Document:

Exhibit 10(q)

                       PHARMOS CORPORATION 2000 STOCK PLAN
                    (As Amended and Restated, February 2003)

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. 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 11.

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 Optionees and all persons deriving their rights from
an Optionee.

SECTION 3. ELIGIBILITY.

      Only Employees, Outside Directors and Consultants shall be eligible for
the grant of Options or the direct award or sale of Shares. Only Employees shall
be eligible for the grant of ISOs. As for Employees and Directors who are
residents of the State of Israel, only Employees and Directors exclusive of
"Nosei Misra," as such term is defined in Israeli Tax Ordinance (New Version),
1961, shall be eligible for the grant of Options in accordance with the trust
arrangements set forth in Section 5(f) of the Plan.

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 3,500,000 Shares, subject to
adjustment pursuant to Section 7. 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.

      (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
3,500,000 Shares (subject to adjustment pursuant to Section 7).

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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 5(f) 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 5(f), 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.

      (f) The Trust. Each Stock Option Agreement for residents of the State of
Israel ("Israeli Options") shall specify that all Options granted under the Plan
shall be granted by the Company to the Optionee and shall be held in Trust by a
trustee designated by the Company (the "Trustee"). The Trustee shall hold such
Options and the Stock issued upon exercise of such Options, together with all
rights conferred by the Stock (including all dividends or distributions of cash,
other shares of the Company's capital stock or other property including "bonus"
shares as defined under applicable laws of the State of Israel), in trust (the
"Trust") for the benefit of the Optionee in respect of whom such Options was
granted. All certificates representing shares of Stock issued to the Trustee
under the Plan shall be deposited with the Trustee and shall be held by the
Trustee until such time that such shares of Stock are released from the Trust.

      (g) Withholding Taxes for Israeli Options. The Trustee shall withhold all
Taxes arising from the sale of the shares of Stock or make sure that all Taxes
arising from the transfer of the shares of Stock from the Trustee to the
Optionee were paid by the Optionee prior to such transfer.

      (h) 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.

      (i) 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

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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.

      (j) 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; and provided further, that in the case of Israeli Options, during the
lifetime of the Optionee, the Israeli Options may be exercised only by the
Trustee upon receipt of written instructions from the Optionee or by the
Optionee's guardian or legal representative.

      (k) 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.

      (l) 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.

      (m) 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.

      (n) 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.

      (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

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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. 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 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 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 7(b) shall be binding on all persons.

      (c) Reservation of Rights. The grant of an Option 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

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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 (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 7,
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 7(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 8. 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 9. NO RETENTION RIGHTS.

      Nothing in the Plan or in any right or Option granted under the Plan shall
confer upon the 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 Optionee)
or of the 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 10. 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 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).

      (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 7), 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 upon exercise of an Option
granted prior to such termination. The termination of the Plan, or any amendment
thereof, shall not affect any Option previously granted under the Plan.

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SECTION 11. DEFINITIONS.

      (a) "Board of Directors" shall mean the Board of Directors of the Company,
as constituted from time to time.

      (b) "Code" shall mean the Internal Revenue Code of 1986, as amended.

      (c) "Committee" shall mean a committee of the Board of Directors, as
described in Section 2(a).

      (d) "Company" shall mean Pharmos Corporation, a Nevada corporation.

      (e) "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.

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

      (g) "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.

      (h) "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 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 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.

      (i) "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.

      (j) "ISO" shall mean an employee incentive stock option described in
Section 422(b) of the Code.

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

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

      (m) "Optionee" shall mean an individual who holds an Option.

      (n) "Outside Director" shall mean a member of the Board of Directors who
is not an Employee.

      (o) "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.

      (p) "Plan" shall mean this Pharmos Corporation 2000 Stock Option Plan.

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      (q) "Service" shall mean service as an Employee, Outside Director or
Consultant.

      (r) "Share" shall mean one share of Stock, as adjusted in accordance with
Section 7 (if applicable).

      (s) "Stock" shall mean the Common Stock of the Company, with a par value
of $0.03 per Share.

      (t) "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.

      (u) "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.

      (v) "Trustee" shall mean an individual selected by the Company from time
to time.

SECTION 12. EXECUTION.

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

                                        PHARMOS CORPORATION

                                        S/ ROBERT W. COOK
                                        ----------------------------------------
                                        Robert W. Cook
                                        Vice President/Finance and
                                        Administration, Chief Financial Officer

                                       7Exhibit 10(s)

                             NOTE PURCHASE AGREEMENT

      AGREEMENT entered into as of the 28th day of February, 2003, by and
between Millennium Partners, L.P. ("Seller") and Pharmos Corporation, a Nevada
corporation having its principal offices at 99 Wood Avenue South, Suite 301,
Iselin, New Jersey 08830 ("Purchaser" or the "Company").

      WHEREAS, upon the terms and conditions hereof, the Purchaser desires to
purchase, and the Seller desires to sell, an aggregate of Two Million Five
Hundred Thousand Dollars ($2,500,000) principal amount of a 6% Convertible
Debenture (the "Note") of the Company purchased by Seller from the Company
pursuant to that certain Purchase Agreement, dated September 1, 2000, by and
among Seller, Purchaser and certain other parties (the "Purchase Agreement").
Certain terms and conditions of the Note were modified by that certain Amendment
Agreement dated December 31, 2001 by and among Seller, Purchaser and certain
other parties (the "Amendment Agreement"). The Purchase Agreement and the
Amendment Agreement are referred to collectively herein as the "Note Purchase
Agreements." Terms not defined herein shall have the meanings ascribed to them
in the Note Purchase Agreements.

      NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Seller and the Purchaser hereby agree as follows:

                           SECTION 1: SALE OF THE NOTE

      1.1 Sale of the Note. Subject to the terms and conditions hereof, the
Seller will sell and deliver to the Purchaser and the Purchaser will purchase
from the Seller, upon the execution and delivery hereof, the Note for an
aggregate of Two Million Seven Hundred and Twenty Five Thousand Dollars
($2,725,000) (the "Purchase Price"). Seller represents and warrants that it is
the sole owner of the Note, free and clear of all claims, liens or encumbrances
of any nature. Seller agrees to waive any claim for accrued but unpaid interest.

                        SECTION 2: CLOSING DATE; DELIVERY

      2.1 Closing Date. The closing of the purchase and sale of the Note
hereunder (the "Closing") shall be held within ten (10) days of the execution of
this Agreement, or as otherwise may be agreed by the parties, at the offices of
Seller's attorneys, Feldman Weinstein LLP.

      2.2 Delivery at Closing. At the Closing, Seller will deliver to the
Purchaser original certificates in Seller's name representing the Note and
Purchaser shall pay the Purchase Price by wire transfer of immediately available
funds to such account as is designated by Seller. Seller may offset the Purchase
Price against any amounts otherwise due the Purchaser under any other agreement
between them.

              SECTION 3: REPRESENTATIONS, WARRANTIES AND COVENANTS

      The parties hereto represent, warrant and covenant, solely as to
themselves, as follows:

      3.1 As of the date hereof, Seller has no claims against the Company
pursuant to the Note for any amounts outstanding or any default thereunder.
Seller is not aware of any default or any events which may give rise to an event
of default pursuant to the Note.

      3.2 Seller agrees not to convert any portion of the Note prior to Closing.

      3.3 As of the date hereof, the Company has no claims against Seller
pursuant to the Note or otherwise. The Company is not aware of any default by
Seller or any events which may give rise to an event of default under the Note.
The Company hereby releases, acquits and forever discharges Seller from any and
all actions, causes of action, claims, demands, damages, judgments, debts, dues
and suits of every kind, nature and description whatsoever arising under the
Note, which the Company ever had, now has or may have against Seller.

      3.4 The Company hereby represents and warrants to Seller as of the date
hereof that the Company has all requisite corporate power and authority to enter
into and perform this Agreement and the transactions contemplated hereby. The
Company further represents and warrants that this Agreement constitutes a valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.

      3.5 The Company hereby represents and warrants it has performed all
agreements and satisfied all conditions required to be performed or satisfied
prior to the date hereof under the Original Transaction Documents and all other
documents executed pursuant to the Note Purchase Agreements when and as
required.

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      3.6 The Company hereby represents that no Event of Default (as defined in
the Note) has occurred, is likely to occur or is threatened, and no event has
occurred which constitutes or would constitute an Event of Default with notice
or the passage of time or both, as of the date hereof.

      3.7 The execution, delivery and performance of this Agreement and
compliance therewith by Purchaser and Seller, and the purchase and sale of the
Note, will not result in a violation of and will not conflict with, or result in
a breach of, any of the terms of, or constitute a default under, any provision
of state or Federal law to which Purchaser or Seller is subject, or any
mortgage, indenture, agreement, instrument, judgment, decree, order, rule or
regulation or other restriction to which the Purchaser or Seller is a party or
by which it is bound, or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of Purchaser or
Seller pursuant to any such term.

                            SECTION 4: MISCELLANEOUS

      4.1 Governing Law. This Agreement shall be governed in all respects by the
laws of the State of New York, without regard to conflicts of laws principles
thereof.

      4.2 Survival. The terms, conditions and agreements made herein shall
survive the Closing.

      4.3 Assignment. This Agreement may not be assigned by either party hereto.

      4.4 Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, permitted assigns, heirs, executors and administrators of the
parties hereto.

      4.5 Entire Agreement; Amendment; Waiver. This Agreement constitutes the
entire and full understanding and agreement between the parties with regard to
the subject matter hereof. Neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated, except by a written instrument signed
by all the parties hereto.

      4.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together,
shall constitute one instrument.

      4.7 No Modification. Except as set forth herein, the Note Purchase
Agreements, the Original Transaction Documents and all other documents and
instruments executed in connection therewith shall remain unmodified and in full
force and effect.

      IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
the day and year first above written.

                              PHARMOS CORPORATION

                              By:    s/ ROBERT W. COOK
                                     -------------------------------------------
                              Name:  Robert W. Cook
                              Title: Executive Vice President and Chief
                                     Financial Officer

                              MILLENNIUM PARTNERS, L.P.

                              By:    S/ TERRY FEENEY
                                     -------------------------------------------
                              Name:  Terry Feeney
                              Title: Vice Chairman

                                       2

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