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Exhibit 10.1

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is made and entered into as of
April 21, 2009 by and [between][among] Pharmos Corporation , a Nevada
corporation (the “Company”), [and] [________] (the “Indemnitee”)[, and
[________], an investment fund affiliated with the Indemnitee (the “Indemnified
Fund”)].
 
WHEREAS, highly competent persons have become more reluctant to serve
corporations as directors, officers or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of their
service to and activities on behalf of the corporation;
 
WHEREAS, the Board of Directors of the Company (the “Board”) has determined
that, in order to attract and retain qualified individuals, the Company will
attempt to maintain on an ongoing basis, at its sole expense, liability
insurance to protect persons serving the Company and its subsidiaries from
certain liabilities.  Although the furnishing of such insurance has been a
customary and widespread practice among United States-based corporations and
other business enterprises, the Company believes that, given current market
conditions and trends, such insurance may be available to it in the future only
at higher premiums and with more exclusions.  At the same time, directors,
officers, and other persons in service to corporations or business enterprises
are being increasingly subjected to expensive and time-consuming litigation
relating to, among other things, matters that traditionally would have been
brought only against the Company or business enterprise itself.  The articles of
incorporation and the bylaws of the Company require indemnification of the
officers and directors of the Company.  The Indemnitee may also be entitled to
indemnification pursuant to the General Corporation Law of the State of Nevada
(“NGCL”).  The articles of incorporation and the NGCL expressly provide that the
indemnification provisions set forth therein are not exclusive, and thereby
contemplate that contracts may be entered into between the Company and members
of the board of directors, officers and other persons with respect to
indemnification;
 
WHEREAS, the uncertainties relating to such insurance and to indemnification
have increased the difficulty of attracting and retaining such persons;
 
WHEREAS, the Board has determined that the increased difficulty in attracting
and retaining such persons is detrimental to the best interests of the Company's
stockholders and that the Company should act to assure such persons that there
will be increased certainty of such protection in the future;
 
WHEREAS, it is reasonable, prudent and necessary for the Company contractually
to obligate itself to indemnify, and to advance expenses on behalf of, such
persons [and certain affiliates of such persons ]to the fullest extent permitted
by applicable law so that they will serve or continue to serve the Company free
from undue concern that they will not be so indemnified;
 
WHEREAS, this Agreement is a supplement to and in furtherance of the articles of
incorporation and the bylaws of the Company and any resolutions adopted pursuant
thereto, and shall not be deemed a substitute therefor, nor to diminish or
abrogate any rights of the Indemnitee thereunder; and
 

 
 

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WHEREAS, the Indemnitee does not regard the protection available under the
Company's articles of incorporation, bylaws and insurance as adequate in the
present circumstances, and may not be willing to serve as a director without
adequate protection, and the Company desires the Indemnitee to serve in such
capacity.  The Indemnitee is willing to serve, continue to serve and to take on
additional service for or on behalf of the Company on the condition that [(i)
]he be so indemnified[ and (ii) the Indemnified Fund and certain of its
affiliates also be so indemnified].
 
NOW, THEREFORE, in consideration of the Indemnitee’s agreement to serve as a
director after the date hereof, the parties hereto agree as follows:
 
1.           Indemnity of Indemnitee.  The Company hereby agrees to hold
harmless and indemnify the Indemnitee to the fullest extent permitted by law, as
such may be amended from time to time.  In furtherance of the foregoing
indemnification, and without limiting the generality thereof:
 
(a)           Proceedings Other Than Proceedings by or in the Right of the
Company.  The Indemnitee shall be entitled to the rights of indemnification
provided in this Section l(a) if, by reason of his Corporate Status (as
hereinafter defined), the Indemnitee is, or is threatened to be made, a party to
or participant in any Proceeding (as hereinafter defined) other than a
Proceeding by or in the right of the Company.  Pursuant to this Section 1(a),
the Indemnitee shall be indemnified against all Expenses (as hereinafter
defined), judgments, penalties, fines and amounts paid in settlement actually
and reasonably incurred by him, or on his behalf, in connection with such
Proceeding or any claim, issue or matter therein, if the Indemnitee acted in
good faith and in a manner the Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, and with respect to any criminal
Proceeding, had no reasonable cause to believe the Indemnitee’s conduct was
unlawful.
 
(b)           Proceedings by or in the Right of the Company.  The Indemnitee
shall be entitled to the rights of indemnification provided in this Section 1(b)
if, by reason of his Corporate Status, the Indemnitee is, or is threatened to be
made, a party to or participant in any Proceeding brought by or in the right of
the Company.  Pursuant to this Section 1(b), the Indemnitee shall be indemnified
against all Expenses actually and reasonably incurred by the Indemnitee, or on
the Indemnitee’s behalf, in connection with such Proceeding if the Indemnitee
acted in good faith and in a manner the Indemnitee reasonably believed to be in
or not opposed to the best interests of the Company; provided, however, if
applicable law so provides, no indemnification against such Expenses shall be
made in respect of any claim, issue or matter in such Proceeding as to which the
Indemnitee shall have been adjudged to be liable to the Company with respect to
the matter claimed for indemnification unless and to the extent that the
appropriate courts  of the State of Nevada shall determine that such
indemnification may be made.
 
(c)           Indemnification for Expenses of a Party Who is Successful on the
Merits or Otherwise.  Notwithstanding any other provision of this Agreement, to
the extent that the Indemnitee is, by reason of his Corporate Status, a party to
and is successful, on the merits or otherwise, in any Proceeding, he shall be
indemnified to the maximum extent permitted by law, as such may be amended from
time to time, against all Expenses actually and reasonably incurred by him or on
his behalf in connection therewith.  If the Indemnitee is not wholly successful
in such Proceeding but is successful, on the merits or otherwise, as to one or
more but
 

 
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less than all claims, issues or matters in such Proceeding, the Company shall
indemnify the Indemnitee against all Expenses actually and reasonably incurred
by him or on his behalf in connection with each successfully resolved claim,
issue or matter.  For purposes of this Section 1(c) and without limitation, the
termination of any claim, issue or matter in such a Proceeding by dismissal,
with or without prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.
 
2.           Additional Indemnity.  In addition to, and without regard to any
limitations on, the indemnification provided for in Section 1 of this Agreement,
the Company shall and hereby does indemnify and hold harmless the Indemnitee
against all Expenses, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by him or on his behalf if, by reason of his
Corporate Status, he is, or is threatened to be made, a party to or participant
in any Proceeding (including, without limitation, a Proceeding by or in the
right of the Company), including, without limitation, all liability arising out
of the negligence or active or passive wrongdoing of the Indemnitee.  The only
limitation that shall exist upon the Company’s obligations pursuant to this
Agreement shall be that the Company shall not be obligated to make any payment
to the Indemnitee that is finally determined (under the procedures, and subject
to the presumptions, set forth in Sections 6 and 7 of this Agreement) to be
unlawful.
 
3.           Contribution.
 
(a)           Whether or not the indemnification provided in Sections 1 and 2 of
this Agreement is available, in respect of any threatened, pending or completed
action, suit or proceeding in which the Company is jointly liable with the
Indemnitee (or would be if joined in such action, suit or proceeding), the
Company shall pay, in the first instance, the entire amount of any judgment or
settlement of such action, suit or proceeding without requiring the Indemnitee
to contribute to such payment and the Company hereby waives and relinquishes any
right of contribution it may have against the Indemnitee.  The Company shall not
enter into any settlement of any action, suit or proceeding in which the Company
is jointly liable with the Indemnitee (or would be if joined in such action,
suit or proceeding) unless such settlement provides for a full and final release
of all claims asserted against the Indemnitee.
 
(b)           Without diminishing or impairing the obligations of the Company
set forth in the preceding subparagraph, if, for any reason, the Indemnitee
shall elect or be required to pay all or any portion of any judgment or
settlement in any threatened, pending or completed action, suit or proceeding in
which the Company is jointly liable with the Indemnitee (or would be if joined
in such action, suit or proceeding), the Company shall contribute to the amount
of expenses (including, without limitation, attorneys’ fees and disbursements),
judgments, fines and amounts paid in settlement actually and reasonably incurred
and paid or payable by the Indemnitee in proportion to the relative benefits
received by the Company and all officers, directors or employees of the Company,
other than the Indemnitee, who are jointly liable with the Indemnitee (or would
be if joined in such action, suit or proceeding), on the one hand, and the
Indemnitee, on the other hand, from the transaction from which such action, suit
or proceeding arose; provided, however, that the proportion determined on the
basis of relative benefit may, to the extent necessary to conform to law, be
further adjusted by reference to the relative fault of the Company and all
officers, directors or employees of the Company other than the Indemnitee who
are jointly liable with the Indemnitee (or would be if joined in such action,
suit or proceeding), on the one hand, and the Indemnitee, on the other hand, in
connection with
 

 
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the events that resulted in such expenses, judgments, fines or settlement
amounts, as well as any other equitable considerations which the Law may require
to be considered.  The relative fault of the Company and all officers, directors
or employees of the Company, other than the Indemnitee, who are jointly liable
with the Indemnitee (or would be if joined in such action, suit or proceeding),
on the one hand, and the Indemnitee, on the other hand, shall be determined by
reference to, among other things, the degree to which their actions were
motivated by intent to gain personal profit or advantage, the degree to which
their liability is primary or secondary and the degree to which their conduct is
active or passive.
 
(c)           The Company hereby agrees to fully indemnify and hold the
Indemnitee harmless from any claims of contribution which may be brought by
officers, directors or employees of the Company, other than the Indemnitee, who
may be jointly liable with the Indemnitee.
 
(d)           To the fullest extent permissible under applicable law, if the
indemnification provided for in this Agreement is unavailable to the Indemnitee
for any reason whatsoever, the Company, in lieu of indemnifying the Indemnitee,
shall contribute to the amount incurred by the Indemnitee, whether for
judgments, fines, penalties, excise taxes, amounts paid or to be paid in
settlement and/or for Expenses, in connection with any claim relating to an
indemnifiable event under this Agreement, in such proportion as is deemed fair
and reasonable in light of all of the circumstances of such Proceeding in order
to reflect (i) the relative benefits received by the Company and the Indemnitee
as a result of the event(s) and/or transaction(s) giving cause to such
Proceeding and/or (ii) the relative fault of the Company (and its directors,
officers, employees and agents) and the Indemnitee in connection with such
event(s) and/or transaction(s).
 
4.           Indemnification for Expenses of a Witness or in Response to a
Subpoena.  Notwithstanding any other provision of this Agreement, to the extent
that (i) the Indemnitee, by reason of his Corporate Status, is a witness, or
receives a subpoena, in any Proceeding to which the Indemnitee is not a party,
the Indemnitee shall be indemnified against all Expenses paid or incurred by the
Indemnitee in connection therewith and in the manner set forth in this
Agreement, and (ii) any Indemnified Fund Party (as hereinafter defined), by
reason of the Indemnitee’s Corporate Status or any Indemnified Fund Party’s
Corporate Status, is a witness, or receives a subpoena, in any proceeding to
which such Indemnified Fund Party is not a party, the Indemnified Fund Party
shall be indemnified against all Expenses paid or incurred by it in connection
therewith and in the manner set forth in this Agreement.
 
5.           Advancement of Expenses.  Notwithstanding any other provision of
this Agreement, the Company shall advance all Expenses incurred by or on behalf
of the Indemnitee in connection with any Proceeding by reason of his Corporate
Status within thirty (30) days after the receipt by the Company of a statement
or statements from the Indemnitee requesting such advance or advances from time
to time, whether prior to or after final disposition of such Proceeding.  Such
statement or statements shall reasonably evidence the Expenses incurred by the
Indemnitee and shall include or be preceded or accompanied by an undertaking by
or on behalf of the Indemnitee to repay any Expenses advanced if it shall
ultimately be determined that the Indemnitee is not entitled to be indemnified
against such Expenses.  Any advances and undertakings to repay pursuant to this
Section 5 shall be unsecured and interest free and made without regard to the
Indemnitee’s ability to repay such advances.
 

 
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6.           Procedures and Presumptions for Determination of Entitlement to
Indemnification.  It is the intent of this Agreement to secure for the
Indemnitee rights of indemnity that are as favorable as may be permitted under
the NGCL and public policy of the State of Nevada.  Accordingly, the parties
agree that the following procedures and presumptions shall apply in the event of
any question as to whether the Indemnitee is entitled to indemnification under
this Agreement:
 
(a)           To obtain indemnification under this Agreement, the Indemnitee
shall submit to the Company a written request, including therein or therewith
such documentation and information as is reasonably available to the Indemnitee
and is reasonably necessary to determine whether and to what extent the
Indemnitee is entitled to indemnification.  The Secretary of the Company shall,
promptly upon receipt of such a request for indemnification, advise the Board in
writing that the Indemnitee has requested indemnification.
 
(b)           Upon written request by the Indemnitee for indemnification
pursuant to the first sentence of Section 6(a) of this Agreement, a
determination, if required by applicable law, with respect to the Indemnitee’s
entitlement thereto shall be made in the specific case by one of the following
four methods, which shall be at the election of the board: (i) by a majority
vote of the Disinterested Directors (as hereinafter defined), even though less
than a quorum; (ii) by a majority vote of a committee of Disinterested Directors
designated by a majority vote of the Disinterested Directors, even though less
than a quorum; (iii) if there are no Disinterested Directors or if the
Disinterested Directors so direct, by Independent Counsel (as hereinafter
defined) in a written opinion to the Board, a copy of which shall be delivered
to the Indemnitee; or (iv) if so directed by the Board, by the stockholders of
the Company.
 
(c)           If the determination of entitlement to indemnification is to be
made by Independent Counsel pursuant to Section 6(b) of this Agreement, the
Independent Counsel shall be selected as provided in this Section 6(c).  The
Independent Counsel shall be selected by the Board.  The Indemnitee may, within
ten (10) days after such written notice of selection shall have been given,
deliver to the Company, as the case may be, a written objection to such
selection; provided, however, that such objection may be asserted only on the
ground that the Independent Counsel so selected does not meet the requirements
of “Independent Counsel” as defined in this Agreement, and the objection shall
set forth with particularity the factual basis of such assertion.  Absent a
proper and timely objection, the person so selected shall act as Independent
Counsel.  If a reasonable written objection is made, the Independent Counsel
selected may not serve as Independent Counsel unless and until such objection is
withdrawn or a court has determined that such objection is without merit.  If,
within twenty (20) days after submission by the Indemnitee of a written request
for indemnification pursuant to Section 6(a) of this Agreement, no Independent
Counsel shall have been selected and not objected to, either the Company or the
Indemnitee may petition the appropriate courts of the State of Nevada or other
court of competent jurisdiction for resolution of any objection which shall have
been made by the Indemnitee to the Company’s selection of Independent Counsel
and/or for the appointment as Independent Counsel of a person selected by the
court or by such other person as the court shall designate, and the person with
respect to whom all objections are so resolved or the person so appointed shall
act as Independent Counsel under Section 6(b) of this Agreement.  The Company
shall pay any and all reasonable fees and expenses of Independent Counsel
incurred by such Independent Counsel in connection with acting pursuant to
Section 6(b) of this Agreement, and the Company shall pay all reasonable fees
and expenses incident to the procedures of this
 

 
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Section 6(c), regardless of the manner in which such Independent Counsel was
selected or appointed.
 
(d)           In making a determination with respect to entitlement to
indemnification hereunder, the person or persons or entity making such
determination shall presume that the Indemnitee is entitled to indemnification
under this Agreement.  Anyone seeking to overcome this presumption shall have
the burden of proof and the burden of persuasion by clear and convincing
evidence.  Neither the failure of the Company (including by its directors or
Independent Counsel) to have made a determination prior to the commencement of
any action pursuant to this Agreement that indemnification is proper in the
circumstances because the Indemnitee has met the applicable standard of conduct,
nor an actual determination by the Company (including by its directors or
Independent Counsel) that the Indemnitee has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
Indemnitee has not met the applicable standard of conduct.
 
(e)           The Indemnitee shall be deemed to have acted in good faith if the
Indemnitee’s action is based on: (i) the records or books of account of the
Enterprise (as hereinafter defined) (including, without limitation, financial
statements); (ii) information supplied to the Indemnitee by the officers of the
Enterprise in the course of their duties; (iii) the advice of legal counsel for
the Enterprise; or (iv) information or records given or reports made to the
Enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Enterprise.  In addition, the
knowledge and/or actions, or failure to act, of any director, officer, agent or
employee of the Enterprise shall not be imputed to the Indemnitee for purposes
of determining the right to indemnification under this Agreement.  Whether or
not the foregoing provisions of this Section 6(e) are satisfied, it shall in any
event be presumed that the Indemnitee has at all times acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the Company.  Anyone seeking to overcome this presumption shall have the
burden of proof and the burden of persuasion by clear and convincing evidence.
 
(f)           If the person, persons or entity empowered or selected under this
Section 6 to determine whether the Indemnitee is entitled to indemnification
shall not have made a determination within sixty (60) days after receipt by the
Company of the request therefor, the requisite determination of entitlement to
indemnification shall be deemed to have been made and the Indemnitee shall be
entitled to such indemnification absent (i) a misstatement by the Indemnitee of
a material fact, or an omission of a material fact necessary to make the
Indemnitee’s statement not materially misleading, in connection with the request
for indemnification or (ii) a prohibition of such indemnification under
applicable law; provided, however, that such 60-day period may be extended for a
reasonable time, not to exceed an additional thirty (30) days, if the person,
persons or entity making such determination with respect to entitlement to
indemnification in good faith requires such additional time to obtain or
evaluate documentation and/or information relating thereto; and provided,
further, that the foregoing provisions of this Section 6(f) shall not apply if
the determination of entitlement to indemnification is to be made by the
stockholders pursuant to item (iv) of Section 6(b) of this Agreement and if (A)
within fifteen (15) days after receipt by the Company of the request for such
determination, the Board or the Disinterested Directors, if appropriate, resolve
to submit such determination to the stockholders for their consideration at an
annual meeting thereof to be held within seventy-five (75) days after such
receipt and such determination is made thereat, or (B) a special meeting of
stockholders is called within fifteen (15) days after such receipt for the
 

 
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purpose of making such determination, such meeting is held for such purpose
within sixty (60) days after having been so called and such determination is
made thereat.
 
(g)           The Indemnitee shall cooperate with the person, persons or entity
making such determination with respect to the Indemnitee’s entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to the Indemnitee and reasonably necessary to such determination.  Any
Independent Counsel, member of the Board or stockholder of the Company shall act
reasonably and in good faith in making a determination regarding the
Indemnitee’s entitlement to indemnification under this Agreement.  Any costs or
expenses (including, without limitation, attorneys’ fees and disbursements)
incurred by the Indemnitee in so cooperating with the person, persons or entity
making such determination shall be borne by the Company (irrespective of the
determination as to the Indemnitee’s entitlement to indemnification) and the
Company hereby indemnifies and agrees to hold the Indemnitee harmless therefrom.
 
(h)           The Company acknowledges that a settlement or other disposition
short of final judgment may be successful if it permits a party to avoid
expense, delay, distraction, disruption and uncertainty.  In the event that any
action, claim or proceeding to which the Indemnitee is a party is resolved in
any manner other than by adverse judgment against the Indemnitee (including,
without limitation, settlement of such action, claim or proceeding with or
without payment of money or other consideration) it shall be presumed that the
Indemnitee has been successful on the merits or otherwise in such action, suit
or proceeding.  Anyone seeking to overcome this presumption shall have the
burden of proof and the burden of persuasion by clear and convincing evidence.
 
(i)           The termination of any Proceeding or of any claim, issue or matter
therein, by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not (except as otherwise expressly provided
in this Agreement) of itself adversely affect the right of the Indemnitee to
indemnification or create a presumption that the Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that the Indemnitee had reasonable cause to believe that his conduct was
unlawful.
 
7.           Remedies of Indemnitee.
 
(a)           In the event that (i) a determination is made pursuant to Section
6 of this Agreement that the Indemnitee is not entitled to indemnification under
this Agreement, (ii) advancement of Expenses is not timely made pursuant to
Section 5 of this Agreement, (iii) no determination of entitlement to
indemnification is made pursuant to Section 6(b) of this Agreement within ninety
(90) days after receipt by the Company of the request for indemnification, (iv)
payment of indemnification is not made pursuant to this Agreement within ten
(10) days after receipt by the Company of a written request therefor or (v)
payment of indemnification is not made within ten (10) days after a
determination has been made that the Indemnitee is entitled to indemnification
or such determination is deemed to have been made pursuant to Section 6 of this
Agreement, the Indemnitee shall be entitled to an adjudication in an appropriate
court of the State of Nevada, or in any other court of competent jurisdiction,
of the Indemnitee’s entitlement to such indemnification.  The Indemnitee shall
commence such
 

 
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proceeding seeking adjudication within one (1) year following the date on which
the Indemnitee first has the right to commence such proceeding pursuant to this
Section 7(a).  The Company shall not oppose the Indemnitee’s right to seek any
such adjudication.
 
(b)           In the event that a determination shall have been made pursuant to
Section 6(b) of this Agreement that the Indemnitee is not entitled to
indemnification, any judicial proceeding commenced pursuant to this Section 7
shall be conducted in all respects as a de novo trial on the merits, and the
Indemnitee shall not be prejudiced by reason of the adverse determination under
Section 6(b) of this Agreement.
 
(c)           If a determination shall have been made pursuant to Section 6(b)
of this Agreement that the Indemnitee is entitled to indemnification, the
Company shall be bound by such determination in any judicial proceeding
commenced pursuant to this Section 7, absent (i) a misstatement by the
Indemnitee of a material fact, or an omission of a material fact necessary to
make the Indemnitee’s misstatement not materially misleading in connection with
the application for indemnification, or (ii) a prohibition of such
indemnification under applicable law.
 
(d)           In the event that the Indemnitee, pursuant to this Section 7,
seeks a judicial adjudication of his rights under, or to recover damages for
breach of, this Agreement, or to recover under any directors’ and officers’
liability insurance policies maintained by the Company, the Company shall pay on
his behalf, in advance, any and all expenses (of the types described in the
definition of Expenses in this Agreement) actually and reasonably incurred by
him in such judicial adjudication, regardless of whether the Indemnitee
ultimately is determined to be entitled to such indemnification, advancement of
expenses or insurance recovery.
 
(e)           The Company shall be precluded from asserting in any judicial
proceeding commenced pursuant to this Section 7 that the procedures and
presumptions of this Agreement are not valid, binding and enforceable and shall
stipulate in any such court that the Company is bound by all the provisions of
this Agreement.  The Company shall indemnify the Indemnitee against any and all
Expenses and, if requested by the Indemnitee, shall (within ten (10) days after
receipt by the Company of a written request therefore) advance, to the extent
not prohibited by law, such expenses to the Indemnitee, which are incurred by
the Indemnitee in connection with any action brought by the Indemnitee for
indemnification or advance of Expenses from the Company under this Agreement or
under any directors' and officers' liability insurance policies maintained by
the Company, regardless of whether the Indemnitee ultimately is determined to be
entitled to such indemnification, advancement of Expenses or insurance recovery,
as the case may be.
 
(f)           Notwithstanding anything in this Agreement to the contrary, no
determination as to entitlement to indemnification under this Agreement shall be
required to be made prior to the final disposition of the Proceeding.
 
8.           Non-Exclusivity; Survival of Rights; Insurance; Subrogation.
 
(a)           The rights of indemnification as provided by this Agreement shall
not be deemed exclusive of any other rights to which the Indemnitee may at any
time be entitled
 

 
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under applicable law, the articles of incorporation and the bylaws of the
Company, any agreement, a vote of stockholders, a resolution of directors or
otherwise.  No amendment, alteration or repeal of this Agreement or of any
provision hereof shall limit or restrict any right of the Indemnitee under this
Agreement in respect of any action taken or omitted by the Indemnitee in his
Corporate Status prior to such amendment, alteration or repeal.  To the extent
that a change in the NGCL, whether by statute or judicial decision, permits
greater indemnification than would be afforded currently under the articles of
incorporation and the bylaws of the Company and this Agreement, it is the intent
of the parties hereto that the Indemnitee shall enjoy by this Agreement the
greater benefits so afforded by such change.  No right or remedy herein
conferred is intended to be exclusive of any other right or remedy, and every
other right and remedy shall be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise.  The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
right or remedy.
 
(b)           To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, employees, or
agents or fiduciaries of the Company or of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise that such person
serves at the request of the Company, the Company shall obtain coverage for the
Indemnitee under such policy or policies in accordance with its or their terms
to the maximum extent of the coverage available for any director, officer,
employee, agent or fiduciary under such policy or policies.  If, at the time of
the receipt of a notice of a claim pursuant to the terms hereof, the Company has
director and officer liability insurance in effect, the Company shall give
prompt notice of the commencement of such proceeding to the insurers in
accordance with the procedures set forth in the respective policies.  The
Company shall thereafter take all necessary or desirable action to cause such
insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of
such proceeding in accordance with the terms of such policies.
 
(c)           [The Company hereby acknowledges that the Indemnitee has certain
rights to indemnification, advancement of expenses and/or insurance provided by
the Indemnified Fund and certain of its affiliates (collectively, the “Fund
Indemnitors”).  The Company hereby agrees that it: (i) is the indemnitor of
first resort (i.e., its obligations to the Indemnitee are primary and any
obligation of the Fund Indemnitors to advance expenses or to provide
indemnification for the same expenses or liabilities incurred by the Indemnitee
are secondary); (ii) shall be required to advance the full amount of expenses
incurred by the Indemnitee and shall be liable for the full amount of all
Expenses, judgments, penalties, fines and amounts paid in settlement to the
extent legally permitted and as required by the terms of this Agreement and the
articles of incorporation and the bylaws of the Company (or any other agreement
between the Company and the Indemnitee), without regard to any rights the
Indemnitee may have against the Fund Indemnitors; and (iii) irrevocably waives,
relinquishes and releases the Fund Indemnitors from any and all claims against
the Fund Indemnitors for contribution, subrogation or any other recovery of any
kind in respect thereof.  The Company further agrees that no advancement or
payment by the Fund Indemnitors on behalf of the Indemnitee with respect to any
claim for which the Indemnitee has sought indemnification from the Company shall
affect the foregoing and that the Fund Indemnitors shall have a right of
contribution and/or be subrogated to the extent of such advancement or payment
to all of the
 

 
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rights of recovery of the Indemnitee against the Company.  The Company and the
Indemnitee agree that the Fund Indemnitors are express third party beneficiaries
of this Section 8(c).]
 
(d)           [Except as provided in Section 8(c) of this Agreement, i][I]n the
event of any payment under this Agreement, the Company shall be subrogated to
the extent of such payment to all of the rights of recovery of the Indemnitee,
who shall execute all papers required and take all action necessary to secure
such rights, including execution of such documents as are necessary to enable
the Company to bring suit to enforce such rights.
 
(e)           [Except as provided in Section 8(c) of this Agreement, t][T]he
Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable hereunder if and to the extent that the Indemnitee has
otherwise actually received such payment under any insurance policy, contract,
agreement or otherwise.
 
(f)           [Except as provided in Section 8(c) of this Agreement, t][T]he
Company's obligation to indemnify or advance Expenses hereunder to the
Indemnitee who is or was serving at the request of the Company as a director,
officer, employee or agent of any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise shall be reduced by any amount
the Indemnitee has actually received as indemnification or advancement of
expenses from such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise.
 
9.           Exception to Right of Indemnification. Notwithstanding any
provision in this Agreement, the Company shall not be obligated under this
Agreement to make any indemnity in connection with any claim made against the
Indemnitee:
 
(a)           for which payment has actually been made to or on behalf of the
Indemnitee under any insurance policy or other indemnity provision, except with
respect to any excess beyond the amount paid under any insurance policy or other
indemnity provision[ or as provided in Section 8(c) of this Agreement]; or
 
(b)           for an accounting of profits made from the purchase and sale (or
sale and purchase) by the Indemnitee of Company securities pursuant to Section
16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions
of state statutory law or common law; or
 
(c)           in connection with any Proceeding (or any part of any Proceeding)
initiated by the Indemnitee (including, without limitation, any Proceeding (or
any part of any Proceeding) initiated by the Indemnitee against the Company or
its directors, officers, employees or other indemnitees), unless (i) the Board
authorized the Proceeding (or any part of any Proceeding) prior to its
initiation or (ii) the Company provides the indemnification, in its sole
discretion, pursuant to the powers vested in the Company under applicable law.
 
10.           [Indemnity of Indemnified Fund.  The Company shall indemnify each
of the Indemnified Fund and its affiliates, general and limited partners,
employees and representatives (each, an “Indemnified Fund Party”) and hold each
Indemnified Fund Party harmless from and against any and all Expenses,
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by or on behalf of such Indemnified Fund Party in
 

 
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connection with any Proceeding, any similar proceeding by reason of any
Indemnified Fund Party’s Corporate Status or any claim, issue or matter therein;
provided, however, that the Company shall not be responsible to an Indemnified
Fund Party with respect to any amounts payable pursuant to this Section 10 to
the extent that a court of competent jurisdiction shall have determined by a
final judgment not subject to further appeal that such amounts payable resulted
from actions taken or omitted to be taken by such Indemnified Fund Party due to
such Indemnified Fund Party’s gross negligence, bad faith or willful
misconduct.  The Company shall advance all Expenses reasonably incurred by or on
behalf of such Indemnified Fund Party in connection therewith within thirty (30)
days after the receipt by the Company of a statement or statements from such
Indemnified Fund Party requesting such advance payment or payments from time to
time so long as such Indemnified Fund Party has delivered to the Company a
written undertaking pursuant to which such Indemnified Fund Party agrees to
return all advanced amounts in the event it is ultimately determined that such
Indemnified Fund Party is not entitled to indemnification under this Section
10.  The foregoing arrangements shall be in addition to any rights that any
Indemnified Fund Party may have under law or otherwise.]
 
11.           Duration of Agreement.  All agreements and obligations of the
Company contained herein shall continue during the period the Indemnitee is a
director of the Company (or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise) and shall continue thereafter for (i) an
additional three (3) years or (ii) so long as the Indemnitee shall be subject to
any Proceeding (or any proceeding commenced under Section 7 of this Agreement)
by reason of his Corporate Status, whether or not he is acting or serving in any
such capacity at the time any liability or expense is incurred for which
indemnification can be provided under this Agreement, whichever such additional
term is longer.  This Agreement shall be binding upon and inure to the benefit
of and be enforceable by the parties hereto and their respective successors
(including, without limitation, any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
or assets of the Company), assigns, spouses, heirs, executors and personal and
legal representatives.
 
12.           Security.  To the extent requested by the Indemnitee and approved
by the Board, the Company may at any time and from time to time provide security
to the Indemnitee for the Company’s obligations hereunder through an irrevocable
bank line of credit, funded trust or other collateral.  Any such security, once
provided to the Indemnitee, may not be revoked or released without the prior
written consent of the Indemnitee.
 
13.           Enforcement.
 
(a)           The Company expressly confirms and agrees that it has entered into
this Agreement and assumes the obligations imposed on it hereby in order to
induce the Indemnitee to serve as a director of the Company, and the Company
acknowledges that the Indemnitee is relying upon this Agreement in serving as a
director of the Company.
 
(b)           This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral, written and implied, between the
parties hereto with respect to the subject matter hereof.
 
14.           Definitions.  For purposes of this Agreement:
 

 
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(a)           “Corporate Status” means the status of a person who is or was a
director, officer, employee, agent or fiduciary of or consultant to the Company
or of any other corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise that such person is or was serving at the express
written request of the Company.
 
(b)           “Disinterested Director” means a director of the Company who is
not and was not a party to the Proceeding in respect of which indemnification is
sought by the Indemnitee.
 
(c)           “Enterprise” means the Company and any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
that the Indemnitee is or was serving at the express written request of the
Company as a director, officer, employee, agent or fiduciary.
 
(d)           “Expenses” means all reasonable attorneys’ fees, retainers, court
costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, participating, or being or preparing to be a
witness in a Proceeding.  Expenses also shall include Expenses incurred in
connection with any appeal resulting from any Proceeding (including, without
limitation) the premium, security for, and other costs relating to any cost
bond, supersede as bond, or other appeal bond or its equivalent).  Expenses,
however, shall not include amounts paid in settlement by the Indemnitee or the
amount of judgments or fines against the Indemnitee.
 
(e)           “Independent Counsel” means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and neither presently is, nor
in the past five (5) years has been, retained to represent (i) the Company or
the Indemnitee in any matter material to either such party (other than with
respect to matters concerning the Indemnitee under this Agreement, or of other
indemnitees under similar indemnification agreements), or (ii) any other party
to the Proceeding giving rise to a claim for indemnification
hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall
not include any person who, under the applicable standards of professional
conduct then prevailing, would have a conflict of interest in representing
either the Company or the Indemnitee in an action to determine the Indemnitee’s
rights under this Agreement.  The Company agrees to pay the reasonable fees of
the Independent Counsel referred to above and to fully indemnify such counsel
against any and all Expenses, claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant hereto.
 
(f)           “Proceeding” means any threatened, pending or completed action,
suit, arbitration, alternate dispute resolution mechanism, investigation,
inquiry, administrative hearing or any other actual, threatened or completed
proceeding, whether brought by or in the right of the Company or otherwise and
whether civil, criminal, administrative or investigative, in which the
Indemnitee was, is or will be involved as a party or otherwise, by reason of the
fact that the Indemnitee is or was an officer or director of the Company, by
reason of any action taken by him or of any inaction on his part while acting as
an officer or director of the Company, or by reason of the fact that he is or
was serving at the request of the Company as a director,
 

 
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officer, employee, agent or fiduciary of another corporation, partnership, joint
venture, trust or other Enterprise; in each case whether or not he is acting or
serving in any such capacity at the time any liability or expense is incurred
for which indemnification can be provided under this Agreement; but excluding
any such proceeding initiated by the Indemnitee pursuant to Section 7 of this
Agreement to enforce his rights under this Agreement.
 
15.           Severability.  The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.  Without limiting the generality of the foregoing, this Agreement is
intended to confer upon the Indemnitee indemnification rights to the fullest
extent permitted by applicable laws.  In the event any provision hereof
conflicts with any applicable law, such provision shall be deemed modified,
consistent with the aforementioned intent, to the extent necessary to resolve
such conflict.
 
16.           Modification and Waiver.  No supplement, modification, termination
or amendment of this Agreement shall be binding unless executed in writing by
both of the parties hereto.  No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.
 
17.           Notice By Indemnitee[ or Indemnified Fund].  The Indemnitee
[agrees][ and the Indemnified Fund each agree] promptly to notify the Company in
writing upon being served with or otherwise receiving any summons, citation,
subpoena, complaint, indictment, information or other document relating to any
Proceeding or matter which may be subject to indemnification covered
hereunder.  The failure to so notify the Company shall not relieve the Company
of any obligation which it may have to the Indemnitee[ or any Indemnified Fund
Party] under this Agreement or otherwise unless and only to the extent that such
failure or delay materially prejudices the Company.
 
18.           Notices.  All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed effectively
given: (a) upon personal delivery to the party to be notified; (b) when sent by
confirmed electronic mail or facsimile if sent during normal business hours of
the recipient, and if not so confirmed, then on the next business day; (c) five
(5) days after having been sent by registered or certified mail, return receipt
requested, postage prepaid; or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt.  All communications shall be sent:
 
To the Indemnitee, at the address set forth on the signature page hereto.
 
[To the Indemnified Fund, at the address set forth on the signature page
hereto.]
 
To the Company, at:
 
Pharmos Corporation
99 Wood Avenue South, Suite 311
Iselin, New Jersey 08830
Attention: President and Chief Financial Officer
 

 
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or to such other address as may have been furnished to the Indemnitee by the
Company or to the Company by the Indemnitee, as the case may be.
 
19.           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.  This Agreement may also
be executed and delivered by facsimile signature and in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
 
20.           Headings.  The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
 
21.           Governing Law and Consent to Jurisdiction.  This Agreement and the
legal relations among the parties shall be governed by, and construed and
enforced in accordance with, the laws of the State of Nevada, without regard to
its conflict of laws rules. The parties hereto hereby irrevocably and
unconditionally: (a) agree that any action or proceeding arising out of or in
connection with this Agreement shall be brought only in the appropriate courts
of the State of Nevada (the “Nevada Court”), and not in any other state or
federal court in the United States of America or any court in any other country;
(b) consent to submit to the exclusive jurisdiction of the Nevada Court for
purposes of any action or proceeding arising out of or in connection with this
Agreement; (c) appoint, to the extent such party is not otherwise subject to
service of process in the State of Nevada, irrevocably National Corporate
Research, Ltd., 202 South Minnesota Street, Carson City, NV 89703 as its agent
in the State of Nevada as such party’s agent for acceptance of legal process in
connection with any such action or proceeding against such party with the same
legal force and validity as if served upon such party personally within the
State of Nevada; (d) waive any objection to the laying of venue of any such
action or proceeding in the Nevada Court; and (e) waive, and agree not to plead
or to make, any claim that any such action or proceeding brought in the Nevada
Court has been brought in an improper or inconvenient forum.  The Company shall
provide National Corporate Research Ltd. with a current mailing address for the
Indemnitee and bear the cost of engaging National Corporate Research Ltd. to act
as agent for service of process for the Indemnitee.
 
[SIGNATURE PAGE FOLLOWS]
 

 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of
the day and year first above written.
 
COMPANY:

PHARMOS CORPORATION

By:                                                                      
Name:                                                                      
Title:

INDEMNITEE:

______________________________________
[________]

Address:
[________]

[INDEMNIFIED FUND:

[________]

By:                                                                      
Name:                                                                      
Title:

Address:
[________]]

[Signature page to Director Indemnification Agreement]