Table A.

C. For each share of common stock of Cell Therapeutics, Inc. acquired between March 25, 2008 and February 7, 2010 and sold between March 22, 2010 and June 18, 2010, the Recognized Loss for each such share shall be the lesser of:

i. $0.59; or


iii. The price paid less the price on the date of sale set forth in Table B.

D. For each share of common stock of Cell Therapeutics, Inc. acquired between February 8, 2010 and March 21, 2010 and held on June 18, 2010, the Recognized Loss for each such share shall be the lesser of:

i. $0.44; or

ii. The price paid less $0.52.

E. For each share of common stock of Cell Therapeutics, Inc. acquired between February 8, 2010 and March 21, 2010 and sold between March 22, 2010 and June 18, 2010, the Recognized Loss for each such share shall be the lesser of:

i. $0.44; or


iii. The price paid less the price on the date of sale set forth in Table B.

F. For each share of common stock of Cell Therapeutics, Inc. acquired between March 25, 2008 and February 7,

2010 and sold between March 25, 2008 and February 7, 2010, the Recognized Loss for each such share shall be:

i. $0.00.

G. For each share of common stock of Cell Therapeutics, Inc. acquired between February 8, 2010 and March 21, 2010 and sold between February 8, 2010 and March 21, 2010, the Recognized Loss for each such share shall be:

i. $0.00.


7

For all purposes, the transaction date, and not the settlement date, shall be used as the date for determining inflation per share, eligibility to file a claim, and the calculation of Recognized Losses. All purchases and sales of Cell Therapeutics, Inc. common shares shall be accounted for and matched using the FIFO method of accounting. Additionally, the Plan of Allocation will account for the reverse stock split that occurred on August 31, 2008, whereby every ten shares of CTI common stock were converted into one share of CTI common stock. All calculations under the Plan of Allocation will be based off the post-split prices of CTI stock, and will account accordingly for stock purchased prior to the reverse stock split.

Table A: Table B: Table B (continued):

X. PARTICIPATION IN THE SETTLEMENT TO PARTICIPATE IN THE DISTRIBUTION OF THE NET SETTLEMENT FUND, YOU MUST TIMELY COMPLETE AND RETURN A VALID PROOF OF CLAIM IN CONNECTION WITH THIS SETTLEMENT.

02/08/2010 $0.64 03/22/2010 $0.47 05/06/2010 $0.61

02/09/2010 $0.71 03/23/2010 $0.56 05/07/2010 $0.60

02/10/2010 $0.73 03/24/2010 $0.59 05/10/2010 $0.60

02/11/2010 $0.74 03/25/2010 $0.61 05/11/2010 $0.60

02/12/2010 $0.74 03/26/2010 $0.61 05/12/2010 $0.60

02/16/2010 $0.73 03/29/2010 $0.61 05/13/2010 $0.60

02/17/2010 $0.72 03/30/2010 $0.61 05/14/2010 $0.59

02/18/2010 $0.72 03/31/2010 $0.60 05/17/2010 $0.59

02/19/2010 $0.72 04/01/2010 $0.59 05/18/2010 $0.59

02/22/2010 $0.72 04/05/2010 $0.59 05/19/2010 $0.58

02/23/2010 $0.71 04/06/2010 $0.58 05/20/2010 $0.58

02/24/2010 $0.71 04/07/2010 $0.58 05/21/2010 $0.58

02/25/2010 $0.71 04/08/2010 $0.59 05/24/2010 $0.57

02/26/2010 $0.71 04/09/2010 $0.59 05/25/2010 $0.57

03/01/2010 $0.71 04/12/2010 $0.59 05/26/2010 $0.56

03/02/2010 $0.71 04/13/2010 $0.60 05/27/2010 $0.56

03/03/2010 $0.70 04/14/2010 $0.60 05/28/2010 $0.56

03/04/2010 $0.71 04/15/2010 $0.60 06/01/2010 $0.55

03/05/2010 $0.72 04/16/2010 $0.61 06/02/2010 $0.55

03/08/2010 $0.74 04/19/2010 $0.61 06/03/2010 $0.54

03/09/2010 $0.76 04/20/2010 $0.61 06/04/2010 $0.54

03/10/2010 $0.77 04/21/2010 $0.61 06/07/2010 $0.54

03/11/2010 $0.78 04/22/2010 $0.62 06/08/2010 $0.53

03/12/2010 $0.79 04/23/2010 $0.62 06/09/2010 $0.53

03/15/2010 $0.80 04/26/2010 $0.62 06/10/2010 $0.53

03/16/2010 $0.81 04/27/2010 $0.62 06/11/2010 $0.52

03/17/2010 $0.82 04/28/2010 $0.62 06/14/2010 $0.52

03/18/2010 $0.82 04/29/2010 $0.62 06/15/2010 $0.52

03/19/2010 $0.83 04/30/2010 $0.62 06/16/2010 $0.52

03/20/2010 $0.83 05/03/2010 $0.62 06/17/2010 $0.52

03/21/2010 $0.83 05/04/2010 $0.61 06/18/2010 $0.52 05/05/2010 $0.61


8

A Proof of Claim is being sent with this Notice. If you are a Class Member and need an additional Proof of Claim, copies may be obtained by telephoning the Claims Administrator at 877-519-0810 or by downloading the form on the Internet at www.gcginc.com. The Proof of Claim, with all supporting documents (DO NOT SEND ORIGINALS), must be postmarked no later than {CLAIM DATE}, and delivered to the Claims Administrator at the address below. DO NOT SEND a Proof of Claim to counsel for the Settling Parties or the Court.


PO Box 9861 Dublin, OH 43017-5764

877-519-0810

Unless the Court orders otherwise, if you do not timely submit a valid Proof of Claim, you will be barred from receiving any payment from the Net Settlement Fund, but will in all other respects be bound by the provisions of the Stipulation and the Judgment. The Court may disallow or adjust the claim of any Class Member. Each claimant will be deemed to have submitted to the jurisdiction of the United States District Court for the Western District of Washington with respect to his, her, or its Proof of Claim.

XI. DISMISSAL AND RELEASES If the proposed settlement is approved, the Court will enter a Final Judgment and Order of Dismissal with Prejudice (“Judgment”). The Judgment will dismiss the Released Claims with prejudice as to the Released Persons, as such terms are defined below. The Judgment will provide that all Class Members shall be deemed to have released and forever discharged all Released Claims against all Released Persons and that the Released Persons shall be deemed to have released and discharged all Released Persons’ Claims against Lead Plaintiffs, Plaintiffs’ Counsel, and Class Members. “Released Claims” means any and all claims, debts, demands, rights, liabilities, and causes of action of every nature and description whatsoever (including, but not limited to, any claims for damages, interest, attorneys’ fees, expert or consulting fees, and any other costs, expenses or liability whatsoever), whether based on federal, state, local, statutory or common law or any other law, rule or regulation, whether fixed or contingent, accrued or un-accrued, liquidated or unliquidated, at law or in equity, matured or unmatured, including, without limitation, claims arising under Sections 10(b) or 20(a) of the Securities Exchange Act of 1934 and claims for control person liability, whether class or individual in nature, including both known claims and Unknown Claims (as defined below), whether or not concealed or hidden that (i) have been asserted in this Action or in the Complaint by the Lead Plaintiffs against any of the Released Persons (as defined below), or (ii) could have been asserted in the Action or any other forum by the Lead Plaintiffs or any Class Members against any of the Released Persons which arise out of, or are based upon or related in any way to, the allegations, transactions, facts, matters or occurrences, representations or omissions involved in the Action, or set forth or referred to in the Complaint, and that relate to the purchase of CTI common stock during the Class Period. “Released Persons” means each and all of the Defendants and their Related Parties. “Related Parties” means each of a Defendant’s past or present directors, officers, employees, partners, insurers, co-insurers, reinsurers, controlling shareholders, attorneys, accountants or auditors, advisors, investment advisors, personal or legal representatives, predecessors, successors, parents, subsidiaries, divisions, joint ventures, agents, assigns, spouses, marital communities, heirs, executors, estates, administrators, related or affiliated persons or entities, any entity in which a Defendant has a controlling interest, any members of any Individual Defendant’s immediate family, or any trust of which any Individual Defendant is the settlor or which is for the benefit of any Individual Defendant’s family. “Unknown Claims” means any Released Claims which any Lead Plaintiff or any Class Member does not know or suspect to exist in his, her, or its favor at the time of the release of the Released Persons which, if known by him, her, or it, might have affected his, her, or its settlement with and release of the Released Persons, or might have affected his, her, or its decisions with respect to this settlement. With respect to any and all Released Claims, the Settling Parties stipulate and agree that, upon the Effective Date, Lead Plaintiffs shall expressly waive and relinquish, and each of the Class Members shall be deemed to have, and by operation of the Judgment shall have, expressly waived and relinquished, the provisions, rights, and benefits of California Civil Code § 1542, which provides:

A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.


http://www.gcginc.com/

9

Lead Plaintiffs shall expressly waive and relinquish, and each of the Class Members shall be deemed to have, and by operation of the Judgment shall have, expressly waived and relinquished, any and all provisions, rights, and benefits conferred by any law of any state or territory of the United States, or principle of common law, which is similar, comparable or equivalent to California Civil Code § 1542. Lead Plaintiffs and Class Members may hereafter discover facts in addition to or different from those which he, she, or it now knows or believes to be true with respect to the subject matter of the Released Claims, but Lead Plaintiffs upon the Effective Date shall expressly, fully, finally, and forever settle and release and each Class Member, upon the Effective Date, shall be deemed to have, and by operation of the Judgment shall have, fully, finally, and forever settled and released any and all Released Claims, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, which now exist, or heretofore have existed, upon any theory of law or equity now existing or coming into existence in the future, including, but not limited to, conduct which is negligent, intentional, with or without malice, or a breach of any duty, law or rule, without regard to the subsequent discovery or existence of such different or additional facts. Lead Plaintiffs acknowledge, and the Class Members shall be deemed by operation of the Judgment to have acknowledged, that the foregoing waiver was separately bargained for and a key element of the settlement of which this release is a part.

XII. APPLICATION FOR ATTORNEYS’ FEES AND EXPENSES At the Settlement Hearing, Lead Counsel will request that the Court award attorneys’ fees in an amount not to exceed 33.33% of the Settlement Fund, plus their costs and expenses in an amount not to exceed $100,000, which were incurred and not previously reimbursed in connection with prosecuting the claims in the Action, plus interest. Plaintiffs’ Counsel’s fee application will be filed with the Court on {FILING DATE} and will available for download at www.gcginc.com immediately following that date. All such sums as may be approved by the Court will be paid from the Settlement Fund. Class Members are not personally liable for any such fees, costs, or expenses. Plaintiffs’ Counsel have committed a substantial amount of time prosecuting claims on behalf of Lead Plaintiffs and the Class. In addition, they have not been reimbursed for any of their costs and expenses. The amounts requested by Plaintiffs’ Counsel will compensate counsel for their efforts in achieving the Settlement for the benefit of the Class, and for their risk in undertaking this representation on a wholly contingent basis. The amount to be requested is well within the range of fees awarded to plaintiffs’ counsel under similar circumstances in other litigations of this type. Plaintiffs’ Counsel may thereafter from time to time apply to the Court, without further notice to the Class, for an additional award of attorneys’ fees and costs incurred in connection with administering the Settlement. All such awards shall be subject to the approval of the Court.

XII. CONDITIONS FOR SETTLEMENT The Settlement is conditioned upon the occurrence of certain events described in the Stipulation. Those events include, among other things: (1) entry of the Judgment by the Court, as provided for in the Stipulation and (2) expiration of the time to appeal from or alter or amend the Judgment. If, for any reason, any one of the conditions described in the Stipulation is not met or the Stipulation otherwise does not become effective or, under certain specified conditions, the Stipulation is terminated and, thereby, becomes null and void, the parties to the Stipulation will be restored to their respective positions as of the date the Stipulation was executed.

XIV. THE RIGHT TO OBJECT AND BE HEARD AT THE HEARING Any Class Member who has not excluded himself, herself, or itself from the Class can object to the Settlement, or any part of it, the application for expenses by the Lead Plaintiffs, and/or the application by Plaintiffs’ Counsel for attorneys’ fees and expenses. To object, any such Person must submit a written objection and copies of any papers and briefs so they are received on or before {OBJECTION DATE}, by each of the following:

Clerk of the Court Western District of Washington U.S. Courthouse, Lobby Level

700 Stewart Street Seattle, Washington 98101

Brower Piven A Professional Corporation

David A.P. Brower 488 Madison Avenue New York, NY 10022

Attorney for the CTIC Investor Group

and Lead Counsel for the Class

Wilson Sonsini Goodrich & Rosati Barry M. Kaplan

701 Fifth Avenue, Suite 5100 Seattle, Washington 98104

Attorneys for Defendants

Cell Therapeutics, Inc., Dr. James Bianco, Louis Bianco, and Craig Philips

Any written objection must demonstrate the objecting Person’s membership in the Class, including the dates of all such Class Member’s purchases and/or sales of CTI common stock during the Class Period, the number of shares purchased and/or sold on each such date, and the prices paid and/or received for all such shares on each such date. Only Class



10

Members who have submitted written objections in this manner will be entitled to be heard at the Settlement Hearing, unless the Court orders otherwise. Persons who intend to object to the Settlement and desire to present evidence at the Settlement Hearing must include in their written objections the identity of any witnesses they may call to testify and any exhibits they intend to introduce into evidence at the Settlement Hearing. If you wish to attend the Settlement Hearing in person and speak to the Court, you must ask the Court for permission. To do so, you must submit a written statement noting your intention to appear at the Settlement Hearing to the persons noted above so that it is received on or before {OBJECTION DATE}.

XV. SPECIAL NOTICE TO SECURITIES BROKERS AND OTHER NOMINEES If you purchased CTI common stock (NASDAQ: CTIC) between March 25, 2008 and March 22, 2010, both dates inclusive, for the beneficial interest of a person or entity other than yourself, THE COURT HAS DIRECTED THAT WITHIN SEVEN DAYS OF YOUR RECEIPT OF THIS NOTICE, you either (a) provide to the Claims Administrator identified below the name and last known address of each person or entity for whom or which you purchased CTI common stock during such time period or (b) request additional copies of this Notice, which will be provided to you free of charge, and within seven days mail the Notice directly to the beneficial owners of that CTI common stock. If you select option (a) above, the Claims Administrator will cause copies of this Notice to be forwarded to the beneficial owners of common stock referred to herein. If you choose to follow alternative procedure (b), the Court has directed that, upon such mailing, you send a statement to the Claims Administrator confirming that the mailing was made as directed. All communications concerning the foregoing should be addressed to the Claims Administrator:


PO Box 9861 Dublin, OH 43017-5764

877-519-0810 You are entitled to reimbursement for your reasonable expenses actually incurred in complying with the foregoing, including reimbursement of reasonable postage expenses and the reasonable costs of obtaining the names and addresses of beneficial owners. Those reasonable expenses and costs will be paid upon request and submission of appropriate supporting documentation. All requests for reimbursement should be sent to the Claims Administrator.

XVI. EXAMINATION OF PAPERS

This Notice is a summary and does not describe all of the details of the Stipulation. For full details of the matters discussed in this Notice, you may review the Stipulation filed with the Court, which may be inspected during business hours, at the office of the Clerk of the Court, Western District of Washington, U.S. Courthouse, Lobby Level, 700 Stewart Street, Seattle, Washington 98101 or at www.gcginc.com. If you have any questions about the Settlement, you may contact a representative of Lead Counsel by calling the following toll-free number: 877-519-0810. You also may email Lead Counsel at the following email address: [email protected]. Any written inquiries about the Action should be addressed to Lead Counsel at:


PO Box 9861 Dublin, OH 43017-5764

PLEASE DO NOT CONTACT THE COURT OR DEFENDANTS’ COUNSEL REGARDING THIS NOTICE.

Dated: ___________________, 2012 BY THE ORDER OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON



mailto:[email protected]

EXHIBIT A-2


UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON AT SEATTLE

In re CELL THERAPEUTICS, INC. CLASS ACTION LITIGATION

Master Docket No. C10-414 MJP (consolidated with Nos. C10-480 MJP and C10-559MJP) CLASS ACTION


SUMMARY NOTICE OF PROPOSED SETTLEMENT OF CLASS ACTION To: All persons and entities who purchased the common stock of Cell Therapeutics, Inc. between March 25, 2008 and March 22, 2010, both dates inclusive. This Summary Notice is given pursuant to Rule 23 of the Federal Rules of Civil Procedure and an Order of the United States District Court for the Western District of Washington (the “Court”), dated ________. The purpose of this Summary Notice is to inform you of the proposed settlement of the above-entitled class action (the “Action”) against defendants Cell Therapeutics, Inc., James A. Bianco, Louis A. Bianco, and Craig W. Philips. A Settlement Hearing will be held before the Hon. Marsha J. Pechman, United States District Judge, at the United States Courthouse, 700 Stewart Street, Seattle, Washington 98101, at ___________ on _______ in order: (1) to determine whether the Court should grant certification to the Class pursuant to Fed. R. Civ. P. 23(a) and (b)(3); (2) to determine whether the Settlement consisting of $19,000,000 in cash should be approved as fair, reasonable, and adequate to the Class and the proposed Judgment entered; (3) to determine whether the proposed Plan of Allocation for the proceeds of the settlement is fair and reasonable, and should be approved by the Court; (4) to determine whether any applications for attorneys’ fees or expenses to Plaintiffs’ Counsel should be approved; and (5) to rule upon such other matters as the Court may deem appropriate. If you purchased the common stock of Cell Therapeutics, Inc. between March 25, 2008 and March 22, 2010 (both dates inclusive), and are not otherwise excluded from the Class, you are a Class Member. Class Members will be bound by the final judgment of the Court. If you are a Class Member, in order to share in the distribution of the Net Settlement Fund, you must submit a Proof of Claim postmarked no later than {CLAIM DATE}, establishing that you are entitled to recovery. A Proof of Claim is being sent with this Notice. If you are a Class Member and need an additional Proof of Claim, copies may be obtained by telephoning the Claims Administrator at 877-519-0810 or by downloading the form on the Internet at www.gcginc.com. If you do not wish to be included in the Class and you do not wish to participate in the proposed settlement described, you may request to be excluded, in the manner specifically set forth in the full Notice of Proposed Settlement of Class Action (“Notice”), no later than {OPT OUT DATE}. If you are a Class Member, you may make a written objection to the Settlement. If you make a written objection, you also may appear at the Settlement Hearing. You must file and serve your written objection, in the manner specifically set forth in the Notice, no later than {OBJECTION DATE}. The procedures which MUST be followed for Class Members to request exclusion from the Class or to object to the settlement, the Plan of Allocation or application for attorneys’ fees and reimbursement of expenses are set forth in full in the Notice. You are urged to obtain a copy of the Notice, which includes, among other things, a description of: (1) the litigation in the Action prior to the settlement; (2) the terms of the proposed settlement; (3) the benefits of the settlement to the Class; (4) the Plan of Allocation for the proceeds of the settlement; (5) the rights of Class Members; (6) the release of claims against defendants Cell Therapeutics, Inc., James A. Bianco, Louis A. Bianco, and Craig W. Philips, and their Related Parties; (7) the application for an award of attorneys’ fees and expenses; and (8) additional details concerning the Settlement Hearing, excluding oneself from the Class and/or objecting to the settlement, the Plan of Allocation, and/or the application for attorneys’ fees and reimbursement of expenses. PLEASE DO NOT CONTACT THE COURT OR DEFENDANTS’ COUNSEL REGARDING THIS NOTICE. This is only a summary notice. The full notice may be accessed at: www.gcginc.com. Dated: _______________________, 2012 Marsha J. Pechman UNITED STATES DISTRICT JUDGE




EXHIBIT A-3


In re Cell Therapeutics, Inc., Class Action

c/o GCG

PO Box 9861

Dublin, OH 43017-5761

1-877-519-0810

Must be Postmarked

No Later Than

____________, 2012

CTT

*P-LBE$F-POC/1*

CLAIMANT IDENTIFICATION:

Claim Number:

Control Number:

PROOF OF CLAIM AND RELEASE

Questions? Call 1-877-519-0810 or visit www.gcginc.com

Please print clearly in black ink.

To recover as a member of the Class based on your claims in the action entitled In re Cell Therapeutics, Inc.,No. C10-414 MJP (the “Action”), in the United States District Court for the Western District of Washington, you

must complete and, under Section E below, sign this Proof of Claim and Release form (“Proof of Claim”). If you

fail to submit a timely, properly completed and addressed Proof of Claim, your claim may be rejected and you

may be precluded from any recovery from the Net Settlement Fund. All defined terms contained herein shall

have the same meanings as set forth in the Stipulation of Settlement dated as of February 13, 2012.

TABLE OF CONTENTS

SECTION A - CLAIMANT INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

SECTION B - SCHEDULE OF TRANSACTIONS IN COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . .3

SECTION C - SUPPORTING DOCUMENTATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

SECTION D - RELEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

SECTION E - CERTIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

PAGE #

THIS PROOF OF CLAIM MUST BE MAILED TO THE ADDRESS ABOVEAND POSTMARKED NO LATER THAN ______________, 2012.


*P-LBE$F-POC/2*2

IF YOU FAIL TO SUBMIT A COMPLETE CLAIM BY ____________, 2012 YOUR CLAIM IS SUBJECT TO REJECTION

OR YOUR PAYMENT MAY BE DELAYED.

NOTICE REGARDING ELECTRONIC FILES: Certain claimants with large numbers of transactions may request to, or

may be requested to, submit information regarding their transactions in electronic files. To obtain the mandatory

electronic filing requirements and file layout, you may visit the website at www.gcginc.com or you may e-mail the Claims

Administrator at [email protected]. Any file not in accordance with the required electronic filing format will be subject

to rejection. No electronic files will be considered to have been properly submitted unless the Claims Administrator issues

an email after processing your file with your claim numbers and respective account information. Do not assume that your

file has been received or processed until you receive this email. If you do not receive such an email within 10 days of your

submission, you should contact the electronic filing department at [email protected] to inquire about your file and

confirm it was received and acceptable.

Address Line 1

City State Zip Code

(Email address is not required, but if you provide it you authorize the Claims Administrator to use it in providing you with information relevant to this claim.)

Beneficial Owner’s Employer Identification Number or Social Security Number

Telephone Number (Day) Telephone Number (Night)

Email Address

Address Line 2 (If Applicable)

Foreign Province Postal Code

Account Number (If Claimant Is Not an Individual) Trust/Other Date (If Applicable)

Trustee/Nominee/Other

Company/Other Entity (If Claimant Is Not an Individual) Contact Person (If Claimant is Not an Individual)

Last Name (Co-Beneficial Owner) First Name (Co-Beneficial Owner)

Last Name (Beneficial Owner if Different From Claimant) First Name (Beneficial Owner)

LAST NAME (CLAIMANT) FIRST NAME (CLAIMANT)

SECTION A - CLAIMANT INFORMATION

- - - -

Foreign Country


2. PURCHASES/ACQUISITIONS: List each individual purchase of Cell Therapeutics, Inc. common stock from

March 25, 2008 through June 18, 2010.1

3. SALES: List each individual sale of Cell Therapeutics, Inc. common stock from March 25, 2008 through

June 18, 2010.

4. ENDING HOLDINGS: Number of shares of Cell Therapeutics, Inc. common stock

owned at the close of trading on June 18, 2010: (If none, write “zero” or “0”; if other

than zero, must be documented.)

*P-LBE$F-POC/5*3

Number of Shares

Purchased/Acquired

Purchase Price Per ShareDate(s) of Purchase or Acquisition

(List Chronologically)

(Month/Day/Year)

Total Transaction Amount

(excluding commissions,

taxes, and fees)

Provide Cell Therapeutics Common Stock Trading History from March 25, 2008 through June 18, 2010.

*NOTE: On August 31, 2008, effective at 12:00 noon Pacific Daylight Time, a reverse stock split for Cell Therapeutics, Inc. common stock occurred,whereby every ten shares of Cell Therapeutics, Inc. common stock were converted into one share of Cell Therapeutics, Inc. common stock. In listingbelow the number of shares traded, please do not try and account for this reverse stock split yourself. Instead, simply list the number of shares youbought, sold and/or held on the actual date of purchase, sale and/or holding.

SECTION B - SCHEDULE OF TRANSACTIONS IN COMMON STOCK*

IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS YOU MUST

PHOTOCOPY THIS PAGE AND CHECK THIS BOX

IF YOU DO NOT CHECK THIS BOX THESE ADDITIONAL PAGES WILL NOT BE REVIEWED

1. BEGINNING HOLDINGS: Number of shares of Cell Therapeutics, Inc. common

stock owned at the close of trading on March 24, 2008: (If none, write “zero” or “0”;

if other than zero, must be documented.) Number of Shares

/ / .

/ / .

/ / .

/ / .

Please check the

box if this was a

purchase in which

you covered a

“short sale”

1 Please note: Information requested with respect to your purchases/acquisitions of CTI common stock from March 22, 2010 through and including June

18, 2010 is needed in order to balance your claim; purchases/acquisitions during this period, however, are not eligible under the Settlement and will not

be used for purposes of calculating your Recognized Claim pursuant to the Plan of Allocation.

Number of Shares

Number of Shares

Sold

Sale Price Per ShareDate(s) of Sale

(List Chronologically)

(Month/Day/Year)

Total Transaction Amount

(excluding commissions,

taxes, and fees)

/ / .

/ / .

/ / .

/ / .

Please check the

box if this was a

purchase in which

you covered a

“short sale”


*P-LBE$F-POC/12*4

Please Submit Supporting Documentation For Your Claim. You must submit documentation for your trading history. Acceptable

documentation may include: (a) monthly stock brokerage or other investment account statements; (b) trade confirmation slips; (c) a

signed letter from your broker on firm letterhead verifying the information you are providing; (d) a Deposit or Escrow Receipt showing

your holdings; or (e) other equivalent proof of your transactions. DO NOT SEND ORIGINALS. If you have questions, please call 1-877-

519-0810.

SECTION C – SUPPORTING DOCUMENTATION

SECTION D – RELEASE

Please Review the Release For the Claims Against the Defendants and Sign Below.

1. I (We) hereby acknowledge full and complete satisfaction of, and do hereby fully, finally and forever release, relinquish and

discharge, all of the Released Claims against Cell Therapeutics, Inc. (“CTI”), James A. Bianco, Louis A. Bianco, and Craig W. Philips

(collectively, “Defendants”) and each and all of their “Related Parties,” defined as each of a Defendant’s past or present directors,

officers, employees, partners, insurers, co-insurers, reinsurers, controlling shareholders, attorneys, accountants or auditors, advisors,

investment advisors, personal or legal representatives, predecessors, successors, parents, subsidiaries, divisions, joint ventures,

agents, assigns, spouses, marital communities, heirs, executors, estates, administrators, related or affiliated persons or entities, any

entity in which a Defendant has a controlling interest, any members of any Defendant’s immediate family, or any trust of which any

Defendant is the settlor or which is for the benefit of any Defendant’s family.

2. “Released Claims” means any and all claims, debts, demands, rights, liabilities, and causes of action of every nature and

description whatsoever (including, but not limited to, any claims for damages, interest, attorneys’ fees, expert or consulting fees, and any

other costs, expenses or liability whatsoever), whether based on federal, state, local, statutory or common law or any other law, rule or

regulation, whether fixed or contingent, accrued or un-accrued, liquidated or unliquidated, at law or in equity, matured or unmatured,

including, without limitation, claims arising under Sections 10(b) or 20(a) of the Securities Exchange Act of 1934 and claims for control

person liability, whether class or individual in nature, including both known claims and Unknown Claims (as defined below) whether or

not concealed or hidden that (i) have been asserted in this Action or in the Complaint by the Lead Plaintiffs against any of the Released

Persons (as defined below), or (ii) could have been asserted in the Action or any other forum by the Lead Plaintiffs or any Class Members

against any of the Released Persons which arise out of, or are based upon or related in any way to, the allegations, transactions, facts,

matters or occurrences, representations or omissions involved in the Action, or set forth or referred to in the Complaint, and that relate

to the purchase of CTI common stock during the Class Period.

3. “Unknown Claims” means any Released Claims which Lead Plaintiffs or any Class Member does not know or suspect to exist in

his, her, or its favor at the time of the release of the Released Persons which, if known by him, her, or it, might have affected his, her,

or its settlement with and release of the Released Persons, or might have affected his, her, or its decisions with respect to this

settlement. With respect to any and all Released Claims, the Settling Parties stipulate and agree that, upon the Effective Date, Lead

Plaintiffs shall expressly waive and relinquish, and each of the Class Members shall be deemed to have, and by operation of the

Judgment shall have, expressly waived and relinquished, the provisions, rights, and benefits of California Civil Code § 1542, which

provides:

A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at

the time of executing the release, which if known by him or her must have materially affected his or her settlement

with the debtor.

Lead Plaintiffs shall expressly waive and relinquish, and each of the Class Members shall be deemed to have, and by operation of the

Judgment shall have, expressly waived and relinquished, any and all provisions, rights, and benefits conferred by any law of any state

or territory of the United States, or principle of common law, which is similar, comparable or equivalent to California Civil Code § 1542.

Lead Plaintiffs and Class Members may hereafter discover facts in addition to or different from those which he, she, or it now knows or

believes to be true with respect to the subject matter of the Released Claims, but Lead Plaintiffs upon the Effective Date shall

expressly, fully, finally, and forever settle and release and each Class Member, upon the Effective Date, shall be deemed to have, and

by operation of the Judgment shall have, fully, finally, and forever settled and released any and all Released Claims, known or unknown,

suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, which now exist, or heretofore have

existed, upon any theory of law or equity now existing or coming into existence in the future, including, but not limited to, conduct which

is negligent, intentional, with or without malice, or a breach of any duty, law or rule, without regard to the subsequent discovery or

existence of such different or additional facts. Lead Plaintiffs acknowledge, and the Class Members shall be deemed by operation of

the Judgment to have acknowledged, that the foregoing waiver was separately bargained for and a key element of the settlement of

which this release is a part.

4. I (We) hereby warrant and represent that I (we) have not assigned or transferred or purported to assign or transfer, voluntarily or

involuntarily, any matter released pursuant to this release or any other part or portion thereof.

5. I (We) hereby warrant and represent to the best of my (our) knowledge that I (we) have included information about all of my (our)

transactions in CTI common stock that occurred during the Class Period as well as the number of shares of CTI common stock held by

me (us) at the close of trading on March 24, 2008 and June 18, 2010.


*P-LBE$F-POC/13*5

Under the penalty of perjury, I (we) certify that:

1. The number shown below on this form is my (our) current SSN/TIN; and

2. I (We) certify that I am (we are) not subjected to backup withholding under the provisions of Section 3406(a)(1)(C) of the Internal

Revenue Code.

NOTE: If you have been notified by the Internal Revenue Service that you are subject to backup withholding, please strike out the

language that you are not subject to backup withholding in the certification above.

The Internal Revenue Service does not require your consent to any provision other than the certification required to avoid backup

withholding.

Social Security No. (for individuals) or Taxpayer Identification Number

I (We) declare under penalty of perjury under the laws of the United States of America that the foregoing information supplied by the

undersigned is true and correct.

Executed this _________ day of _______________, 20______ in ________________________, _____________________________.

(month) (year) (city) (state)

______________________________________________________ _________________________________________________

Signature of Claimant Signature of Joint Claimant, if any

______________________________________________________ _________________________________________________

Print Name of Claimant Print Name of Joint Claimant, if any

______________________________________________________ _________________________________________________

Date Date

If Claimant is other than an individual, or is not the person completing this form, the following also must be provided:

______________________________________________________ _________________________________________________

Signature of Person Completing Form Date

______________________________________________________ _________________________________________________

Print Name of Person Completing Form Capacity of person signing on behalf of Claimant, if other than

an individual, e.g., executor, president, custodian, etc.

SECTION E – CERTIFICATION

- - -


1. Please sign the above release and certification. If this Claim Form is being

made on behalf of joint Claimants, then both must sign.

2. Remember to attach only copies of acceptable supporting documentation.

3. Please do not highlight any portion of the Claim Form or any supporting

documents.

4. Do not send original stock certificates or documentation. These items cannot

be returned to you by the Claims Administrator.

5. Keep copies of the completed Claim Form and documentation for your own

records.

6. The Claims Administrator will acknowledge receipt of your Claim Form by

mail, within 60 days. Your claim is not deemed filed until you receive an

acknowledgement postcard. If you do not receive an acknowledgement

postcard within 60 days, please call the Claims Administrator toll free at

1-877-519-0810.

7. If your address changes in the future, or if this Claim Form was sent to an old

or incorrect address, please send the Claims Administrator written notification

of your new address. If you change your name, please inform the Claims

Administrator.

8. If you have any questions or concerns regarding your claim, please contact

the Claims Administrator at the above address or at 1-877-519-0810, or visit

www.gcginc.com.

THIS CLAIM FORM MUST BE MAILED TO THE CLAIMS ADMINISTRATOR BY FIRST-CLASS MAIL,

POSTAGE PREPAID, POSTMARKED NO LATER THAN _______________, 2012, ADDRESSED AS

FOLLOWS:

In re Cell Therapeutics, Inc., Class Action

c/o GCG

PO Box 9861

Dublin, OH 43017-5761

REMINDER CHECKLIST

*P-LBE$F-POC/13*6


EXHIBIT B


[PROPOSED] FINAL JUDGMENT AND ORDER OF DISMISSAL WITH PREJUDICE

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AT SEATTLE In re CELL THERAPEUTICS, INC. CLASS ACTION LITIGATION

Master Docket No. C10-414 MJP (consolidated with Nos. C10-480 MJP and C10-559MJP) CLASS ACTION [PROPOSED] FINAL JUDGMENT AND ORDER OF DISMISSAL WITH PREJUDICE


This matter came before the Court for hearing pursuant to this Court’s Order Granting

Preliminary Approval of Settlement, Conditional Class Certification, and Providing for Notice

dated ______________, 2012 (the “Preliminary Approval Order”), on the application of the

Settling Parties for approval of the settlement (the “Settlement”) set forth in the Stipulation of

Settlement dated as of February 13, 2012 (“Stipulation”), and, following a hearing on

__________, 2012 before this Court to consider the applications of the Settling Parties. The

Court having considered all papers filed and proceedings held herein, and having received


[PROPOSED] FINAL JUDGMENT AND ORDER OF DISMISSAL WITH PREJUDICE 2

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declarations attesting to the mailing of the Notice and the publication of the Summary Notice in

accordance with the Preliminary Approval Order, and good cause appearing therefore,

IT IS HEREBY ADJUDGED AND DECREED THAT:

1. This Final Judgment incorporates by reference the definitions in the Stipulation,

and all terms used herein shall have the same meanings as set forth in the Stipulation unless set

forth differently herein. The terms of the Stipulation are fully incorporated in this Final Judgment

as if set forth fully herein.

2. The Court has jurisdiction over the subject matter of this Action and all parties to

the Action, including all Class Members.

3. This Court finds that due and adequate notice was given of the Settlement, the

Plan of Allocation of the Settlement proceeds, and Plaintiffs’ Counsel’s application for an award

of attorneys’ fees and reimbursement of expenses, as directed by this Court’s Preliminary

Approval Order, and that the forms and methods for providing such notice to Class Members:

(a) constituted the best notice practicable under the circumstances,

including individual notice to all Class Members who could be

identified through reasonable effort;

(b) was reasonably calculated, under the circumstances, to apprise Class

Members of: (i) the proposed settlement of this class action and the

right to exclude themselves from the Class; (ii) their right to object to

any aspect of the proposed settlement, including the terms of the

Stipulation and the Plan of Allocation; (iii) their right to appear at the

Settlement Hearing, either on their own or through counsel hired at

their own expense, if they are not excluded from the Class; and (iv)

the binding effect of the proceedings, rulings, orders and judgments in

this Action, whether favorable or unfavorable, on all persons who are

not excluded from the Class;



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(c) was reasonable and constituted due, adequate, and sufficient notice to

all persons entitled to be provided with notice; and

(d) fully satisfied all the applicable requirements of Rule 23 of the Federal

Rules of Civil Procedure, due process, and all other applicable laws.

4. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, the Court hereby

certifies a Class consisting of all Persons (other than those Persons who timely and validly

requested exclusion from the Class) who purchased the common stock of Cell Therapeutics, Inc.

(“CTI”) between March 25, 2008 and March 22, 2010, inclusive. Excluded from the Class are

Defendants, members of the Individual Defendants’ immediate families, the directors, officers,

subsidiaries, and affiliates of CTI, any person, firm, trust, corporation, officer, director or other

individual or entity in which any Defendant has a controlling interest, and the legal

representatives, affiliates, heirs, successors-in-interest or assigns of any such excluded person.

5. The Class also excludes those Persons who timely and validly filed valid requests

for exclusion from the Class pursuant to the Notice sent to Class Members as provided in this

Court’s Preliminary Approval Order (“Opt-Outs”). A list of such Persons who filed timely,

completed Opt-Outs is attached hereto as Exhibit 1. Persons who filed timely, completed Opt-

Outs are not bound by this Final Judgment or the terms of the Stipulation, and may pursue their

own individual remedies against Defendants and the Released Persons. However, such Persons

are not entitled to any rights or benefits provided to Class Members by the terms of the

Stipulation.

6. With respect to the Class, the Court finds that:

(a) the Class Members satisfy all of the requirements of Rule 23(a) of the

Federal Rules of Civil Procedure because:

i. the members of the Class are so numerous that joinder of all

members is impracticable;

ii. there are questions of law and fact common to the Class;



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iii. the claims and defenses of the representative parties are typical of

the Class; and

iv. the representative parties will fairly and adequately protect the

interests of the Class.

(b) In addition, the Court finds that the Action satisfies the requirement of

Federal Rule of Civil Procedure 23(b)(3) in that there are questions of law

and fact common to the Class Members that predominate over any

questions affecting only individual members, and that a class action is

superior to other available methods for the fair and efficient adjudication

of the controversy; and

(c) The Court finds that Satish Shah, David Gipson, and Xavian L. Draper

possess claims that are typical of the claims of Class Members and that

they have and will adequately represent the interest of Class Members and

appoints them as the representatives of the Class (“Class

Representatives”), and appoints Lead Counsel, Brower Piven, A

Professional Corporation as counsel for the Class.

7. Pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, this Court hereby

approves the Settlement set forth in the Stipulation and finds that said Settlement is, in all

respects, fair, reasonable, and adequate to, and is in the best interests of, Lead Plaintiffs and each

of the Class Members based on: (a) the Settlement resulting from arm’s-length negotiations

between able and experienced counsel representing the interests of Lead Plaintiffs, the Class

Members, and the Defendants, following significant development of the facts in the Action; (b)

the amount of the recovery for Class Members being within the range of fairness given the

strengths and weaknesses of the claims and defenses thereto; (c) the risks of non-recovery and/or

recovery of a lesser amount than is represented through the Settlement by continued litigation

through all pre-trial, trial and appellate procedures; and (d) the recommendation of experienced



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counsel. All objections to the proposed Settlement, if any, are overruled in their entirety.

Accordingly, the Settlement embodied in the Stipulation is hereby approved in all respects and

shall be consummated in accordance with its terms and provisions. The Settling Parties are

hereby directed to perform the terms of the Stipulation.

8. This Court hereby approves the Plan of Allocation as set forth in the Notice as fair

and equitable, and overrules all objections to the Plan of Allocation, if any, in their entirety. The

Court directs Lead Counsel to proceed with the processing of Proofs of Claim and the

administration of the Settlement pursuant to the terms of the Plan of Allocation and, upon

completion of the claims processing procedure, to present to this Court a proposed final

distribution order for the distribution of the Net Settlement Fund to Class Members, as provided

in the Stipulation and Plan of Allocation.

9. This Court hereby awards Plaintiffs’ Counsel attorneys’ fees equal to _____%

percent of the Settlement Fund (including interest accrued thereon), and reimbursement of their

out-of-pocket expenses in the amount of $________________, with interest to accrue thereon at

the same rate and for the same periods as has accrued by the Settlement Fund from the date of

this Final Judgment to the date of actual payment of said attorneys’ fees and expenses to

Plaintiffs’ Counsel as provided in the Stipulation. The Court finds the amount of attorneys’ fees

awarded herein are fair and reasonable based on: (a) the work performed and costs incurred by

Plaintiffs’ Counsel; (b) the complexity of the case; (c) the risks undertaken by Plaintiffs’ Counsel

and the contingent nature of their employment; (d) the quality of the work performed by

Plaintiffs’ Counsel in this Action and their standing and experience in prosecuting similar class

action securities litigation; (e) awards to successful plaintiffs’ counsel in other, similar litigation;

(f) the benefits achieved for Class Members through the Settlement; and (g) the absence of

[any/a significant number of] objection[s] from [any] Class Members to either the application for

an award of attorneys’ fees or reimbursement of expenses to Plaintiffs’ Counsel. The Court also

finds that the requested reimbursement of expenses is proper as the expenses incurred by



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Plaintiffs’ Counsel, including the costs of experts, were reasonable and necessary in the

prosecution of this Action on behalf of Class Members. The attorneys’ fees awarded and

expenses reimbursed above shall be paid to, and distributed between and among Plaintiffs’

Counsel, as provided in the Stipulation.

10. Plaintiffs’ Counsel may apply, from time to time, for any fees and/or expenses

incurred by them solely in connection with the administration of the Settlement and distribution

of the Net Settlement Fund to Class Members.

11. The attorneys’ fees awarded shall be paid to Lead Counsel as provided in the

Stipulation and Lead Counsel shall thereafter allocate the attorneys’ fees between and among

Plaintiffs’ Counsel in a manner that they, in good faith, believe reflects the contribution of such

counsel to the initiation, prosecution and resolution of the Action.

12. All payments of attorneys’ fees and reimbursement of expenses to Plaintiffs’

Counsel in the Action shall be made from the Settlement Fund, and the Released Persons shall

have no liability or responsibility for the payment of any of Lead Plaintiffs’ or Plaintiffs’

Counsel’s attorneys’ fees or expenses except as expressly provided in the Stipulation with

respect to the cost of Notice and administration of the Settlement.

13. Pursuant to Federal Rule of Civil Procedure 23(c)(3), all Class Members who

have not timely and validly filed Opt-Outs are thus Class Members who are bound by this Final

Judgment and by the terms of the Stipulation.

14. The Released Persons are hereby released and forever discharged from any and all

of the Released Claims. All Class Members are hereby forever barred and enjoined from

asserting, instituting or prosecuting, directly or indirectly, any Released Claim in any court or

other forum against any of the Released Persons. All Class Members are bound by paragraph 4.3

of the Stipulation (“Covenant Not to Sue”) and are hereby forever barred and enjoined from

taking any action in violation of the Covenant Not to Sue.



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15. The Court hereby dismisses with prejudice the Action and all Released Claims

against each and all Released Persons and without costs to any of the Settling Parties as against

the others.

16. None of the provisions of the Settlement, the Stipulation, or this Final Judgment,

nor the fact of the Settlement, constitute any admission by any of the Settling Parties of any

liability, wrongdoing or violation of law, damages or lack thereof, or of the validity or invalidity

of any claim or defense asserted in the Action. None of the provisions of the Settlement, the

Stipulation, this Final Judgment, the fact of the Settlement, the proceedings related to the

Settlement, the Settling Parties’ negotiations, nor any documents related thereto may be offered

or received in evidence or construed as an admission, concession, presumption or inference

against any Party in any proceeding, except insofar as may be necessary to effectuate or enforce

the terms of the Settlement, the Stipulation and this Final Judgment.

17. The Court finds that during the course of the Action, the Settling Parties and their

respective counsel at all times complied with the requirements of Federal Rule of Civil

Procedure 11.

18. Without affecting the finality of this Final Judgment in any way, this Court hereby

reserves and retains continuing jurisdiction over: (a) implementation and enforcement of any

award or distribution from the Settlement Fund or Net Settlement Fund; (b) disposition of the

Settlement Fund or Net Settlement Fund; (c) determining applications for payment of attorneys’

fees and/or expenses incurred by Plaintiffs’ Counsel in connection with administration and

distribution of the Net Settlement Fund; (d) payment of taxes by the Settlement Fund; (e) all

parties hereto for the purpose of construing, enforcing, and administering the Stipulation; and (f)

any other matters related to finalizing the Settlement and distribution of the proceeds of the

Settlement.

19. Neither appellate review nor modification of the Plan of Allocation set forth in the

Notice, nor any action in regard to the motion by Plaintiffs’ Counsel for attorneys’ fees and/or



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reimbursement of expenses and the award of costs and expenses to Class Representatives, shall

affect the finality of any other portion of this Final Judgment, nor delay the Effective Date of the

Stipulation, and each shall be considered separate for the purposes of appellate review of this

Final Judgment.

20. In the event that the Settlement does not become Final in accordance with the

terms of the Stipulation or the Effective Date does not occur, or in the event that the Settlement

Fund, or any portion thereof, is returned to the Defendants, then this Final Judgment shall be

rendered null and void to the extent provided by and in accordance with the Stipulation and shall

be vacated and, in such event, all orders entered and releases delivered in connection herewith

shall be null and void to the extent provided by and in accordance with the Stipulation.

21. The Court, finding that no reason exists for delay, hereby directs the Clerk to

enter this Final Judgment forthwith.

IT IS SO ORDERED. Dated: _____________________, 2012 ________________________________ Marsha J. Pechman UNITED STATES DISTRICT JUDGE



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Presented By: David A.P. Brower (admitted pro hac vice) E-mail: [email protected] BROWER PIVEN A Professional Corporation 488 Madison Avenue New York, NY 10022 Tel: (212) 501-9000 Fax: (212) 501-0300 Attorney for the CTIC Investor Group and Lead Counsel for the Class Dan Drachler (WSBA #27728) E-mail: [email protected] ZWERLING, SCHACHTER & ZWERLING, LLP 1904 Third Avenue, Suite 1030 Seattle, WA 98101-1170 Tel: (206) 223-2053 Fax: (206) 343-9636 Attorney for the CTIC Investor Group and Liaison Counsel for the Class Douglas J. Clark, admitted pro hac vice WILSON SONSINI GOODRICH & ROSATI Professional Corporation 650 Page Mill Road Palo Alto, CA 94304 Telephone: (650) 493-9300 Facsimile: (650) 493-6811 Email: [email protected] Barry M. Kaplan, WSBA #8661 Email: [email protected] Claire Loebs Davis, WSBA #39812 Email: [email protected] WILSON SONSINI GOODRICH & ROSATI Professional Corporation 701 Fifth Avenue, Suite 5100 Seattle, WA 98104-7036 Telephone: (206) 883-2500 Facsimile: (206) 883-2699 Attorneys for Defendants Cell Therapeutics, Inc., Dr. James Bianco, Louis Bianco, and Craig Philips


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