CELL THERAPEUTICS INC
EMPLOYMENT AGREEMENT BETWEEN THE REGISTRANT AND JAMES A. BIANCO
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>7
<FILENAME>dex109.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT BETWEEN THE REGISTRANT AND JAMES A. BIANCO
<TEXT>
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                                                                    Exhibit 10.9

                             CELL THERAPEUTICS, INC.

                        JAMES BIANCO EMPLOYMENT AGREEMENT

        This Employment Agreement is entered into as of December 31, 2002, (the
"Effective Date") by and between Cell Therapeutics, Inc. (the "Company"), and
James A. Bianco (the "Executive") (the "Agreement").

        1.      Duties and Scope of Employment.

                    (a) Positions and Duties. As of the Effective Date,
Executive will serve as President and Chief Executive Officer of the Company.
Executive will render such business and professional services in the performance
of his duties, consistent with Executive's position within the Company, as shall
reasonably be assigned to him by the Company's Board of Directors (the "Board").
The period of Executive's employment shall be from the Effective Date through
December 31, 2005 and is referred to herein as the "Employment Term."

                    (b) Obligations. During the Employment Term, Executive will
perform his duties faithfully and to the best of his ability and will devote his
full business efforts and time to the Company. For the duration of the
Employment Term, Executive agrees not to actively engage in any other
employment, occupation or consulting activity for any direct or indirect
remuneration without the prior written approval of the Board.

        2.      At-Will Employment. The parties agree that the Executive's
employment with the Company will be "at-will" employment and may be terminated
at any time with or without cause or notice. Executive understands and agrees
that neither his job performance nor promotions, commendations, bonuses or the
like from the Company give rise to or in any way serve as the basis for
modification, amendment, or extension, by implication or otherwise, of his
employment with the Company.

        3.      Compensation.

                    (a) Base Salary. During the Employment Term, the Company
will pay Executive as compensation for his services a base salary at the
annualized rate of Four Hundred Sixty Thousand Two Hundred Ninety Seven Dollars
($ 460,297) (the "Base Salary"). The Base Salary will be paid periodically in
accordance with the Company's normal payroll practices and be subject to the
usual, required withholding.

                    (b) Discretionary Bonus. Subject to Executive accomplishing
such performance objectives as Executive and the Company's compensation
committee (the "Compensation Committee") shall mutually agree upon, Executive
will receive that amount of bonus that the Compensation Committee, in its sole
discretion, determines is appropriate. Although the contemplated range of
Executive's bonus is targeted to be between 25%-100% of Executive's base

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salary, the Compensation Committee retains discretion to award any amount of
bonus or no bonus whatsoever; provided that such discretion is exercised in good
faith.

                    (c) Stock Option. Executive shall be eligible to receive
option grants at the discretion of the Board under and pursuant to the terms of
any stock option and stock incentive plans of the Company.

        4.      Executive Benefits.

                    (a) Health Benefits. During the Employment Term, Executive
will be entitled to participate in the employee benefit plans currently and
hereafter maintained by the Company of general applicability to other senior
executives of the Company, including, without limitation, the Company's group
medical (including MD2 retainer fees), dental, vision, and flexible-spending
account plans. To the extent the Company cancels or changes the benefit plans
and programs it offers to all other senior executives, the Company reserves the
right to cancel or change the benefit plans and programs it offers to Executive
on an equivalent basis.

                    (b) Life/Disability Insurance. The Company shall provide
universal (or other non-term) life insurance for the benefit of Executive and
his beneficiaries in an amount not less than Five Million Dollars ($5,000,000).
Furthermore, the Company shall provide, at Executive's expense, disability
insurance for the benefit of Executive. Executive's Base Salary shall be
increased by the amount of the annual premium for such disability coverage and
the Company's records shall reflect that the premiums for the disability policy
have been paid by the Executive. The above benefits are subject to availability
at reasonable cost and any limitations resulting from Executive's physical
condition. The policy shall accrue to the benefit of Executive and Executive
shall be entitled to the full ownership and benefit of the life insurance
policy, even after termination of his employment for any reason.

                    (c) Health Club Membership. The Company shall reimburse the
Executive the expense of maintaining his health club membership.

        5.      Vacation. Executive shall be entitled to paid vacation of four
(4) weeks per year in accordance with the Company's vacation policy, with the
timing and duration of specific vacations mutually and reasonably agreed to by
the parties hereto. Any accrued but unused vacation time shall be paid in a cash
lump sum payment promptly upon Executive's termination of employment, regardless
of the reason for such termination, or at such earlier time as required by
Company vacation policy to avoid forfeiture of such vacation time.

        6.      Expenses. The Company will reimburse Executive for reasonable
travel, entertainment or other expenses incurred by Executive in the furtherance
of or in connection with the performance of Executive's duties hereunder, in
accordance with the Company's expense reimbursement policy as in effect from
time to time.

                                                                             -2-

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        7.      Severance.

                    (a) Involuntary Termination. If Executive's employment with
the Company terminates other than voluntarily or for "Cause" (as defined
herein), and Executive signs and does not revoke a release of claims with the
Company (in the form provided by the Company), then, subject to Section 13,
Executive shall be entitled to receive: (i) continuing payments of severance pay
(less applicable withholding taxes) at a rate equal to his monthly Base Salary
rate, as then in effect, for a period of eighteen (18) months from the date of
such termination, payable periodically in accordance with the Company's normal
payroll policies; (ii) any unvested portion of any outstanding options and/or
any unvested shares of Company common stock that have been issued under any
stock option and stock incentive plans of the Company or otherwise shall
immediately vest and become exercisable (except with respect to any options
granted pursuant to a plan intended to qualify under Section 423 of the Internal
Revenue Code of 1986, as amended (the "Code")) subject to the terms of the
applicable award agreement; (iii) all equity in the life insurance policy
referenced in section 4(b) shall be paid; and (iv) all accrued but unused
vacation shall be paid.

                    (b) Voluntary Termination; Termination for Cause. If
Executive's employment with the Company terminates voluntarily, other than for
Good Reason (as defined in Section 7(c) hereof) by Executive or for Cause by the
Company, then (i) all vesting of unvested or restricted shares of Company common
stock or of any outstanding options under any stock option and stock incentive
plans of the Company or otherwise will terminate immediately; (ii) all payments
of compensation by the Company to Executive hereunder will terminate immediately
(except as to amounts already earned), and (iii) Executive will only be eligible
for severance benefits in accordance with the Company's established policies as
then in effect.

                    (c) Voluntary Termination for Good Reason. If Executive
terminates his employment for Good Reason, then Executive shall be entitled to
receive: (i) continuing payments of severance pay (less applicable withholding
taxes) at a rate equal to his monthly Base Salary rate, as then in effect, for a
period of twelve (12) months, from the date of such termination, payable in
accordance with the Company's established policies as then in effect; (ii) any
unvested portion of any outstanding options and/or any unvested shares of
Company common stock that have been issued under any stock option or stock
incentive plans of the Company or otherwise shall immediately vest and become
exercisable (except with respect to any options granted pursuant to a plan
intended to qualify under Section 423 of the Code) subject to the terms of the
applicable award agreement; (iii) all equity in the life insurance policy
referenced in Section 4(b) shall be paid; and (iv) all accrued but unused
vacation shall also be paid. Executive shall be entitled to resign for Good
Reason, as that term is used in this Section, for the following reasons: a
change of control as defined in Section 11(b); a material change in Executive's
terms and conditions of employment; any material reduction of Executive's duties
and/or responsibilities; any material reduction in Executive's benefits; or a
change in location of the Company in excess of 50 miles.

        8.      Spousal Travel. The Company shall pay for Executive's spouse to
travel with him, both domestically and internationally, for any trips where
Executive will be away from home for four or more consecutive days. This
includes all necessary travel and accommodations. Notwithstanding, the total
cost of such spousal travel is not to exceed Twenty-Five Thousand Dollars
($25,000) per annum unless otherwise determined by the Board.

                                                                             -3-

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        9.      Change of Control Benefits. In the event of a "Change of
Control" (as defined below) that occurs prior to the Executive's termination of
employment, any unvested portion of any outstanding options and/or any unvested
shares of Company common stock that have been issued under any stock option and
stock incentive plans of the Company or otherwise will have such vesting
accelerated so as to become 100% vested. Thereafter, any outstanding options
and/or shares of Company common stock that have been issued under any stock
option and stock incentive plans of the Company or otherwise will continue to be
subject to the terms, definitions and provisions of the applicable award
agreements.

        10.     Gross-Up. In the event that any compensation and other benefits
provided for in this Agreement or amounts otherwise payable to the Executive
constitute "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code") and will be subject to
the excise tax imposed by Section 4999 of the Code, then the Executive shall
receive (i) a payment from the Company sufficient to pay such excise tax, and
(ii) an additional payment from the Company sufficient to pay the excise tax and
federal and state income taxes arising from the payments made by the Company to
Executive pursuant to this sentence. Any determination required under this
Section shall be made in writing by the Company's independent public accountants
(the "Accountants"), whose determination shall be conclusive and binding upon
the Executive and the Company for all purposes. In the event that the excise tax
incurred by Executive is determined by the Internal Revenue Service to be
greater or lesser than the amount so determined by the Accountants, the Company
and Executive agree to promptly make such additional payment, including interest
and any tax penalties, to the other party as the Accountants reasonably
determine is appropriate to ensure that the net economic effect to Executive
under this Section, on an after-tax basis, is as if the Code Section 4999 excise
tax did not apply to Executive. For purposes of making the calculations required
by this Section, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on interpretations of
the Code for which there is a "substantial authority" tax reporting position.
The Company and the Executive shall furnish to the Accountants such information
and documents as the Accountants may reasonably request in order to make a
determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section.

        11.     Definitions.

                    (a) Cause. For purposes of this Agreement, "Cause" is
defined as (i) an act of material dishonesty made by Executive in connection
with Executive's responsibilities as an employee, (ii) Executive's conviction
of, or plea of nolo contendere to, a felony, (iii) Executive's gross misconduct,
or (iv) Executive's continued substantial violations of his employment duties
after Executive has received a written demand for performance from the Company
which specifically sets forth the factual basis for the Company's belief that
Executive has not substantially performed his duties and provides Executive five
(5) business days to cure any such violation(s).

                    (b) Change of Control. For purposes of this Agreement,
"Change of Control" of the Company is defined as: (i) any "person" (as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of the Company representing 50%
or more of the total voting power represented by the Company's then outstanding
voting securities; or (ii) a change in the composition of the Board occurring
within a two-year period, as a result of which

                                                                             -4-

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fewer than a majority of the directors are Incumbent Directors. "Incumbent
Directors" will mean directors who either (A) are directors of the Company as of
the date hereof, or (B) are elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of the Incumbent Directors at
the time of such election or nomination (but will not include an individual
whose election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors to the Company); or (iii) the date
of the consummation of a merger or consolidation of the Company with any other
corporation that has been approved by the shareholders of the Company, other
than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the shareholders
of the Company approve a plan of complete liquidation of the Company; or (iv)
the date of the consummation of the sale or disposition by the Company of all or
substantially all the Company's assets.

        12.     Confidential Information. Executive agrees that the Company's
Confidential Information and Invention Assignment Agreement (the "Confidential
Information Agreement") that Executive has previously signed shall remain in
full force and effect throughout the term of this Agreement.

        13.     Conditional Nature of Severance Payments.

                    (a) Noncompete. Executive acknowledges that the nature of
the Company's business is such that if Executive were to become employed by, or
substantially involved in, the business of a competitor of the Company during
the severance payment period following the termination of Executive's employment
with the Company, it would be very difficult for the Executive not to rely on or
use the Company's trade secrets and confidential information. Thus, to avoid the
inevitable disclosure of the Company's trade secrets and confidential
information, Executive agrees and acknowledges that Executive's right to receive
the severance payments set forth in Section 7 (to the extent Executive is
otherwise entitled to such payments) shall be conditioned upon the Executive not
directly or indirectly engaging in (whether as an employee, consultant, agent,
proprietor, principal, partner, shareholder, corporate officer, director or
otherwise), nor having any ownership interest in or participating in the
financing, operation, management or control of, any person, firm, corporation or
business that competes with Company. Upon any breach of this section, all
severance payments pursuant to this Agreement shall immediately cease. For
purposes of this Agreement, "competition" with the Company is defined as any
business that develops and/or markets: (i) inhibitors of phospholipids with
applications for cancer prevention or treatment; (ii) use of polymers (PG or PA)
as novel cancer drug delivery technology; or (iii) products utilizing arsenic
trioxide as an anti-cancer agent.

                    (b) Non-Solicitation. Executive agrees and acknowledges that
Executive's right to receive the severance payments set forth in Section 7 (to
the extent Executive is otherwise entitled to such payments) shall be
conditioned upon Executive not either directly or indirectly soliciting,
inducing, attempting to hire, recruiting, encouraging, taking away, hiring any
employee of the Company or causing an employee to leave his or her employment
either for Executive or for any other entity or person.

                                                                             -5-

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                    (c) Understanding of Covenants. The Executive represents
that he (i) is familiar with the foregoing covenants not to compete and not to
solicit, and (ii) is fully aware of his obligations hereunder, including,
without limitation, the reasonableness of the length of time, scope and
geographic coverage of these covenants.

        14.     Assignment. This Agreement will be binding upon and inure to the
benefit of (a) the heirs, executors and legal representatives of Executive upon
Executive's death and (b) any successor of the Company. Any such successor of
the Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes. For this purpose, "successor" means any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of the rights
of Executive to receive any form of compensation payable pursuant to this
Agreement may be assigned or transferred except by will or the laws of descent
and distribution. Any other attempted assignment, transfer, conveyance or other
disposition of Executive's right to compensation or other benefits will be null
and void.

        15.     Notices. All notices, requests, demands and other communications
called for hereunder shall be in writing and shall be deemed given (i) on the
date of delivery if delivered personally, (ii) one (1) day after being sent by a
well established commercial overnight service, or (iii) four (4) days after
being mailed by registered or certified mail, return receipt requested, prepaid
and addressed to the parties or their successors at the following addresses, or
at such other addresses as the parties may later designate in writing:

                  If to the Company:

                  Cell Therapeutics, Inc.
                  501 Elliot Avenue West,
                  Suite 400
                  Seattle, Washington 98819
                  Attn: Chairman of the Board

                  If to Executive:

                  James A. Bianco, M.D.
                  10453 Maplewood Place, S.W.
                  Seattle, Washington 98146

                  or, in the event Executive changes residences, at the last
                  residential address known by the Company.

        16.     Severability. In the event that any provision hereof becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement will continue in full force and effect without said
provision.

                                                                             -6-

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        17.     Arbitration.

                    (a) Executive agrees that any dispute or controversy arising
out of, relating to, or in connection with this Agreement, or the
interpretation, validity, construction, performance, breach, or termination
thereof, shall be settled by binding arbitration to be held in King County,
Washington in accordance with the National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association (the
"Rules"). The arbitrator may grant injunctions or other relief in such dispute
or controversy. The decision of the arbitrator will be final, conclusive and
binding on the parties to the arbitration. Judgment may be entered on the
arbitrator's decision in any court having jurisdiction.

                    (b) The arbitrator(s) will apply Washington law to the
merits of any dispute or claim, without reference to rules of conflicts of law.
The arbitration proceedings will be governed by federal arbitration law and by
the Rules, without reference to state arbitration law. The Executive hereby
consents to the personal jurisdiction of the state and federal courts located in
Washington for any action or proceeding arising from or relating to this
Agreement or relating to any arbitration in which the parties are participants.

                    (c) EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH
DISCUSSES ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT,
EXECUTIVE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN
CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION,
PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT THIS
ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A JURY TRIAL AND
RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE
EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, DISCRIMINATION
CLAIMS.

        18.     Integration. This Agreement, together with the Confidential
Information Agreement represents the entire agreement and understanding between
the parties as to the subject matter herein and supersedes all prior or
contemporaneous agreements whether written or oral. No waiver, alteration, or
modification of any of the provisions of this Agreement will be binding unless
in writing and signed by duly authorized representatives of the parties hereto.

        19.     Tax Withholding. All payments made pursuant to this Agreement
will be subject to withholding of applicable taxes.

        20.     Governing Law. This Agreement will be governed by the laws of
the State of Washington.

        21.     Acknowledgment. Executive acknowledges that he has had the
opportunity to discuss this matter with and obtain advice from his private
attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.

        IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by their duly authorized officers, as of the day and
year first above written.

                                                                             -7-

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        Cell Therapeutics, Inc.

        By:  /s/ Jack Bowman                             Date: 03/15/03
             ----------------------------------

        Title: Chairman, Compensation Committee
               --------------------------------


        James A. Bianco, M.D.

        /s/ James A. Bianco                              Date:      3/15/03
        ----------------------------------------               -----------------
        James A. Bianco, M.D.

                                                                             -8-

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