Cell Therapeutics adopts stockholder rights plan.

SEATTLE--(BUSINESS WIRE)--Nov. 11, 1996--Cell Therapeutics Inc. (cti) today announced that its board of directors adopted a stockholder rights plan in which preferred stock purchase rights will be distributed as a dividend at the rate of one right for each share of common stock held as of the close of business on Nov. 21, 1996.

The rights are designed to guard against partial tender offers and other abusive tactics that might be used in an attempt to gain control of the company without paying all stockholders a fair price for their shares. The rights plan will not prevent takeovers, but is designed to deter coercive takeover tactics and to encourage anyone attempting to acquire the company to first negotiate with the board.

Each right will entitle stockholders to buy one one-thousandth of a share of Series C preferred stock of the company at an exercise price of $50.00. The rights will be exercisable only if a person or group acquires beneficial ownership of 15% or more of the company's outstanding common stock or commences a tender or exchange offer upon consummation of which a person or group would beneficially own 15% or more of the company's outstanding common stock.

If any person becomes the beneficial owner of 15% or more of the company's common stock or a holder of 15% or more of the company's common stock engages in certain self-dealing transactions or a merger transaction in which the company is the surviving corporation and its common stock remains outstanding, then each right not owned by such person or certain related parties will entitle its holder to purchase, at the right's then-current exercise price, units of the company's Series C preferred stock (or, in certain circumstances, company common stock, cash, property or other securities of the company) having a market value equal to twice the then-current exercise price.

In addition, if cti is involved in a merger or other business combination transactions with another person after which its common stock does not remain outstanding, or sells 50% or more of its assets or earning power to another person, each right will entitle its holder to purchase, at the right's then-current exercise price, shares of common stock of the ultimate parent of such other person having a market value equal to twice the then-current exercise price.

Cti will generally be entitled to redeem the rights at $.001 per right at any time until the 10th business day following public announcement that a person or group has acquired 15% or more of the company's common stock.

Certain provisions of the stockholder rights plan are outlined in the attached letter, which is being mailed to all stockholders.

Cti is a Seattle-based biopharmaceutical company focusing on the development of a new class of drugs that seeks to selectively regulate the metabolism of phospholipids in intracellular signaling pathways relevant to cancer, immune diseases and other life-threatening conditions.

Letter to stockholders follows. -0-

November 11, 1996

To Our Stockholders:

Your Board of Directors has announced the adoption of a Stockholder Rights Plan. We are enclosing a document entitled "Summary of Rights to Purchase Preferred Stock" which provides certain information about the Plan, and we urge you to read it carefully. This letter explains some of the Board's reasons for adopting the Plan.

The Plan is intended to protect your interests in the event the Company is confronted with coercive or unfair takeover tactics. The Plan, together with certain charter and by-law provisions and certain provisions of the Washington Business Corporation Act, is designed to safeguard stockholders from abusive takeover tactics that have been used by certain bidders and that your Board believes are not in the best interests of the Company's stockholders. These tactics may unfairly pressure stockholders, squeeze them out of their investment without giving them any real choice, and deprive them of the full value of their shares.

A number of other major corporations have adopted rights plans similar to the one we have adopted. We consider these Rights Plans to be very valuable in protecting your right to retain your equity investment in Cell Therapeutics, Inc. and to realize the full value of that investment, while not foreclosing a fair acquisition bid for the Company.

The Plan is not intended to prevent a takeover of the Company and will not do so. The Plan is designed to deal with the very serious problem of unilateral actions by hostile acquirors which are calculated to deprive the Company's Board and its stockholders of their ability to determine the destiny of the Company. However, the mere establishment of the Rights Plan should not affect any prospective offeror willing to acquire the Company and to negotiate with your Board of Directors. The Rights issued under the Plan may generally be redeemed by the Company at a price of $.001 per Right up to the tenth business day after any person or group has acquired 15% or more of the Company's common stock, and thus they should not interfere with any merger or other business combination approved by the Board.

The Rights Plans is not being adopted in response to any effort to acquire the Company, and the Board is not aware of any such effort. Rather, the Plan has been adopted in order to assure the ability of the Board to protect your interests. Issuance of the Rights under the Plan does not in any way weaken the financial strength of the Company or interfere with its business plans. The issuance of the Rights has no dilutive effect, will not affect reported earnings per share and is not taxable to the Company or to you. As explained in the enclosed Summary of Rights to Purchase Preferred Stock, the Rights will only be exercisable if and when an event arises which triggers their effectiveness. They will then operate to protect you from being deprived of your right to share in the full measure of your Company's long-term potential.

Your Board of Directors believes the Rights Plan will serve an important role in protecting the value of your shares.

Sincerely,

James A. Bianco, M.D. President & Chief Executive Officer

T 206/282-7100 F 206/213-8317

CONTACT: Cell Therapeutics Inc.

Lee M. Parker, 206/282-7100

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