Salary Accrual and Stock Payment Agreement between Catherine M. Vaczy and Phase III Medical, Inc.

Summary

This agreement between Catherine M. Vaczy and Phase III Medical, Inc. confirms that Ms. Vaczy will stop accruing 50% of her salary as of October 1, 2005, and will instead receive her full salary in cash from that date forward. For the period from April 20, 2005, to September 30, 2005, the accrued portion of her salary will be paid in shares of the company's common stock, with the share price determined by the stock's closing price on specified dates. Both parties reaffirm the terms of a prior Stock Purchase Agreement regarding these shares.

EX-10.7 10 a4952796ex107.txt EXHIBIT 10.7 Exhibit 10.7 Catherine M. Vaczy 140 East 28th Street #11C New York, New York 10016 Phase III Medical, Inc. 330 South Service Road Suite 120 Melville, New York 11747 Attention: Mark Weinreb, President & CEO August 12, 2005 Dear Mark: As you know, pursuant to the terms of my employment agreement with Phase III Medical, Inc. (the "Company") dated April 20, 2005 (the "Employment Agreement"), I have been accruing my salary as to 50% since April 20, 2005. This letter is being written to confirm our agreement, as approved by the Board at their meeting yesterday, that (i) I will cease to accrue salary as of October 1, 2005 and will as of that date begin to receive payment of my salary solely in cash in accordance with the Company's standard payroll practices, and (ii) I will accept in payment of my salary accruing during the period that commenced on April 20, 2005 and will end on September 30, 2005, shares (the "Shares") of the common stock, $.001 par value (the "Common Stock") of the Company. With respect to the portion of my salary that has accrued from April 20, 2005 through August 12, 2005, the price per share will be $.06, the closing price of the Common Stock today. For the portion of my salary that will accrue from August 13, 2005 through September 30, 2005, the price per share will be the closing price of the Common Stock on September 30, 2005. By signing this agreement, you and I each reaffirm the representations made by each of us in the Stock Purchase Agreement dated April 20, 2005 and agree that the Shares are being sold pursuant to the rights and conditions contained therein, including the right to registration of the Shares. Please acknowledge your agreement with the foregoing by countersigning this letter agreement as provided below. Very truly yours, /s/ Catherine M. Vaczy Catherine M. Vaczy Accepted and agreed: Phase III Medical, Inc. By: /s/ Mark Weinreb Mark Weinreb, President and CEO