Document:

EXHIBIT 10.1

                          SECURITIES PURCHASE AGREEMENT

 This Securities Purchase Agreement (together with all amendments, supplements,
changes, schedules and exhibits hereto, collectively, this "Agreement") is dated
as of June 2, 2006 by and among Phase III Medical, Inc., a Delaware corporation
(the "Company"), and each purchaser identified on the signature pages hereto
(each, including its successors and assigns, a "Purchaser" and collectively the
"Purchasers").

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act") and Rule 506 promulgated thereunder, the Company desires to
issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully
described in this Agreement, on a $2,000,000 minimum (the "Minimum Amount") and
a $3,000,000 maximum (the "Maximum Amount") basis.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree
as follows:

                                   ARTICLE I.
                                   DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement
the following terms have the meanings indicated in this Section 1.1:

"Action" shall have the meaning ascribed to such term in Section 3.1(j).

"Affiliate" means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 144 under the
Securities Act. With respect to a Purchaser, any investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as such Purchaser will be deemed to be an Affiliate of such Purchaser.

"Board" shall mean the Company's Board of Directors.

"Business Day" means any day except Saturday, Sunday, any day which shall be a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.

"Closing" means each closing of the purchase and sale of the Securities pursuant
to Section 2.1.
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"Closing Date" means the Business Day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers' obligations to pay the Purchase
Price and (ii) the Company's obligations to deliver the Securities have been
satisfied or waived.

"Commission" means the Securities and Exchange Commission.

"Common Stock" means the common stock of the Company, par value $.001 per share,
and any other class of securities into which such securities may hereafter be
reclassified or changed into.

"Company Counsel" means Lowenstein Sandler PC.

"DC" shall mean DCI Master LDC, together with any of its investment entities,
subsidiaries, affiliates, successors and other controlled units, either existing
or formed subsequent to the execution of this Agreement.

"Director" shall mean a member of the Company's Board of Directors.

"Disclosure Schedules" shall have the meaning ascribed to such term in Section
3.1.

"Effective Date" means the date that the initial Registration Statement filed by
the Company pursuant to the Registration Rights Agreement is first declared
effective by the Commission.

"Engagement Agreement" means the Engagement Agreement dated May 5, 2006 by and
among DC and the Company.

"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

"Exhibits" shall mean the following exhibits attached hereto and made a part of
this Agreement:

Exhibit A -       Registration Rights Agreement
---------
Exhibit B -       The Warrants
---------
Exhibit C -       Legal Opinion of Company Counsel
---------
Exhibit D -       Use of Proceeds
---------
Exhibit E -       Executive Officer Compensation Plan
---------
Exhibit F -       Officer and Director Lockup
---------

"GAAP" shall have the meaning ascribed to such term in Section 3.1(i).

"Independent Director" shall have the meaning ascribed to such term in the
Sarbanes-Oxley Act of 2002.

"Intellectual Property Rights" shall have the meaning ascribed to such term in
Section 3.1(n).

"Initial Closing" shall have the meaning ascribed to such term in Section 2.1.

"Liens" means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.

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"Material Adverse Effect" shall have the meaning assigned to such term in
Section 3.1(b).

"Material Permits" shall have the meaning ascribed to such term in Section
3.1(l).

"Person" means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

"Purchase Price" means $.044 per share of Common Stock in United States dollars
and in immediately available funds.

"Registration Rights Agreement" means the Registration Rights Agreement, dated
the date hereof, among the Company and the Purchasers, in the form of Exhibit A
attached hereto.

"Registration Statement" means a registration statement meeting the requirements
set forth in the Registration Rights Agreement and covering the resale of the
Shares and Warrant Shares by each Purchaser as provided for in the Registration
Rights Agreement.

"Required Approvals" shall have the meaning ascribed to such term in Section
3.1(e).

"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

"SEC Reports" shall have the meaning ascribed to such term in Section 3.1(h).

"Securities" means the Common Stock, the Warrants and the Warrant Shares.

"Securities Act" means the Securities Act of 1933, as amended, and the rules and
regulations promulgated hereunder.

"Shares" means the shares of Common Stock which are being issued and sold by the
Company to the Purchasers at the Closing.

"Short Sales" shall include all "short sales" as defined in Rule 200 of
Regulation SHO under the Exchange Act (but shall not be deemed to include the
location and/or reservation of borrowable shares of Common Stock).

"Subsidiary" means NeoStem, Inc., a Delaware corporation.

"Termination Date" shall mean the earlier of (i) the sale of the Maximum Amount;
(ii) mutual written termination of this Agreement by the Company and each person
who signed this Agreement as a Purchaser, and (iii) May 15, 2006, subject to a
30-day extension.

"Transaction Documents" means this Agreement, the Engagement Agreement, the
Warrants and the Registration Rights Agreement.

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<PAGE>

"Warrants" means the aggregate amount of Common Stock purchase warrants, in the
form of Exhibit B to this Agreement.

"Warrant Shares" means the shares of Common Stock issuable upon exercise of the
Warrants.

                                   ARTICLE II.
                                PURCHASE AND SALE

         2.1 Closing. At each Closing, upon the terms and subject to the
conditions set forth herein, Purchasers shall purchase, severally and not
jointly, and the Company shall issue and sell to the Purchasers such number of
shares of Common Stock and Warrants to purchase such number of shares of Common
Stock as set forth opposite such Purchaser's name on the signature page hereto
for the aggregate Purchase Price. The Company may hold a Closing at any time
after subscriptions for the $2,000,000 Minimum Amount have been received and
accepted by the Company and after the other conditions to Closing as specified
herein have been satisfied. The initial Closing (the "Initial Closing"), which
shall be for no less than the $2,000,000 Minimum Amount, shall occur on or
before May 15, 2006 (unless extended by up to 30 days) and each subsequent
Closing until the Termination Date, shall occur at the offices of Company's
counsel, Lowenstein Sandler PC, 1251 Avenue of the Americas, New York, New York
10020 at 12:00 p.m. or such other time and/or location as the parties shall
mutually agree. If the Minimum Amount is not reached by May 15, 2006 (subject to
a 30 day extension), all funds will be returned without interest or deduction.

         All amounts received from Purchasers for the Shares and Warrants will
be deposited in a special non-interest bearing escrow account (the "Escrow
Account") with Hudson Valley Bank and will be released to the Company at the
Closing. Checks shall be made out to "Phase III Medical, Inc. Private Placement
Account.

2.2 Deliveries.

(a) At the Closing, the Company shall deliver or cause to be delivered to DC or
each Purchaser the following:

(i) this Agreement duly executed by the Company to DC;

(ii) a legal opinion of Company Counsel, in the form of Exhibit C attached
hereto to DC;

(iii) a stock certificate for each Purchaser's purchased Shares, registered in
the name of such Purchaser to each Purchaser;

(iv) a Warrant registered in the name of each Purchaser to purchase up to a
number of shares of Common Stock equal to 50% of the Shares purchased by such
Purchaser, to each Purchaser;

(v) the Registration Rights Agreement duly executed by the Company, to each
Purchaser;

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(vi) Officer's Certificate in a form reasonably acceptable to DC;

(vii) Secretary's Certificate in a form reasonably acceptable to DC, with good
standing certificates of the Company and the Subsidiary as of a recent date to
be delivered at the Initial Closing;

(vii) a Lock-Up in the form of Exhibit F hereto from each officer and director
of the Company and the Subsidiary as set forth in Section 4.5 hereto to DC; and

(viii) evidence, reasonably satisfactory to DC, that the Company has delivered
to holders of Series A Preferred notice of the exchange of Series A Preferred
for Common Stock.

(b) At each Closing, each Purchaser shall deliver or cause to be delivered to
the Company the following:

(i) this Agreement duly executed by such Purchaser;

(ii) the aggregate Purchase Price allocable to the Shares being purchased by the
Purchaser and set forth below such Purchaser's signature block on the signature
page hereto, in United States dollars and in immediately available funds; and

(iii) the Registration Rights Agreement duly executed by such Purchaser.

2.3 Closing Conditions.

(a) The obligations of the Company hereunder in connection with each Closing are
subject to the following conditions being met:

(i) the accuracy in all material respects when made and on the Closing Date of
the representations and warranties of the Purchasers contained herein;

(ii) all obligations, covenants and agreements of the Purchasers required to be
performed at or prior to the Closing Date shall have been performed;

(iii) the delivery by the Purchasers of the items set forth in Section 2.2(b) of
this Agreement; and

(iv) the Initial Closing shall be for no less than the $2,000,000 Minimum
Amount;

(b) The respective obligations of the Purchasers hereunder in connection with
each Closing are subject to the following conditions being met:

(i) the accuracy in all material respects on the Closing Date of the
representations and warranties of the Company contained herein;

(ii) Accrued Salary (as hereinafter defined) shall have been converted to shares
of the Company's Common Stock or forfeited in accordance with the provisions of
Section 3.1(s);

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(iii) all obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been performed;

(iv) the Initial Closing shall be for no less than the $2,000,000 Minimum
Amount;

(v) the delivery by the Company of the items set forth in Section 2.2(a) of this
Agreement;

(vi) there shall have been no Material Adverse Effect with respect to the
Company since the date hereof; and

(vii) the Engagement Letter on terms and conditions satisfactory shall be in
effect and constitute a binding agreement on the parties thereto.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. The Company hereby makes the
representations and warranties set forth below to each Purchaser.

(a) Subsidiaries. The Company owns, directly or indirectly, all of the capital
stock or other equity interests of the Subsidiary free and clear of any Liens,
and all the issued and outstanding shares of capital stock of the Subsidiary are
validly issued and are fully paid, non-assessable and free of preemptive and
similar rights to subscribe for or purchase securities. The Company has no other
direct or indirect subsidiaries other than the Subsidiary.

(b) Organization and Qualification. Each of the Company and the Subsidiary is an
entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted. Each
of the Company and the Subsidiary is duly qualified to conduct business and is
in good standing as a foreign corporation or other entity in each jurisdiction
in which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not have a material adverse effect on the
results of operations, assets, business or condition (financial or otherwise) of
the Company and the Subsidiary (a "Material Adverse Effect").

(c) Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
each of the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company, its Board or its stockholders in connection therewith. Each Transaction
Document has been (or upon delivery will have been) duly executed by the Company
and, when delivered in accordance with the terms hereof and thereof, will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

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<PAGE>

(d) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company do not and will not: (i) conflict with or violate any
provision of the Company's or the Subsidiary's certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, result in the creation of any Lien
upon any of the properties or assets of the Company or the Subsidiary, or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of any agreement, credit
facility, debt or other instrument (evidencing a Company or Subsidiary debt or
otherwise) by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) conflict with or result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which the Company or the Subsidiary is
subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or the Subsidiary is bound or
affected; except in the case of each of clauses (ii) and (iii), such as would
not result in a Material Adverse Effect.

(e) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other than
(i) the filing with the Commission of the Registration Statement, and (ii) the
filing of Form D with the Commission and such filings as are required to be made
under applicable state securities laws (collectively, the "Required Approvals").

(f) Issuance of the Securities. The Securities are duly authorized and, when
issued and paid for in accordance with the applicable Transaction Documents,
will be duly and validly issued, fully paid and nonassessable, free and clear of
all Liens imposed by the Company other than restrictions on transfer provided
for in the Transaction Documents (including restrictions under federal and state
securities laws). The Warrant Shares, when issued in accordance with the terms
of the Transaction Documents, will be validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company other than
restrictions on transfer provided for in the Transaction Documents (including
restrictions under federal and state securities laws).

(g) Capitalization. The capitalization (including warrants, options,
exchangeable and/or convertible securities) of the Company as of April 26, 2006
is as set forth on Schedule 3.1(g), and such schedule shall be updated so that
it remains true and correct as of the Initial Closing date. The Company has not
issued any capital stock since its most recently filed periodic report under the
Exchange Act except as set forth on such schedule. No Person has any right of
first refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents. All
of the outstanding shares of capital stock of the Company are validly issued,
fully paid and nonassessable.

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<PAGE>

(h) SEC Reports. The Company has filed all reports, schedules, forms, statements
and other documents required to be filed by it under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the one
year preceding the date hereof (or such shorter period as the Company was
required by law or regulation to file such material) (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the "SEC Reports"). As of their
respective dates, the SEC Reports (including the financial statements, exhibits
and schedules thereto) complied in all material respects with the requirements
of the Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, as applicable and did not at the time they
were filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of
material fact or omit to state a material fact required to be stated therein or
necessary in order to made the statements therein, in light of the circumstances
they were made, not misleading.

Each of the financial statements (including, in each case, any related notes
thereto) contained in the SEC Reports (the "Company Financials"), including any
SEC Reports filed after the date hereof until the Closing, as of their
respective dates, (i) complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 10-Q under the Exchange Act) and (iii) fairly presented the financial
position of the Company at the respective dates thereof and the consolidated
results of its operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not, or are not expected to be,
material in amount. The balance sheet of the Company as of December 31, 2005 is
hereinafter referred to as the "Company Balance Sheet." Except as disclosed in
the Company Financials, the Company does not have any liabilities (absolute,
accrued, contingent or otherwise) of a nature required to be disclosed on a
balance sheet or in the related notes to the consolidated financial statements
prepared in accordance with GAAP which are, individually or in the aggregate,
material to the business, results of operations or financial condition of the
Company, except liabilities (i) provided for in the Company Balance Sheet, or
(ii) incurred since the date of the Company Balance Sheet in the ordinary course
of business consistent with past practices and which would not reasonably be
expected to have a Material Adverse Effect.

(i) Material Changes. Since the date of the Company Balance Sheet, except as
specifically disclosed in or contemplated by a subsequent SEC Report, (i) there
has been no event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect, (ii) the Company
has not incurred any liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
in the Company's financial statements pursuant to GAAP United States generally
accepted accounting principles applied on a consistent basis during the periods
involved ("GAAP") or disclosed in filings made with the Commission, (iii) the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock, (iv) the Company has not
issued any equity securities to any officer, director or Affiliate except as set
forth on Schedule 3.1(i) and (v) the Company has not made any changes to its
accounting principals, practices or methods, its disclosure controls and
procedures or its internal control over financial reporting. The Company does
not have pending before the Commission any request for confidential treatment of
information.

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<PAGE>

(j) Litigation. Except as set forth on Schedule 3.1(j), there is no action,
suit, inquiry, notice of violation, proceeding or investigation pending or, to
the knowledge of the Company, threatened against or affecting the Company, the
Subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an "Action") which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) would, if there were an
unfavorable decision, result in a Material Adverse Effect.

(k) Compliance. Neither the Company nor the Subsidiary (i) is in default under
or in violation of (and no event has occurred that has not been waived that,
with notice or lapse of time or both, would result in a default by the Company
or any Subsidiary under), any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties is bound), (ii) is in violation of any order of any court, arbitrator
or governmental body, or (iii) is in violation of any statute, rule or
regulation of any governmental authority, except in each case as would not
result in a Material Adverse Effect.

(l) Regulatory Permits. Except as set forth in Schedule 3.1(l), the Company and
the Subsidiary possesses all certificates, authorizations and permits issued by
the appropriate federal, state, local or foreign regulatory authorities
necessary to conduct their respective businesses as described in the SEC
Reports, except where the failure to possess such permits would not result in a
Material Adverse Effect ("Material Permits").

(m) Title to Assets. The Company and the Subsidiary have good and marketable
title in fee simple to all real property (if any) owned by them that is material
to the business of the Company and the Subsidiary and good and marketable title
in all personal property owned by them that is material to the business of the
Company and the Subsidiary, in each case free and clear of all Liens, except for
Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and the Subsidiary and Liens for the payment of federal, state or
other taxes, the payment of which is neither delinquent nor subject to
penalties.

(n) Patents and Trademarks. The Company and the Subsidiary have, or have rights
to use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, trade secrets, inventions, copyrights, licenses and
other intellectual property rights and similar rights necessary or material for
use in connection with their respective businesses as described in the SEC
Reports and which the failure to so would not result in a Material Adverse
Effect (collectively, the "Intellectual Property Rights"). Neither the Company
nor the Subsidiary has received a notice (written or otherwise) that the
Intellectual Property Rights used by the Company or the Subsidiary violates or
infringes upon the rights of any Person. To the best knowledge of the Company,
all such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights. The
Company and its Subsidiary have used their respective best efforts using
security measures to protect the secrecy, confidentiality and value of all of
their Intellectual Property Rights and Intellectual Property, except where
failure to do so would not have a Material Adverse Effect.

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(o) Insurance. The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as it believes are prudent and customary in the businesses in which the
Company and the Subsidiary are engaged, including, but not limited to, directors
and officers insurance coverage. Neither the Company nor the Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a
significant increase in cost.

(p) Private Placement. Assuming the accuracy of the Purchasers representations
and warranties set forth in Section 3.2, no registration under the Securities
Act is required for the offer and sale of the Securities by the Company to the
Purchasers as contemplated hereby.

(q) No General Solicitation. Neither the Company nor any person acting on behalf
of the Company has offered or sold any of the Securities by any form of general
solicitation or general advertising. The Company has offered the Securities for
sale only to the Purchasers and certain other "accredited investors" within the
meaning of Rule 501 under the Securities Act.

(r) Series A $.07 Convertible Preferred Stock. The Company has received
requisite approval by the Board and the approval of its stockholders to amend
its Certificate of Incorporation, in compliance with all applicable laws to
provide for the mandatory exchange all of its outstanding shares of Series A
$.07 Preferred Stock for shares of Common Stock (the "Mandatory Exchange") on
the terms set forth in the Definitive Proxy Statement used in connection with
its March 17, 2006 Special Meeting of Stockholders. The Company has provided
notice of the Mandatory Exchange as required pursuant to the Company's
Certificate of Incorporation, as amended (the "Amended Certificate"), and
Delaware Law to the holders of the Company's Series A $.07 Preferred Stock, and
accordingly, the shares of Series A $.07 Convertible Preferred Stock are deemed
to have been exchanged for Common Stock and no further action of the Company or
the holders of the Series A $.07 Preferred Stock (but for mechanics, including
the submission of their stock certificate) is required to complete the Mandatory
Exchange. The Series A $.07 Convertible Preferred Stock has been delisted from
the OTC:BB. The balance sheet to be included in the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 2006 will reflect no shares of
Series A $.07 Preferred Stock outstanding.

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(s) Accrued Salaries. The unpaid and accrued salaries (the "Accrued Salary") of
the Company as of May 15, 2006 is expected to be approximately $404,000.
Effective as of the Initial Closing date, not less than $275,000 of the Accrued
Salary shall have been forfeited or converted into shares of Common Stock at a
price equal to the Purchase Price (with appropriate adjustment made to account
for applicable payroll and withholding taxes which shall be paid by the
Company).

3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby, for
itself and for no other Purchaser, represents and warrants as of the date hereof
and as of the Closing Date to the Company as follows:

(a) Organization; Authority. Such Purchaser if an entity is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with full right, corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution, delivery and performance by such Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate or similar action on the part of such Purchaser. Each Transaction
Document to which it is a party has been duly executed by such Purchaser, and
when delivered by such Purchaser in accordance with the terms hereof, will
constitute the valid and legally binding obligation of such Purchaser,
enforceable against it in accordance with its terms, except (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

(b) Own Account. Such Purchaser understands that the Securities are "restricted
securities" and have not been registered under the Securities Act or any
applicable state securities law and is acquiring the Securities as principal for
its own account and not with a view to or for distributing or reselling such
Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of
such Securities in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings with
any other persons to distribute or regarding the distribution of such Securities
(this representation and warranty not limiting such Purchaser's right to sell
the Securities pursuant to the Registration Statement or otherwise in compliance
with applicable federal and state securities laws) in violation of the
Securities Act or any applicable state securities law. Such Purchaser is
acquiring the Securities hereunder in the ordinary course of its business.

(c) Purchaser Status. At the time such Purchaser was offered the Securities, it
was, and at the date hereof it is, and on each date on which it exercises any
Warrants it will be either: (i) an "accredited investor" as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act. Such
Purchaser is not required to be registered as a broker-dealer under Section 15
of the Exchange Act.

(d) Experience of Such Purchaser. Such Purchaser, either alone or together with
its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment. Such Purchaser is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.

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(e) General Solicitation. Such Purchaser is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.

(f) Short Sales and Confidentiality Prior To The Date Hereof. Such Purchaser has
not directly or indirectly, nor has any Person acting on behalf of or pursuant
to any understanding with such Purchaser, executed any Short Sales or granted
any option for the purchase of or entered into any hedging or similar
transaction with the same economic effect as a Short Sale, in the securities of
the Company since the time period beginning two weeks prior to the time that
such Purchaser was first contacted regarding an investment in the Company
through the date hereof. During such period, neither such Purchaser nor any
Person acting on behalf of or pursuant to any understanding with such Purchaser,
has taken, directly or indirectly, any actions to trade in the Company's
Securities that might reasonably be expected to cause or result, under the
Securities Act or Exchange Act, or otherwise, or that has constituted,
stabilization or manipulation of the price of the Common Stock. Additionally,
each Purchaser agrees to comply with Regulation M under the Exchange Act.

                                   ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

4.1 Transfer Restrictions.

(a) The Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement or Rule 144, to the Company or
to an affiliate of a Purchaser, the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the transferor and
reasonably acceptable to the Company (the cost of which will be borne by the
Company), the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act. As a
condition of transfer, any such transferee shall agree in writing to be bound by
the terms of this Agreement and shall have the rights of a Purchaser under this
Agreement and the Registration Rights Agreement.

(b) The Purchasers agree to the imprinting, so long as is required by this
Section 4.1, of a legend on any of the Securities in the following form:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION NOR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.

                                       12
<PAGE>

(c) Certificates evidencing the Shares and the Warrant Shares shall not be
required to bear any legend (including the legend set forth in Section 4.1(b)
hereof): (i) while a registration statement (including the Registration
Statement) covering the resale of such security is effective under the
Securities Act, or (ii) following any sale of such Shares or Warrant Shares
pursuant to Rule 144, or (iii) if such Shares or Warrant Shares are eligible for
sale under Rule 144(k). If requested by a Person holding the Shares, the
Warrants or the Warrant Shares, the Company shall take action reasonably
requested by a Purchaser (including, but not limited to, causing Company counsel
to issue a legal opinion to the Company's transfer agent) after the Effective
Date if required by the Company's transfer agent to effect the removal of the
legend hereunder provided that the Person requesting the removal of such legend
shall have provided to such counsel such documents as it may reasonably request
and are normally provided in accordance with industry standards.

(d) Each Purchaser, severally and not jointly with the other Purchasers, agrees
that the removal of the restrictive legend from certificates representing
Securities as set forth in this Section 4.1 is predicated upon the Company's
reliance that the Purchaser will sell any Securities pursuant to either the
registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom, and that if
Securities are sold pursuant to a Registration Statement, they will be sold in
compliance with the plan of distribution set forth therein.

4.2 Composition of the Board; Officers.

(a) Prior to or at the Initial Closing, the Company shall increase the size of
the Board from three persons to four persons and appoint Dr. Robin Smith to fill
such vacancy and to serve in such capacity until the Company's next annual
meeting of stockholders and otherwise pursuant to the Company's By-laws. Dr.
Smith shall serve as Chairman. Thereafter, Dr. Smith shall be included on the
slate of Directors presented to shareholders for election at each annual meeting
of stockholders of the Company. Dr. Smith and the DC Designee (as defined below)
shall be entitled to payment of all reasonable costs and expenses to attend
Board meetings, including travel and hotel and to receive no less than the
highest amount of compensation as the directors of the Company receives and in
accordance with compensation otherwise set by the Board.

(b) Following the Closing, DC shall be entitled to designate one Board member
(the "DC Designee"), in addition to Dr. Smith, reasonably acceptable to the
Company and the Company shall increase the size of the Board by one additional
member and appoint such designee to fill such vacancy and to serve in such
capacity until the Company's next annual meeting of stockholders and otherwise
pursuant to the Company's By-laws. Should such designee constitute an
Independent Director (an "Independent Director") such designee shall be entitled
to serve on the Company's Compensation Committee of the Board, should the
Company have one. Thereafter, such designee shall be included on the slate of
Directors presented to shareholders for election at each annual meeting of
stockholders of the Company.

                                       13
<PAGE>

(c) Following the Closing, the Company will endeavor to add additional members
to its Board of Directors such that a majority of the Board is composed of
Independent Directors. For purposes hereof, Dr. Smith shall in all events be
considered an Independent Director.

(d) Prior to or at the Initial Closing, the Board will appoint Dr. Smith as the
Company's Chief Executive Officer and the Company's current Chief Executive
Officer and President shall retain the title of President.

(e) The rights provided for in this Section 4.2 shall cease immediately upon
Purchasers beneficially owning in the aggregate less than 20% of the Common
Stock on a fully-diluted basis. The Company shall be entitled to verify such
level of ownership by the Purchasers of the Common Stock as it may reasonably
request.

4.3 Board Meetings; Annual Stockholder's Meeting. The Company agrees that the
Board shall meet at least quarterly and it shall hold an annual meeting of its
stockholders on an annual basis.

4.4 SEC Filings. As long as the Purchasers own Securities, the Company covenants
to timely file (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the Company after
the date hereof pursuant to the Exchange Act.

4.5 Lock-up. Without the express prior written consent of DC, none of the
Company's or the Subsidiary's current or future respective officers or directors
will offer, sell, contract to sell or grant any option to purchase or otherwise
dispose of, directly or indirectly, conduct or announce the offering of, any
shares of capital stock of the Company, or any securities convertible into, or
exchangeable for or containing rights to purchase, shares of capital stock of
the Company, during the period beginning on the date hereof and ending three
months after the Effective Date (the "Lock-up Period").

4.6 Use of Proceeds. The Company shall use the net proceeds from the sale of the
Securities hereunder for marketing and other working capital purposes associated
with the establishment and expansion of the Company's adult stem cell collection
and storage business and other general corporate purposes. Such use of net
proceeds shall be as set forth on Exhibit D attached hereto.

4.7 Executive Officer Compensation Plan. On the Closing Date, the Company shall
adopt the Executive Officer Compensation Plan set forth as Exhibit E which shall
be effective as of the initial Closing Date.

4.8 Certain Actions. Without the approval of a majority of the Board the Company
shall not, directly and/or indirectly, take any of the following actions for so
long as the Purchasers beneficially own in the aggregate not less than 20 % of
the Common Stock on a fully-diluted basis:

(a) unless in the ordinary course of business, make any loan or advance, own any
stock or other securities of, any subsidiary or other corporation, partnership
or other entity unless it is wholly-owned by the Company;

                                       14
<PAGE>

(b) guaranty any indebtedness except for trade accounts of the Company or any
subsidiary arising in the ordinary course of business;

(c) incur any aggregate indebtedness in excess of $100,000 that is not already
included in a Board approved budget or otherwise already approved by the Board
on the date hereof (for clarity, this limitation shall not apply to indebtedness
associated with the Company's acquisition of the assets of NeoStem, nor other
trade credit incurred in the ordinary course of business);

(d) change the principal business of the Company;

(e) sell, transfer, license, pledge or encumber technology or intellectual
property, including, but not limited to any of the Intellectual Property Rights,
other than licenses granted in the ordinary course of business, including but
not limited to the establishment of adult stem cell collection sites;

(f) sell, merge or dispose of any key technology;

(g) sell, merge or dispose of any business unit; or

(h) Except as contemplated by Exhibit E or this Agreement, hire, fire or change
the compensation of executive officers or enter into any new employment
agreements with executive officers, including adding a senior management person
to the Company as CEO, President or as otherwise determined.

For purposes of this Section 4.8, the Company shall be entitled to verify such
level of ownership by the Purchasers of the Common Stock as it may reasonably
request.

4.9 Absence of Certain Debt. On the Initial Closing date, unless otherwise
agreed to by DC, there shall be no direct and/or indirect debt, quasi-debt or
preferred stock of the Company outstanding, other than (A) convertible notes in
an aggregate principal amount not to exceed $500,000 (the "Convertible Notes");
(B) other promissory notes in an aggregate principal amount not to exceed
$100,000; (C) the Company's Series A $.07 Convertible Preferred Stock and Series
B Convertible Preferred Stock and (D) an aggregate of $500,000 of trade payables
and other liabilities incurred in the ordinary course of business.

4.10 Non-Competition and Non-Disclosure. The Company will require each key
employee who has not already done so to enter into agreements containing the
Company's standard non-competition, inventions and confidentiality agreement.

4.11 Information Rights. For so long as the Purchasers own beneficially at least
20% of the Company's Common Stock, DC will be granted access to Company
facilities and personnel during normal business hours and with reasonable
advance notification. The Company will deliver to the Purchasers annual,
quarterly financial statements and copies of other financial and other documents
and/or information reasonably requested by DC to monitor the Company and its
investment in the Securities.

                                       15
<PAGE>

4.12 Reservation and Listing of Securities. The Company shall maintain a reserve
from its duly authorized shares of Common Stock for issuance pursuant to the
Transaction Documents in such amount as may be required to fulfill its
obligations in full under the Transaction Documents.

4.13 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof, promptly upon request of any Purchaser. The Company shall take such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for, or to qualify the Securities for, sale to the Purchasers at
the Closing under applicable securities or "Blue Sky" laws of the states of the
United States, and shall provide evidence of such actions promptly upon request
of any Purchaser.

4.15. Public Disclosure. The Company shall not issue any press release or
otherwise make any public statement with respect to this Agreement and will not
issue any such press release or make any such public statement without the prior
consent of DC, which shall not be unreasonably withheld.

                                   ARTICLE V.
                                  MISCELLANEOUS

5.1 Termination. On the Termination Date, this Agreement shall be
automatically terminated.

5.2 Fees and Expenses. The parties acknowledge that the obligations relating to
the payment of certain fees and expenses relating to the negotiation,
preparation, execution, delivery and performance of the transactions
contemplated by the Transaction Documents are set forth in the Engagement
Agreement and further described in Exhibit D - Use of Proceeds. Except as
expressly set forth in the Engagement Agreement, each party to the Transaction
Documents shall pay the fees and expenses of its advisers, counsel, accountants
and other experts, if any, and all other expenses incurred by such party
incident to the transactions contemplated by the Transaction Documents. The
Company shall pay all transfer agent fees, stamp taxes and other taxes and
duties levied in connection with the delivery of any Securities to the
Purchasers.

5.3 Entire Agreement. The Transaction Documents and the Engagement Agreement,
together with the exhibits and schedules thereto, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.

5.4 Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of (a) the date of transmission (accompanied
by confirmation of receipt of transmission), if such notice or communication is
delivered via facsimile at the facsimile number or via e-mail at the e-mail
address respectively set forth on the signature pages attached hereto prior to
5:30 p.m. (New York City time) on a Business Day, (b) the next Business Day
after the date of transmission (accompanied by confirmation of receipt of
transmission), if such notice or communication is delivered via facsimile at the
facsimile number or via e-mail at the e-mail address respectively set forth on
the signature pages attached hereto on a day that is not a Business Day or later
than 5:30 p.m. (New York City time) on any Business Day, (c) the 2nd Business
Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom such
notice is required to be given. The address for such notices and communications
shall be as set forth on the signature pages attached hereto.

                                       16
<PAGE>

5.5 Amendments; Waivers. No provision of this Agreement may be waived, modified,
supplemented or amended except in a written instrument signed, in the case of an
amendment, by the Company and each Purchaser or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is sought. No waiver
of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right.

5.6 Headings. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.

5.7 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser (other than by merger). Any
Purchaser may assign any or all of its rights under this Agreement to any Person
to whom such Purchaser assigns or transfers any Securities, provided such
transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions of the Transaction Documents that apply to the
"Purchasers".

5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person.

5.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced exclusively in accordance with the internal laws of
the State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper or is an inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any other manner permitted by law. The
parties hereby waive all rights to a trial by jury. If either party shall
commence an action or proceeding to enforce any provisions of the Transaction
Documents, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its reasonable attorneys' fees and other costs
and expenses incurred with the investigation, preparation and prosecution of
such action or proceeding.

                                       17
<PAGE>

5.10 Survival. The representations, warranties, covenants and other agreements
contained herein shall survive the Closing and the delivery, exercise and/or
conversion of the Securities, as applicable for the applicable statue of
limitations.

5.11 Execution. This Agreement may be executed in two or more counterparts, all
of which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a ".pdf" format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or ".pdf" signature page were an original thereof.

5.12 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

5.13 Independent Nature of Purchasers' Obligations and Rights. The obligations
of each Purchaser under any Transaction Document are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance or non-performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant
thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights, including without limitation the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. Each Purchaser has been represented by its own
separate legal counsel in their review and negotiation of the Transaction
Documents.

                                       18
<PAGE>

5.14 Construction. The parties agree that each of them and/or their respective
counsel has reviewed and had an opportunity to revise the Transaction Documents
and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.

                            (Signature Pages Follow)

                                       19
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

PHASE III MEDICAL, INC.                             Address for Notice:
                                                    -------------------

By:                                                 330 South Service Road
                                                    Suite 120
               ------------------------------------ Melville,  New York  11747
               Name:                                Attention:  CEO
               Title:

With a copy to (which shall not constitute notice): 330 South Service Road
                                                    Suite 120
                                                    Melville, New York  11747
                                                    Attention:  General Counsel

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]

                                       20
<PAGE>

          [PURCHASER SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

Name of
Purchaser:_____________________________________________________________________

Signature of Authorized Signatory of
Purchaser:_____________________________________________________________________

Name of Authorized
Signatory:_____________________________________________________________________

Title of Authorized
Signatory:_____________________________________________________________________

Email Address of
Purchaser:_____________________________________________________________________

Facsimile Number of
Purchaser:_____________________________________________________________________

Home Address of Purchaser:_____________________________________________________

Business Address of Purchaser:_________________________________________________

Address for Delivery of Securities of Purchaser (if not same as above):

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

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

 Social Security Number or Tax ID Number of Purchaser:_________________________

Aggregate Purchase Price:
                           -----------------------------------
Number of Shares:
                           -----------------------------------
Number of Warrants:
                           -----------------------------------

                                       21
<PAGE>Exhibit 10.2

                          REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this "Agreement") is made and entered into
as of June 2, 2006, among Phase III Medical, Inc., a Delaware corporation (the
"Company"), and the several purchasers signatory hereto (each such purchaser is
a "Purchaser" and collectively, the "Purchasers").

This Agreement is made pursuant to the Securities Purchase Agreement, dated as
of the date hereof between the Company and each Purchaser (the "Purchase
Agreement").

Capitalized terms used and not otherwise defined herein that are defined in the
Purchase Agreement shall have the meaning given such terms in the Purchase
Agreement.

The Company and each Purchaser hereby agrees as follows:

                                    ARTICLE I

                             REGISTRATION STATEMENT

         1.1 Filing of Registration Statement. (a) The Company will prepare and
file (which may include the preparation and filing of one or more pre-effective
amendments to any registration statements that relates to the Company's
securities, which may be currently on file or may be subsequently filed with the
Commission), at its own expense, a registration statement on Form S-1 or other
appropriate form under the Securities Act (the "Registration Statement") with
the Commission no later than June 30, 2006, sufficient to permit the
non-underwritten public offering and resale of the Shares and the Warrant Shares
(subject to adjustment as set forth in the Warrants) (the "Registrable
Securities") through the facilities of all appropriate securities exchanges, if
any, on which the Company's Common Stock is being sold or on the
over-the-counter market if the Company's Common Stock is quoted thereon.

         (b) Piggyback Registrations Rights. If, at any time for so long as the
Company is required to maintain the effectiveness of a Registration Statement
pursuant to Section 1.2(b) of this Agreement, there is not an effective
Registration Statement covering all of the Registrable Securities and the
Company shall determine to prepare and file with the Commission a registration
statement relating to an offering for its own account or the account of others
under the Securities Act of any of its equity securities, other than on Form S-4
or Form S-8 (each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, then the Company
shall provide to the holder of the Registrable Securities the opportunity to
have such Registrable Securities included in such Registration Statement;
provided, that the Company shall only be required to provide such opportunity to
holders of Registrable Securities until the earlier of (i) two years from the
date of this Agreement; (ii) the date such Registrable Securities have been sold
pursuant to a Registration Statement, (ii) the date such Registrable Securities
have otherwise been transferred to Persons who may trade such shares without
restriction under the Securities Act, and the Company has delivered a new
certificate or other evidence of ownership for such securities not bearing a
restrictive legend, (iii) the date such Registrable Securities may be sold
without volume or manner of sale limitations pursuant to Rule 144(k) or any
similar provision then in effect under the Securities Act in the opinion of
counsel to the Company.

<PAGE>

         1.2  Effectiveness of Registration Statement.

         (a) The Company will use its reasonable best efforts to cause such
Registration Statement to become effective within 150 days of the Initial
Closing date. The number of shares designated in the Registration Statement to
be registered shall include all of the Registrable Securities and shall include
appropriate language regarding reliance upon Rule 416 to the extent permitted by
the Commission. The Company will notify each Purchaser of the date of
effectiveness of the Registration Statement within two business days of such
event.

         (b) The Company will maintain the Registration Statement or
post-effective amendment filed under the terms of this Agreement effective under
the Securities Act until the earlier of (i) the date that all of the Registrable
Securities have been sold pursuant to such Registration Statement, (ii) all
Registrable Securities have been otherwise transferred to Persons who may trade
such shares without restriction under the Securities Act, and the Company has
delivered a new certificate or other evidence of ownership for such securities
not bearing a restrictive legend, (iii) all Registrable Securities may be sold
at any time, without volume or manner of sale limitations pursuant to Rule
144(k) or any similar provision then in effect under the Securities Act in the
opinion of counsel to the Company, or (iv) two years from the effective date of
the Registration Statement (collectively, the "Effectiveness Period").

         (c) In the event that (i) the Registration Statement is not declared
effective by the Commission within 150 days of the Initial Closing date, or (ii)
such Registration Statement is not maintained as effective by the Company for
the Effectiveness Period except an Allowed Delay under 3.1(b), below (each a
"Registration Default") then, for each month in the event of late effectiveness
(in case of clause (i) above) or lapsed effectiveness (in the case of clause
(ii) above), the Company will pay an amount equal to 1% of the aggregate
Purchase Price as partial compensation for such failure and not as a penalty.
Such amount shall be payable in cash to each Purchaser pro-rata based upon the
percentage of the aggregate Purchase Price paid by each Purchaser.

         1.3 Fees. All fees, disbursements and out-of-pocket expenses and costs
incurred by the Company in connection with the preparation and filing of the
Registration Statement, in making filings with NASD or NASDR (including, without
limitation, pursuant to NASD Rule 2710), and in complying with applicable
federal securities and Blue Sky laws (including, without limitation, all
attorneys' fees of the Company) shall be borne by the Company. The Purchasers
shall bear any reasonable cost of underwriting and/or brokerage discounts, fees,
and commissions, if any, applicable to the Registrable Securities being
registered and sold by an underwriter for a Purchaser and the fees and expenses
of their counsel. The Company shall use its reasonable best efforts to qualify
any of the Securities for sale in such states as any Purchaser reasonably
designates and shall furnish indemnification. However, the Company shall not be
required to qualify in any state which will require an escrow or other
restriction relating to the Company and/or the sellers, or which will require
the Company to qualify to do business in such state or require the Company to
file therein any general consent to service of process and the Company shall in
no event be required to qualify in greater than five states. The Company at its
expense will supply the Purchasers with copies of the applicable Registration
Statement and any prospectus included therein and other related documents in
such quantities as may be reasonably requested.

                                       2
<PAGE>

                                   ARTICLE II

[Intentionally Omitted]

                                   ARTICLE III

                               FURTHER AGREEMENTS

         3.1 In the case of each registration effected by the Company pursuant
to any section herein, the Company will keep each Purchaser advised in writing
as to the initiation of each registration and as to the completion thereof. At
its expense, the Company will:

         (a) Not less than five (5) business days prior to the filing of the
         Registration Statement or any related Prospectus or any amendment or
         supplement thereto, furnish to DC a draft of the Registration
         Statement.

          (b) Prepare and file with the Commission such amendments and
         supplements to such registration statement and the prospectus used in
         connection with such registration statement as may be necessary to
         comply with the provisions of the Securities Act with respect to a
         disposition of all securities covered by such registration statement;

         (c) Notify each Purchaser as promptly as reasonably possible: (i)(A)
         upon request by a Purchaser, when the Commission notifies the Company
         whether there will be a "review" of the Registration Statement and
         whenever the Commission comments in writing on the Registration
         Statement (the Company shall upon request provide true and complete
         copies thereof and all written responses thereto to each of the
         Holders, subject, if appropriate, to the execution of confidentiality
         agreements in form acceptable to the Company); and (B) with respect to
         the Registration Statement or any post-effective amendment, when the
         same has become effective; (ii) of any request by the Commission or any
         other Federal or state governmental authority during the period of
         effectiveness of the Registration Statement for amendments or
         supplements to the Registration Statement or Prospectus or for
         additional information; (iii) of the issuance by the Commission or any
         other federal or state governmental authority of any stop order
         suspending the effectiveness of the Registration Statement covering any
         or all of the Registrable Securities or the initiation of any
         Proceedings for that purpose; (iv) of the receipt by the Company of any
         notification with respect to the suspension of the qualification or
         exemption from qualification of any of the Registrable Securities for
         sale in any jurisdiction, or the initiation or threatening of any
         Proceeding for such purpose; and (v) of the occurrence of any event or
         passage of time that makes the financial statements included in the
         Registration Statement ineligible for inclusion therein or any
         statement made in the Registration Statement or Prospectus or any
         document incorporated therein by reference untrue in any material
         respect or that requires any revisions to the Registration Statement,
         Prospectus or other documents so that, in the case of the Registration
         Statement or the Prospectus, as the case may be, it will not contain
         any untrue statement of a material fact or omit to state any material
         fact required to be stated therein or necessary to make the statements
         therein, in light of the circumstances under which they were made, not
         misleading; provided that, for not more than 30 consecutive business
         days (or a total of not more than 120 calendar days in any 12-month
         period), the Company may delay the disclosure of material non-public
         information concerning the Company the public disclosure of which at
         the time is not, in the good faith opinion of the Company in the best
         interests of the Company and which may, based on the written advice of
         outside counsel, be delayed under applicable law or regulation (an
         "Allowed Delay"); provided, further, that the Company shall promptly
         (a) notify each Purchaser in writing of the existence of (but in no
         event, without the prior written consent of such Purchaser, shall the
         Company disclose to such Purchaser any of the facts or circumstances
         regarding) material non-public information giving rise to an Allowed
         Delay and (b) advise each Investor in writing to cease all sales under
         such registration statement until the termination of the Allowed Delay;

                                       3
<PAGE>

         (d) use its commercially reasonable best efforts to prevent the
         issuance of any stop order or other suspension of effectiveness of a
         registration statement, and, if such an order is issued, to obtain the
         withdrawal of such order at the earliest possible moment and to notify
         Purchaser (and, in the event of an underwritten offering, the managing
         underwriter) of the issuance of such order and the resolution thereof;

         (e) If NASD Rule 2710 requires any broker-dealer to make a filing prior
         to executing a sale of Registrable Securities by a Purchaser, make an
         Issuer Filing with the NASD Corporate Financing Department pursuant to
         NASD Rule 2710 and respond within a reasonable period of time to any
         comments received from NASD in connection therewith.

         (f) Otherwise use its commercially reasonable best efforts to comply
         with all applicable rules and regulations of the Commission.

         (g) The Company shall either (a) cause all the Registrable Securities
         covered by a Registration Statement to be listed on each securities
         exchange on which securities of the same class or series issued by the
         Company are then listed, if any, if the listing of such Registrable
         Securities is then permitted under the rules of such exchange, or (b)
         secure designation and quotation of all the Registrable Securities
         covered by the Registration Statement on the Nasdaq National Market or
         the Nasdaq Capital Market, or, (c) if the Company is unsuccessful in
         satisfying the preceding clauses (a) or (b), the Company shall secure
         the inclusion for quotation on The American Stock Exchange, Inc. or if
         it is unable to, the Over The Counter Bulletin Board for such
         Registrable Securities and, without limiting the generality of the
         foregoing, to attempt to arrange for at least two (2) market makers to
         register with the National Association of Securities Dealers, Inc.
         ("NASD") as such with respect to such Registrable Securities. The
         Company shall pay all fees and expenses in connection with satisfying
         its obligation under this Section 3(h).

                                       4
<PAGE>

         (h) The Company covenants that it shall file the reports required to be
         filed by it under the Securities Act and the Exchange Act and the rules
         and regulations adopted by the SEC thereunder so long as any Purchaser
         owns any Registrable Securities; provided, however, the Company may
         delay any such filing but only pursuant to Rule 12b-25 under the
         Exchange Act, and the Company shall take such further reasonable action
         as the Purchaser may reasonably request (including, without limitation,
         promptly obtaining any required legal opinions from Company counsel
         necessary to effect the sale of Registrable Securities under Rule 144
         and paying the related fees and expenses of such counsel), all to the
         extent required from time to time to enable such Purchaser to sell
         Registrable Securities without registration under the Securities Act
         within the limitation of the exemptions provided by (a) Rule 144 under
         the Securities Act, as such Rule may be amended from time to time, or
         (b) any similar rule or regulation hereafter adopted by the Commission.
         Upon the request of any Purchaser of Registrable Securities, the
         Company will deliver to such Purchaser a written statement as to
         whether it has complied with such requirements.

                                   ARTICLE IV

                        INDEMNIFICATION AND CONTRIBUTION

         (a) To the extent a Purchaser includes any Shares or Warrant Shares in
a registration statement pursuant to the terms hereof, the Company will
indemnify and hold harmless the Purchaser, its directors and officers, and each
Person, if any, who controls the Purchaser within the meaning of the Securities
Act, from and against, and will reimburse the Purchaser, its directors and
officers and each controlling Person with respect to, any and all loss, damage,
liability, cost, and expense to which the Purchaser or such controlling Person
may become subject under the Securities Act or otherwise, insofar as such
losses, damages, liabilities, costs, or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, damage, liability,
cost or expense arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by the Purchaser or any such controlling Person in writing
specifically for use in the preparation thereof.

         (b) To the extent a Purchaser includes any Shares or Warrant Shares in
a registration statement pursuant to the terms hereof, Purchaser will indemnify
and hold harmless the Company, its directors and officers and any controlling
Person from and against, and will reimburse the Company, its directors and
officers and any controlling Person with respect to, any and all loss, damage,
liability, cost, or expense to which the Company, its directors and officers or
such controlling Person may become subject under the Securities Act or
otherwise, insofar as such losses, damages, liabilities, costs, or expenses are
caused by any untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained therein or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and in
conformity with written information furnished by or on behalf of the Purchaser
specifically for use in the preparation thereof.

                                       5
<PAGE>

         (c) To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
hereunder to the extent permitted by law, provided that (i) no contribution
shall be made under circumstances where the indemnifying party would not have
been liable for indemnification pursuant to the provisions hereof, (ii) no
seller of securities guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any seller of securities who was not guilty of such fraudulent
misrepresentation, and (iii) the amount of the contribution together with any
other payments made in respect of such loss, damage, liability, or expense, by
any seller of securities shall be limited to the net amount of proceeds received
by such seller from the sale of such securities.

         (d) The Purchasers will cooperate with the Company in connection with
this Agreement, including timely supplying all information and executing and
returning the Selling Securityholder Notice and Questionnaire attached hereto as
Exhibit A, and any other documents requested by the Company that are required to
enable the Company to perform its obligations to register the Shares and the
Warrant Shares.

                                    ARTICLE V

                                  MISCELLANEOUS

         5.1 Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the same shall be in writing and signed by the Company and the
holders of a majority of the then outstanding Registrable Securities.

         5.2 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be delivered as set forth
in the Purchase Agreement.

         5.3 Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties.

         5.4 Execution and Counterparts. This Agreement may be executed in two
or more counterparts, all of which when taken together shall be considered one
and the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being understood that
both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission or by e-mail delivery of a ".pdf" format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or ".pdf" signature page were an original
thereof.

                                       6
<PAGE>

         5.5 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in
accordance with the provisions of the Purchase Agreement.

         5.6 Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any other remedies provided by law.

         5.7 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

         5.8 Headings. The headings in this Agreement are for convenience only,
do not constitute a part of the Agreement and shall not be deemed to limit or
affect any of the provisions hereof.

         5.9 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser hereunder are several and not joint with the
obligations of any other Purchaser hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.

                              ********************

                                       7
<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Registration Rights
     Agreement as of the date first written above.

                                    PHASE III MEDICAL, INC.

                                    By:
                                       -------------------------------

                                    Name:
                                    Title:

                     [SIGNATURE PAGE OF PURCHASERS FOLLOWS]

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

                                       8
<PAGE>

          [PURCHASER SIGNATURE PAGES TO REGISTRATION RIGHTS AGREEMENT]

Name of
Purchaser:_____________________________________________________________________

Signature of Authorized Signatory of
Purchaser:_____________________________________________________________________

Name of Authorized
Signatory:_____________________________________________________________________

Title of Authorized
Signatory:_____________________________________________________________________

Email Address of
Purchaser:_____________________________________________________________________

Facsimile Number of
Purchaser:_____________________________________________________________________

Address for Notice of Purchaser:_______________________________________________

                                       9
<PAGE>

                                                                         Annex A

                             PHASE III MEDICAL, INC.

                 Selling Securityholder Notice and Questionnaire

The undersigned beneficial owner of common stock, par value $0.001 per share
(the "Common Stock"), of Phase III Medical, Inc., a Delaware corporation (the
"Company"), (the "Registrable Securities") understands that the Company has
filed or intends to file with the Securities and Exchange Commission (the
"Commission") a registration statement on an appropriate form for the
registration and resale under Rule 415 of the Securities Act of 1933, as amended
(the "Securities Act"), of the Registrable Securities, in accordance with the
terms of the Registration Rights Agreement, dated as of May , 2006 (the
"Registration Rights Agreement"), among the Company and the Purchasers named
therein. A copy of the Registration Rights Agreement is available from the
Company upon request at the address set forth below. All capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the
Registration Rights Agreement.

Certain legal consequences arise from being named as a selling securityholder in
the Registration Statement and the related prospectus. Accordingly, Purchasers
and beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling securityholder in the Registration Statement and the related
prospectus.

                                     NOTICE

The undersigned beneficial owner (the "Selling Securityholder") of Registrable
Securities hereby elects to include the Registrable Securities owned by it and
listed below in Item 3 (unless otherwise specified under such Item 3) in the
Registration Statement. The undersigned hereby provides the following
information to the Company and represents and warrants that such information is
accurate:

                                       10
<PAGE>

                                  QUESTIONNAIRE

1. Name.

         (a)      Full Legal Name of Selling Securityholder

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

         (b)      Full Legal Name of Registered Holder (if not the same as (a)
                  above) through which Registrable Securities Listed in Item 3
                  below are held:

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

         (c)      Full Legal Name of Natural Control Person (which means a
                  natural person who directly or indirectly alone or with others
                  has power to vote or dispose of the securities covered by the
                  questionnaire):

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

2. Address for Notices to Selling Securityholder:

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

Telephone: ____________________________________________________________________

Fax: __________________________________________________________________________

Contact Person: _______________________________________________________________

3. Beneficial Ownership of Registrable Securities:

         (a)      Type and Principal Amount of Registrable Securities
                  beneficially owned (not including the Registrable Securities
                  that are issuable pursuant to the Purchase Agreement):

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

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

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

                                       11
<PAGE>

4. Broker-Dealer Status:

         (a)      Are you a broker-dealer?

                                     Yes   No

         (b)      If "yes" to Section 4(a), did you receive your Registrable
                  Securities as compensation for investment banking services to
                  the Company.

                                     Yes   No

Note: If no, the Commission's staff has indicated that you should be identified
as an underwriter in the Registration Statement.

         (c)      Are you an affiliate of a broker-dealer?

                                     Yes   No

         d)       If you are an affiliate of a broker-dealer, do you certify
                  that you bought the Registrable Securities in the ordinary
                  course of business, and at the time of the purchase of the
                  Registrable Securities to ( be resold, you had no agreements
                  or understandings, directly or indirectly, with any person to
                  distribute the Registrable Securities?

                                     Yes   No

Note: If no, the Commission's staff has indicated that you should be identified
as an underwriter in the Registration Statement.

5. Beneficial Ownership of Other Securities of the Company Owned by the Selling
Securityholder. Except as set forth below in this Item 5, the undersigned is not
the beneficial or registered owner of any securities of the Company other than
the Registrable Securities listed above in Item 3.

         (a)      Type and Amount of Other Securities beneficially owned by the
                  Selling Securityholder:

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

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

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

                                       12
<PAGE>

6. Relationships with the Company:

Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has had
any other material relationship with the Company (or its predecessors or
affiliates) during the past three years.

State any exceptions here:
------------------------------------------------------------------------------

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

The undersigned agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein that may occur subsequent to the date
hereof at any time while the Registration Statement remains effective.

By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 6 and the inclusion of such
information in the Registration Statement and the related prospectus and any
amendments or supplements thereto. The undersigned understands that such
information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus.

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.

Dated:                           Beneficial
                                 Owner Name: _____________________________

                                 By:     _________________________________

                                 Name: ___________________________________

                                 Title: __________________________________

                                       13
<PAGE>

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

Catherine M. Vaczy
Executive Vice President and General Counsel
Phase III Medical, Inc.
330 South Service Road
Suite 120
Melville, New York  11747
631.574.4956

                                       14

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