SEVERANCE AGREEMENT AND GENERAL RELEASE

Exhibit 10.1

SEVERANCE AGREEMENT AND GENERAL RELEASE

This Severance Agreement (“Agreement”) is entered into by and between Scott Stromatt (“Employee”) and Cell Therapeutics, Inc. (“Employer” or “CTI”).

RECITALS

A. Employee has been continuously employed by Employer since January 27, 2003, most recently in the capacity of Executive Vice President, Clinical Operations and Regulatory Affairs.

B. Employer and Employee have mutually decided to terminate Employee’s employment as of April 4, 2008.

C. Employee and Employer wish to enter into an agreement to terminate the employment relationship and to clarify and resolve any disputes that may exist between them, including any arising out of the employment relationship and its termination, and the continuing obligations of the parties to each other following the end of the employment relationship.

AGREEMENTS

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises contained below, it is agreed as follows:

Employee’s employment with Employer terminated effective April 4, 2008. Employee and Employer agree that the mutual covenants and agreements contained in this Agreement constitute full and valid consideration for the termination of the Employment relationship and the release obligations. Employer will not oppose unemployment benefits.

A. Employer will pay to Employee a total of $291,666.66 which is the equivalent to ten months of pay, at the Employee’s current annual wage. Severance will be paid in two formats: one lump sum payment of $87,500.04, and 14 semi-monthly payments of $14,583.33. Employee acknowledges and agrees that all amounts payable are subject to withholding by the Employer for federal (state and local, if applicable) taxes, FICA and any other government mandated withholdings. The lump sum payment will be processed in the normal payroll processing schedule following the expiration of the seven day revocation period of this agreement, as administratively feasible. The 14 semi-monthly payments will be processed thereafter according to the company’s normal semi-monthly payroll schedule following the expiration of the seven day revocation period of this agreement, as administratively feasible.

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B. Employee’s existing health insurance will be discontinued as of April 30, 2008. Employee and covered dependents have the opportunity to continue group medical, dental and EAP insurance through CTI at Employee expense pursuant to rights under the federal COBRA statute. The company will also make a one time payment of $15,000.00 to assist the employee with transitioning health insurance.

C. Employee will discontinue vesting in any stock option grants or restricted stock grants as of April 4, 2008, with the exception identified in Section 5 A. “Duty to Cooperate” of this document. Employee will receive information explaining the time frame he has for exercising any vested options he may have, by mail.

D. Employee’s vacation accrual will cease as of April 4, 2008. Employee’s accrued and unused vacation time will be paid out on the employees final pay check.

Employee releases Employer, its officers, directors, managers, agents, attorneys, employees, representatives, administrators, and successors, from all claims he has or may have, whether known or unknown, against Employer as of the date he executes this Agreement, including, but not limited to, claims in any way connected with Employee’s employment with Employer and/or the termination of that employment. Employer releases Employee, his agents, attorneys, representatives, administrators, and successors, as of the date he executes this Agreement, from all claims it has or may have, whether known or unknown, including, but not limited to, claims in any way connected with Employee’s employment with Employer and/or the termination of that employment. The rights and claims covered by these releases of claims include, without limitation, all rights or claims arising out of any contracts, expressed or implied (except as set forth in paragraphs 4, 5 and 6 below), any tort theory, any theory of wrongful discharge or negligent or intentional wrongdoing, any claim of retaliation or whistleblower protection, or any Federal, State or other governmental statute, ordinance or regulation, without limitation as to subject matter, including, but not limited to, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, The Civil Rights Act of 1991, the Americans With Disabilities Act, the Fair Labor Standards Act, the Family and Medical Leave Act, the Older Workers Benefit Protection Act, any federal, state or local

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whistleblower protection statute, ordinance or regulation, the Employment Retirement Income Security Act, the state law against discrimination in the state of Employee’s residence, any state family leave law in the state of Employee’s resident, any claim for lost benefits or wages (whether present or future), attorneys’ fees and costs, and any other legal limitation on the employment relationship or regulation or statute pertaining to the employment relationship in any way. It is the intention of both parties to make this release as broad and general as the law permits.

Employer and Employee agree to keep all aspects of this Agreement confidential including, but not limited to, the terms of this Agreement and the negotiations that lead up to this Agreement. Employer and Employee agree they will not disclose this information in any manner, whether in writing or orally, to any person, directly or indirectly, or by or through any agent, representative, attorney, or any other such person, except that the Employer and Employee may disclose this information necessary in the course of preparing financial documents, income tax returns, dealing with the Internal Revenue Service or any state taxing authority, or as otherwise required by law, or as to Employer, in the preparation and dissemination of information to its officers, Board of Directors and shareholders or as required for Employer’s reporting purposes.

Employer and Employee agree not to discuss with any current or former employer, or any third party, any issues relating to Employee’s