Prepared by R.R. Donnelley Financial -- Cell Therapeutics, Inc. 1994 Equity Incentive Plan

1. Purpose. The purpose of this 1994 Equity Incentive Plan (the “Plan”) is to enable Cell Therapeutics. Inc., a Washington corporation (the “Company”), to attract and retain the services of (a) selected employees, officers and directors of the Company or of any parent or subsidiary corporation of the Company; (b) non-employee members of the Company’s Board of Directors; and (c) other selected non-employee agents, consultants, advisors and independent contractors of the Company or any parent or subsidiary (together, “Eligible Persons”).

2. Shares Subject to the Plan. Subject to adjustment as provided below and in paragraph 10, up to 8,336,715 shares of the Company’s Common Stock (inclusive of the 1,800,000-share increase authorized by the Board on May 23, 2002 and approved by the shareholders at the Company’s 2002 annual meeting of shareholders), plus such shares of Common Stock for which options previously granted under the Company’s 1992 Stock Option Plan may expire, terminate or be cancelled (the “Shares”) shall be offered and issued under the Plan. To the fullest extent permitted under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”); (a) if an option granted under the Plan expires, terminates or is cancelled, the unissued Shares subject to such option shall again be available under the Plan; and (b) if Shares sold under the Plan are forfeited to the Company or repurchased by the Company at the purchase price paid per share, the number of Shares forfeited or repurchased shall again be available under the Plan. In accordance with the requirements of Section 162(m) of the Code, no eligible employee shall receive stock options and direct stock awards for more than 500,000 shares in the aggregate per calendar year under the Plan.

(a) Effective Date. The Plan shall become effective when adopted by the Board of Directors of the Company (the “Board”) and approved by the affirmative vote of the holders of a majority of the Common Stock of the Company represented at a shareholder meeting at which a quorum is present. Options may be granted and Shares may be awarded as bonuses or sold under the Plan at any time after the effective date and before termination of the Plan.

(b) Duration. No options may be granted under the Plan, no stock bonuses may be awarded under the Plan, and no Shares may be sold pursuant to paragraph 8 of the Plan on or after January 1, 2004. However, the Plan shall continue in effect until all Shares available for issuance under the Plan have been issued and all restrictions on such Shares have lapsed. The Board may suspend or terminate the Plan at any time, except with respect to options and Shares subject to restrictions then outstanding under the Plan. Termination shall not affect any outstanding options, any right of the Company to repurchase Shares or the forfeitability of Shares issued under the Plan.

provided in paragraphs 3 and 14. At any time when the officers and directors of the Company are subject to Section 16(b) of the Exchange Act, the Committee shall consist solely of “non-employee directors” as such term is defined from time to time in Rule 16b-3 under the Exchange Act. In addition, at any time when the Company is subject to Section 162(m) of the Code, the Committee shall consist solely of “outside directors”, as defined in the regulations promulgated pursuant to Section 162(m) of the Code. Notwithstanding the provisions of Section 4(a) and Section 4(b) below, all discretionary actions to be taken with respect to the options granted to Non-Employee Directors pursuant to Section 10 below shall be made by the Board.

(b) Subject to the provisions of the Plan, the Committee may from time to time adopt and amend rules and regulations relating to administration of the Plan, advance the lapse of any waiting period, accelerate any exercise date, waive or modify any restriction applicable to Shares (except those restrictions imposed by law) and make all other determinations in the judgment of the Committee necessary or desirable for the administration of the Plan. The interpretation and construction of the provisions of the Plan and related agreements by the Committee shall be final and conclusive. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any related agreement in the manner and to the extent it shall deem expedient to carry the Plan into effect, and it shall be the sole and final judge of such expediency.

5. Types of Awards; Eligibility. The Committee may, from time to time, take the following actions under the Plan: (i) grant Incentive Stock Options, as defined in Section 422 of the Code, as provided in paragraph 6(b); (ii) grant options other than Incentive Stock Options (“Nonstatutory Stock Options”) as provided in paragraph 6(c); (iii) award stock bonuses as provided in paragraph 7; and (iv) sell Shares as provided in paragraph 8. Any such awards may be made to employees (including employees who are officers or directors of the Company or of any parent or subsidiary corporation of the Company, and to other Eligible Persons described in paragraph 1 who the Committee believes have made or will make an important contribution to the Company or its parent or subsidiaries; provided, however, that only employees of the Company or a parent or subsidiary shall be eligible to receive Incentive Stock Options under the Plan. The Committee shall select the Eligible Persons to whom awards shall be made and shall specify the action taken with respect to each Eligible Person to whom an award is made under the Plan. At the discretion of the Committee, an Eligible Person may be given an election to surrender an award in exchange for the grant of a new award.

(a) Grant. Each option granted under the Plan shall be evidenced by a stock option agreement in such form as the Committee shall prescribe from time to time in accordance with the Plan. With respect to each option grant, the Committee shall determine the number of Shares subject to the option, the option price, the period of the option, and the time or times at which the option may be exercised and whether the option is an Incentive Stock Option or a Nonstatutory Stock Option. If an employee’s status changes from that of an “employee” to that of a “consultant”, all options granted remain in effect.

(i) No employee may be granted Incentive Stock Options under the Plan such that the aggregate fair market value, on the date of grant, of the Shares with respect to which Incentive Stock Options are exercisable for the first time by that employee during any calendar year under the Plan and under any other incentive stock option plan (within the meaning of Section 422 of the Code) of the Company or of any parent or subsidiary corporation of the Company exceeds $100,000.

(iv) The option price per Share shall be determined by the Committee at the time of grant. Subject to paragraph
6(b)(ii), the option price shall not be less than 100 percent (100%) of the fair market value of the Shares covered by the Incentive Stock Option at the date the option is granted. The fair market value shall be fixed by the Committee at whatever price the Committee may determine in the exercise of its sole discretion; provided, that the per share exercise price for any option granted following the effective date of registration of any of the Company’s securities under Section 12 of the Exchange Act shall be deemed to be the average of the closing and bid and asked prices for the Common Stock of the Company as reported on the National Association of Securities Dealers, Inc. Automated Quotation System on the day preceding the day the option is granted, or if there has been no sale on that date, on the last preceding date on which a sale occurred, or such other reported value of the Common Stock of the Company as shall be specified by the Committee.

(v) The Committee may at any time without the consent of the optionee convert an Incentive Stock Option into a Nonstatutory Stock Option. The aggregate fair market value (determined at the date of grant) of the share of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by the optionee during any calendar year (granted under the Plan and any other Incentive Stock Options plans (within the meaning of Section 422 of the Code) of the Company, related corporations or a predecessor corporation) shall not exceed $100,000, or other such limit as may be prescribed by the Code as it may be amended from time to time. Any portion of the option which exceeds optionee’s annual limit shall not be void but rather shall automatically be deemed Nonstatutory Stock Options (i.e. stock options that do not qualify under Section 422 of the Code.)

(d) Exercise of Options. Except as provided in paragraph 6(f) or as determined by the Committee, no option granted under the Plan may be exercised unless at the time of such exercise the optionee is employed by or in the service of the Company or any parent or subsidiary corporation of the Company and shall have been so employed or have provided such service continuously since the date such option was granted. Absence on leave or on account of illness or disability under rules established by the Committee shall not, however, be deemed an interruption of employment for purposes of the Plan. Unless otherwise determined by the Company, vesting of options shall not continue during an absence on leave (including an extended illness) or on account of disability. Except as provided in paragraphs 6(f), 12 and 13, options granted under the Plan may be exercised from time to time over the period stated in each option in such amounts and at such times as shall be prescribed by the Committee; provided that options shall not be

(e) Limited Transferability. During the lifetime of the optionee, options under the Plan shall be exercisable only by the optionee and shall not be assignable or transferable other than by will or the laws of descent and distribution following the optionee’s death. However, with the consent of the Committee, Nonstatutory Stock Options may, in connection with the optionee’s estate plan, be assigned in whole or in part during the optionee’s lifetime to one or more members of the optionee’s immediate family or to a trust established exclusively for one or more such family members. The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee by the Committee. Nonstatutory Stock Options may also be assigned or transferred pursuant to a qualified domestic relations order.

(i) In the event the employment or services of the optionee by the Company or a parent or subsidiary corporation of the Company terminates for any reason other than because of death or physical disability, the option may be exercised at any time prior to the expiration date of the option or the expiration of three (3) months after the date of such termination, whichever is the shorter period, but only if and to the extent the optionee was entitled to exercise the option at the date of such termination.

(ii) In the event of the termination of the optionee’s employment or service with the Company or a parent or subsidiary corporation of the Company because the optionee becomes disabled (within the meaning of Section 22(e)(3) of the Code), the option may be exercised at any time prior to the expiration date of the option or the expiration of one (1) year after the date of such termination, whichever is the shorter period, but only if and to the extent the optionee was entitled to exercise the option at the date of such termination.

(iii) In the event of the death of an optionee while employed by or providing a service to the Company or a parent or subsidiary corporation of the Company, the option may be exercised at any time prior to the expiration date of the option or the expiration of one (1) year after the date of such death, whichever is the shorter period, but only if and to the extent the optionee was entitled to exercise the option on the date of death, and only by the person or persons to whom such optionee’s rights under the option shall pass by the optionee’s will or by the laws of descent and distribution of the state or country of domicile at the time of death.

the option and the date on which the optionee desires to complete the transaction, and, if required to comply with the Securities Act of 1933, as amended, or state securities laws, the notice shall include a representation that it is the optionee’s present intention to acquire the Shares for investment and not with a view to distribution. The certificates representing the Shares shall bear any legends required by the Committee. Unless the Committee determines otherwise, on or before the date specified for completion of the purchase of Shares pursuant to an option, the optionee must have paid the Company the full purchase price of such Shares in cash (including, with the consent of the Committee, cash that may be the proceeds of a full-recourse loan at Fair Market Value from the Company), or, with the consent of the Committee, in whole or in part, in Shares valued at fair market value, as determined pursuant to paragraph 6(b)(iv). Unless the Committee determines otherwise, all payments to the Company in connection with the exercise of an option must be made by certified or cashier’s bank check or by the transfer of immediately available federal funds. No Shares shall be issued until full payment, except in the receipt of a full-recourse note, therefore has been made. Each optionee who has exercised an option shall immediately upon notification of the amount due, if any, pay to the Company in cash amounts necessary to satisfy any applicable federal, state and local tax withholding requirements. If additional withholding is or becomes required beyond any amount deposited before delivery of the certificates, the optionee shall pay such amount to the Company on demand. If the optionee fails to pay the amount demanded, the Company or any parent or subsidiary corporation of the Company may withhold that amount from other amounts payable to the optionee by the Company or the parent or subsidiary corporation, including salary, subject to applicable law. With the consent of the Committee, an optionee may deliver Shares to the Company to satisfy the minimum statutory withholding obligation.

7. Stock Bonuses. The Committee may award Shares to Eligible Persons under the Plan as stock bonuses. Shares awarded as a stock bonus shall be subject to such terms, conditions and restrictions as shall be determined by the Committee, all of which shall be evidenced in a writing signed by the recipient prior to receiving the bonus Shares. The Committee may not require the recipient to pay any monetary consideration other than amounts necessary to satisfy tax withholding requirements. The certificates representing the Shares awarded shall bear any legends required by the Committee. The Company may require any recipient of a stock bonus to pay the Company in cash upon demand amounts necessary to satisfy any applicable federal, state or local tax withholding requirements. If the recipient fails to pay the amount demanded, the Company or any parent or subsidiary corporation of the Company may withhold that amount from other amounts payable to the recipient by the Company or parent or subsidiary corporation of the Company, including salary, subject to applicable law. With the consent of the Committee, a recipient may deliver Shares to the Company to satisfy the withholding obligation.

8. Stock Sales. The Committee may issue Shares to Eligible Persons under the Plan for such consideration (including promissory notes and services) as determined by the Committee, provided that in no event shall the consideration be less than 75 percent (75%) of the fair market value of the Shares at the time of issuance, determined pursuant to paragraph 6(b)(iv). Shares issued under this paragraph 8 shall be subject to the terms, conditions and restrictions determined by the Committee. The restrictions may include restrictions concerning transferability, repurchase by the Company and forfeiture of the Shares issued, together with such other restrictions as may be determined by the Committee. The certificates representing the Shares shall bear any legends required by the Committee. The Company may require any purchaser of stock issued under this paragraph 8 to pay the Company in cash upon demand amounts necessary to satisfy any applicable Federal, state or local withholding requirements. If the purchaser fails to pay the amount demanded, the Company or any parent or subsidiary corporation of the Company may withhold that amount from other amounts payable to the purchaser by the Company or parent or subsidiary corporation of the Company, including salary, subject to applicable law. With the consent of the Committee, a purchaser may deliver Shares to the Company to satisfy the withholding obligation.

(a) Automatic Grants. Each Non-Employee Director shall automatically be granted a fully vested Nonstatutory Stock Option to purchase 15,000 Shares upon his or her election to the Board of Directors for the first time. In addition, on each anniversary of each Non-Employee Director’s immediately preceding election or appointment to the Board, such Non-Employee Director who is a member of the Board on such anniversary date shall automatically be granted, effective as of such anniversary date, a fully vested Nonstatutory Stock Option to purchase 5,000 shares. A “Non-Employee Director” is a director of the Company who is not an employee of the Company or of any parent or subsidiary corporation of the Company on the date the option is granted.

10. Changes in Capital Structure. If the outstanding shares of Common Stock of the Company are hereafter increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation by reason of any recapitalization, reclassification, stock split, combination of shares or dividend payable in shares, the Committee shall make appropriate adjustments to (i) the number and kind of securities available for awards under the Plan; (ii) the number and kind of securities as to which outstanding options, or portions thereof then unexercised, shall be exercisable, so that the participant’s proportionate interest before and after the occurrence of the event is maintained, provided that this paragraph 10 shall not apply with respect to transactions referred to in paragraph 12; (iii) the maximum number and kind of securities for which any one person may be granted stock options and direct stock awards per calendar year; and (iv) the number and kind of securities for which automatic option grants are to be made to newly-elected or continuing Non-Employee Directors pursuant to paragraph 9 hereof. Appropriate adjustments to reflect any such transaction shall also be made to the exercise price per share in effect under each outstanding stock option, provided the aggregate exercise price of each grant shall remain the same. The Committee may also require that any securities issued in respect of or exchanged for Shares issued hereunder that are subject to restrictions be subject to similar restrictions. Notwithstanding the foregoing, the Committee shall have no obligation to effect any adjustment that would or might result in the issuance of fractional shares, and any fractional shares resulting from any adjustment may be disregarded or provided for in any manner determined by the Committee. Any such adjustment made by the Committee shall be conclusive.

(a) Cash, Stock or Other Property for Stock. Except as provided in paragraph 12(b), upon a merger, consolidation, reorganization, plan of exchange or liquidation involving the Company, as a result of which the shareholders of the Company receive cash, stock or other property in exchange for or in connection with their Common Stock (any such transaction to be referred to in this paragraph 12 as an “Accelerating Event”), any option granted hereunder shall terminate, but the optionee shall have the right during a 30-day period immediately prior to any such Accelerating Event to exercise his or her option, in whole or in part, without any limitation on exercisability.

consolidation, reorganization, or plan of exchange, all options granted hereunder shall be converted into options to purchase shares of Exchange Stock, unless the Committee, in its sole discretion, determines that any or all such options granted hereunder shall not be converted, but instead shall terminate in accordance with the provisions of paragraph 12(a). The amount and price of converted options shall be determined by adjusting the amount and price of the options granted hereunder to take into account the relative values of the Exchange Stock and the Common Stock in the transaction.

(c) Change of Control. In the event of a Change in Control and except as the Committee, (as constituted immediately prior to such Change in Control) may otherwise determine in its sole discretion, (i) all options granted hereunder (including options granted to officers or directors less than six (6) months prior to any such Change in Control) shall become fully exercisable as of the date of the Change in Control, whether or not then exercisable; and (ii) all restrictions and conditions of all bonus Shares then outstanding shall lapse as of the date of the Change in Control. A “Change in Control” means:

(i) The acquisition, directly or indirectly, by any individual, entity or group (within the meaning of Section 13d-3 or 14d-2 of the Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities representing 50.1 percent (50.1%) or more of either (a) the then outstanding shares of Common Stock (the “Outstanding Company Common Stock”) or (b) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Company (excluding an acquisition by virtue of the exercise of a conversion privilege); (B) any acquisition by the Company; (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or (D) any acquisition by any corporation pursuant to a reorganization, merger or consolidation which would not be a Change of Control under paragraph (iii) below; or

(ii) Individuals who, as of the effective date of the Plan, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the effective date of the Plan whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board will be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14(a) promulgated under the Exchange Act) or any other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board; or

(iii) Approval by the shareholders of the Company of a reorganization, merger or consolidation, in each case, unless following such reorganization, merger or consolidation, (a) more than 50 percent (50%) of the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; and (b) at least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement providing for such reorganization, merger or consolidation; or

(iv) Approval by the shareholders of the Company of (a) a complete liquidation or dissolution of the Company; or (b) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, (A) more than 50 percent (50%) of the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition, as the case may be; and (B) at least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such sale or other disposition of assets of the Company.

13. Corporate Mergers, Acquisitions, Etc. The Committee may also grant options, award stock bonuses and sell stock under the Plan having terms, conditions and provisions that vary from those specified in the Plan; provided that any such awards are granted in substitution for, or in connection with the assumption of, existing options, stock bonuses and stock sold or awarded by another corporation and assumed or otherwise agreed to be provided for by the Company pursuant to or by reason of a transaction involving a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation to which the Company or a parent or subsidiary corporation of the Company is a party.

14. Amendment of Plan. The Board may at any time, and from time to time, modify or amend the Plan in such respects as it shall deem advisable because of changes in the law while the Plan is in effect or for any other reason; except that no such modification or amendment shall be effective without shareholders approval if such approval is required to comply with any applicable law, rule or regulation. Except as provided in paragraphs 6(b)(v), 9, 10, and 12, however, no change in an award already granted shall be made without the written consent of the holder of such award. Notwithstanding the foregoing, the Company shall not, without shareholders approval, (i) reduce the option price of any outstanding option granted under the Plan to the then current fair market value if the fair market value of the Common Stock covered by such option shall have declined since the date the option was granted or (ii) institute a program whereby outstanding options are surrendered in exchange for options with a new exercise price.

15. Approvals. The obligations of the Company under the Plan are subject to the approval of state and federal authorities or agencies with jurisdiction in this matter. The Company shall not be obligated to issue or deliver Shares under the Plan if such issuance or delivery would violate applicable state or federal securities laws, or if compliance with such laws would, in the opinion of the Company, be unduly burdensome or require the disclosure of information which would not be in the Company’s best interests.

16. Employment and Service Rights. Nothing in the Plan or any award pursuant to the Plan shall (i) confer upon any employee any right to be continued in the employment of the Company or any parent or subsidiary corporation of the Company or shall interfere in any way with the right of the Company or parent or subsidiary corporation of the Company by whom such employee is employed to terminate such employee’s employment at any time, for any reason, with or without cause, or to increase or decrease such employee’s compensation or benefits; or (ii) confer upon any person engaged by the Company or any parent or subsidiary corporation of the Company any right to be retained or employed by the Company or the parent or subsidiary or to the continuation, extension, renewal, or modification of any compensation, contract, or arrangement with or by the Company or the parent or subsidiary.