Document:

exhibit4_3.htm

    
      

      

    

    Exhibit 4.3

     

    REGISTRATION
RIGHTS AGREEMENT

     

    This
Registration Rights Agreement (this “Agreement”) is made
and entered into as of April 21, 2009, by and among Pharmos Corporation, a
Nevada corporation (the “Company”), and the
purchasers signatory hereto (each a “Purchaser” and
collectively, the “Purchasers”),
including any Purchasers who become signatories to this Agreement in accordance
with the Purchase Agreement (as hereinafter defined) subsequent to the date
hereof by executing the Instrument of Accession in the form of Exhibit A attached
hereto.

     

    This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of the
date hereof among the Company and the Purchasers (the “Purchase
Agreement”).

     

    The
Company and the Purchasers hereby agree as follows:

     

    1.           Definitions.  Capitalized
terms used and not otherwise defined herein that are defined in the Purchase
Agreement shall have the meanings given such terms in the Purchase
Agreement.  As used in this Agreement, the following terms shall have
the following meanings:

     

    “Effectiveness Date”
means, with respect to the Registration Statement required to be filed
hereunder, the earlier of (a) the 30th calendar day following the Filing Date
(60th
calendar day in the event of a review by the Commission) and (b) the fifth
Business Day following the date on which the Company is notified by the
Commission that the Registration Statement will not be reviewed or is no longer
subject to further review and comments.

     

    “Effectiveness Period”
shall have the meaning set forth in Section 2(a).

     

    “Filing Date” means,
with respect to the Registration Statement required to be filed hereunder, the
30th
calendar day following the Closing Date.

     

    “Holder” or “Holders” means the
holder or holders, as the case may be, from time to time of Registrable
Securities.

     

    “Indemnified Party”
shall have the meaning set forth in Section 5(c).

     

    “Indemnifying Party”
shall have the meaning set forth in Section 5(c).

     

    “Losses” shall have
the meaning set forth in Section 5(a).

     

    “Proceeding” means an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced
or threatened.

     

    “Prospectus” means the
prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in
reliance

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    upon Rule
430A promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Securities covered by the Registration Statement, and all
other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.

     

    “Registrable
Securities” means all of the Shares and the Warrant Shares.

     

    “Registration
Statement” means the registration statements required to be filed
hereunder, including (in each case) the Prospectus, amendments and supplements
to the registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in the registration
statement.

     

    “Rule 415” means Rule
415 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such
Rule.

     

    “Rule 424” means Rule
424 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such
Rule.

     

    “Securities Act” means
the Securities Act of 1933, as amended.

     

    2.           Registration.

     

    (a)           Subject
to the limitations set forth in this Section 2(a) and in Section 2(b) below, on
or prior to the Filing Date, the Company shall prepare and file with the
Commission the Registration Statement covering the resale of all of the
Registrable Securities for an offering to be made on a continuous basis pursuant
to Rule 415.  The Registration Statement required hereunder shall be
on the appropriate form for which the Company is eligible (except if the Company
is then eligible to register for resale the Registrable Securities on Form S-3,
in which case the Registration shall be on Form S-3 in accordance
herewith).  The Registration Statement required hereunder shall
contain (except if otherwise directed by the Holders) the “Plan of Distribution”
attached hereto as Exhibit
B.  The Company shall cause the Registration Statement to
become effective and remain effective as provided herein. The Company shall use
its commercially reasonable efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as possible after the
filing thereof, but in any event not later than the Effectiveness Date, and
shall use its commercially reasonable efforts to keep the Registration Statement
continuously effective under the Securities Act until the date which is five
years after the Closing Date or such earlier date when all Registrable
Securities covered by the Registration Statement have been sold or may be sold
without volume restrictions pursuant to Rule 144(k) as determined by the counsel
to the Company

     

    
      
         

      

      
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    pursuant
to a written opinion letter to such effect, addressed and acceptable to the
Company’s transfer agent and the affected Holders (the “Effectiveness
Period”).

    

    (b)           Notwithstanding
anything to the contrary set forth in Section 2(a) above, the Company shall not
be obligated to prepare or file any registration statement pursuant to Section
2(a) hereof, or to prepare or file any amendment or supplement thereto, and the
Holders agree that they shall not sell any Registrable Securities, at any time
when the Company, in the good faith and reasonable judgment of its Board of
Directors, and upon the advice of counsel, reasonably believes that the filing
thereof at that time, or the offering or sale of Registrable Securities pursuant
thereto, (a) would materially adversely affect a pending or proposed public
offering of capital stock of the Company, or an acquisition, merger,
recapitalization, consolidation, reorganization or other transaction, or any
negotiations, discussions or pending proposals with respect thereto, or
(b) would require the disclosure of information that would have a material
adverse effect on the Company, is likely to materially adversely affect the
Company or any pending transaction or negotiations of the Company, or would
constitute a violation of the Securities Act or any state or other applicable
securities laws; provided, however, that the
filing of a registration statement, or any supplement or amendment thereto, by
the Company may be deferred pursuant to this Section 2(b), and the restrictions
on the sale of Registrable Securities by the Holders shall be effective, only
for the minimum period of time necessary under the circumstances, but not to
exceed sixty (60) days and in any event no more than two deferrals shall be
allowed in any twelve (12) month period.  In the case of any such
delay, the Company shall deliver to the Holders a written certificate of the
Company’s Chief Executive Officer certifying that such delay is necessary in the
good faith and reasonable judgment of the Company's Board of
Directors.

    

    (c)           If:
(i) a Registration Statement filed or required to be filed hereunder is not
declared effective by the Commission within six months of the Closing Date, or
(ii) after a Registration Statement is first declared effective by the
Commission, it ceases for any reason to remain continuously effective as to all
Registrable Securities for which it is required to be effective, or the Holders
are not permitted to utilize the Prospectus therein to resell such Registrable
Securities, for in any such cases fifteen Trading Days (which need not be
consecutive days) in the aggregate during any 12-month period (any such failure
or breach being referred to as an “Event,” and for
purposes of clause (i) the date on which such Event occurs, or for purposes of
clause (ii) the date on which such fifteen Trading Day period is exceeded being
referred to as “Event
Date”), then in addition to any other rights the Holders may have
hereunder or under applicable law: (x) on each such Event Date the Company shall
pay to each Holder an amount in cash, as liquidated damages and not as a
penalty, equal to 1% of the aggregate purchase price paid by such Holder
pursuant to the Purchase Agreement for any Shares and Warrants and/or Warrant
Shares then held by such Holder; and (y) on each monthly anniversary of each
such Event Date (if the applicable Event shall not have been cured by such date)
until the applicable Event is cured, the Company shall pay to each Holder an
amount in cash, as liquidated damages and not as a penalty, equal to 1% of the
aggregate purchase price paid by such Holder pursuant to the Purchase Agreement
for any Shares and Warrants and/or Warrant Shares then held by such Holder;
provided, however, liquidated
damages payable to any Holder hereunder shall not exceed 25% of the aggregate
purchase price

    
      
         

      

      
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    paid by
such Holder pursuant to the Purchase Agreement for the Shares and Warrants
and/or Warrant Shares issued to such Holder.

    

    3.           Registration
Procedures

     

    In
connection with the Company's registration obligations hereunder, the Company
shall:

     

    (a)           Not
less than two Trading Days prior to the filing of the Registration Statement or
any related Prospectus or any amendment or supplement thereto, the Company
shall, (i) furnish to the Holders copies of all such documents proposed to be
filed (including documents incorporated or deemed incorporated by reference to
the extent requested by such Person) which documents will be subject to the
review of such Holders, and (ii) cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of respective counsel to conduct a
reasonable investigation within the meaning of the Securities
Act.  The Company shall not file the Registration Statement or any
such Prospectus or any amendments or supplements thereto to which the Holders of
a majority of the Registrable Securities shall reasonably object in good
faith.

     

    (b)           (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep the Registration Statement continuously
effective as to the applicable Registrable Securities for the Effectiveness
Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of the
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424; (iii) respond as promptly as
reasonably possible to any comments received from the Commission with respect to
the Registration Statement or any amendment thereto and, as promptly as
reasonably possible, upon request, provide the Holders true and complete copies
of all correspondence from and to the Commission relating to the Registration
Statement; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.

     

    (c)           Notify
the Holders of Registrable Securities to be sold as promptly as reasonably
possible (and, in the case of (i)(A) below, not less than two Trading Days prior
to such filing) and (if requested by any such Person) confirm such notice in
writing promptly following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement is proposed
to be filed; (B) when the Commission notifies the Company whether there will be
a “review” of the Registration Statement and whenever the Commission comments in
writing on the Registration Statement (the Company shall upon request provide
true and complete copies thereof and all written responses thereto to each of
the Holders); and (C) with

     

    
      
         

      

      
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    respect
to the Registration Statement or any post-effective amendment, when the same has
become effective; (ii) of any request by the Commission or any other Federal or
state governmental authority during the period of effectiveness of the
Registration Statement for amendments or supplements to the Registration
Statement or Prospectus or for additional information; (iii) of the issuance by
the Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; and (v) of the occurrence of any
event or passage of time that makes the financial statements included in the
Registration Statement ineligible for inclusion therein or any statement made in
the Registration Statement or Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.

    

    (d)           Use
its commercially reasonable efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of the
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.

     

    (e)           Furnish
to each Holder, without charge, at least one conformed copy of the Registration
Statement and each amendment thereto, including financial statements and
schedules, all documents incorporated or deemed to be incorporated therein by
reference to the extent requested by such Person, and all exhibits to the extent
requested by such Person (including those previously furnished or incorporated
by reference) promptly after the filing of such documents with the
Commission.

     

    (f)           Promptly
deliver to each Holder, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request in connection with
resales by the Holder of Registrable Securities.  The Company hereby
consents to the use of such Prospectus and each amendment or supplement thereto
by each of the selling Holders in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto, except after the giving on any notice pursuant to Section
3(c).

     

    (g)           Prior
to any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders
in connection with the registration or qualification (or exemption from the
Registration or qualification) of such Registrable Securities for the resale by
the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each the
Registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all

     

    
      
         

      

      
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    other
acts or things reasonably necessary to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statement; provided, that the
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or file a
general consent to service of process in any such jurisdiction.

    

    (h)           If
requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to the Registration Statement, which
certificates shall be free, to the extent permitted by the Purchase Agreement,
of all restrictive legends, and to enable such Registrable Securities to be in
such denominations and registered in such names as any such Holders may
request.

     

    (i)           Upon
the occurrence of any event contemplated by Section 3(c)(v), as promptly as
reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.

     

    (j)           Comply
with all applicable rules and regulations of the Commission.

     

    (k)           It
shall be a condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement of the Registrable Securities of each
Purchaser that such Stockholder shall furnish to the Company in writing such
information regarding itself and the Registrable Securities held by it, as shall
be reasonably required to effect the registration of such Registrable
Securities, and such Purchaser shall execute such documents in connection with
such registration as the Company may reasonably request.  At least
five (5) Trading Days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify such Purchaser of the
information the Company requires from such Stockholder (the “Requested
Information”).  If, at least two (2) Trading Days prior to the
filing date, the Company has not received the Requested Information from a
Purchaser, then the Company may file the Registration Statement without
including the Registrable Securities of such Purchaser.  Each
Purchaser hereby agrees, as to himself or itself only, to cooperate with the
Company as reasonably requested by the Company in connection with the
preparation and filing of the Registration Statement and that upon receipt of
any notice from the Company of the happening of any event of the kind described
in Sections 3(c)(iii), (iv) or (v) above, such Purchaser will immediately
discontinue disposition of its Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until such copies of
a supplemented or amended prospectus contemplated by Section 3 shall be
furnished to such Purchaser.

     

    4.           Registration
Expenses.  All fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by the Company
whether or not

     

    
      
         

      

      
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    any
Registrable Securities are sold pursuant to the Registration
Statement.  The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the Trading Market on which the Common Stock is then
listed for trading, and (B) in compliance with applicable state securities or
Blue Sky laws), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities and of printing prospectuses
if the printing of prospectuses is reasonably requested by the holders of a
majority of the Registrable Securities included in the Registration Statement),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance,  (vi) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement and (vi) reasonable fees and
expenses up to $5,000 of one counsel for the Purchasers in connection with the
review of the Registration Statement.  In addition, the Company shall
be responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit and the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder.

    

    5.           Indemnification

     

    (a)           Indemnification by the
Company.  The Company shall, notwithstanding any termination of
this Agreement, indemnify and hold harmless each Holder, the officers,
directors, agents and employees of each of them, each Person who controls any
such Holder (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, agents and employees of
each such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable attorneys' fees) and expenses
(collectively, “Losses”), as
incurred,  to the extent arising out of or relating to any untrue or
alleged untrue statement of a material fact contained in the Registration
Statement, any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that (1) such untrue statements or omissions are based
solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement thereto
(it being understood that the Holder has approved Exhibit B hereto for this
purpose) or (2) in the case of an occurrence of an event of the type specified
in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or defective and prior to the receipt by such Holder of
the Advice contemplated in Section 7(c).  The Company shall notify
the

     

    
      
         

      

      
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    Holders
promptly of the institution, threat or assertion of any Proceeding of which the
Company is aware in connection with the transactions contemplated by this
Agreement.

    

    (b)           Indemnification by
Holders. Each Holder shall, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all Losses, as incurred, to the extent arising
out of or based upon: (x) such Holder's failure to comply with the prospectus
delivery requirements of the Securities Act or (y) any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading (i) to the extent, but
only to the extent, that such untrue statement or omission is contained in any
information so furnished in writing by such Holder to the Company specifically
for inclusion in the Registration Statement or such Prospectus or (ii) to the
extent that (1) such untrue statements or omissions are based solely upon
information regarding such Holder furnished in writing to the Company by such
Holder expressly for use therein, or to the extent that such information relates
to such Holder or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement (it being understood that the
Holder has approved Exhibit B hereto for this purpose), such Prospectus or such
form of Prospectus or in any amendment or supplement thereto or (2) in the case
of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the
use by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective and
prior to the receipt by such Holder of the Advice contemplated in Section
7(c).  In no event shall the liability of any selling Holder hereunder
be greater in amount than the dollar amount of the net proceeds received by such
Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.

     

    (c)           Conduct of Indemnification
Proceedings. If any Proceeding shall be brought or asserted against any
Person entitled to indemnity hereunder (an “Indemnified Party”),
such Indemnified Party shall promptly notify the Person from whom indemnity is
sought (the “Indemnifying Party”)
in writing, and the Indemnifying Party shall have the right to assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have prejudiced the Indemnifying Party.

     

    An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless:  (1) the

     

    
      
         

      

      
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    Indemnifying
Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying
Party shall have failed promptly to assume the defense of such Proceeding and to
employ counsel reasonably satisfactory to such Indemnified Party in any such
Proceeding; or (3) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by counsel that a
conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
the reasonable fees and expenses of one separate counsel shall be at the expense
of the Indemnifying Party).  The Indemnifying Party shall not be
liable for any settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld.  No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.

     

    All
reasonable fees and expenses of the Indemnified Party (including reasonable fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten Trading
Days of written notice thereof to the Indemnifying Party; provided, that the
Indemnified Party shall promptly reimburse the Indemnifying Party for that
portion of such fees and expenses applicable to such actions for which such
Indemnified Party is not entitled to indemnification hereunder, determined based
upon the relative faults of the parties.

     

    (d)           Contribution.  If
a claim for indemnification under Section 5(a) or 5(b) is unavailable to an
Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations.  The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission.  The amount paid or payable by a party
as a result of any Losses shall be deemed to include, subject to the limitations
set forth in Section 5(c), any reasonable attorneys' or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.

     

    
      
         

      

      
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    The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding
paragraph.  Notwithstanding the provisions of this Section 5(d), no
Holder shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the proceeds actually received by such Holder from the
sale of the Registrable Securities subject to the Proceeding exceeds the amount
of any damages that such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, except
in the case of fraud by such Holder.

    

    The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties.

     

    6.           Deferral of Registration
Rights.  Any other provision of this Agreement notwithstanding,
the Purchasers hereby agree to suspend indefinitely their registration rights,
and waive the Company’s compliance with its registration obligations hereunder,
until those Purchasers (or their transferees) then holding more than 50% of the
Registrable Securities not yet sold under Rule 144 or otherwise consent in
writing to the reinstatement of such registration rights (the
“Reinstatement”).  Upon receipt by the Company of the Reinstatement,
the Filing Date shall be reset as the 30th
calendar date following the Reinstatement.  Additionally, any
Registration Statement will cover the resale of only those Registrable
Securities as are permitted by SEC Guidance (defined below and including,
without limitation, the Manual of Publicly Available Telephone Interpretations,
D.29) and that are not then registered on an effective Registration Statement
for an offering to be made on a continuous basis pursuant to Rule 415 or
otherwise eligible for sale under Rule 144.  The failure by the
Company to register any Registrable Securities solely as a result of the
limitations identified in the SEC Guidance or their eligibility for sale under
Rule 144 will not subject the Company to liability for the payment of liquidated
damages provided in Section 2(c) with respect to such Registrable Securities,
and any liquidated damages otherwise payable by the Company pursuant thereto
shall be reduced pro rata by a fraction, the numerator of which shall be the
number of Registrable Securities not successfully registered or otherwise
eligible for sale under Rule 144 and the demominator of which shall be the total
number of Registrable Securities held by such Purchaser.  For purposes
of this Agreement, “SEC Guidance” means (i) any publicly-available written or
oral guidance, comments, requirements or requests of the Commission staff and
(ii) the Securities Act.

     

    7.           Miscellaneous

     

    (a)           Remedies.  In
the event of a breach by the Company or by a Holder, of any of their obligations
under this Agreement, each Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement.  The Company and each
Holder agree that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    (b)           Compliance.  Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.

    

    (c)           Discontinued
Disposition.  Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 3(c), such Holder will
forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder's receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement or until it is
advised in writing (the “Advice”) by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.  The Company may provide appropriate stop
orders to enforce the provisions of this paragraph.

     

    (d)           Piggy-Back
Registrations.  If at any time during the Effectiveness Period
there is not an effective Registration Statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with the stock option or other employee
benefit plans, then the Company shall send to each Holder a written notice of
such determination and, if within fifteen days after the date of such notice,
any such Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
Holder requests to be registered, subject to customary underwriter cutbacks
applicable to all holders of registration rights (such cutbacks to be applied
first to those holders of registration rights other than the Holders of
Registrable Securities, and only afterwards, to such Holders) .

     

    (e)           Amendments and
Waivers.  The provisions of this Agreement, including the
provisions of this sentence, only may be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof only may be given,
in accordance with the provisions of Section 5.4 of the Purchase Agreement,
which are hereby incorporated herein by reference.

     

    (f)           Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile prior to 6:30 p.m. (New York City time)
on a Trading Day, (ii) the Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile later than 6:30 p.m. (New
York City time) on any date and earlier than 11:59 p.m. (New York City time) on
such date, (iii) the Trading Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt by
the party to whom such notice is required to be

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    given.  The
address for such notices and communications shall be delivered and addressed as
set forth in the Purchase Agreement.

    

    (g)           Successors and
Assigns.  This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Holder.  Each Holder may assign
their respective rights hereunder in the manner and to the Persons as permitted
under the Purchase Agreement.

     

    (h)           Execution and
Counterparts.  This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same
Agreement.  In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.

     

    (i)           Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law
thereof.  Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City of New
York, New York.  Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of
New York, New York for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of the any of this Agreement),
and hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is
improper.  Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law. Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.

     

    (j)           Cumulative
Remedies.  The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.

     

    (k)           Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    invalidated,
and the parties hereto shall use their commercially reasonable efforts to find
and employ an alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or
restriction.  It is hereby stipulated and declared to be the intention
of the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.

    

    (l)           Headings.  The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

     

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

     

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

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

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

     

    PHARMOS
CORPORATION

    

    

    
      	
               
      

            	
              By:
      _____________________________________

            

    

    
      	
               
      

            	
              Name:

            	
              S.
      Colin Neill

            

    

    
      	
               
      

            	
              Title:

            	
              President
      and Chief Financial Officer

            

    

    

    [PURCHASERS’
SIGNATURE PAGES TO FOLLOW]

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    [PURCHASER’S
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

     

    

    [PURCHASER]

    

    

    By:                                                      

    Name:

    Title:

    

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    EXHIBIT
A

    

    Instrument of
Accession

    

    

    Reference
is made to that certain Securities Purchase Agreement (the “Purchase Agreement”),
dated as of April 21, 2009, among Pharmos Corporation (the “Company”) and the
signatories thereto, and that certain Registration Rights Agreement, dated as of
April 21, 2009, a copy of which is attached hereto (the “Registration Rights
Agreement”), among the Company and the signatories
thereto.  Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed thereto in the Purchase Agreement or in the
Registration Rights Agreement.

     

    In
connection with acquisition by the undersigned in accordance with the Purchase
Agreement of [$__________] of Shares and Warrants of the Company, the Company
and the undersigned hereby agree that by execution hereof the undersigned is a
Holder party to the Registration Rights Agreement subject to all of the rights
and conditions set forth in such Registration Rights Agreement.  This
Instrument of Accession shall take effect and shall become a part of said
Registration Rights Agreement immediately upon execution.

     

    Executed
as of [_______], 200_ under the laws of the State of New York.

    

    

    

    [_____________]

    

    

    By:                 ____________________________

    Name:

    Title:

    

    

    

    Accepted:

    

    PHARMOS
CORPORATION

    

    

    By:                                                                

    Name:

    Title:

    

    

    

     

    

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    EXHIBIT
B

     

    Plan of
Distribution

     

    The
Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions.  These sales may be at
fixed or negotiated prices.  The Selling Stockholders may use any one
or more of the following methods when selling shares:

     

    
      	
               

            	
              ·           ordinary
      brokerage transactions and transactions in which the broker-dealer
      solicits purchasers;

            

    

     

    
      	
               

            	
              ·           block
      trades in which the broker-dealer will attempt to sell the shares as agent
      but may position and resell a portion of the block as principal to
      facilitate the transaction;

            

    

     

    
      	
               

            	
              ·           purchases
      by a broker-dealer as principal and resale by the broker-dealer for its
      account;

            

    

     

    
      	
               

            	
              ·           an
      exchange distribution in accordance with the rules of the applicable
      exchange;

            

    

     

    
      	
               

            	
              ·           privately
      negotiated transactions;

            

    

     

    
      	
                

            	
              ·           settlement
      of short sales;

            

    

     

    
      	
                

            	
              ·           broker-dealers
      may agree with the Selling Stockholders to sell a specified number of such
      shares at a stipulated price per
share;

            

    

     

    
      	
                

            	
              ·           a
      combination of any such methods of sale;
and

            

    

     

    
      	
                

            	
              ·           any
      other method permitted pursuant to applicable
  law.

            

    

     

    The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.

     

    Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales.  Broker-dealers may receive commissions or
discounts from the Selling Stockholders (or, if any broker-dealer acts as agent
for the purchaser of shares, from the purchaser) in amounts to be
negotiated.  The Selling Stockholders do not expect these commissions
and discounts to exceed what is customary in the types of transactions
involved.

     

    The
Selling Stockholders may from time to time pledge or grant a security interest
in some or all of the shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time to time under this
prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933 amending the list of
Selling Stockholders to include the pledgee, transferee or other successors in
interest as Selling Stockholders under this prospectus.

     

    The
Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales.  In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.  The Selling
Stockholders have informed the Company that they do not have any agreement or
understanding, directly or indirectly, with any person to distribute the Common
Stock.

     

    The
Company is required to pay all fees and expenses incident to the registration of
the shares.  The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.

     

    

    17exhibit4_4.htm

    
      

      

    

    Exhibit 4.4

    

    Debenture
Amendment Agreement

    

    April 21,
2009

    

    Pharmos
Corporation

    99 Wood
Avenue South, Suite 311

    Iselin,
New Jersey 08830

    

    Re:           10% Convertible Debenture Due
November 1, 2012

    

    Ladies
and Gentlemen:

    

    The
undersigned, a Holder of a 10% Convertible Debenture (the “Debenture”) due
November 1, 2012 of Pharmos Corporation (the “Company”), and in consideration of
having agreed to purchase certain additional securities of the Company pursuant
to the Securities Purchase Agreement dated as of the date hereof among the
Company, the undersigned and the other Purchasers listed on Exhibit A annexed
thereto, each severally hereby agrees that the Set Price thereunder with respect
to the conversion of the principal amount of only those Debentures held by all
of the undersigned is reduced from $0.70 to $0.275, with the conversion price
for all unpaid and accrued interest thereon remaining unchanged at
$0.34.

    

    The
undersigned each also hereby severally agrees to convert the Debenture in full
as of the date hereof, and has tendered the Debenture to the Company in
accordance with the provisions of Section 4(a)(iii) thereof, with this letter
being deemed to satisfy the requirements of delivering a Notice of Conversion
thereunder.

    

    [remainder
of page left intentionally blank]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Very
truly yours,

    

    Venrock
Associates

    

    

    By:___________________________

    Name: Anthony B. Evnin

    Title:                      General
Partner

    

    Venrock
Associates III, L.P.

    

    By:           Venrock
Management III LLC

    Its:           General
Partner

    

    By:___________________________

    Name:                      Anthony
B. Evnin

    Title:                      Member

    

    Venrock
Entrepreneurs Fund III, L.P.

    

    By: VEF
Management III LLC

    Its:           General
Partner

    

    By:___________________________

    Name:                      Anthony
B. Evnin

    Title:                      Member

    

    New
Enterprise Associates 10, Limited Partnership

    

    By: NEA
Partners 10, Limited Partnership, its General Partner

    

    

    By:____________________________

    Name:                      Charles
W. Newhall, IIITitle:General Partner

    

    

    ______________________________

    Robert F.
Johnston

    

    

    ACCEPTED
AND AGREED:

    

    PHARMOS
CORPORATION

    

    By:________________________

    Name:                      S.
Colin Neill

    Title:                      President
and Chief Financial Officer

    

     

    2

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