Exhibit 10(o)

PHARMOS CORPORATION
AMENDED AND RESTATED 2000 STOCK OPTION PLAN
(December 2004)

SECTION 1.   ESTABLISHMENT AND PURPOSE.

                The purpose of the Plan is to offer selected individuals an
opportunity to acquire a proprietary interest in the success of the Company, or
to increase such interest, through the granting of Options to purchase Shares of
the Company’s Stock, restricted Stock Awards and Stock Units. Options granted
under the Plan may include Nonstatutory Options as well as ISOs intended to
qualify under Section 422 of the Code.

                Capitalized terms are defined in Section 12.

SECTION 2.   ADMINISTRATION.

                (a)   Committees of the Board of Directors.  The Plan may be
administered by one or more Committees. Each Committee shall consist of one or
more members of the Board of Directors who have been appointed by the Board of
Directors. Each Committee shall have such authority and be responsible for such
functions as the Board of Directors has assigned to it. If no Committee has been
appointed, the entire Board of Directors shall administer the Plan. Any
reference to the Board of Directors in the Plan shall be construed as a
reference to the Committee (if any) to whom the Board of Directors has assigned
a particular function.

                (b)   Authority of the Board of Directors.  Subject to the
provisions of the Plan, the Board of Directors shall have full authority and
discretion to take any actions it deems necessary or advisable for the
administration of the Plan. All decisions, interpretations and other actions of
the Board of Directors shall be final and binding on all Awardees and Optionees
and all persons deriving their rights from an Awardee or Optionee.

SECTION 3.   ELIGIBILITY.

                Only Employees, Outside Directors and Consultants shall be
eligible for the grant of Options, Awards or the direct award or sale of Shares.
Only Employees shall be eligible for the grant of ISOs. In addition to other
provisions of the Plan, the provisions of Section 14 of the Plan shall govern
Awards to Employees and Directors who are residents of the State of Israel.

SECTION 4.   STOCK SUBJECT TO PLAN.

                (a)   Basic Limitation.  Shares offered under the Plan may be
authorized but unissued Shares or treasury Shares. The aggregate number of
Shares that may be issued under the Plan (either directly or upon exercise of
Options or other rights to acquire Shares) shall not exceed 6,000,000 Shares,
subject to adjustment pursuant to Section 8. The number of Shares that are
subject to Options or other rights outstanding at any time under the Plan shall
not exceed the number of Shares that then remain available for issuance under
the Plan. The Company, during the term of the Plan, shall at all times reserve
and keep available sufficient Shares to satisfy the requirements of the Plan.

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                (b)   Additional Shares.  In the event that any outstanding
Option or other right for any reason expires or is canceled or otherwise
terminated, the Shares allocable to the unexercised portion of such Option or
other right shall again be available for the purposes of the Plan. In the event
that Shares issued under the Plan are reacquired by the Company pursuant to any
forfeiture provision, right of repurchase or right of first refusal, such Shares
shall again be available for the purposes of the Plan, except that the aggregate
number of Shares which may be issued upon the exercise of ISOs shall in no event
exceed 6,000,000 Shares (subject to adjustment pursuant to Section 8).

SECTION 5.   TERMS AND CONDITIONS OF OPTIONS.

                (a)   Stock Option Agreement.   Each grant of an Option under
the Plan shall be evidenced by a Stock Option Agreement between the Optionee and
the Company. Such Option shall be subject to all applicable terms and conditions
of the Plan and may be subject to any other terms and conditions which are not
inconsistent with the Plan and which the Board of Directors deems appropriate
for inclusion in a Stock Option Agreement. The provisions of the various Stock
Option Agreements entered into under the Plan need not be identical.

                (b)   Number of Shares   Each Stock Option Agreement shall
specify the number of Shares that are subject to the Option. The Stock Option
Agreement shall also specify whether the Option is an ISO or a Nonstatutory
Option.

                (c)   Exercise Price.   Each Stock Option Agreement shall
specify the Exercise Price. The Exercise Price under any Option shall be
determined by the Board of Directors at its sole discretion, subject to the
following limitations: (i) the Exercise Price of an ISO shall not be less than
100% of the Fair Market Value of a Share on the date of grant (110% for an ISO
granted to a Greater Than Ten-Percent Stockholder) and (ii) in no event may the
Exercise Price of any Option be less than the par value of a Share.

                (d)   Special Rule for Incentive Options. For those Options not
covered by the trust arrangements provided in Section 14 and consistent with
Section 422 of the Code and any regulations, notices or other official
pronouncements of general applicability, to the extent the aggregate Fair Market
Value (as of the time the Option is granted) of the Shares of Stock with respect
to which ISOs are exercisable for the first time by an Optionee during any
calendar year (under all plans of his employer corporation and its Parent and
Subsidiary corporations) exceeds $100,000, such Options shall not be treated as
ISO’s. Nothing in this special rule shall be construed as limiting the
exercisability of any Option, unless the Stock Option Agreement expressly
provides for such a limitation.

                (e)   Withholding Taxes. For those Options not covered by the
trust provisions of Section 14, as a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Board of Directors may require for
the satisfaction of any federal, state, local or foreign withholding tax
obligations (“Taxes”) that may arise in connection with such exercise. The
Optionee shall also make such arrangements as the Board of Directors may require
for the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with the disposition of Shares acquired
by exercising an Option.

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                (f)   Exercisability. Each Stock Option Agreement shall specify
the date when all or any installment of the Option is to become exercisable. The
exercisability provisions of any Stock Option Agreement shall be determined by
the Board of Directors at its sole discretion.

                (g)   Basic Term. The Stock Option Agreement shall specify the
term of the Option. The term shall not exceed 10 years from the date of grant
(five years, in the case of an ISO granted to a Greater Than Ten-Percent
Stockholder). Subject to the preceding sentence, the Board of Directors at its
sole discretion shall determine when an Option is to expire. A Stock Option
Agreement may provide for expiration prior to the end of its term in the event
of the termination of Optionee’s Service or death or any other circumstances.

                (h)   Nontransferability. No Option may be transferred other
than by will or by the laws of descent and distribution, and during the lifetime
of the Optionee may be exercised only by the Optionee or by the Optionee’s
guardian or legal representative; provided, however, that an Option that is not
an ISO may be otherwise transferred to the extent, if any, permitted by the
Board of Directors.

                (i)   No Rights as a Stockholder. Neither an Optionee nor in the
case of an Israeli Option, the Trustee, or in either case a transferee of an
Optionee, shall have any rights as a stockholder with respect to any Shares
covered by the Optionee’s Option until such Shares are issued pursuant to the
terms of such Option.

                (j)   Modification and Extension of Options. Within the
limitations of the Plan, the Board of Directors may modify or extend Options.
The foregoing notwithstanding, no modification of an Option shall, without the
consent of the Optionee, impair the Optionee’s rights or increase the Optionee’s
obligations under such Option.

                (k)   Substitution of Options. The Board of Directors may grant
Options under the Plan in substitution for options held by employees of another
corporation who concurrently become employees of the Company or a Parent or
Subsidiary as the result of a merger or consolidation of the employing
corporation with the Company or a Parent or Subsidiary, or as the result of the
acquisition by the Company of property or stock of the employing corporation.
The Company may direct that substitute awards be granted on such terms and
conditions as the Board of Director considers appropriate in the circumstances.

                (l)   Restrictions on Transfer of Shares and Minimum Vesting.
Any Shares issued upon exercise of an Option shall be subject to such special
forfeiture conditions, rights of repurchase, rights of first refusal and other
transfer restrictions as the Board of Directors may determine. Such restrictions
shall be set forth in the applicable Stock Option Agreement and shall apply in
addition to any restrictions that may apply to holders of Shares generally.

SECTION 6.   PAYMENT FOR SHARES.

                (a)   General Rule. The entire Exercise Price of Shares issued
under the Plan shall be payable, at the time when such Option is exercised, in
cash or cash equivalents payable to the order of the Company, except as
otherwise provided in this Section 6.

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                (b)   Surrender of Stock. For Options that are not Israeli
Options, unless a Stock Option Agreement otherwise provides, all or any part of
the Exercise Price may be paid by surrendering, or attesting to the ownership
of, Shares that are already owned by the Optionee. Such Shares shall be
surrendered to the Company in good form for transfer and shall be valued at
their Fair Market Value on the date when the Option is exercised. The Optionee
shall not surrender, or attest to the ownership of, Shares in payment of the
Exercise Price if such action would cause the Company to recognize compensation
expense (or additional compensation expense) with respect to the Option for
financial reporting purposes.

                (c)   Promissory Note.  Unless a Stock Option Agreement
otherwise provides, all or a portion of the Exercise Price of Shares issued
under the Plan may be paid with a full-recourse promissory note (provided that
the Optionee is an Employee of the Company). The Shares shall be pledged as
security for payment of the principal amount of the promissory note and interest
thereon. The interest rate payable under the terms of the promissory note shall
not be less than the minimum rate (if any) required to avoid the imputation of
additional interest under the Code. Subject to the foregoing, the Board of
Directors (at its sole discretion) shall specify the term, interest rate,
amortization requirements (if any) and other provisions of such note.

                (d)   Exercise/Sale.  Unless a Stock Option Agreement otherwise
provides (or if otherwise approved by the Board of Directors), and if Stock is
publicly traded, payment may be made all or in part by the delivery (on a form
prescribed by the Company) of an irrevocable direction to a securities broker
approved by the Company to sell Shares and to deliver all or part of the sales
proceeds to the Company in payment of all or part of the Exercise Price and any
withholding taxes.

                (e)   Exercise/Pledge.  Unless a Stock Option Agreement
otherwise provides (or if otherwise approved by the Board of Directors), and if
Stock is publicly traded, payment may be made all or in part by the delivery (on
a form prescribed by the Company) of an irrevocable direction of the Optionee,
or in the case of an Israeli Option, of the Trustee, to pledge Shares to a
securities broker or lender approved by the Company, as security for a loan, and
to deliver all or part of the loan proceeds to the Company in payment of all or
part of the Exercise Price and any withholding taxes.

SECTION 7.   RESTRICTED STOCK AND STOCK UNITS.

                (a)   Grants.  Subject to the other applicable provisions of the
Plan, the Board of Directors may grant Restricted Stock Awards or Stock Units to
Awardees in such amounts and for such consideration, including no consideration
or such minimum consideration as may be required by law, as it determines. Such
Awards shall be made pursuant to a Grant Agreement, and shall be subject to all
applicable terms and conditions of the Plan and may be subject to any other
terms and conditions which are not inconsistent with the Plan and which the
Board of Directors deems appropriate for inclusion in the Grant Agreement. The
provisions of the various Grant Agreements entered into under the Plan need not
be identical.

                (b)   Terms and Conditions. A Restricted Stock Award entitles
the recipient to acquire shares of Stock and a Stock Unit Award entitles the
recipient to be paid the Fair Market Value of

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the Stock on the exercise date. Stock Units may be settled in Stock, cash or a
combination thereof, as determined by the Board of Directors. Restricted Stock
Awards and Stock Unit Awards are subject to vesting periods and other
restrictions and conditions as the Board of Directors may include in the Grant
Agreement.

                (c)   Restricted Stock Awards.

                              (i)  The Grant Agreement for each Restricted Stock
Award shall specify the applicable restrictions on such shares of Stock, the
duration of such restrictions, and the times at which such restrictions shall
lapse with respect to all or a specified number of shares of Stock that are part
of the Award. Notwithstanding the foregoing, the Board of Directors may reduce
or shorten the duration of any restriction applicable to any shares of Stock
awarded to any Awardee under the Plan.

                             (ii)   Share certificates with respect to
restricted shares of Stock may be issued at the time of grant of the Restricted
Stock Award, subject to forfeiture if the restrictions do not lapse, or upon
lapse of the restrictions. If share certificates are issued at the time of grant
of the Restricted Stock Award, the certificates shall bear an appropriate legend
with respect to the restrictions applicable to such Restricted Stock Award or,
alternatively, the Awardee may be required to deposit the certificates with the
Company during the period of any restriction thereon and to execute a blank
stock power or other instrument of transfer.

                            (iii)   The extent of the Awardee’s rights as a
shareholder with respect to the Restricted Stock shall be specified in the Grant
Agreement.

                (d)   Stock Units.

                              (i)    The grant of Stock Units shall be evidenced
by a Grant Agreement that states the number of Stock Units evidenced thereby and
the terms and conditions of such Stock Units.

                             (ii)    Stock Units may be exercised in the manner
described in the Grant Agreement.

                            (iii)    The extent of the Awardee’s rights as a
shareholder with respect to the Stock Units shall be specified in the Grant
Agreement.

                (e)   Transferability. Unvested Restricted Stock Awards or Stock
Units may not be sold, assigned, transferred, pledged or otherwise encumbered or
disposed of except as specifically provided in the Grant Agreement.

SECTION 8.   ACQUISITION EVENTS AND OTHER  ADJUSTMENT OF SHARES.

                (a)   Acquisition Events.   In the event of a consolidation or
merger in which the Company is not the surviving corporation or in the event of
any transaction that results in the acquisition of substantially all of the
Company’s outstanding Stock by a single person or entity or by a group of

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persons and/or entities acting in concert, or in the event of the sale or other
transfer of substantially all of the Company’s assets (all the foregoing being
referred to as “Acquisition Events”), outstanding Options shall be subject to
the agreement of merger or consolidation. Such agreement, without the Optionee’s
consent, may provide for any of the following:

                              (i)      The continuation of such outstanding
Options by the Company (if the Company is not the surviving corporation);

                             (ii)      The assumption of the Plan and such
outstanding Options by the surviving corporation or its parent;

                            (iii)      The substitution by the surviving
corporation or its parent of options with substantially the same terms for such
outstanding Options; or

                            (iv)      The cancellation of such outstanding
Options without payment of any consideration.

                The provisions of Section 7(b) below shall not apply to any
Option that is terminated pursuant to this Section 7(a).

                (b)   Other Events. In the event that the outstanding Shares of
Stock are changed into or exchanged for a different number or kind of shares or
other securities or property (including cash) of the Company or of another
corporation by reason of a stock dividend, stock split or combination of shares,
recapitalization or other change in the Company’s capital stock, reorganization,
merger, sale or other transfer of substantially all the Company’s assets to
another corporation, consolidation, or other transaction described in Section
424(a) of the Code, the Board of Directors shall make appropriate adjustments
(in such manner as it deems equitable in its sole discretion) in (i) the number
and kind of shares of Stock, other securities or property for the purchase of
which Options and Awards may be granted under the Plan, (ii) the number and kind
of shares of Stock, other securities or property as to which outstanding
Options, or portions thereof then unexercised, shall be exercisable, (iii) the
Exercise Price and other terms of outstanding Options and (iv) any other
relevant provisions of the Plan. Any adjustment of the Plan or in outstanding
Options shall be effective on the effective date of the event giving rise to
such adjustment. The Board of Directors may also adjust the number of Shares
subject to outstanding Options, the Exercise Price of outstanding Options and
the terms of outstanding Options to take into consideration any other event
(including, without limitation, accounting changes) if the Board of Directors
determines that such adjustment is appropriate to avoid distortion in the
operation of the Plan. All determinations and adjustments made by the Board of
Directors pursuant to this Section 8(b) shall be binding on all persons.

                (c)   Reservation of Rights. The grant of an Option or an Award
pursuant to the Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure, to merge or consolidate or to dissolve,
liquidate, sell or transfer all or any part of its business or assets.

                (d)   Sale or Merger. “Sale” means: (i) sale (other than a sale
by the Company) of securities entitled to more than 75% of the voting power of
the Company in a single transaction or a related series of transactions; or
(ii) sale of substantially all of the assets of the Company; or

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(iii) approval by the stockholders of the Company of a reorganization, merger or
consolidation of the Company, as a result of which the persons who were the
stockholders of the Company immediately prior to such reorganization, merger or
consolidation do not own securities immediately after the reorganization, merger
or consolidation entitled to more than 50% of the voting power of the
reorganized, merged or consolidated company. Notwithstanding the other
provisions of this Section 8, immediately prior to a Sale, each Optionee may
exercise his or her Option as to all Shares then subject to the Option,
regardless of any vesting conditions otherwise expressed in the Option. Voting
power, as used in this Section 8(d), shall refer to those securities entitled to
vote generally in the election of directors, and securities of the Company not
entitled to vote but which are convertible into, or exercisable for, securities
of the Company entitled to vote generally in the election of directors shall be
counted as if converted or exercised, and each unit of voting securities shall
be counted in proportion to the number of votes such unit is entitled to cast.

SECTION 9.   SECURITIES LAW REQUIREMENTS.

                The Company and, in the case of Israeli Options, the Trustee,
shall not be obligated to deliver any Shares of Stock (a) until, in the opinion
of the Company’s counsel, all applicable federal and state laws and regulations
have been complied with, and (b) if the outstanding Stock is at the time listed
on any stock exchange or other stock market, until the Shares to be delivered
have been listed or authorized to be listed on such exchange or other stock
market upon official notice of issuance, and (c) until all other legal matters
in connection with the issuance and delivery of such Shares have been approved
by the Company’s counsel. If the sale of Stock has not been registered under the
Securities Act of 1933, as amended, the Company may require, as a condition to
exercise of the Option, such representations or agreements as counsel for the
Company may consider appropriate to avoid violation of such Act and may require
that the certificates evidencing such Stock bear an appropriate legend
restricting transfer.

SECTION 10.   NO RETENTION RIGHTS.

                Nothing in the Plan or in any right, Award or Option granted
under the Plan shall confer upon the Awardee or Optionee any right to continue
in Service for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Company (or any Parent or Subsidiary
employing or retaining the Awardee or Optionee) or of the Awardee or Optionee,
which rights are hereby expressly reserved by each, to terminate his or her
Service at any time and for any reason, with or without cause.

SECTION 11.   DURATION AND AMENDMENTS.

                (a)   Term of the Plan. The Plan, as set forth herein, shall
become effective on the date of its adoption by the Board of Directors, subject
to the approval of the Company’s stockholders. In the event that the
stockholders fail to approve the Plan within 12 months after its adoption by the
Board of Directors, any grants of Awards or Options that have already occurred
shall be rescinded, and no additional grants shall be made thereafter under the
Plan. The Plan shall terminate automatically 10 years after its adoption by the
Board of Directors and may be terminated on any earlier date pursuant to Section
10(b).

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                (b)   Right to Amend or Terminate the Plan. The Board of
Directors may amend, suspend or terminate the Plan at any time and for any
reason; provided, however, that any amendment of the Plan that increases the
number of Shares available for issuance under the Plan (except as provided in
Section 8), or that otherwise materially changes the class of persons who are
eligible for the grant of ISOs, will be subject to the approval of the
stockholders of the Company. Stockholder approval shall not be required for any
other amendment of the Plan.

                (c)   Effect of Amendment or Termination. No Shares shall be
issued or sold under the Plan after the termination thereof, except pursuant to
an Award or Option granted prior to such termination. The termination of the
Plan, or any amendment thereof, shall not affect any Award or Option previously
granted under the Plan.

SECTION 12.   DEFINITIONS.

                (a)    “Award” shall mean a Restricted Stock Award or Stock Unit
Award.

                (b)    “Awardee” shall mean an individual to whom an Award has
been granted.

                (c)    “Board of Directors” shall mean the Board of Directors of
the Company, as constituted from time to time.

                (d)    “Code” shall mean the Internal Revenue Code of 1986, as
amended.

                (e)    “Committee” shall mean a committee of the Board of
Directors, as described in Section 2(a).

                (f)    “Company” shall mean Pharmos Corporation, a Nevada
corporation.

                (g)   “Consultant” shall mean a person who performs bona fide
services for the Company, a Parent or a Subsidiary as a consultant or advisor,
excluding Employees and Outside Directors.

                (h)    “Employee” shall mean any individual who is a common-law
employee of the Company, a Parent or a Subsidiary.

                (i)     “Exercise Price” shall mean the amount for which one
Share may be purchased upon exercise of an Option, as specified by the Board of
Directors in the applicable Stock Option Agreement.

                (j)     “Fair Market Value” shall be determined by the Committee
or the Board of Directors in its discretion; provided, that if the Stock is
listed on a stock exchange, the Fair Market Value per Share shall be the closing
price on such exchange on the date of grant of the Award or Option as reported
in the Wall Street Journal (or, (i) if not so reported, as otherwise reported by
the exchange, and (ii) if not reported on the date of grant, then on the last
prior date on which a sale of the Stock was reported); or if not listed on an
exchange but traded on the National Association of Securities Dealers Automated
Quotation National Market System (“NASDAQ”), the Fair Market Value per Share
shall be the closing price per share of the Stock for the date of grant, as
reported in the Wall Street Journal (or, (i) if not so reported, as otherwise
reported by NASDAQ, and (ii) if not reported on the date of grant, then on the
last prior date on

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which a sale of the Common Stock was reported); or, if the Stock is otherwise
publicly traded, the mean of the closing bid price and asked price for the last
known sale.

                (k)    “Grant Agreement” shall mean the agreement between the
Company and an Awardee which contains the terms, conditions and restrictions
pertaining to the Awardee’s Award.

                (l)     “Greater Than Ten-Percent Stockholder” as of any time
shall mean any Employee who at such time owns directly, or is deemed to own by
reason of the attribution rules set forth in Section 424(d) of the Code, stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company.

                (m)    “ISO” shall mean an employee incentive stock option
described in Section 422(b) of the Code.

                (n)    “Nonstatutory Option” shall mean a stock option not
described in Sections 422(b) or 423(b) of the Code.

                (o)    “Option” shall mean an ISO or Nonstatutory Option granted
under the Plan and entitling the holder to purchase Shares.

                (p)    “Optionee” shall mean an individual who holds an Option.

                (q)    “Outside Director” shall mean a member of the Board of
Directors who is not an Employee.

                (r)     “Parent” shall mean any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company, if each
of the corporations other than the Company owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corpora­tions in such chain. A corporation that attains the status of a Parent
on a date after the adoption of the Plan shall be considered a Parent commencing
as of such date.

                (s)    “Plan” shall mean this Pharmos Corporation 2000 Stock
Option Plan.

                (t)     “Restricted Stock Award” shall mean an award of shares
of restricted Stock pursuant to the Plan.

                (u)    “Service” shall mean service as an Employee, Outside
Director or Consultant.

                (v)    “Share” shall mean one share of Stock, as adjusted in
accordance with Section 8 (if applicable).

                (w)   “Stock” shall mean the Common Stock of the Company, with a
par value of $0.03 per Share.

                (x)     “Stock Option Agreement” shall mean the agreement
between the Company and an Optionee which contains the terms, conditions and
restrictions pertaining to the Optionee’s Option.

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                (y)    “Stock Unit” shall mean a credit to a bookkeeping reserve
account solely for accounting purposes, where the amount of the credit shall
equal the Fair Market Value of a share of Stock on the date of the Award (unless
the Board of Directors provides otherwise in the Grant Agreement) and which
shall be subsequently increased or decreased to reflect the Fair Market Value of
a share of Stock. Stock Units do not require segregation of any of the Company’s
assets.

                (z)     “Stock Unit Award” shall mean an award of Stock Units
pursuant to the Plan.

                (aa)  “Subsidiary” means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company, if
each of the corporations other than the last corpora­tion in the unbroken chain
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain. A corporation
that attains the status of a Subsidiary on a date after the adoption of the Plan
shall be considered a Sub­sidiary commencing as of such date.

SECTION 13.   EXECUTION.

                To record the adoption of the Plan by the Board of Directors,
the Company has caused its authorized officer to execute the same.

SECTION  14.   SECTION 102 OF THE ISRAELI TAX ORDINANCE.

                The provisions of this Section shall govern all grants of Stock
Options, Restricted Stock and Restricted Stock Units under Section 102 of the
Israeli Income Tax Ordinance [new version] - 1961 (“Section 102”) and the Income
Tax Rules (Tax Relief for Issuance of Shares to Employees), 2003 (“Section 102
Rules”) to Israeli Employees and Directors of the Company or any of its
affiliates (provided such Employee or Director does not control the Company, as
such term is defined in Section 102 (respectively the “Israeli Award” and
“Israeli Awardee”). Except as detailed below, all other provisions, definitions,
terms and conditions, of the Plan shall continue to be valid and in full force
and effect.

14.1         Trust Arrangement and Holding Period

                The Company may grant Israeli Awards to Israeli Awardees under
the provisions of one of three tax tracks provided for in Section 102 as
detailed below (“Tax Track”).

                (a) Trustee Tax Tracks

                If the Company elects to grant an Israeli Award through (i) the
Capital Gains Track Through a Trustee, or (ii) the Income Tax Track Through a
Trustee, then, in accordance with the requirements of Section 102, the Company
shall appoint a Trustee who will hold in trust on behalf of each Awardee the
Israeli Award.

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                The holding period (the “Holding Period ”) for the Israeli Award
will be as follows:

                (i) The Capital Gains Tax Track Through a Trustee  – if the
Company elects to grant the Israeli Award according to the provisions of this
track, then the Holding Period will be 24 months from the end of the tax year in
which the Israeli Award was allocated to the Trustee on behalf of the Israeli
Awardee, or such shorter period as may be legislated or approved by the Israeli
Authorities.

                (ii) The Income Tax Track Through a Trustee – if the Company
elects to grant the Israeli Award according to the provisions of this track,
then the Holding Period will be 12 months from the end of the tax year in which
the Options were allocated to the Trustee on behalf of the Israeli Awardee, or
such shorter period as may be legislated or approved by the Israeli Authorities.

                Subject to Section 102, Israeli Awardees shall not be able to
receive from the Trustee, nor shall they be able to sell or dispose of shares
issued upon exercise of Stock Options (the “Underlying Shares”) before the end
of the applicable Holding Period. However, if an Israeli Awardee sells or
removes the Israeli Award or the Underlying Shares form the Trustee before the
end of the applicable Holding Period (“Breach”), the Israeli Awardee shall pay
all applicable taxes imposed on such Breach by rule 7 of the Section 102 Rules.

                In the event of a distribution of rights, including an issuance
of bonus shares, in connection with the Israeli Award originally allocated to
the Trustee (the “Additional Rights”), all such Additional Rights shall be
allocated and/or issued to the Trustee for the benefit of Israeli Awardee and
shall be held by the Trustee for the remainder of the Holding Period applicable
to the Israeli Award originally allocated. Such Additional Rights shall be
treated in accordance with the provisions of the applicable Tax Track.

(b)           Income Tax Track Without a Trustee

                If the Company elects to grant an Israeli Award according to the
provisions of this track, then the Israeli Award will not be subject to a
Holding Period.

14.2         Track Selection

                The Company, in its sole discretion, shall elect under which of
above three Tax Tracks each Israeli Award is granted and shall notify the
Israeli Awardee in the Grant Agreement or the Stock Option Agreement (as the
case may be), which Tax Track applies to each Israeli Award.

14.3         Concurrent Conditions

                The Holding Period, if any, is in addition to any vesting period
specified in the Plan or the Grant Agreement. The Holding Period and vesting
period may run concurrently, but neither is a substitute for the other, and each
are independent terms and conditions for Israeli Awards.

14.4         Trust Agreement

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                The terms and conditions applicable to the trust relating to the
Tax Track selected by the Company, as appropriate, shall be set forth in an
agreement signed by the Company and the Trustee (the “Trust Agreement”).

14.5         Tax Matters

                Israeli Awards shall be governed by, and shall conform with and
be interpreted so as to comply with, the requirements of Section 102 and any
written approval from the Israeli Tax Authorities. All tax consequences under
any applicable law (other than stamp duty) which may arise from the award of
Israeli Awards, from the exercise thereof or from the holding or sale of
Underlying Shares (or other securities issued under the Plan) by or on behalf of
the Israeli awardee, shall be borne solely on the Israeli Awardee. The Israeli
Awardee shall indemnify the Company and/or Affiliate and/or Trustee, as the case
may be, and hold them harmless, against and from any liability for any such tax
or any penalty, interest or indexing.

                If the Company elects to grants Israeli Awards according to the
provisions of the Income Tax Track Without a Trustee (Section 14.1(b) of this
Plan), and if prior to the exercise of any and/or all of this Israeli Award,
such Israeli Awardee ceases to be an employee, director, or officer of the
Company or Affiliate, the Israeli Awardee shall deposit with the Company a
guarantee or other security as required by Section 102, in order to ensure the
payment of applicable taxes upon the exercise of such Israeli Award.

14.6         Withholding Taxes

                Whenever an amount with respect to withholding tax relating to
Israeli Awards granted to a Israeli Awardees and/or Underlying Shares due from
the Israeli Awardee and/or the Company and/or an Affiliate and/or the Trustee,
the Company and/or an Affiliate and/or the Trustee shall have the right to
demand from an Israeli Awardee such amount sufficient to satisfy any applicable
withholding tax requirements related thereto, and whenever Shares or any other
non-cash assets are to be delivered pursuant to the exercise of an Israeli
Award, or transferred thereafter, the Company and/or an Affiliate and/or the
Trustee shall have the right to require the Israeli Awardee to remit to the
Company and/or to the Affiliate, or to the Trustee an amount in cash sufficient
to satisfy any applicable withholding tax requirements related thereto, and if
such amount is not timely remitted, the Company and/or the Affiliate or the
Trustee shall have the right to withhold or set-off (subject to Law) such Shares
or any other non-cash assets pending payment by the Israeli Awardee of such
amounts.

                Until all taxes have been paid in accordance with Rule 7 of the
Section 102 Rules, Israeli Awards, Underlying Shares and Additional Rights may
not be sold, transferred, assigned, pledged, encumbered, or otherwise willfully
hypothecated or disposed of, and no power of attorney or deed of transfer,
whether for immediate or future use may be validly given. Notwithstanding the
foregoing, the Israeli Awards, Underlying Shares and Additional Rights may be
validly transferred in a transfer made by will or laws of descent, provided that
the transferee thereof shall be subject to the provisions of Section 102 and the
Section 102 Rules as would have been applicable to the deceased Israeli Awardee
were he or she to have survived.

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14.7         Israeli Awardee Undertakings

                By accepting an Israeli Award, the Israeli Awardee (1) agrees
and acknowledges that he or she have received and read the Plan and the Grant
Agreement or Stock Option agreement (as the case may be); (2) undertakes all the
provisions set forth in: Section 102 (including provisions regarding the
applicable Tax Track that the Company has selected), the 102 Rules, the Plan,
the Grant Agreement and the Trust Agreement; and (3) undertakes not to sell or
release the Shares from trust before the end of the Holding Period, subject to
the provisions of Section 102 and the Rules.

 

  PHARMOS CORPORATION       /s/  GAD RIESENFELD

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  Gad Riesenfeld   President and Chief Operating Officer    

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