Document:

EXHIBIT 10(DD)
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                    SETTLEMENT AGREEMENT AND GENERAL RELEASE
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     This Settlement  Agreement and General Release (this "Agreement") is hereby
entered  into as of this 31st day of March,  2006 by and among  Robert J. Aholt,
Jr., an individual (the  "Executive"),  and Phase III Medical,  Inc., a Delaware
corporation (the "Company").

                                    RECITALS

     A.   The  Executive  was employed by the Company  pursuant to an Employment
Agreement by and between the Company and the Executive dated as of September 13,
2004,  as amended  pursuant to an amendment  thereto dated as of August 12, 2005
(the "Employment Agreement"), serving as the Company's Chief Operating Officer;

     B.   The Executive's employment has terminated as of February 19, 2006 (the
Termination Date"); and

     C.   Each of the parties hereto believes it to be in their  respective best
interests to enter into an agreement to set forth the terms of their  respective
rights and obligations relating to the Executive's separation from the Company.

                                    AGREEMENT

     In consideration of the mutual promises contained herein and for other good
and  valuable  consideration,  the  receipt  and  adequacy  of which are  hereby
acknowledged, the parties hereby agree as follows:

     1.   EFFECTIVE  DATE.  This Agreement shall be effective on the date hereof
(the "Effective Date").

     2.   END OF  EMPLOYMENT.  The  Executive's  status  as an  employee  and an
officer of the Company has previously terminated.  Each party hereto understands
that,  except as otherwise  provided under this Agreement,  each party hereto is
entitled to nothing further from the other party (whether arising out of (i) the
Employment Agreement or the termination  thereof, or (ii) Employee's  employment
with the Company or the termination thereof or otherwise).

     3.   SEPARATION  PAYMENT.  As consideration for the Executive's  execution,
delivery,  and  non-revocation  of this  Agreement,  the  Company  shall  pay to
Executive  the  aggregate  amount  of  $250,000  (less  applicable  Federal  and
California state and local withholdings and payroll  deductions),  payable in 51
consecutive  biweekly   installments  of  $4,807.69  each  (less  in  each  case
applicable  Federal  and  California  State and local  withholdings  and payroll
deductions  ("Payroll Taxes"))  commencing on April 7, 2006 and continuing every
two weeks thereafter until the full amount of $250,000 (less applicable  Federal
and California state and local  withholdings and payroll  deductions) is paid in
full;  except that (a) the first payment (and only the first payment) will be in
an amount of $9,615,38 less Payroll Taxes and (b) the first payment will be made
on the  later of April 7,  2006 or the date  that the  rescission  rights  under
Section 10 have expired.

     4.   STOCK  OPTIONS.  Nothing  in this  Agreement  shall  adversely  effect
Executive's stock option agreement ("Stock Option Grant Agreement")  pursuant to
which he was granted,  under the Company's 2003 Equity  Participation  Plan (the

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"EPP"),  an option to purchase  1,500,000  shares of the Company's common stock,
$.001 par value (the "Common Stock"), which agreement shall remain in full force
and effect in accordance with its terms and the terms of the EPP.

     5.   ACKNOWLEDGMENT OF COMPENSATION.  The Executive acknowledges and agrees
that,  except as otherwise  specifically  set forth herein,  the payments  under
Section 3 of this Agreement shall extinguish any and all obligations for monies,
additional stock options,  additional equity grants, or compensation or benefits
of any kind  that the  Executive  claims  or could  claim to have  earned or are
otherwise owed to him as a result of his  employment by the Company  through the
date hereof, under the Employment Agreement or otherwise.

     6.   STATUS OF RELATED AGREEMENTS OR PURPORTED AGREEMENTS.

          (a)  AGREEMENTS OR PURPORTED  AGREEMENTS BETWEEN THE EXECUTIVE AND THE
COMPANY.  The Executive and the Company agree that,  except for this  Agreement,
the  Employment  Agreement  and the Stock Option Grant  Agreement,  there are no
other executed  agreements or purported  agreements  between the Company and the
Executive.

          (b)  EMPLOYMENT  AGREEMENT.  Except as otherwise  provided herein, the
parties  agree  that the  Employment  Agreement  has been  terminated  as of the
Termination Date.  Notwithstanding the termination of the Employment  Agreement,
the Executive  acknowledges  that the duties and  obligations  set forth therein
relating to  confidentiality,  non-solicitation  and noncompetition as set forth
below (the "Surviving  Employment Agreement  Provisions") extend beyond the date
hereof.  In the event that any provision of this  Agreement  conflicts with such
Surviving  Employment  Agreement  Provisions,  the terms and  provisions  of the
following Surviving Employment Agreement Provisions shall control.

     "You  acknowledge  that,  as COO,  you will have  access  to the  Company's
confidential  information  and that all  confidential  information  shall be and
remain the sole  property of the Company and that you will not at any time,  now
or in the future,  disclose,  disseminate  or  otherwise  make public any of the
confidential information without the express written permission of the Company.

     You  acknowledge  and agree  that your  services  pursuant  to this  Letter
Agreement are unique and extraordinary;  that the Company will be dependent upon
you for development, financial, marketing and other expertise; and that you will
have access to and  control of  confidential  information  of the  Company.  You
further  acknowledge  that the business of the Company is international in scope
and  cannot  be  confined  to  any  particular   geographic  area.  You  further
acknowledge  that the scope and duration of the  restrictions  set forth in this
paragraph  are  reasonable  in light of the specific  nature and duration of the
transactions  contemplated by this Letter  Agreement.  For the foregoing reasons
and to induce the Company to enter this Letter Agreement, you covenant and agree
that during the Term and the period  beginning at the end of the Term and ending
one (1) year  after the end of the  Term,  you shall  not  unless  with  written
consent of the Company:

     (i)  engage in any business  directly  related to the business of providing
capital  and  guidance  to  companies,  within the  medical  pharmaceutical  and
biotechnology  sector, or in any other business  conducted by the Company during
the Term  (collectively,  the  "Prohibited  Activity") in the world for your own
account;

     (ii) become interested in any individual, corporation, partnership or other
business  entity (a "Person")  engaged in any Prohibited  Activity in the world,
directly  or  indirectly,  as  an  individual,  partner,  shareholder,  officer,
director,  principal,  agent,  employee,  trustee,  consultant  or in any  other

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relationship  or  capacity;  provided,  however,  that you may own  directly  or
indirectly,  solely as an investment,  securities of any Person which are traded
on any national  securities exchange if you (x) are not a controlling person of,
or a member of a group which  controls,  such person or (y) do not,  directly or
indirectly, own 5% or more of any class of securities of such person; or

     (iii) directly or indirectly  hire,  employ or retain any person who at any
time  during the last  twelve  (12)  months of the Term was an  employee  of the
Company or directly or indirectly solicit,  entice, induce or encourage any such
person to become employed by any other person.

You hereby  acknowledge  that the  covenants  and  agreements  contained  in the
immediately  preceding  paragraph are  reasonable  and valid in all respects and
that the Company is entering into this Letter Agreement on such  acknowledgment.
If you  breach,  or  threaten  to  commit a  breach,  of any of the  restrictive
covenants set forth in this Letter Agreement (the "Restrictive Covenants"),  the
Company shall have the following  rights and remedies,  each of which rights and
remedies shall be independent of the other and severally enforceable, and all of
which rights and remedies shall be in addition to, and not in lieu of, any other
rights and  remedies  available to the Company  under law or in equity:  (i) the
right and remedy to have the Restrictive Covenants  specifically enforced by any
court having equity jurisdiction, it being acknowledged and agreed that any such
breach or  threatened  breach will cause  irreparable  injury to the Company and
that money damages will not provide an adequate remedy to the Company;  and (ii)
the right and remedy to require  you to account  for and pay over to the Company
such  damages  as are  recoverable  at law as  the  result  of any  transactions
constituting a breach of any of the "Restrictive Covenants."

For purposes of interpretation of the Surviving Employment Agreement Provisions,
the last day of the "Term" shall be deemed to have been the Termination Date.

     7.   RELEASES.

          (a)  The   Executive,   for   himself   and  his   heirs,   executors,
administrators,  assigns, affiliates,  successors and agents, as well as (in his
capacity as trustee) for and on behalf of the Robert J. Aholt,  Jr. Family Trust
(collectively, the "Executive's Affiliates") hereby fully and without limitation
irrevocably releases and forever discharges the Company, its affiliates and each
of its  and  their  respective  agents,  representatives,  officers,  directors,
shareholders,  members, partners, employees,  consultants,  attorneys, auditors,
accountants,  investigators,  affiliates,  successors and assigns (collectively,
the "Company Releasees"),  both individually and collectively,  from any and all
rights, claims, demands, liabilities, actions, causes of action, suits, charges,
controversies,  damages,  losses, costs, expenses and compensation,  of whatever
nature whatsoever, known or unknown, fixed or contingent, which the Executive or
any of the  Executive's  Affiliates has or may have or may claim to have against
the Company  Releasees  by reason of any  matter,  cause,  or thing  whatsoever,
arising  on or  prior  to the  Effective  Date  ("Claims"),  including,  without
limiting the generality of the foregoing, any Claims arising out of, based upon,
or  relating to the  recruitment,  hiring,  employment,  or  termination  of the
Executive by any of the Company Releasees, the Executive's tenure as an employee
and/or an officer of any of the Company Releasees, any agreement or compensation
arrangement  between the Executive and any of the Company Releasees  (including,
without  limitation,  the  Employment  Agreement),  or any act or  occurrence in
connection with any actual, existing, proposed, prospective or claimed ownership
interest of any nature of the Executive or the Executive's  Affiliates in equity
capital or rights in equity  capital or other  securities  of any of the Company
Releasees to the maximum extent permitted by law. The Executive specifically and
expressly  releases  any Claims  arising  out of or based on: the New York State
Human  Rights Law,  the New York City Human  Rights  Law;  the  California  Fair
Employment  and Housing  Act, as amended;  Title VII of the Civil  Rights Act of
1964,  as amended;  the Civil Rights Act of 1991;  the Family and Medical  Leave

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Act; the Vietnam Era Veterans  Readjustment  Act; the Fair Credit Reporting Act;
the Americans With  Disabilities  Act; the  Sarbanes-Oxley  Act of 2002; the Age
Discrimination  in Employment Act; the National Labor Relations Act, as amended;
the Equal Pay Act;  ERISA;  any  provision  of the  California  Labor Code;  the
California  common  law on  fraud,  misrepresentation,  negligence,  defamation,
infliction of emotional  distress or other tort, breach of contract or covenant,
violation of public  policy or wrongful  termination;  state or federal wage and
hour laws;  state of federal  whistleblower  laws; or any other state or federal
law, rule, or regulation dealing with the employment relationship.  This Section
7(a)  releases all Claims  including  those of which  Executive is not aware and
those not mentioned in this Agreement.  Nothing in this Agreement shall preclude
the Executive from  participating in any manner in an investigation,  hearing or
proceeding  conducted by the Equal Employment  Opportunity  Commission,  but the
Executive  hereby waives any and all rights to recover  under,  or by virtue of,
any such  investigation,  hearing or proceeding.  Notwithstanding the foregoing,
nothing in this Section 7(a) shall be deemed to release  Company  Releasees from
actions and claims by Executive  against any Company  Releasee for  contribution
and/or  indemnification  if a third party has brought an action or claim against
Executive  arising  out of a  Company  Releasee's  willful  misconduct  or gross
negligence while employed by, or serving as an officer or director of, Company.

          (b)  In  consideration  of the  releases  by  Executive  set  forth in
Section 7(a) above, the Company, for itself and its,  affiliates,  subsidiaries,
successors,  and assigns  (collectively  the "Company  Group")  hereby fully and
without  limitation  irrevocably  releases and forever discharges the Executive,
and the Executive Affiliates,  (collectively,  the "Executive Releasees"),  both
individually  and  collectively,  from  any and  all  rights,  claims,  demands,
liabilities, actions, causes of action, suits, charges, controversies,  damages,
losses, costs, expenses and compensation,  of whatever nature whatsoever,  known
or unknown,  fixed or contingent,  which the Company or any of the Company Group
has or may have or may claim to have against the  Executive  Releasees by reason
of any matter, cause, or thing whatsoever,  arising on or prior to the Effective
Date ("Claims"),  including without  limitation,  any and all actions,  charges,
controversies,   demands,   causes  of  action,  suits,  rights,  and/or  claims
whatsoever that the Company may have against  Executive  arising out of: (i) the
Employment  Agreement  and/or the  termination  of the  Employment  Agreement or
otherwise arising out of Executive's  employment with, or position as an officer
of, the Company or termination of Executive's employment with, or position as an
officer of, the Company; or (ii) by reason of any other matter,  cause, or thing
whatsoever  from  the  date  of the  Executive's  employment  to the  date  this
Agreement is executed by Company and  delivered to  Executive,  whether  arising
directly  or  indirectly  from  any  act or  omission,  whether  intentional  or
unintentional.  This Section 7(b) releases all Company Claims including those of
which Company is not aware and those not  mentioned in this  Agreement up to the
date of  Company's  execution  and  delivery  of this  Agreement  to  Executive.
Notwithstanding  the foregoing,  nothing in this Section 7(b) shall be deemed to
release  Employee  from (i) any of  Executive's  acts or omissions  involving or
arising from fraud,  deceit or theft, (ii) Executive's  obligations with respect
to the Surviving Employment Agreement Provisions, or (iii) actions and claims by
Company against Executive for contribution and/or  indemnification of any action
or claim brought by any third party person  arising out of  Executive's  willful
misconduct or gross  negligence  while employed by, or serving as an officer of,
Company;  provided,  however,  that exceptions (i) and (iii) are exceptions from
the release only if the Company would  generally  have a cause of action against
any officer if such officer's conduct was as described in clauses (i) and (iii).

     8.   WAIVER OF CIVIL CODE SECTION 1542.

          (a)  Both  parties  hereto  understand  and  agree  that  the  release
provided  herein  extends to all Claims and Company  Claims  released in Section
7(a) and 7(b),  respectively,  above,  whether  known or unknown,  suspected  or
unsuspected. Both parties expressly waive and relinquish any and all rights they
may have under California Civil Code Section 1542, which provides as follows:

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     "A GENERAL  RELEASE DOES NOT EXTEND TO CLAIMS  WHICH THE CREDITOR  DOES NOT
KNOW OR  SUSPECT  TO EXIST IN HIS OR HER  FAVOR  AT THE  TIME OF  EXECUTING  THE
RELEASE,  WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY  AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR."

          (b)  Both parties  expressly waive and release any rights and benefits
that  they  have  or may  have  under  any  similar  law or  rule  of any  other
jurisdiction.  It is the intention of each party through this Agreement and with
the advice of counsel to fully,  finally  and  forever  settle and  release  the
Claims and the Company Claims as set forth in Section 7 above. In furtherance of
such intention, the release herein given shall be and remain in effect as a full
and  complete  release of such  matters  notwithstanding  the  discovery  of any
additional Claims, Company Claims or facts relating thereto.

     9.   RELEASE OF FEDERAL AGE  DISCRIMINATION  CLAIMS BY THE  EXECUTIVE.  The
Executive  hereby  knowingly and voluntarily  waives and releases all rights and
claims, known or unknown, arising under the Age Discrimination In Employment Act
of 1967, as amended,  which he might  otherwise  have had against the Company or
any of the Company  Releasees  regarding any actions which occurred prior to the
Effective Date.

     10.  RIGHTS UNDER THE OLDER WORKERS  BENEFIT  PROTECTION ACT. In accordance
with the Older Workers Benefit  Protection Act of 1990, the Executive  hereby is
advised of the following:

          (a)  The  Executive  has the right to consult with an attorney  before
signing this Agreement and is encouraged by the Company to do so;

          (b)  The Executive has  twenty-one  (21) days from his receipt of this
Agreement to consider it; and

          (c)  The Executive has seven (7) days after signing this  Agreement to
revoke  Sections 7(a), 8, 9, and 11(a) of this Agreement  (which must be revoked
in their  entirety and as a group),  and the Executive  understands  he will not
receive any of the pay and benefits under this Agreement  until that  revocation
period has expired without exercise.  The Executive understands that to exercise
his right to revoke this Agreement within such seven (7) day period,  he must do
so in a signed writing delivered to the Company's Chief Executive Officer before
the close of business on the seventh calendar day after he signs this Agreement.
In the event that the Executive  exercises  his right to revoke this  Agreement,
this Agreement shall be null and void and of no force and effect.

     11.  REPRESENTATIONS; COVENANT NOT TO SUE.

          (a)  Executive hereby represents and warrants to the Company Releasees
that (i)  Executive  has not filed,  caused or permitted to be filed any pending
proceeding  (nor has  Executive  lodged a  complaint  with any  governmental  or
quasi-governmental authority) against the Company or any other Company Releasee,
nor has  Executive  agreed to do any of the  foregoing,  (ii)  Executive has not
assigned,  transferred,  sold,  encumbered,  pledged,  hypothecated,  mortgaged,
distributed,  or otherwise  disposed of or conveyed to any third party any right
or Claim against Company or any Company  Releasee that has been released in this
Agreement,  and  (iii)  Executive  has not  knowingly  assisted  (and  will  not
knowingly  assist) any third party in filing,  causing or assisting to be filed,
any Claim against Company or any other Company Releasee. In addition,  Executive
shall not  knowingly  encourage  or solicit or,  unless  compelled by a lawfully
issued  governmental order or decree or any other legal  requirement,  knowingly
assist or  participate  in any way in the filing,  reporting or  prosecution  by
itself or any third party of a proceeding or Claim against  Company or any other

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Company  Releasee  based upon or relating to any Claim  released by Executive in
this Agreement.  It shall not be a breach of this Section 11(a) for either party
to testify truthfully in any judicial or administrative proceeding.

          (b)  Company  hereby  represents  and warrants to  Executive  that (i)
Company has not filed,  caused or permitted  to be filed any pending  proceeding
(nor has Company lodged a complaint with any governmental or  quasi-governmental
authority) against Executive, nor has Company agreed to do any of the foregoing,
(ii)  Company  has  not  assigned,   transferred,  sold,  encumbered,   pledged,
hypothecated, mortgaged, distributed or otherwise disposed of or conveyed to any
third party any right or Company Claim against  Executive that has been released
in this  Agreement,  and (iii) Company has not knowingly  assisted (and will not
knowingly  assist) any third party in filing,  causing or assisting to be filed,
any claim against Executive. In addition,  Company shall not knowingly encourage
or solicit or,  unless  compelled  by a lawfully  issued  governmental  order or
decree or any other legal  requirement,  knowingly  assist or participate in any
way in the filing,  reporting or  prosecution  by itself or any third party of a
proceeding  or Company  Claim  against  Employee  based upon or  relating to any
Company Claim released by Company in this Separation Agreement.  It shall not be
a breach of this Section 11(b) for Company to testify truthfully in any judicial
or administrative proceeding.

     12.  PROPRIETARY  INFORMATION.  The  Executive  acknowledges  that  certain
information,  observations  and data  obtained  by him  during  the course of or
related to his  employment  with the  Company  (including,  without  limitation,
projection programs, business plans, business matrix programs (I.E., measurement
of  business),   strategic   financial   projections,   financial   information,
shareholder  information,   product  design  information,   marketing  plans  or
proposals, personnel information, customer lists and other customer information)
are the sole property of the Company and constitute Confidential  Information of
the  Company.  In addition to his  promises in  Surviving  Employment  Agreement
Provisions,  the Executive agrees that he will not disclose to any person or use
any such  information,  observations  or data. If the Executive is served with a
deposition  subpoena or other legal process  calling for the  disclosure of such
information he will notify the Company's Chief  Executive  Officer as soon as is
reasonably  practicable  after receiving  notice to enable the Company to seek a
protective order at Company's sole cost and expense.

     13.  COVENANTS.  Until such time as the entire payment described in Section
3 above  is paid in  full,  Company  hereby  agrees  as  follows  (the  "Payroll
Covenants"):

          (a)  Company  shall not pay any deferred  compensation  to any officer
that  was  earned  by  them,  but  unpaid,  as of  December  31,  2005,  unless,
simultaneously with such payment of deferred  compensation,  the Company pays to
Executive the same proportionate  amount of deferred  compensation which was due
to him at  December  31,  2005.  Executive  was owed  approximately  $58,000  of
deferred  compensation  at  December  31,  2005.  All  officers  (including  the
Executive),   were  owed  $278,241  of  deferred   compensation  at  such  date.
Accordingly,   the  Executive  must  received  at  least  20%  of  all  deferred
compensation payments made by the Company hereafter until all amounts due to him
are paid in full. Furthermore,  no deferred compensation payments may be made if
the  Company  is  late  in  making  scheduled  payment  under  Section  3 to the
Executive.  Any amount  paid to  Executive  pursuant  to Section  13(a) shall be
offset against the last payment(s) due under Section 3 above.

Nothing  contained  herein  shall  prevent or give the  Executive  any rights or
claims if any officer or employee  of the  Company is paid any  compensation  or
deferred compensation in securities of the Company. The foregoing covenant shall
only affect cash payments.

     14.  REMEDIES.

          (a)  If the Executive breaches any of the material terms or conditions
of this Agreement, it shall constitute a breach and Company shall be entitled to

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all remedies available  hereunder  (including,  without  limitation,  injunctive
relief herein), or otherwise available at law or in equity.  Notwithstanding the
foregoing, to the extent any such breach by the Executive is curable,  Executive
shall have 10 days  following  notice from Company to cure such breach.  Without
limiting the foregoing,  the Executive  acknowledges that any unfair competition
or misuse of trade secret or Confidential  Information belonging to the Company,
or any violation of the Surviving Employment Agreement Provisions or Sections 12
and 16 of this Agreement,  will result in irreparable  harm to the Company,  and
therefore, the Company shall, in addition to any other remedies available at law
or in equity, be entitled to immediate injunctive relief.

          (b)  If Company  breaches any of the material  terms or  conditions of
this Agreement  (including,  without limitation,  the failure to pay any payment
installment  to Executive  hereunder  when due after the  expiration of the cure
period set forth in Section  30(c) below or failure to adhere to the  provisions
of Section 13), it shall constitute a breach of this Agreement if such breach is
not cured within ten (10) days after written notice,  and in addition to and not
instead of  Executive's  other  remedies  hereunder  or  otherwise  at law or in
equity,  Company's obligation to pay the unpaid balance of the payment set forth
in  Section  3, at the  option of  Executive,  shall  accelerate  and be due and
payable  in full ten (10) days after  written  notice of the  acceleration  from
Executive, without delay or discount. If the accelerated amount is not paid when
due, time being of the essence, the consideration for Executive's release herein
against  Company  shall be deemed to have  failed and such  release  against the
Company shall be deemed  withdrawn.  The release  against the Company's  agents,
representatives,  officers, directors, shareholders, and other Company Releasees
shall not be  withdrawn  and shall remain at all times in full force and effect.
Notwithstanding  the  foregoing,  Company  shall during the term hereof have one
ninety  day grace  period  after  notice to cure a failure  to pay the  biweekly
payments due Executive herein; provided that such 90 day grace period may not be
exercised by the Company prior to July 15, 2006.  Company shall notify Executive
within five (5) days after receiving a notice of default relating to a bi-weekly
payment of Company's  election to exercise its one time grace  period,  in which
case,  Company shall be in breach of its  obligations  hereunder only if it does
not cure such breach within ninety days after such notice of breach.

          (c)  In the event  Company  fails to make the payments when due as set
forth in Section 3 herein,  or  defaults  in its  obligations  under  Section 13
herein, Company shall provide to Executive upon Executive's written request, the
Company's most recently  filed Federal IRS form 941 for Company,  its affiliates
and subsidiaries, if applicable, concurrently with the filing thereof .

     15.  NO FUTURE  EMPLOYMENT.  The Executive  understands that his employment
with the  Company  has ended and will not be resumed at any time in the  future.
The Executive  agrees that he will not apply for,  seek or accept  employment by
the Company at any time, unless invited to do so by the Company.

     16.  NON-DISPARAGEMENt.  The Executive agrees not to disparage or otherwise
publish or communicate  derogatory statements about the Company, its management,
products  and services to any third party.  Company  agrees to use  commercially
reasonable  efforts  to  cause  its  executive  officers  and  directors  not to
disparage or other publish or communicate derogatory statements about Executive.
It shall not be a breach  of this  Section  16 for the  Executive  or  Company's
executive  officers  and/or  directors to testify  truthfully in any judicial or
administrative  proceeding, or to make factually accurate statements in legal or
public filings.

     17.  TAXES.  The  Executive  acknowledges  that the  payments  set forth in
Section 3 will be subject to customary  payroll  withholding  and deductions and
agrees that he is solely  responsible for all other tax obligations,  including,
but not limited to, all payment obligations, which may arise as a consequence of

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this settlement.  The Executive  further agrees to promptly pay and to indemnify
and hold the Company Releasees harmless from and against any and all loss, cost,
damage or expense,  including,  without limitation,  attorneys' fees,  interest,
assessments, withholdings and penalties, arising out of any dispute over the tax
treatment  of any of the  proceeds  paid to the  Executive  as a result  of this
settlement.  The Executive further agrees not to seek or make any claims against
the  Company  Releasees  for any loss,  cost,  damage or  expense  if a claim or
adverse determination is made in connection with the tax treatment of any of the
proceeds of this settlement or a portion thereof. The Executive  understands and
agrees that the Company  Releasees shall not have any duty to defend against any
claim or assertion in connection  with the tax treatment of the proceeds of this
settlement  or any  portion  thereof,  and the  Executive  agrees to assume full
responsibility  for defending against any such claim or assertion.  In addition,
the Executive  agrees to notify the Company within ten (10) business days of any
communication  or action by any government  agency relating the tax treatment of
any of the proceeds paid to the Executive as a result of this settlement.

     18.  GOVERNING  LAW. This  Agreement  shall be governed by and construed in
accordance  with the laws of the State of New  York,  without  giving  effect to
principles of conflict of laws.

     19.  VENUE;  ARBITRATION.  The  arbitration  provisions  of the  Employment
Agreement are incorporated herein as follows:

          This  Agreement  shall be  governed  by, and  construed  in with,  the
     internal laws of the State of New York,  without reference to the choice of
     law  principles  thereof.  Any claim,  controversy  or dispute  between the
     parties  hereto,  arising out of,  relating to, or in connection  with this
     Agreement  or  any  aspect  of  your  services  to the  Company  hereunder,
     including but not limited to the  termination of this Agreement and any and
     all  claims in tort or  contract,  shall be  submitted  to  arbitration  in
     Melville,  New  York,  pursuant  to the  American  Arbitration  Association
     ("AAA")  National  Arbitration  Rules  for  the  Resolution  of  Employment
     Disputes.  This provision  shall apply to claims against the Company and/or
     its affiliates and their respective  current or former  employees,  agents,
     managers,  officers  and/or  directors.  Any issue about whether a claim is
     covered by this  Agreement  shall be  determined by the  arbitrator.  There
     shall be one  arbitrator,  who (a) shall be chosen from a panel provided by
     the AAA and who shall apply the  substantive  law of the State of New York,
     (b) may award injunctive relief or any other remedy available from a judge,
     including attorney fees and costs to the prevailing party, and (c) not have
     the power to award punitive  damages.  Judicial review of the  arbitrator's
     award  shall be  strictly  limited to the issue of  whether  said award was
     obtained through fraud, corruption or misconduct.

     20.  SALE OF STOCK.  Company agrees that if Executive elects to sell any of
his stock in Company in the  future and if the sale by the  Executive  is exempt
from registration  under applicable  securities laws, the Company will cause its
counsel,  at the Company's  expense,  to provide an appropriate  opinion to that
effect to the Company's transfer agent.

     21.  ATTORNEYS' FEES. In any action,  litigation or proceeding  between the
parties  arising out of or relating to this  Agreement,  including any purported
breach  of  this   Agreement,   the  prevailing   party  shall  be  entitled  to
reimbursement of its reasonable attorneys fees and costs.

     22.  NON-ADMISSION  OF  LIABILITY.  The parties  understand  and agree that
neither the payment of any sum of money nor the  execution of this  Agreement by
the parties will constitute or be construed as an admission of any wrongdoing or
liability whatsoever by any party.

     23.  SEVERABILITY.  If any one or more of the provisions  contained  herein
(or parts thereof) or in the Surviving Employment Agreement Provisions (or parts

<PAGE>

thereof),  or the  application  thereof in any  circumstances,  is held invalid,
illegal or  unenforceable  in any  respect  for any  reason,  the  validity  and
enforceability of any such provision in every other respect and of the remaining
provisions  hereof and thereof will not be in any way  impaired or affected,  it
being intended that all of the rights and privileges shall be enforceable to the
fullest extent permitted by law.

     24.  ENTIRE  AGREEMENT.   This  Agreement  and  the  Surviving   Employment
Agreement  Provisions  represent the sole and entire agreement among the parties
and,  except as  expressly  stated  herein,  supersedes  all  prior  agreements,
negotiations  and  discussions  among the  parties  with  respect to the subject
matters contained herein.

     25.  WAIVER. No waiver by any party hereto at any time of any breach of, or
compliance  with,  any condition or provision of this Agreement or the Surviving
Employment Agreement Provisions to be performed by any other party hereto may be
deemed a waiver of similar or  dissimilar  provisions  or conditions at the same
time or at any prior or subsequent time.

     26.  AMENDMENT.  This  Agreement  may be modified  or amended  only if such
modification  or amendment is agreed to in writing and signed by duly authorized
representatives of the parties hereto, which writing expressly states the intent
of the parties to modify this Agreement.

     27.  COUNTERPARTS.   This   Agreement  may  be  executed  in  one  or  more
counterparts,  each of which will be deemed to be an  original  as  against  any
party that has signed it, but all of which together will  constitute one and the
same instrument.

     28.  ASSIGNMENT.  This  Agreement  inures to the  benefit of and is binding
upon both parties and their respective successors and assigns.

     29.  NOTICE.   All   notices,   requests,   demands,   claims   and   other
communications  hereunder  shall be in writing  and shall be deemed to have been
duly given (a) if personally delivered; (b) if sent by telecopy or facsimile; or
(c) if mailed by  overnight or by first class,  certified  or  registered  mail,
postage prepaid, return receipt requested, and properly addressed as follows:

If to the Executive:   Robert J. Aholt, Jr.
                       20128 Cavern Court
                       Saugus, California  91390

If to the Company:     Phase III Medical, Inc.
                       330 South Service Road
                       Suite 120
                       Melville, New York  11747
                       Att:  Principal Executive Officer
                       Fax: (631) 574-4956

Such addresses may be changed,  from time to time, by means of a notice given in
the manner provided above. Notice will conclusively be deemed to have been given
when  personally  delivered  (including,  but not  limited to, by  messenger  or
courier); or if given by mail, on the fifth postal day after being sent by first
class,  certified or registered  mail;  or if given by Federal  Express or other
similar overnight service,  on the date of delivery;  or if given by telecopy or
facsimile  machine  during  normal  business  hours  on  a  business  day,  when
confirmation of transmission is indicated by the sender's  machine;  or if given

<PAGE>

by telecopy or facsimile  machine at any time other than during normal  business
hours on a business day, the first business day following when  confirmation  of
transmission  is indicated by the sender's  machine,  provided  that a duplicate
copy is  deposited  in the United  States mail and mailed by first class mail to
the addressee on the same date as the facsimile transmission. Notices, requests,
demands and other communications delivered to legal counsel of any party hereto,
whether or not such counsel shall consist of in-house or outside counsel,  shall
not constitute duly given notice to any party hereto.

     30.  MISCELLANEOUS PROVISIONS.

     (a)  The parties  represent  that they have read this  Agreement  and fully
understand all of its terms;  that they have conferred with their  attorneys and
financial advisors,  or have knowingly and voluntarily chosen not to confer with
their  attorneys and financial  advisors  about this  Agreement;  that they have
executed this  Agreement  without  coercion or duress of any kind; and that they
understand  any rights that they have or may have and sign this  Agreement  with
full knowledge of any such rights.

     (b)  Each party has been represented by counsel who has participated in the
drafting of this Agreement.  The language in all parts of this Agreement must be
in all cases construed simply according to its fair meaning and not strictly for
or against  any party.  Whenever  the  context  requires,  all words used in the
singular must be construed to have been used in the plural,  and vice versa, and
each gender must include any other gender.  The captions of the Sections of this
Agreement  are for  convenience  only and must not  affect the  construction  or
interpretation of any of the provision herein.

     (c)  Each  provision  of  this  Agreement  and  the  Surviving   Employment
Agreement  Provisions to be performed by a party hereto is both a covenant and a
condition,  and is a material  consideration  for the other party's  performance
hereunder,  and any  breach  thereof  by the party  will be a  material  default
hereunder. All rights, remedies, undertakings,  obligations, options, covenants,
conditions and agreements  contained in this Agreement are cumulative and no one
of them is exclusive of any other.  Notwithstanding anything contained herein to
the  contrary,  the Company shall have ten (10) days  following  notice from the
Executive to cure any payment default under this  Agreement.  In addition to any
other rights and remedies hereunder or pursuant to applicable law or equity, any
payments  not made  within  such 10 day grace  period  shall  thereafter  accrue
interest on the amount past due at the rate of 1% per month.

     (d)  Each party acknowledges that no  representation,  statement or promise
made by any other party, or by the agent or attorney of any other party,  except
for those in this  Agreement,  has been relied on by him or it in entering  into
this Agreement.

     (e)  Each  party  understands  that the facts  with  respect  to which this
Agreement is entered into may be materially different from those the parties now
believe to be true.  Except in the case where the existence of any additional or
different facts constitutes the material breach of a representation or warranty,
each party accepts and assumes this risk and agrees that this  Agreement and the
releases  in it shall  remain in full force and  effect,  and  legally  binding,
notwithstanding the discovery or existence of any additional or different facts,
or of any claims with respect to those facts.

     (f)  EACH OF THE PARTIES  ACKNOWLEDGES  THAT HE/IT HAS READ THIS AGREEMENT,
UNDERSTANDS IT AND IS VOLUNTARILY ENTERING INTO IT, AND SPECIFICALLY,  EXECUTIVE
UNDERSTANDS  THAT THIS  AGREEMENT  INCLUDES A RELEASE  OF ALL KNOWN AND  UNKNOWN
CLAIMS.

     IN WITNESS WHEREOF,  the parties hereto have executed this Agreement on the
dates indicated below.

<PAGE>

"EXECUTIVE"

/s/ Robert J. Aholt, Jr.
------------------------------
Robert J. Aholt, Jr.

"COMPANY"

PHASE III MEDICAL, INC., a Delaware corporation

By:  /s/ Mark Weinreb
    ------------------------------
    Mark Weinreb, President and CEOEXHIBIT 10(Y)
                                  -------------

                               Catherine M. Vaczy
                            140 East 28th Street #11C
                               New York, NY 10016

Phase III Medical, Inc.
330 South Service Road
Suite 120
Melville, New York  11747
Attention:  Mark Weinreb, President & CEO

As of December 22, 2005

Dear Mark:

As you know, at a meeting of the Board of Directors held on December 22, 2005, I
agreed and the Board  approved a total of  $25,000  of my  accrued  salary  (the
"Converting  Salary") be converted  into shares of the  Company's  common stock,
$.001 par value (the "Common Stock").  The price at which the Converting  Salary
will be converted  into shares of Common  Stock is $.06 per share,  which is the
closing price of the Common Stock on the date of such agreement,  resulting in a
total of 416,666 shares (the "Shares") being issued to me as of the date hereof.
We both confirm that appropriate  withholding taxes must be paid with respect to
the Shares.  These shares carry the same registration  rights as my other shares
purchased from the Company.

In connection  with my purchase of the Shares I hereby make to you the following
representations in which I am hereafter referred to as "Investor":

(a)  The  Investor  hereby  represents  and  warrants  to the  Company  that the
Investor is an  "accredited  investor" as that term is defined in Rule 501(a) of
Regulation  D  promulgated  under the  Securities  Act of 1933,  as amended (the
"Securities  Act").  Specifically,  the  Investor  certifies  that  (initial all
appropriate spaces on the following pages):

           CMV ___       (1)  The Investor is an accredited  investor because he
            (Initial)         has an individual net worth, or with his spouse as
                              a joint net worth,  in excess of  $1,000,000.  For
                              purposes of this Agreement,  "net worth" means the
                              excess  of  total  assets  at fair  market  value,
                              including home, home  furnishings and automobiles,
                              over total liabilities.

             _______     (2)  The Investor is an accredited  investor because he
            (Initial)         has  individual  income  (exclusive  of any income
                              attributable  to his spouse) of more than $200,000
                              in each of the past  two  years,  or joint  income
                              with his spouse in excess of  $300,000  in each of
                              those years, and such investor  reasonably expects
                              to reach  the  same  income  level in the  current
                              year.

             _______     (3)  The Investor is an accredited  investor because he
            (Initial)         is  a  director,  executive  officer  or  managing
                              member of the Company.

<PAGE>

     (b)  The Investor hereby certifies that he is not a non-resident  alien for
purposes of income  taxation  (as such term is defined in the  Internal  Revenue
Code of 1986,  as amended,  and Income Tax  Regulations).  The  Investor  hereby
agrees that if any of the information in this section changes, the Investor will
notify the Company  within 60 days thereof.  The Investor  understands  that the
information  contained in this  Section  2.4(b) may be disclosed to the Internal
Revenue  Service by the Company and that any false  statement  contained in this
Section 2.4(b) could be punished by fine, imprisonment or both.

     (c)  The Investor  will not sell or otherwise  transfer the Shares  without
registration  under the  Securities  Act or an  exemption  therefrom,  and fully
understands and agrees that he must bear the economic risk of his investment for
an indefinite period of time because,  among other reasons,  the Shares have not
been registered under the Securities Act or under the securities laws of certain
states and, therefore, cannot be resold, pledged, assigned or otherwise disposed
of unless they are  subsequently  registered  under the Securities Act and under
applicable securities laws of such states or an exemption from such registration
is available.  The Investor  understands that the Company is under no obligation
to  register  the Shares on his behalf or to assist  him in  complying  with any
exemption from such  registration  under the Securities  Act, except that if any
sale  proposed by the  Investor is exempt from  registration,  the Company  will
cause its counsel,  at the Company's expense,  to provide an appropriate opinion
to that effect to the Company's  transfer agent. It also  understands that sales
or transfers of the Shares are further restricted by state securities laws.

     (d)  The Investor  acknowledges  that in making a decision to subscribe for
the Shares, the Investor has relied solely upon independent  investigations made
by  the  Investor  and  the  representations   contained  herein.  The  Investor
understands  the business  objectives and policies of, and the strategies  which
may be pursued  by, the  Company.  The  Investor's  investment  in the Shares is
consistent   with  the   investment   purposes  and  objectives  and  cash  flow
requirements  of the  Investor  and will not  adversely  affect  the  Investor's
overall need for diversification and liquidity.  The Investor  acknowledges that
he is  not  subscribing  pursuant  hereto  for  any  Shares  as a  result  of or
subsequent to (a) any  advertisement,  article,  notice or other  communications
published on-line, in any newspaper, magazine or similar media or broadcast over
television or radio,  or (b) any seminar or meeting whose  attendees,  including
the Investor,  had been invited as a result of, subsequent to or pursuant to any
of the foregoing.

     (e)  The  Investor  has  not  reproduced,   duplicated  or  delivered  this
Agreement to any other person,  except professional  advisors to the Investor or
as instructed by the Company.

     (f)  The Investor  has such  knowledge  and  experience  in  financial  and
business matters that the Investor is capable of evaluating the merits and risks
of the Investor's  investment in the Shares and is able to bear such risks,  and
has  obtained,  in the  Investor's  judgment,  sufficient  information  from the
Company or its  authorized  representatives  to evaluate the merits and risks of
such investment. The Investor has evaluated the risks of investing in the Shares
and has determined that the Shares is a suitable investment for the Investor.

     (g)  The  Investor  can afford a  complete  loss of the  investment  in the
Shares.

     (h)  The Investor is acquiring the Shares subscribed for herein for his own
account,  for  investment  purposes  only and not with a view to  distribute  or
resell such Shares in whole or in part.

     (i)  The Investor agrees and is aware that:

<PAGE>

          (1)  the Company  has a limited  operating  history  under its current
          business plan;

          (2)  no federal or state agency has passed upon the Shares or made any
          findings or determination as to the fairness of this investment; and

          (3)  there are substantial  risks of loss of investment  incidental to
          the purchase of the Shares.

     (j)  The Investor and his advisors,  if any, have been  furnished  with all
materials  relating to the business,  finances and operations of the Company and
materials  relating  to the  offer  and  sale of the  Shares,  which  have  been
requested by the  Investor.  The Investor and his  advisors,  if any,  have been
afforded  the  opportunity  to ask  questions  of the Company and have  received
satisfactory  answers  to any  such  inquiries.  Except  as set  forth  in  this
Agreement,  the  Company  has made no  representation  or  warranty on which the
Investor has relied to enter into this Agreement and acquire the Shares.

     (k)  The Investor does not have a present  intention to sell the Shares nor
a present  arrangement  or  intention to effect any  distribution  of any of the
Shares to or through any person or entity for  purposes  of  selling,  offering,
distributing or otherwise disposing of any of the Shares.

     (l)  The  Investor  understands  that the net  proceeds to the Company from
this subscription will be used by the Company for general operating expenses.

Please  acknowledge  your  agreement with the foregoing by  countersigning  this
letter agreement as provided below.

Very truly yours,

/s/ Catherine M. Vaczy
----------------------
Catherine M. Vaczy

Accepted and agreed:

Phase III Medical, Inc.

By:  /s/ Mark Weinreb
     ----------------

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