Document:

Exhibit 10.3

THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
OTHER SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION
STATEMENT COVERING SUCH SECURITIES UNDER THE ACT AND ANY OTHER APPLICABLE
SECURITIES LAWS, OR (2) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

                             PHASE III MEDICAL, INC.

                       WARRANT TO PURCHASE _______ SHARES
                             (SUBJECT TO ADJUSTMENT)
                                       OF
                    COMMON STOCK, PAR VALUE $0.001 PER SHARE

Date __________, 2006                                            Warrant No. ___

         For value  received,  Phase III Medical,  Inc., a Delaware  corporation
(the  "Company"),  hereby  certifies  that  _____________,   or  its  registered
transferees, successors or assigns (each person or entity holding all or part of
this Warrant  being  referred to as a  "Holder"),  is the  registered  holder of
warrants (the "Warrants") to subscribe for and purchase _____________ (________)
shares (as adjusted  pursuant to Section 3 hereof,  the "Warrant Shares") of the
fully  paid and  nonassessable  common  stock,  par value  $0.001 per share (the
"Common Stock"),  of the Company,  at a purchase price per share initially equal
to EIGHT CENTS ($0.08) (the "Warrant  Price") on or before,  5:00 P.M.,  Eastern
Time, on __________, 2011 (the "Expiration Date"), subject to the provisions and
upon the terms and conditions  hereinafter  set forth.  As used in this Warrant,
the term  "Business  Day" means any day other than a Saturday or Sunday on which
commercial  banks  located  in New  York,  New York  are  open  for the  general
transaction  of business.  This Warrant has been issued in  connection  with the
holder's  investment  in the  Company's  Common  Stock  financing  of even  date
herewith.

         This Warrant was issued pursuant to a Securities  Purchase Agreement by
and among the Company,  the Holder and certain  other  parties set forth therein
(the "Purchase Agreement"),  pursuant to an offering by the Company of a minimum
of $2,000,000  and a maximum of  $3,000,000  of shares of the  Company's  Common
Stock and Warrants, as described in the Purchase Agreement.

1.       Exercise.

         (a)      Method of Exercise; Payment; Issuance of New Warrant.

                  (i) Subject to the provisions  hereof, the Holder may exercise
         this  Warrant,  in  whole or in part  and  from  time to  time,  by the
         surrender of this Warrant (with the Notice of Exercise  attached hereto
         as Appendix A duly executed) at the principal office of the Company, or
         such  other  office  or  agency  of the  Company  as it may  reasonably
         designate by written notice to the Holder, during normal business hours
         on any Business  Day, and the payment by the Holder by cash,  certified
         check payable to the Company or wire transfer of immediately  available
         funds to an account  designated to the exercising Holder by the Company
         of an amount equal to the then applicable  Warrant Price  multiplied by
         the number of Warrant Shares then being purchased, or in the event of a
         cashless  exercise  pursuant to Section 1(b) below,  with the Net Issue
         Election  Notice  attached  hereto  as  Appendix  B duly  executed  and
         completed. On the date on which the Holder shall have satisfied in full
         the Holder's obligations set forth herein regarding an exercise of this
         Warrant  (provided  such  date is prior to the  Expiration  Date),  the
         Holder (or such other  person or persons  as  directed  by the  Holder,
         subject to compliance with applicable securities laws) shall be treated
         for all purposes as the holder of record of such  Warrant  Shares as of
         the close of business on such date.
<PAGE>

                  (ii) In the event of any exercise of the rights represented by
         this  Warrant,  certificates  for the whole  number of shares of Common
         Stock so  purchased  shall be  delivered  to the  Holder (or such other
         person or persons as directed by the Holder, subject to compliance with
         applicable  securities  laws) as promptly as is reasonably  practicable
         (but not later than three (3) Business Days) after such exercise at the
         Company's expense, and, unless this Warrant has been fully exercised, a
         new Warrant  representing  the whole number of Warrant Shares,  if any,
         with respect to which this Warrant  shall not then have been  exercised
         shall  also be issued to the Holder as soon as  reasonably  practicable
         thereafter  (but not later than  three (3)  Business  Days)  after such
         exercise.

         (b)   Cashless   Right  to   Convert   Warrant   into   Common   Stock.
Notwithstanding  any  provision  herein  to the  contrary,  if as of the date of
exercise of all or a part of this  Warrant,  the Fair  Market  Value (as defined
below) for one share of Common Stock is greater than the Warrant Price,  then in
lieu of  exercising  this  Warrant  for cash,  the Holder may elect to  receive,
without the payment by the Holder of the Warrant Price,  Warrant Shares equal to
the value of this Warrant or any portion hereof by the surrender of this Warrant
(or such portion of this Warrant being so exercised) together with the Net Issue
Election Notice annexed hereto as Appendix B duly executed and completed, at the
office of the  Company,  or such other office or agency of the Company as it may
reasonably  designate by written  notice to the Holder,  during normal  business
hours on any Business Day. Thereupon, the Company shall issue to the Holder such
number of fully paid,  validly issued and  nonassessable  Warrant Shares,  as is
computed using the following formula:

                                    X= Y(A-B)
                                    ---------
                                        A
where

         X = the number of shares of Common Stock to be issued to the Holder (or
such other  person or persons as directed by the Holder,  subject to  compliance
with all  applicable  laws) upon such  exercise of the rights under this Section
1(b)

         Y = the total number of shares of Common Stock  covered by this Warrant
which the Holder has surrendered for cashless exercise

         A = the "Fair  Market  Value" of one share of Common  Stock on the date
that the  Holder  delivers  the Net  Issue  Election  Notice to the  Company  as
provided herein

         B = the Warrant Price in effect under this Warrant on the date that the
Holder delivers the Net Issue Election Notice to the Company as provided herein

The "Fair Market Value" of a share of Common Stock as of a particular date (the
"Valuation Date") shall mean the following:

                                       2
<PAGE>

                  (i)  if  the  Common  Stock  is  then  listed  on  a  national
         securities  exchange,  the average  closing  sale price of one share of
         Common Stock on such  exchange over the ten (10) trading days ending on
         the last trading day prior to the Valuation Date; provided that if such
         stock has not traded in the ten (10) consecutive  trading days prior to
         the Valuation  Date, the Fair Market Value shall be the average closing
         price of one share of Common  Stock in the most recent ten (10) trading
         days during which the Common  Stock has traded  prior to the  Valuation
         Date;

                  (ii) if the Common Stock is then  included in The Nasdaq Stock
         Market, Inc. ("Nasdaq"), the average closing sale price of one share of
         Common  Stock on Nasdaq  over the ten (10)  trading  days ending on the
         last  trading day prior to the  Valuation  Date or, if no closing  sale
         price is available for any of such ten (10) trading  days,  the closing
         sale price for such day shall be  determined as the average of the high
         bid and  the  low ask  price  quoted  on  Nasdaq  as of the end of such
         trading  day;  provided  that if the Common Stock has not traded in the
         ten (10) consecutive trading days prior to the Valuation Date, the Fair
         Market Value shall be the average  closing price of one share of Common
         Stock in the most recent ten (10)  trading days during which the Common
         Stock has traded prior to the Valuation Date;

                  (iii)  if  the   Common   Stock  is  then   included   in  the
         Over-the-Counter  Bulletin Board, the average closing sale price of one
         share of Common Stock on the  Over-the-Counter  Bulletin Board over the
         ten (10)  trading  days  ending  on the last  trading  day prior to the
         Valuation  Date or, if no closing  sale price is  available  for any of
         such ten (10) trading  days,  the closing sale price for such day shall
         be  determined  as the  average  of the high bid and the low ask  price
         quoted  on the  Over-the-Counter  Bulletin  Board as of the end of such
         trading  day;  provided  that if the Common Stock has not traded in the
         ten (10) consecutive trading days prior to the Valuation Date, the Fair
         Market Value shall be the average  closing price of one share of Common
         Stock in the most recent ten (10)  trading days during which the Common
         Stock has traded prior to the Valuation Date;

                  (iv)  if the  Common  Stock  is  then  included  in the  "pink
         sheets", the average closing sale price of one share of Common Stock on
         the "pink  sheets"  over the ten (10)  trading  days ending on the last
         trading day prior to the Valuation Date or, if no closing sale price is
         available for any of such ten (10) trading days, the closing sale price
         for such day shall be determined as the average of the high bid and the
         low ask price quoted on the "pink sheets" as of the end of such trading
         day;  provided  that if the Common Stock has not traded in the ten (10)
         consecutive  trading days prior to the Valuation  Date, the Fair Market
         Value shall be the average  closing  price of one share of Common Stock
         in the most recent ten (10)  trading days during which the Common Stock
         has traded prior to the Valuation Date; or

                  (v) if the  Common  Stock is not  then  listed  on a  national
         securities  exchange  or  quoted  on  Nasdaq  or  the  Over-the-Counter
         Bulletin Board or the "pink sheets", the Fair Market Value of one share
         of Common Stock as of the  Valuation  Date shall be  determined in good
         faith by the Board of Directors of the Company (the "Board").

     2. Reservation of Shares;   Stock  Fully Paid;  Listing.  The Company shall
keep  reserved a  sufficient  number of shares of the  authorized  and  unissued
shares of Common  Stock to provide  for the  exercise  of the rights of purchase
represented  by this Warrant in compliance  with its terms.  All Warrant  Shares
issued upon  exercise of this  Warrant  shall be, at the time of delivery of the
certificates  for such Warrant  Shares upon payment in full of the Warrant Price
therefor in accordance with the terms of this Warrant (or proper exercise of the
cashless  exercise rights  contained in Section 1(b) hereof),  duly  authorized,
validly  issued,  fully paid and  non-assessable  shares of Common  Stock of the
Company.  The Company shall during all times prior to the  Expiration  Date when
the shares of Common  Stock  issuable  upon the  exercise  of this  Warrant  are
authorized for listing or quotation on any national securities exchange,  Nasdaq
(or the  Over-the-Counter  Bulletin Board or the "pink sheets",  as the case may
be), keep the shares of Common Stock  issuable upon the exercise of this Warrant
authorized for listing or quotation on such national securities exchange, Nasdaq
(or the  Over-the-Counter  Bulletin Board or the "pink sheets",  as the case may
be).

                                       3
<PAGE>

     3. Adjustments.

         3.1 With respect to any rights that Holder has to exercise this Warrant
and  convert  into  shares of Common  Stock,  Holder  shall be  entitled  to the
following adjustments:

         (a) Merger or Consolidation.  If at any time there shall be a merger or
a consolidation  of the Company with or into, or if the Company shall enter into
an agreement  providing for the transfer or sale of all or substantially  all of
its assets to, another entity (the  "Surviving  Entity") when the Company is not
the  surviving  corporation,  then, as part of such merger or  consolidation  or
transfer  of assets  lawful  provision  shall be made so that the holder  hereof
shall  thereafter be entitled to receive upon  exercise of this Warrant,  during
the period  specified  herein and upon payment of the aggregate  Exercise  Price
then in effect,  the number of shares of stock or other  securities  or property
(including   cash)  of  the  Surviving   Entity   resulting  from  such  merger,
consolidation or transfer of assets, to which the holder hereof as the holder of
the stock  deliverable upon exercise of this Warrant would have been entitled in
such  merger,  consolidation  or  transfer of assets,  if this  Warrant had been
exercised  immediately  before such transaction.  In any such case,  appropriate
adjustment  shall be made in the  application  of the provisions of this Warrant
with respect to the rights and  interests of the holder  hereof as the holder of
this Warrant after the merger,  consolidation,  or transfer of assets.  Under no
circumstances may the Company into any agreement or instrument providing for the
merger,  consolidation or transfer of its assets or similar  transaction without
first assuring Warrant is fully  enforceable and exercisable with respect to the
Surviving Entity as contemplated by this Warrant.

         (b) Reclassification, Recapitalization, etc. If the Company at any time
shall,  by   subdivision,   combination  or   reclassification   of  securities,
recapitalization,  automatic  conversion,  or other similar event  affecting the
number or character of outstanding shares of Common Stock, or otherwise,  change
any of the securities as to which purchase  rights under this Warrant exist into
the same or a different number of securities of any other class or classes, this
Warrant shall thereafter  represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the  securities  that were subject to the purchase  rights under this Warrant
immediately prior to such subdivision,  combination,  reclassification  or other
change.

         (c) Split or  Combination of Common Stock and Stock  Dividend.  In case
the Company shall at any time subdivide, redivide,  recapitalize, split (forward
or  reverse)  or change its  outstanding  shares of Common  Stock into a greater
number of shares or declare a dividend upon its Common Stock  payable  solely in
shares of Common Stock, the Exercise Price shall be proportionately  reduced and
the number of Warrant Shares proportionately increased.  Conversely, in case the
outstanding  shares of Common  Stock of the  Company  shall be  combined  into a
smaller number of shares, the Exercise Price shall be proportionately  increased
and the number of Warrant Shares proportionately reduced.

         (a) Consideration  Other than Cash. For purposes of this Warrant,  if a
part or all of the consideration  received by the Company in connection with the
issuance  of shares of Common  Stock or the  issuance  of any of the  securities
described  in  this  Warrant   consists  of  property  other  than  cash,   such
consideration  shall be  deemed  to have a fair  market  value as is  reasonably
determined in good faith by the Board.

                                       4
<PAGE>

                  (e) No Increased Warrant Price. Notwithstanding any other
provisions of this Section 3, no adjustment of the Warrant Price pursuant to
this Section 3 shall have the effect of increasing the Warrant Price above the
Warrant Price in effect immediately prior to such adjustment.

         3.2 Certificate as to Adjustments; Notice by Company. In each case of
an adjustment or readjustment of the Warrant Price, the Company at its expense
will furnish the Holder with a certificate prepared by the Treasurer or Chief
Financial Officer of the Company, showing such adjustment or readjustment, and
stating in detail the facts upon which such adjustment or readjustment is based.

         3.3 Further Adjustments. In the event that, as a result of an
adjustment made pursuant to this Section 3, the Holder shall become entitled to
receive any shares of capital stock of the Company other than shares of Common
Stock, the number of such other shares so receivable upon exercise of this
Warrant shall be subject thereafter to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions with respect
to the Warrant Shares contained in this Warrant.

         3.4 Adjustment of Number of Shares. Upon each adjustment in the Warrant
Price pursuant to this Section 3, the number of Warrant Shares purchasable
hereunder shall be adjusted, to the nearest whole share, to the product obtained
by multiplying the number of Warrant Shares purchasable immediately prior to
such adjustment by a fraction, (i) the numerator of which shall be the Warrant
Price immediately prior to such adjustment, and (ii) the denominator of which
shall be the Warrant Price immediately thereafter.

     4. Redemption of Warrants. This  Warrant  is  subject  to redemption by the
Company as provided in this Section 4.

         4.1.  This  Warrant may be redeemed,  at the option of the Company,  in
whole  and not in  part,  at a  redemption  price of  $.0001  per  Warrant  (the
"Redemption Price"),  provided (i) the average closing price of the Common Stock
as quoted by Bloomberg,  LP., on the Principal Trading Market (as defined below)
on which the Common Stock is included for  quotation or trading,  shall equal or
exceed $.36 per share (taking into account all  adjustments) for the twenty (20)
consecutive  trading days ending on the second  trading day prior to the date of
Redemption Notice (as defined below) is sent to the Holder (the "Target Price");
(ii) the Common Stock is either quoted on the NASD Bulletin  Board,  traded on a
national  securities  exchange  or  quoted  on the NNM or NCSM  (the  "Principal
Trading Market");  (iii) the registration  statement  covering the resale of the
Warrant  Shares  under the  Securities  Act has been  declared  effective by the
Securities and Exchange  Commission and remains effective on the Redemption Date
(as defined  below) so that the Warrant  Shares may be sold without  limitation;
(iv) the dollar value of the trading  volume of the Common Stock for each of the
twenty (20)  consecutive  trading  days prior to the  Redemption  Date equals or
exceeds  $100,000;  and (v) the  Holder of this  Warrant  is not  subject to any
lock-up provisions with respect to this Warrant or the Warrant Shares.

         4.2.  If the  conditions  set  forth in  Section  4.1 are met,  and the
Company  desires to exercise its right to redeem this  Warrant,  it shall mail a
notice (the  "Redemption  Notice") to the  registered  holder of this Warrant by
first class mail, postage prepaid,  at least ten (10) Business Days prior to the
date fixed by the  Company  for  redemption  of the  Warrants  (the  "Redemption
Date").

         4.3. The Redemption Notice shall specify (i) the Redemption Price, (ii)
the Redemption  Date,  (iii) the place where the Warrant  certificates  shall be
delivered  and the  redemption  price paid,  and (iv) that the right to exercise
this Warrant  shall  terminate at 5:00 p.m.  (New York time) on the business day
immediately  preceding the  Redemption  Date. No failure to mail such notice nor
any defect  therein or in the mailing  thereof  shall affect the validity of the
proceedings for such redemption except as to a holder (a) to whom notice was not
mailed,  or (b) whose notice was defective.  An affidavit of the Secretary or an
Assistant  Secretary of the Company that the  Redemption  Notice has been mailed
shall,  in the  absence of fraud,  be prima facie  evidence of the facts  stated
therein.

                                       5
<PAGE>

         4.4. Any right to exercise a Warrant shall  terminate at 5:00 p.m. (New
York time) on the business day immediately preceding the Redemption Date. On and
after the  Redemption  Date,  the holder of this  Warrant  shall have no further
rights except to receive, upon surrender of this Warrant, the Redemption Price.

         4.5. From and after the  Redemption  Date,  the Company  shall,  at the
place specified in the Redemption Notice, upon presentation and surrender to the
Company  by  or on  behalf  of  the  holder  thereof  the  warrant  certificates
evidencing this Warrant being redeemed,  deliver, or cause to be delivered to or
upon the written  order of such  holder,  a sum in cash equal to the  Redemption
Price of this Warrant.  From and after the Redemption  Date,  this Warrant shall
expire  and  become  void  and  all  rights  hereunder  and  under  the  warrant
certificates, except the right to receive payment of the Redemption Price, shall
cease.  If the shares of Common Stock are  subdivided or combined into a greater
or  smaller  number of  shares  of  Common  Stock,  the  Target  Price  shall be
proportionately adjusted by the ratio which the total number of shares of Common
Stock  outstanding  immediately prior to such event bears to the total number of
shares of Common Stock to be outstanding immediately after such event.

     5. Transfer  Taxes.  The  Company will  pay  any  documentary   stamp taxes
attributable  to the  initial  issuance  of  Warrant  Shares  issuable  upon the
exercise  of the  Warrant;  provided,  however,  that the  Company  shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Warrant Shares in a
name  other  than that of the  registered  holder of this  Warrant in respect of
which  such  shares  are  issued,  and in such case,  the  Company  shall not be
required to issue or deliver any  certificate  for Warrant Shares or any Warrant
until the person  requesting the same has paid to the Company the amount of such
tax or has established to the Company's  reasonable  satisfaction  that such tax
has been paid.

     6.  Mutilated  or  Missing   Warrants.   In  case  this  Warrant  shall  be
mutilated,  lost, stolen, or destroyed,  the Company shall issue in exchange and
substitution of and upon  cancellation of the mutilated  Warrant,  or in lieu of
and  substitution  for the Warrant lost,  stolen or destroyed,  a new Warrant of
like tenor and for the  purchase  of a like number of Warrant  Shares,  but only
upon receipt of evidence  reasonably  satisfactory  to the Company of such loss,
theft or  destruction  of the  Warrant,  and with  respect to a lost,  stolen or
destroyed  Warrant,  reasonable  and  customary  indemnity  or bond with respect
thereto, if requested by the Company.

     7.  Fractional  Shares.   No fractional  shares of  Common Stock  shall  be
issued in connection with any exercise or cashless  exercise  hereunder,  and in
lieu of any  such  fractional  shares  the  Company  shall  make a cash  payment
therefor  to the  Holder (or such other  person or  persons as  directed  by the
Holder, subject to compliance with all applicable laws) based on the Fair Market
Value of a share of Common Stock on the date of exercise or cashless exercise of
this Warrant.

     8.  Compliance   with   Securities   Act  and  Legends.    The  Holder,  by
acceptance  hereof,  agrees that it will not offer, sell or otherwise dispose of
this Warrant,  or any shares of Common Stock to be issued upon  exercise  hereof
except  under  circumstances  which  will  not  result  in a  violation  of  the
Securities  Act of 1933, as amended,  or the rules and  regulations  promulgated
thereunder,  as amended (the "1933 Act"),  or any state's  securities  laws. All
shares of Common Stock issued upon exercise of this Warrant  (unless  registered
under the 1933 Act) shall be stamped or imprinted with a legend as follows:

                  THIS SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
                  "ACT"), OR ANY OTHER SECURITIES LAWS AND MAY NOT BE OFFERED
                  FOR SALE, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
                  ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT COVERING
                  THESE SECURITIES UNDER THE ACT AND ANY OTHER APPLICABLE
                  SECURITIES LAWS, OR (2) AN OPINION OF COUNSEL REASONABLY
                  SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
                  REQUIRED.

                                       6
<PAGE>

     9. Rights as a Stockholder.  Except as expressly  provided in this Warrant,
no Holder,  as such, shall be entitled to vote or receive dividends or be deemed
the holder of Common Stock or any other  securities  of the Company which may at
any time be issuable on the exercise hereof for any purpose,  nor shall anything
contained  herein be  construed to confer upon the Holder,  as such,  any of the
rights of a stockholder  of the Company or any right to vote for the election of
the  directors  or upon any matter  submitted  to  stockholders  at any  meeting
thereof,  or  to  receive  notice  of  meetings,  or  to  receive  dividends  or
subscription  rights or otherwise,  until this Warrant shall have been exercised
and the Warrant Shares  purchasable  upon the exercise  hereof shall have become
deliverable, as provided herein.

     10.  Modification  and Waiver.  This Warrant and any provision hereof shall
not be changed,  waived,  discharged  or  terminated  except by an instrument in
writing  signed by the Company and the then  current  Holder,  and such  change,
waiver, discharge or termination shall be binding on any future Holder.

     11. Notices.  Unless otherwise  provided,  any notice required or permitted
under this Warrant shall be given in  accordance  with the terms of the Purchase
Agreement.

     12. Securities Purchase Agreement and Registration  Rights Agreement.  This
Warrant  has  been  issued   pursuant  to  the  Purchase   Agreement,   and  the
transferability  of this Warrant and the Common Stock issuable upon the exercise
hereof are subject to the Purchase  Agreement.  In addition,  the Holder of this
Warrant and the Common Stock  issuable upon the exercise  hereof are entitled to
have  such  shares of  Common  Stock  registered  under  the  Securities  Act in
accordance with the Registration  Rights  Agreement  referred to in the Purchase
Agreement  and to such  remedies  for  breaches  of,  or  defaults  under,  such
Registration Rights Agreement.

     13.  Descriptive  Headings.  The  descriptive  headings  contained  in this
Warrant are inserted for  convenience  only and do not constitute a part of this
Warrant.

     14.  Governing  Law.  This  Warrant  shall be governed  exclusively  by and
construed in accordance  with the internal laws of the State of New York without
regard to the conflicts of laws  principles  thereof.  The parties hereto hereby
irrevocably agree that any suit or proceeding arising directly and/or indirectly
pursuant to or under this Warrant, shall be brought solely in a federal or state
court  located  in the City,  County  and State of New  York.  By its  execution
hereof,  the parties hereby covenant and  irrevocably  submit to the in personam
jurisdiction  of the federal and state  courts  located in the City,  County and
State of New York and agree that any  process  in any such  action may be served
upon any of them  personally,  or by certified mail or registered mail upon them
or their agent, return receipt requested, with the same full force and effect as
if personally  served upon them in New York City.  The parties  hereto waive any
claim that any such  jurisdiction is not a convenient forum for any such suit or
proceeding  and any defense or lack of in  personam  jurisdiction  with  respect
thereto.  In the event of any such action or  proceeding,  the party  prevailing
therein  shall be  entitled  to  payment  from the  other  party  hereto  of its
reasonable  counsel fees and disbursements in an amount  judicially  determined.
Acceptance,  receipt and  execution of this  Warrant by the Holder  hereof shall
constitute acceptance of and agreement to the foregoing terms and conditions.

                                       7
<PAGE>

     15. Identity of Transfer Agent.  The Transfer Agent for the Common Stock is
Continental  Stock  Transfer  and Trust  Company.  Upon the  appointment  of any
subsequent  transfer agent for the Common Stock or other shares of the Company's
capital stock  issuable upon the exercise of the rights of purchase  represented
by this Warrant,  the Company will mail to the Holder a statement  setting forth
the name and address of such transfer agent.

     16. No  Impairment  of Rights.  The Company  will not, by  amendment of its
Certificate of  Incorporation  or through any other voluntary  action,  avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the holder of this Warrant against material impairment.

     17. Assignment.  Subject to the terms hereof and compliance with applicable
federal and state securities laws, this Warrant may be transferred by the Holder
with  respect to any or all of the Warrant  Shares then  purchasable  hereunder.
Upon surrender of this Warrant to the Company, together with a properly endorsed
notice of transfer (an "Assignment  Form"),  for transfer of this Warrant in its
entirety  by the  Holder,  the  Company  shall  issue a new  warrant of the same
denomination to the designated transferee. Upon surrender of this Warrant to the
Company,  together with a properly  endorsed  Assignment Form, by the Holder for
transfer  with  respect  to a portion of the  Warrant  Shares  then  purchasable
hereunder,  the Company shall issue a new warrant to the designated  transferee,
in such denomination as shall be requested by the Holder hereof, and shall issue
to such Holder a new warrant covering the number of Warrant Shares in respect of
which this Warrant shall not have been  transferred.  In addition to, and not in
limitation of, the foregoing, a Holder that is a corporation, a partnership or a
limited  liability  company,  may  distribute any portion of this Warrant to its
respective  shareholders,  partners or members.  Unless and until the provisions
for  assignment  set forth herein have been fully complied with, the Company may
treat the last  registered  Holder as the absolute owner of this Warrant for all
purposes, notwithstanding any notice to the contrary.

     18.  Limitation  on  Exercise.  Notwithstanding  anything  to the  contrary
contained  herein,  the number of shares of Common Stock that may be acquired by
the Holder upon any  exercise of this Warrant (or  otherwise in respect  hereof)
shall be limited to the extent necessary to insure that, following such exercise
(or  other  issuance),   the  total  number  of  shares  of  Common  Stock  then
beneficially owned by such Holder and its affiliates and any other persons whose
beneficial  ownership of Common Stock would be aggregated  with the Holder's for
purposes of Section  13(d) of the  Exchange  Act,  does not exceed  9.99% of the
total number of issued and  outstanding  shares of Common Stock  (including  for
such purpose the shares of Common Stock issuable upon such  exercise).  For such
purposes,  beneficial  ownership  shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations  promulgated thereunder.
Each delivery of an Exercise Notice  hereunder will constitute a  representation
by the Holder that it has evaluated the  limitation  set forth in this paragraph
and determined  that issuance of the full number of Warrant Shares  requested in
such Exercise Notice is permitted under this paragraph. This provision shall not
restrict  the number of shares of Common  Stock  which a Holder  may  receive or
beneficially  own in  order to  determine  the  amount  of  securities  or other
consideration  that such  Holder  may  receive in the event of a merger or other
business  combination or reclassification  involving the Company as contemplated
in Section 3 of this Warrant.  By written notice to the Company,  the Holder may
waive the  provisions  of this Section but any such waiver will not be effective
until the 61st day after such notice is delivered to the Company.

                                       8
<PAGE>

         IN WITNESS WHEREOF, the Company and the Holder have caused this Warrant
to be executed on their behalf by one of their officers thereunto duly
authorized.

                                        Phase III Medical, Inc.

                                        By:

                                        Name:

                                        Title:

                                       9
<PAGE>

                                   APPENDIX A

                               NOTICE OF EXERCISE

To:______[Company]

1._______The undersigned hereby irrevocably elects to purchase [_____] shares of
Common Stock of [Company] pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full, by [cash,
certified check/wire transfer, or surrender of the originally executed Warrant]
[select the applicable method of payment].

2._______Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name or names as are specified
below:

==============================
               (Name)

------------------------------
               (Address)

------------------------------
(Signature)

------------------------------
(Date)

3._______Please issue a new Warrant of equivalent form and tenor for the
unexercised portion of the attached Warrant in the name of the undersigned or in
such other name as is specified below:

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

Date: ________________________________

(Warrantholder) ______________________

Name: (Print) ________________________

By:___________________________________

<PAGE>

                                   APPENDIX B

                            Net Issue Election Notice

To: [Company]

Date:[_________________________]

         The undersigned hereby elects under Section 1(c) of this Warrant to
surrender the right to purchase [____________] shares of Common Stock pursuant
to this Warrant and hereby requests the issuance of [_____________] shares of
Common Stock. The certificate(s) for the shares issuable upon such net issue
election shall be issued in the name of the undersigned or as otherwise
indicated below.

-----------------------------------------
Signature

-----------------------------------------
Name for Registration

-----------------------------------------
Mailing AddressExhibit 10.4

                               COMPANY LETTERHEAD

May 26, 2006

Dr. Robin L. Smith 930 Fifth Avenue
Suite 8H
New York, New York 10021

Dear Robin:

         We are delighted to present this letter agreement (the "Agreement"),
setting out the terms of your employment with Phase III Medical, Inc. (the
"Company") as Chairman of the Board and Chief Executive Officer. If these terms
are acceptable, please sign and date the copy of this letter provided herewith
and return it to the Company at your first convenience. If you accept the terms
offered herein, this Agreement shall be deemed to be effective (the "Effective
Date") on the later of May 16, 2006 or immediately after the close of the
current financing of at least $2 million with Duncan Capital (the current
financing effort which is seeking at least $2 million but up to $3.75 million in
financing is referred to as the "Duncan Financing"). If the aforementioned
financing of at least $2 million is not closed by June 14, 2006, this letter
agreement shall be void and of no effect whatsoever.

1. Employment.

         You will be employed by the Company as Chief Executive Officer. As
Chief Executive Officer you will have overall responsibility for all aspects of
the Company's business. You will report directly to the Board of the Directors
of the Company (the "Board") and shall have such duties and responsibilities
consistent with such position as shall, from time to time, be delegated or
assigned to you by the Board. You will also serve as Chairman of the Board.

         During the Term, as defined below, you shall devote your best efforts,
energy and skill to the services of the Company and the promotion of its
interests and not take part in activities detrimental to the best interests of
the Company.

2. Term.

         The term of this Agreement shall continue for a period of two (2) years
following the Effective Date, unless earlier terminated as provided herein, and
shall be automatically renewed for successive one (1) year terms unless the
Company or you provide written notice of its or your determination not to renew
this Agreement at least sixty (60) days prior to the expiration of the then
current term (the "Term"). In the event of a determination by you or the Company
not to renew this Agreement based upon Good Reason (as defined below)or Without
Cause (as defined below), as the case may be, the Company shall pay to you the
Base Salary (as defined below) for a period of three months following the end of
the Term.

<PAGE>

3. Base Salary.

         In consideration for your services under this Agreement, you shall be
paid an annual base salary ("Base Salary") of One Hundred and Eighty Thousand
Dollars ($180,000), which amount shall increase to Two Hundred Thirty-Six
Thousand Dollars ($236,000) on the first year anniversary of the Effective Date;
provided, however, that if after the Effective Date, the Company raises an
aggregate of at least $5,000,000 in one or a series of equity and/or debt
financings (which financings commence after completion of the Duncan Financing),
the Base Salary shall be increased to Two Hundred Seventy-Five Thousand Dollars
($275,000). After the second year anniversary of the Effective Date, and on an
annual basis thereafter, the Base Salary shall be reviewed by the Board and any
increase to the Base Salary shall be determined by the Board based on your
performance and the Company's overall performance. The Base Salary shall be paid
to you in accordance with the Company's standard payroll practices, but not less
than monthly.

4. Annual Bonus.

         You shall be eligible to receive an annual bonus in an amount
determined by the Board in its sole discretion, based on your performance.

5. Benefits; Perquisites; Reimbursement of Expenses.

         In addition to those payments set forth above, you shall be entitled to
the following benefits and payments:

                  (a) Employee Benefit Plans Generally. The Company shall
         provide medical insurance to you, your spouse and your dependents, and
         provide you disability insurance, on terms satisfactory to you. You
         shall be entitled to participate in all other employee benefit plans
         which the Company provides or may establish from time to time for the
         benefit of its senior executives.

                  (b) Vacation. You shall be entitled to six weeks paid vacation
         in addition to Company holidays. Any vacation time not used during a
         calendar year will be forfeited without compensation.

                  (c) Perquisites and Reimbursement of Expenses. You shall be
         entitled to a car allowance of $1,000 per month, all other perquisites
         offered to senior executives of the Company, including, but not limited
         to, payment or reimbursement for cell phone, blackberry and internet
         service and free life time storage of stem cells. In addition, you
         shall be entitled to reimbursement for all ordinary and reasonable
         out-of-pocket business expenses which are incurred by you in
         furtherance of the Company's business, in accordance with the policies
         adopted from time to time by the Company. You shall submit to the
         Company not less than once a calendar quarter reports of such expenses
         and other disbursements in the form normally used by the Company.

                  (d) Insurance. You shall be covered by a Directors and
         Officers Liability Insurance policy that generally covers the directors
         and officers of the Company, provided by the Company at its expense.
         The Company shall, at your option, either (i) obtain and maintain
         $2,000,000 of variable life insurance with an insurance company of your
         choice or (ii) reimburse you or pay directly the monthly payments for
         an insurance policy you currently own not to exceed $1200 per month.
         You shall cooperate in all respects with the Company's efforts to
         obtain and maintain key person life insurance on your life.

                                        2
<PAGE>

                  (e) Legal Fees. The Company shall reimburse you for reasonable
         legal fees incurred by you to in connection with the negotiation and
         drafting of this Agreement.

                  (f) Indemnification. You shall be entitled through the Term of
         your employment with the Company to the benefit of the indemnification
         provisions contained on the date hereof in the Company's By-Laws as the
         same may hereafter be amended, and of any indemnification provisions
         that may hereafter be added to the Company's Certificate of
         Incorporation (not including any amendments or additions that limit or
         narrow, but including any that add to or broaden, the protection
         afforded to you by those provisions), to the extent permitted by
         applicable law at the time of the assertion of any liability against
         you.

6. Stock and Options.

         You shall be eligible to receive annual equity incentive grants under
the Company's 2003 Equity Incentive Plan (the "Plan") or any other to plan
adopted by the Board. In addition, on the Effective Date you shall receive under
the Plan:

                  (a) Stock. Two Million (2,000,000) shares of the Company's
         common stock (the "Shares"). The Shares are included in the Company's
         registration statement on Form S-8; and

                  (b) Options. Ten (10) year reload options (with reload subject
         to availability of shares under the Plan as it may be amended from time
         to time) to purchase Five Million Four Hundred Thousand (5,400,000)
         shares of the Company's common stock (the "Option Shares"), which
         options shall be exercisable on a cashless basis and shall vest as to
         Three Million (3,000,000) Option Shares immediately, One Million Two
         Hundred Thousand (1,200,0000) Option Shares on the first anniversary of
         the Effective Date and One Million Two Hundred Thousand (1,200,0000)
         Option Shares on the second anniversary of the Effective Date. The
         exercise price of the options shall be (i) $.053 as to the first
         1,000,000 Option Shares, (ii) $.08 as to the second 1,000,000 Option
         Shares, (iii) $.10 as to the third 1,000,000 Option Shares, (iv) $.16
         as to the next 1,200,000 Option Shares, and (v) $.25 as to the balance.
         The Option Shares are included in the Company's registration statement
         on Form S-8.

         All share and option issuances are subject to your execution of the
Company's Insider Trading Policy. In addition, you acknowledge that in your
position, you will be an "affiliate" of the Company for purposes of federal
securities laws and your shares and transfer of your shares will be treated as
such.

7. Termination.

                  (a) Termination of Your Employment due to Death or Disability.
         Your employment with the Company shall terminate as of the date of your
         death or the date you are determined to be "Disabled," as defined
         below. Upon such termination, the following shall apply:

                                       3
<PAGE>

                           (i) The Company shall pay to you or your estate, as
                  the case may be, all amounts due and owing as of the date of
                  termination.

                           (ii) If you or your eligible spouse and dependents
                  timely elect health care continuation coverage ("COBRA
                  Coverage"), the Company shall pay the monthly premiums for
                  such coverage for the duration of the applicable COBRA
                  Coverage period.

                           (iii) All of your stock options which have vested as
                  of the termination date shall remain exercisable by you or
                  your estate, as the case may be, for 48 months following the
                  termination date, but not beyond the original 10 year term of
                  the options.

         For these purposes, you shall be considered to be "Disabled" if you are
unable to perform the substantial functions of your position for one hundred
eighty (180) consecutive days or more in a twelve (12) month period, unless a
greater period is required by law. A determination of disability shall be made
jointly by a physician of your choice and a physician of the Company's choice.
If both physicians cannot agree on whether you are Disabled, a third physician
chosen by the first two shall make the final and binding determination.

                  (b) Termination of Your Employment by the Company Without
         Cause or Voluntary Termination by You With Good Reason. If the Company
         terminates your employment without Cause or if you terminate your
         employment with Good Reason the following shall apply:

                           (i) The Company shall pay to you the Base Salary for
                  a period equal to the greater of the balance of the Term or
                  one (1) year following the date of such termination (the
                  "Severance Period"). You shall be under no obligation to
                  secure alternative employment during the Severance Period, and
                  payment of the Base Salary shall be made without regard to any
                  subsequent employment you may obtain.

                           (ii) The Company shall also pay you a bonus equal to
                  the last annual bonus you received multiplied by a fraction,
                  the numerator of which shall be the number of days in the
                  calendar year elapsed as of the termination date and the
                  denominator of which shall be 365.

                           (iii) If you or your eligible spouse and dependents
                  timely elect COBRA Coverage, the Company shall pay the monthly
                  premiums for such coverage during the Severance Period;
                  provided that, if you are entitled to coverage under a
                  subsequent employer's group health insurance plan during the
                  Severance Period, payment of such premiums shall cease.

                           (iv) All of your stock options which have vested as
                  of the termination date plus any additional options that would
                  have vested during the twelve (12) month period following such
                  date (which additional options shall become immediately and
                  fully vested as of the termination date) shall remain
                  exercisable for 48 months following such date but not beyond
                  the original 10 year term of the options.

                                       4
<PAGE>

         (c) Termination of Your Employment by the Company With Cause or by You
Without Good Reason. The Company may terminate your employment with Cause or you
may resign at any time. In such case, you shall be paid all amounts due for
services rendered under this Agreement up until the termination date.
Thereafter, no further payments shall be made to you under this Agreement. All
stock options granted to you hereunder or under any other agreement that are
fully vested as of the date of your termination shall remain exercisable for
ninety (90) days from the termination date. If you dispute the grounds for your
termination, your vested options will remain exercisable until ninety (90) day
after the date the dispute is resolved. All unvested options shall be forfeited.

         (d) Cause. As used herein, "Cause" means that you have:

                  (i)      committed gross negligence in connection with your
                           duties as set forth herein or otherwise with respect
                           to the business and affairs of the Company, which
                           gross negligence has a material adverse effect on the
                           business of the Company or your ability to perform
                           your duties under this Agreement;

                  (ii)     committed fraud in connection with your duties as set
                           forth herein or otherwise with respect to the
                           business and affairs of the Company;

                  (iii)    engaged in "willful misconduct" with respect to the
                           business and affairs of the Company. For purposes of
                           this Agreement, "willful misconduct" means misconduct
                           committed with actual knowledge that your actions
                           violate directions and instructions of the Board,
                           which directions and instructions are legal and
                           consistent with the Agreement; or

                  (iv)     been found by a court of competent jurisdiction to
                           have committed or plead guilty to an unlawful act
                           whether or not related to the business of the Company
                           if the commission of such act has a material adverse
                           effect either on (a) your ability to perform your
                           duties under the Agreement or (b) the reputation and
                           goodwill of the Company.

         "Cause" shall be found only by a majority of the full Board and only
         after you have received notice from the Board, have had an opportunity
         to discuss the issues with the Board, have had an opportunity to be
         heard generally and through counsel, and have been given a thirty (30)
         day period to cure, where cure is feasible.

                                       5
<PAGE>

         (e) Good Reason. As used herein, "Good Reason" means that:

                  (i) the Company has materially breached this Agreement;

                  (ii)     you are removed or not appointed as a member the
                           Board;

                  (iii)    the Company fails to acquire the assignment of this
                           Agreement by an acquiring entity;

                  (iv)     your position has been materially reduced or you have
                           been assigned duties that are materially inconsistent
                           with your duties as set forth herein or which
                           materially impair your ability to perform the
                           services contemplated hereunder; or

                  (v)      the Company relocates its offices outside of a fifty
                           (50) mile radius of New York City.

         Termination for Good Reason may occur only after you have given the
         Board notice and thirty (30) day period to cure, where cure is
         feasible.

8. Change in Control.

         (a) Subject to the provisions of this Section 8, the vesting of your
options upon a Change of Control shall be governed by the terms of this
Agreement, the Plans and your option agreements, but in no event shall less than
75% of your then unvested stock options become immediately vested and
exercisable.

         (b) Voluntary Termination by You After a Change in Control Without Good
Reason. If you voluntarily terminate your employment following the effective
date of the Change in Control the following shall apply:

                  (i) The Company shall pay to you the Base Salary for a period
         of one (1) year following the date of such termination (the "Change in
         Control Severance Period"). You shall be under no obligation to secure
         alternative employment during the Change in Control Severance Period,
         and payment of the Base Salary shall be made without regard to any
         subsequent employment you may obtain;

                  (ii) The Company shall also pay you a bonus equal to the last
         annual bonus you received multiplied by a fraction, the numerator of
         which shall be the number of days in the calendar year elapsed as of
         the termination date and the denominator of which shall be 365. Should
         the Company revise its compensation schedule, you will be paid a
         pro-rata bonus as reasonably determined under the compensation system
         then in place;

                  (iii) If you or your eligible spouse and dependents timely
         elect COBRA Coverage, the Company shall pay the monthly premiums for
         such coverage during the Change in Control Severance Period; provided
         that, if you elect coverage under a subsequent employer's group health
         insurance plan during the Change in Control Severance Period, payment
         of such premiums shall cease; and

                                       6
<PAGE>

                  (iv) All of your stock options which have vested as of the
         termination date plus any additional options that would have vested
         during the twelve (12) month period following such date (which
         additional options shall become immediately and fully vested as of the
         termination date) shall remain exercisable for 48 months following such
         date but not beyond the original 10 year term of the options.

         (c) If you voluntarily terminate your employment after a Change in
Control with Good Reason, then Paragraph 7(c) shall apply in lieu of Paragraph
8(b).

         (d) Notwithstanding anything contained herein to the contrary, the
Company may reduce the payments set forth in this Section 8 to the extent such
payments, when added to other payments made pursuant to this Agreement,
constitute a "parachute payment" as defined in Section 280(G) of the Internal
Revenue Code of 1986, as amended.

         (e) Change in Control Defined. A Change in Control shall be deemed to
have occurred if:

         (i)      there is a consolidation or merger of the Company, whether or
                  not the Company is the continuing or surviving corporation;
                  if, after such merger or consolidation shareholders of the
                  Company immediately prior to such merger or consolidation hold
                  less than 50% of the voting stock of the surviving entity;

         (ii)     there is a sale or transfer of all or substantially all of the
                  assets of the Company in one or a series of transactions or
                  there is a complete liquidation or dissolution of the Company;
                  or

         (iii)    any individual or entity or group acting in concert and
                  affiliates thereof, acquires, directly or indirectly, more
                  than 50% of the outstanding shares of voting stock of the
                  Company; provided that this subsection (iii) shall not apply
                  to an underwritten public offering of the Company's
                  securities.

         (f) The Company shall not be required to make the payments and provide
the benefits specified in Sections 7 or 8 of this letter agreement unless you or
your estate, as applicable, has executed and delivered to the Company (and does
not revoke) a general release in a form reasonably satisfactory and mutually
agreeable to you and the Company (the "Release"). The Release shall include,
without limitation, a general release of the Company, its affiliates and
subsidiaries and their respective officers, directors, managers, members,
shareholders, partners, employees, agents and other related parties (the
"Releasees") from all liability (excluding the Company's obligations to pay and
provide the post-termination payments and benefits described in Sections 7 or 8
hereof, as applicable), a covenant not to sue the Releasees and such other terms
deemed reasonably necessary by the Company for its protection.

                                       7
<PAGE>

9. Confidentiality/Noncompetition.

         (a) During the term of your employment and for an additional period of
two years after you are no longer employed by the Company, you will not reveal,
divulge or make known to any individual, partnership, joint venture, corporation
or other business entity (other than the Company or its affiliates) or use for
your own account any customer lists, trade secrets or any confidential
information of any kind ("Protected Information") used by the Company or any of
its commonly controlled affiliates in the conduct of the Company's business and
made known to you by reason of your employment with the Company or any of its
affiliates (whether or not developed, devised or otherwise created in whole or
in part by your efforts), and upon termination of the Term you will deliver to
the Company any material relating to any Protected Information that you have
received during your employment with the Company; provided, that Protected
Information shall not include information that shall become known to the public
or the trade without violation of this Section 9(a); and provided, further, that
you shall not violate this Section 9(a) if Protected Information is disclosed by
you at the direction of the Company or if you are required to provide Protected
Information in any legal proceeding or by order of any court.

         (b) During the term of your employment, you will not, directly or
indirectly, engage in a Competitive Business, including owning or controlling an
interest in (except as a passive investor owning less than five percent (5%) of
the equity securities of a publicly-owned company), or acting as director,
officer or employee of, or consultant to, any individual, partnership, joint
venture, corporation or other business entity known to you to be engaged in a
Competitive Business. "Competitive Business" shall mean the collection or
storage of stem cells or any other business which comprises a substantial
portion of the Company's operations or Board approved planned operations during
the Term of your employment; provided, however, that notwithstanding the
aforesaid, you shall not be prohibited from acting in any of the aforesaid
capacities for or with respect to any subsidiary, division, affiliate or unit
(each, a "Unit") of an entity if that Unit itself is not engaged in a
Competitive Business, irrespective of whether some other Unit of such entity
engages in such competition (as long as you do not engage in a Competitive
Business for such other Unit); and provided further that you will not be
restricted from continuing to act in any capacity for and receiving compensation
from those companies with which you currently have understandings, arrangements,
agreements or commitments or from engaging in any activities for such industry
organizations or charitable foundations as you may desire.

         (c) You acknowledge that the provisions of this Section 9 are
reasonable and necessary for the protection of the Company and that each
provision, and the period or periods of time and types and scope of restrictions
on the activities specified herein are, and are intended to be divisible. In the
event that any provision of this Agreement, including any sentence, clause or
part hereof, shall be deemed contrary to law or invalid or unenforceable in any
respect by a court of competent jurisdiction, the remaining provisions shall not
be affected, but shall, subject to the discretion of such court, remain in full
force and effect and any invalid and unenforceable provisions shall be deemed,
without further action on the part of the parties hereto, modified, amended and
limited to the extent necessary to render the same valid and enforceable.

                                       8
<PAGE>
10. Section 409A.

         All payments of "nonqualified deferred compensation" (within the
meaning of Section 409A of the Internal Revenue Code of 1986, as amended
("Section 409A")) are intended to comply with the requirements of Section 409A,
and shall be interpreted in accordance therewith. Unless otherwise expressly
provided, any payment of compensation by the Company to you, whether pursuant to
this Agreement or otherwise, shall be made within two and one-half months (2
1/2) months after the end of the calendar year in which your right to such
payment vests (for purposes of Section 409A). Neither party may accelerate any
such deferred payment, except in compliance with Section 409A, and no amount
shall be paid prior to the earliest date on which it is permitted to be paid
under Section 409A. Notwithstanding anything herein to the contrary no amendment
may be made to this Agreement if it would cause the Agreement or any payment
hereunder not to be in compliance with Section 409A.

11. Miscellaneous Provisions.

         (a) Notices. All notices and other communications hereunder between you
and the Company shall be in writing, shall be addressed to the receiving party's
address of record (or to such other address as a party may designate by notice
hereunder), and shall be either (i) delivered by hand, (ii) made by telecopy,
(iii) sent by overnight courier, or (iv) sent by certified mail, return receipt
requested, postage prepaid.

         (b) Modifications and Amendments. The terms and provisions of this
Agreement may be modified or amended only by written agreement executed by the
parties hereto.

         (c) Source of Payment. All payments provided for in this Agreement
shall be paid in cash from the general funds of the Company. The Company shall
not be required to establish a special or separate fund or other segregation of
assets to assure such payments.

         (d) Waivers and Consents. The terms and provisions of this Agreement
may be waived, or consent for the departure there from granted, only by written
document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.

         (e) Assignment. This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributes, devisees and legatees. This
Agreement may not be assigned or pledged by you. In the event of the merger or
consolidation of the Company (whether or not the Company is the surviving or
resulting corporation), the transfer of all or substantially all the assets of
the Company, or the voluntary or involuntary dissolution of the Company, the
surviving or resulting corporation or the transferee or transferees of the
Company's assets shall be bound by this and the Company shall take all actions
necessary to ensure that such corporation, transferee or transferees assume and
are bound by its provisions.

                                       9
<PAGE>

         (f) Severability. The parties intend this Agreement to be enforced as
written. However, if any portion or provision of this Agreement shall to any
extent be declared illegal or unenforceable by a duly authorized court of proper
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.

         (g) Choice of Law. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed by the law
of the State of New York, without giving effect to the conflict of law
principles thereof.

         (h) Entire Agreement; Termination of Prior Agreements; Exceptions. This
Agreement constitutes the entire agreement of the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings
of the parties hereto, oral or written, with respect to the subject matter
hereof. The Advisory Board Agreement dated September 14, 2005, as supplemented
and extended including by way of a Supplement to Advisory Agreement dated as of
January 18, 2006, shall be deemed terminated and null and void except as
follows: (1) vesting of the 240,000 warrants granted pursuant to the Advisory
Board Agreement shall be accelerated so that the warrants are fully vested as of
the Effective Date, (2) the Executive shall receive $103,000 in cash and 1
million shares of the Company's restricted Common Stock upon the initial closing
of the Duncan Financing (3) if an aggregate of at least $3 million dollars is
raised and/or other debt or equity financings in accordance with the Advisory
Board Agreement prior to August 15, 2006, the Executive shall receive an
additional payment of $50,000, and (4) all registration rights provisions of the
Advisory Board Agreement shall continue in full force and effect.

         (i) Acknowledgments. You hereby acknowledge and warrant that (i) you
have the legal capacity to execute and perform this Agreement, and have
knowingly and voluntarily entered into this Agreement; (ii) you have been
advised that your interests may be different from the Company's interests, (iii)
you have been afforded a reasonable opportunity to review this Agreement, to
understand its terms and to discuss it with an attorney and/or financial advisor
of your choice, (iv) this Agreement is a valid and binding agreement enforceable
against you according to its terms and (v) the execution and performance of this
Agreement does not violate the terms of any existing agreement or understanding
to which you are a party or by which you are bound.

         (j) Arbitration. Any dispute or controversy between you and the
Company, arising out of or relating to this Agreement or the breach of this
Agreement, shall be settled by arbitration administered by the American
Arbitration Association ("AAA") in accordance with its Employment Disputes
Arbitration Rules then in effect, and judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. Any
arbitration shall be held before a single arbitrator who shall be selected by
the mutual agreement of you and the Company, unless the parties are unable to
agree to an arbitrator, in which case, the arbitrator will be selected under the
procedures of the AAA. The arbitrator shall have the authority to award any
remedy or relief that a court of competent jurisdiction could order or grant,
including, without limitation, the issuance of an injunction. However, either
party may, without inconsistency with this arbitration provision, apply to any
court having jurisdiction over such dispute or controversy and seek interim
provisional, injunctive or other equitable relief until the arbitration award is
rendered or the controversy is otherwise resolved. Except as necessary in court
proceedings to enforce this arbitration provision or an award rendered
hereunder, to obtain interim relief, as required by law, or the party's
immediate family and legal and financial advisors, neither a party nor an
arbitrator may disclose the existence, content or results of any arbitration
hereunder without the prior written consent of you and the Company. The
non-prevailing party shall pay all costs and fees associated with such
arbitration, including all arbitration fees, the arbitrator's fees, attorneys'
fees and all costs.

                                       10
<PAGE>

         If the terms of this Agreement are acceptable to you please sign where
         indicated below. It is understood and acknowledged that a fax signature
         will be considered to be valid as an original.

                                       Very truly yours,

                                       PHASE III MEDICAL, INC.

                                       By:  ________________________________
                                                Name:
                                                Title:

Agreed to and accepted:

--------------------------------
Robin L. Smith, M.D.

                                       11

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