EXHIBIT 10.1


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                           CONVERTIBLE PROMISSORY NOTE

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                                                              New York, New York
US$__________                                               December  [__], 2005

     FOR VALUE RECEIVED,  PHASE III MEDICAL,  INC., a Delaware  corporation (the
"Maker"),  unconditionally,  subject to the terms hereof, hereby promises to pay
to     the     order     of     [______________________________________],      a
[_____________________] corporation, or its successor or assigns (the "Holder"),
at such place as the Holder  may from time to time  designate  in writing to the
Maker,  in lawful money of the United  States of America,  the  principal sum of
_________________  Thousand  and No/100  Dollars  ($__________),  together  with
interest as herein provided,  subject to the terms set forth in this Convertible
Promissory  Note (the "Note").  Capitalized  terms not otherwise  defined herein
shall have the meanings set forth in the Subscription Agreement or the Notes.

     Section 1. Term.  The  principal  balance of this Note,  together  with all
accrued interest, shall be payable on the earlier of (i) the "Maturity Date" (as
defined in Section 2,  below) or (ii) the  occurrence  of any of the  "Events of
Default"  (as  defined  in Section 6,  below).  Upon the  payment in full of the
outstanding  principal  and all  accrued  interest  thereon,  this Note shall be
surrendered to the Maker for cancellation.

     Section 2. Maturity  Date.  The "Maturity  Date" is September  [__],  2006.

     Section 3. Interest;  Prepayment. The unpaid principal balance of this Note
shall  bear  interest  at the  rate of  nine  percent  (9%)  per  annum  payable
semi-annually on June __, 2006 and the Maturity Date. Interest shall commence to
accrue as of the date hereof and shall be  calculated  on the basis of a 365-day
year.  Any interest not paid shall be  capitalized  as principal and  compounded
semiannually. In no event shall the Holder be entitled to interest exceeding the
maximum rate  permitted  by the laws of the State of Delaware.  If any excess of
interest is provided for or shall be  adjudicated  to be so provided for in this
Note, then in such event:  (i) the provisions of this paragraph shall govern and
control;  (ii) the  Maker  shall  not be  obligated  to pay the  amount  of such
interest to the extent that it is in excess of the maximum  amount  permitted by
the laws of the State of Delaware; and (iii) any such excess which may have been
collected  or  attributed  shall be  subtracted  from the then unpaid  principal
amount hereof,  or refunded to the Maker. For so long as any Event of Default is
continuing,  and until such default has been cured,  interest  shall accrue at a
rate of 14% per annum on the unpaid  portion of  principal  and interest on this
Note.

     Subject to the Maker's  providing not less than 10 days' written  notice to
the Holder to provide the Holder with the  opportunity to exercise any or all of
his conversion  rights,  the Maker may prepay this Note at any time, in whole or
in part, without premium or penalty. All such payments shall be applied first to
accrued but unpaid interest and the remainder to principal.



                                       -4-

<PAGE>

     Section 4. Conversion.

          (a)  Optional  Conversion.  All or any portion of the principal amount
               of this Note then  outstanding,  together  with any  accrued  and
               unpaid interest hereunder,  may be converted at the option of the
               Holder  at any time  and from  time to time  into  shares  of the
               Maker's common stock,  $.001 par value (the "Common  Stock") at a
               conversion  price (the  "Conversion  Price") of $.06 per share of
               Common  Stock  (a  "Conversion   Share"),   with  the  number  of
               Conversion  Shares  subject  to  adjustment  from  time  to  time
               pursuant to Section 11, at the sole discretion of the Holder,  at
               any time through and including the Maturity  Date. The Holder may
               effect  conversions  under this Section 4, by delivering  written
               notice in the form attached hereto as Exhibit A (the  "Conversion
               Notice") to the Maker. Holder may convert the principal amount of
               this Note and if the  Holder is  converting  less than all of the
               principal  amount,  together with any accrued and unpaid interest
               hereunder,  represented  by this Note, the Maker shall honor such
               conversion to the extent permissible hereunder and shall promptly
               deliver  to the  Holder  a  schedule  in the form of  Schedule  1
               attached  hereto  (the  "Conversion   Schedule")  indicating  the
               principal amount which has not been converted.

          (b)  Mandatory Conversion.  On the day that written notice is given to
               the  Holder  by the  Company,  this Note  shall be  automatically
               converted into Conversion Shares at the then effective Conversion
               Price if (a) the  closing  price for a share of  Common  Stock as
               reported on the Over the Counter Bulletin Board (or the principal
               market for the  Company's  Common Stock at the time if other than
               the Over the Counter  Bulletin  Board) has been at least $.18 per
               share  (subject to adjustment  consistent  with any adjustment in
               the Conversion  Price hereunder) for the period of 10 consecutive
               trading  days prior to the date on which  such  notice is sent by
               the  Company,  and (b) the  Conversion  Shares to be issued  upon
               conversion and the shares underlying the Unit Warrant Shares have
               been registered for resale  pursuant to a registration  statement
               declared and remaining  effective  pursuant to the Securities Act
               of 1933, as amended (the "Securities Act").

     Section 5. Mechanics of Conversion.

          (a)  Number of Issuable  Conversion  Shares.  The number of Conversion
Shares  issuable upon conversion of the Note and any interest  thereunder  shall
equal the outstanding  principal amount of this Note and any interest thereon to
be converted,  divided by the Conversion  Price on the "Conversion  Date,".  The
Conversion Date is the date of the Conversion Notice.

          (b)  Effective  Date  of  Conversion;   Certificate.  Each  and  every
conversion hereunder shall be effective on the Conversion Date. The Maker shall,
by the fifth business day following each Conversion  Date,  issue or cause to be
issued and cause to be delivered to or upon the written  order of the Holder and
in such  name or  names  as the  Holder  may  designate  a  certificate  for the
Conversion  Shares.  The Holder,  or any Person so  designated  by the Holder to
receive  Conversion  Shares,  shall be  deemed to have  become  holder of record
thereof as of such Conversion Date.



                                       -5-

<PAGE>

          (c)  Effect of  Conversion  Notice.  The  Holder  shall  deliver  this
original  Note to the Maker to effect a conversion  hereunder or an affidavit of
loss and indemnity agreement in form and substance reasonably  acceptable to the
Maker and in  accordance  with  Section  12.1.  Notwithstanding  any  failure to
deliver the original Note,  execution and delivery of the  Conversion  Notice by
the Holder shall have the same effect as  cancellation  of the Note and issuance
of a New Note representing the remaining outstanding principal amount.

          (d)  The Maker's  Obligations.  The Maker's  obligations  to issue and
deliver  Conversion  Shares upon  conversion of this Note in accordance with the
terms  hereof are  absolute  and  unconditional,  irrespective  of any action or
inaction by the Holder to enforce the same,  any waiver or consent  with respect
to any provision hereof,  the recovery of any judgment against any Person or any
action to enforce the same, or any setoff, counterclaim, recoupment, limitation,
or  termination,  or any  breach or  alleged  breach by the  Holder or any other
Person of any  obligation to the Maker or any violation or alleged  violation of
law  by  the  Holder  or  any  other  Person,  and  irrespective  of  any  other
circumstance  which might  otherwise  limit such  obligation of the Maker to the
Holder in connection with the issuance of such Conversion Shares.

     Section 6. Events of Default.  Upon the  occurrence of any of the following
"Events of  Default,"  all  principal  and  accrued  and unpaid  interest  shall
immediately become due and payable:

          (a)  Bankruptcy,  etc.  The Company  shall  commence a voluntary  case
concerning   itself  under  Title  11  of  the  United   States  Code   entitled
"Bankruptcy,"  as now or  hereafter  in effect,  or any  successor  thereto (the
"Bankruptcy Code"); or an involuntary case is commenced against the Company, and
the petition is not  controverted  within 20 days, or is not dismissed within 60
days,  after  commencement  of the  case;  or a  custodian  (as  defined  in the
Bankruptcy Code) is appointed for, or takes charge of, all or substantially  all
of the property of the Company,  or the Company  commences any other  proceeding
under any  reorganization,  arrangement,  adjustment of debt, relief of debtors,
dissolution,  insolvency  or  liquidation  or  similar  law of any  jurisdiction
whether  now or  hereafter  in  effect  relating  to the  Company,  or  there is
commenced against the Company any such proceeding which remains  undismissed for
a period of 60 days, or the Company is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or the Company  suffers any  appointment  of any custodian or the like for it or
any substantial part of its property to continue  undischarged or unstayed for a
period of 60 days; or the Company makes a general  assignment for the benefit of
creditors;  or any  corporate  action is taken by the Company for the purpose of
effecting any of the foregoing;

          (b)  Breach of  Covenants.  The breach of any of the  covenants of the
Maker set forth in this Note and the Warrant To Purchase  Shares of Common Stock
of the  Maker  issued  to  Holder  as of the date  hereof,  subject  to a thirty
calendar day period to cure following written notice thereof from Holder.

          (c)  Nonpayment of Principal and Interest.  If any of the principal or
accrued and unpaid interest shall not be paid when due,  subject to a thirty day
period to cure.

     Section 7. Charges,  Taxes,  and  Expenses.  Issuance of  certificates  for
Conversion  Shares upon  conversion  of (or  otherwise  in respect of) this Note
shall be made  without  charge  to the  Holder  for any issue or  transfer  tax,



                                       -6-

<PAGE>

withholding  tax,  transfer  agent fee or other  incidental  tax or  expense  in
respect of the  issuance of such  certificate,  all of which taxes and  expenses
shall be paid by the  Maker;  provided,  however,  that the  Maker  shall not be
required to pay any tax that may be payable in respect of any transfer  involved
in the registration of any certificates for Conversion  Shares or Note in a name
other than that of the Holder.

     Section 8. Reservation of Common Stock. The Maker covenants that it will at
all times reserve and keep  available out of the aggregate of its authorized but
unissued  and  otherwise  unreserved  Common  Stock,  solely for the  purpose of
enabling  it to issue  Conversion  Shares as required  hereunder,  the number of
shares  of  Common  Stock  that  are  then  issuable  and  deliverable  upon the
conversion  of (and  otherwise  in respect  of) this entire  Note  (taking  into
account the adjustments of Section 10), free from preemptive rights or any other
contingent purchase rights of persons other than the Holder. The Maker covenants
that all Conversion  Shares so issuable and deliverable  shall, upon issuance in
accordance  with the terms hereof,  be duly and validly  authorized,  issued and
fully paid and nonassessable.

     Section  9.  Certain  Adjustments.  The  Conversion  Price  is  subject  to
adjustment from time to time as set forth in this Section 10.


          (a)  Stock Dividends and Splits.  If the Maker, at any time while this
Note is outstanding:  (i) pays a stock dividend on its Common Stock or otherwise
makes a distribution  on any class of capital stock that is payable in shares of
Common Stock, (ii) subdivides  outstanding  shares of Common Stock into a larger
number of shares,  or (iii) combines  outstanding  shares of Common Stock into a
smaller number of shares,  then in each such case the Conversion  Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common  Stock  outstanding  immediately  before  such  event  and of  which  the
denominator   shall  be  the  number  of  shares  of  Common  Stock  outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
subsection  shall  become  effective  immediately  after the record date for the
determination of shareholders entitled to receive such dividend or distribution,
and any  adjustment  pursuant to clause (ii) or (iii) of this  subsection  shall
become  effective  immediately  after the effective date of such  subdivision or
combination.

          (b)  Reorganization,  Consolidation,  Merger, etc. In case at any time
or from  time to  time,  the  Maker  shall  (a)  effect  a  reorganization,  (b)
consolidate  with or merge with or into any other  person,  (c)  reclassify  its
shares of capital  stock in such a manner as would effect its Common  Stock,  or
(d) transfer all or  substantially  all of its properties or assets to any other
person under any plan or arrangement contemplating the dissolution of the Maker,
then,  in  each  such  case,  as a  condition  to  the  consummation  of  such a
transaction,  proper and adequate  provision  shall be made by the Maker whereby
the Holder of the Note,  on the  conversion  hereof as provided in Section 4, at
any time after the consummation of such reorganization,  consolidation,  merger,
or reclassification  or the effective date of such dissolution,  as the case may
be, shall  receive,  in lieu of the Conversion  Shares and  Conversion  Warrants
issuable on such conversion  prior to such  consummation or such effective date,
the stock and other  securities  and  property  (including  cash) to which  such
Holder would have been entitled  upon such  consummation  or in connection  with
such dissolution, as the case may be, if such Holder had so converted this Note,
immediately  prior  thereto,  all subject to further  adjustment  thereafter  as
otherwise provided in this Section 10.

          (c)  Calculations.  All  calculations  under this  Section 10 shall be
made to the nearest cent or the nearest 1/100th of a share,  as applicable.  The



                                       -7-
<PAGE>

number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Maker,  and the disposition of
any such shares shall be considered an issue or sale of Common Stock.

          (d)  Notice of  Adjustments.  Upon the  occurrence of each  adjustment
pursuant  to this  Section  11,  the  Maker at its  expense  will  compute  such
adjustment  in  accordance  with the terms  hereof.  Upon  written  request by a
Holder, Maker will deliver to any Holder so requesting a certificate  describing
in reasonable detail such adjustment and the transactions giving rise thereto,

     Section 10. Fractional  Shares. The Maker shall not be required to issue or
cause to be issued  fractional  Conversion Shares on conversion of this Note. If
any fraction of a  Conversion  Share would,  except for the  provisions  of this
Section  10, be  issuable  upon  conversion  of this Note or payment of interest
hereon,  the number of Conversion  Shares to be issued will be rounded up to the
nearest whole Conversion Share.

     Section 11. Miscellaneous.

     (a)  Exchange; Lost, Stolen,  Destroyed, or Mutilated Note. Upon receipt of
evidence reasonably  satisfactory to the Maker of the ownership of and the loss,
theft, destruction,  or mutilation of this Note and (in the case of loss, theft,
or  destruction)  upon delivery of an indemnity  agreement in an amount and by a
person or an entity  reasonably  satisfactory  to the Maker,  or (in the case of
mutilation)  upon surrender and  cancellation  of the mutilated  Note, the Maker
will execute and deliver,  in lieu thereof, a new Note containing the same terms
and conditions, as adjusted for unpaid principal and interest on this Note.

     (b)  Successors  and Assigns.  The terms and  conditions of this Note shall
inure to the  benefit  of and be  binding  upon the  respective  successors  and
assigns of the parties. Nothing in this Note, express or implied, is intended to
confer  upon any  party,  other  than the  parties  hereto  or their  respective
successors and assigns, any rights, remedies,  obligations, or liabilities under
or by reason of this Note, except as expressly provided in this Note.

     (c)  Notices.  Any notice  required or  permitted  under this Note shall be
given in writing and shall be deemed effectively given upon personal delivery to
the party to be notified or by telex or confirmed facsimile, or one delivery day
after deposit with a recognized  overnight  express  delivery service or courier
(for FedEx  Express  Overnight [or  equivalent]  delivery to and from an address
within the United States of America) or three delivery days after deposit with a
recognized  overnight  express  delivery  service or courier (for FedEx  Express
International  Priority [or equivalent]  delivery to and from an address outside
the United States of America),  and addressed to the party to be notified at the
address  indicated for such party below,  or at such other address as such party
may designate by ten days' advance written notice to the other party:

     (a)  If to the Maker:      Phase III Medical, Inc.
                                330 South Service Road
                                Suite 120
                                Melville, NY 11747
                                Attention: Mark Weinreb, Chief Executive Officer
                                Facsimile: 631.574.4955



                                       -8-

<PAGE>

     With a copy to:            (which shall not constitute notice)
                                Lowenstein Sandler PC
                                65 Livingston Ave.
                                Roseland, NJ 07068
                                Fax 973.597.2565

     (b)  If to the Holder:     [____________________________________]
                                [____________________________________]
                                [____________________________________]
                                [____________________________________]
                                Facsimile: [_________________________]


          With a copy to:       Meister Seelig & Fein LLP
          (which shall not      140 East 45th Street, 19th Floor
          constitute notice)    New York, NY 10017
                                Attention: Ronniel Levy, Esq.
                                Facsimile: 646.539.3622

     (d)  Severability.  If one or more  provisions  of this Note are held to be
unenforceable  under applicable law, such provisions shall be excluded from this
Note and the  balance of this Note shall be  interpreted  as if such  provisions
were so excluded and shall be enforceable in accordance with its terms.

     (e)  Consents,   Waivers,   and  Modifications.   No  consent,   waiver  or
modification  of any nature  relating to this Note,  or the  obligations  of the
Maker hereunder,  shall be effective unless the same is in writing and signed by
an authorized representative of the Holder.

     (f)  Entire Agreement. This Note and the other documents delivered pursuant
hereto, or referenced herein,  constitute the full and entire  understanding and
agreement between the parties with regard to the subjects hereof.

     (g)  Governing  Law.  This Note shall be construed in  accordance  with and
governed  by the laws of the State of  Delaware  and the  venue for any  dispute
resolution  process shall be New York County,  New York. Subject to the terms of
this Note, this Note is an instrument  representing an unconditional  obligation
of the Maker for payment of money only and is enforceable by summary  proceeding
and without a jury pursuant to New York  C.P.L.R.  3213, in the Supreme Court of
the State of New York, County of New York.

     (h)  Further Assurances. At any time or from time to time upon request of a
party hereto (the "Requesting  Party"),  the other party hereto will execute and
deliver  such  further  documents  and do such  other  acts  and  things  as the
Requesting Party may reasonably request in order fully to effectuate the purpose
of this Note and to provide for the payment of the  principal  and  interest due
hereunder.

     (i)  No Stockholder Rights. No provision of this Note shall be construed as
conferring  upon the  Holder  the  right  to vote or to  consent  or to  receive
dividends  or to receive  notice as a  stockholder  in respect  of  meetings  of
stockholders  for the  election of  directors  of the Maker or any other  matter
whatsoever as a stockholder of the Maker. No provision hereof, in the absence of
conversion  referred to in Section 4 hereof,  and no mere enumeration  herein of



                                       -9-

<PAGE>

the rights or  privileges  of the Holder,  shall give rise to any  liability  of
Holder for the purchase  price of such shares or as a stockholder  of the Maker,
whether  such  liability is asserted by the Maker,  creditors  of the Maker,  or
others.

     (j)  Amendments.  This Note may not be amended  without the prior,  written
consent  of the  Holder  (which  consent  shall  not be  unreasonably  withheld,
delayed,   or  denied),   if  such  amendment  would  materially  and  adversely
disadvantage  the Holder or one or more of such  holders  vis-a-vis  any of such
other holders.

     (k)  Headings.  The  titles  and  subtitles  used in this Note are used for
convenience only and are not to be considered in construing or interpreting this
Note.

     IN  WITNESS  WHEREOF,  the  undersigned  has  executed  or  caused  a  duly
authorized  officer or  representative  to execute this Note, all as of the date
first above written.

                                       PHASE III MEDICAL, INC.
                                       a Delaware corporation



                                       By:
                                           -------------------------------------
                                           Mark Weinreb, Chief Executive Officer









                                      -10-

<PAGE>

                                    EXHIBIT A

                                CONVERSION NOTICE

(To be Executed by the Registered Holder in order to convert Note)

     The undersigned  hereby elects to convert the principal  amount of Note and
any accrued interest thereon indicated below, into Units, as of the date written
below.  If  shares  are  to be  issued  in  the  name  of a  Person  other  than
undersigned,  the  undersigned  will pay all transfer taxes payable with respect
thereto and is delivering  herewith such certificates and opinions as reasonably
requested by the Maker in  accordance  therewith.  No fee will be charged to the
Holder for any  conversion,  except for such transfer  taxes,  if any. All terms
used in this notice shall have the meanings set forth in the Note.

Conversion calculations:
                         -------------------------------------------------------
                                       Date to Effect Conversion

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               Principal amount of Note owned prior to conversion

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                    Principal amount of Note to be Converted

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               Principal amount of Note remaining after Conversion

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                        Accrued Interest to be Converted

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                  Number of shares of Common Stock to be Issued

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                           Applicable Conversion Price

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                                 Name of Holder

By:
    ----------------------------------------------------------------------------
    Name:
           --------------------------------------------
    Title:
           --------------------------------------------



                                      -11-

<PAGE>

                                   Schedule 1

                             PHASE III MEDICAL, INC.
                    CONVERTIBLE NOTE DUE SEPTEMBER [__], 2006

                               CONVERSION SCHEDULE

     This Conversion Schedule reflects conversions made under the
above-referenced Note.

<TABLE>
<CAPTION>
<S>                                     <C>                        <C>                       <C>
------------------------------ -------------------------- --------------------- ---------------------------------
                                                           Aggregate Principal
                                                            Amount Remaining
                                                              Subsequent to
     Date of Conversion          Amount of Conversion          Conversion         Applicable Conversion Price
------------------------------ -------------------------- --------------------- ---------------------------------

------------------------------ -------------------------- --------------------- ---------------------------------

------------------------------ -------------------------- --------------------- ---------------------------------

------------------------------ -------------------------- --------------------- ---------------------------------

------------------------------ -------------------------- --------------------- ---------------------------------
</TABLE>










                                      -12-