Item 1.01 Entry into a Material Definitive Agreement.
On January 15, 2009, Pharmos Corporation received written waivers from certain holders of its 10% Convertible Debentures Due November 1, 2012 - New Enterprise Associates 10, Limited Partnership (affiliated with Charles W. Newhall, III, a Director of Pharmos), Robert F. Johnston (Executive Chairman of Pharmos) and Venrock Associates, Venrock Associates III, L.P., and Venrock Entrepreneurs Fund III, L.P. (all of which are affiliated with Anthony B. Evnin, a Director of Pharmos) - that permitted the payment of interest to such holders, with respect to the interest due on the January 15, 2009 interest payment date, in the form of shares of common stock notwithstanding the absence of a registration statement. The interest conversion rate is defined in the debenture as the greater of (i) the average of the five closing prices immediately prior to the applicable interest payment date (which was $0.128), (ii) the closing price on the date of the second closing (which has not occurred to date), and (iii) the closing price on the date of the first closing (which was $0.34). The dollar amount of interest to be paid in stock amounted to an aggregate of $150,000 which, converted at $0.34 per share, resulted in an aggregate of 441,177 shares issued to the debenture holders who agreed to receive interest in the form of common stock.