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Marketing Agreement - Bausch & Lomb Pharmaceuticals Inc. and Pharmos Corp.

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                                MARKETING AGREEMENT
                                ___________________

            THIS MARKETING AGREEMENT (this "Agreement"), dated as of June
       30, 1995, between Bausch & Lomb Pharmaceuticals, Inc., a Delaware
       corporation having its principal office at 8500 Hidden River
       Parkway, Tampa, Florida 33637 ("BLP") and Pharmos Corporation, a
       Nevada corporation having its principal office at 2 Innovation
       Drive, Alachua, Florida 32615 ("Pharmos").

            In consideration of the respective representations, warranties,
       covenants and agreements of the parties set forth below, and other
       good and valuable consideration, the receipt and sufficiency of
       which are hereby acknowledged, the parties agree as follows:

                                     ARTICLE I

                                    DEFINITIONS

            Unless otherwise defined in this Agreement, all capitalized
       terms used herein shall have the following meanings:

            1.1  "Adjusted Sales" means the gross sales price for a Drug
       Product invoiced for sale by BLP to third parties, less (i)
       discounts, chargebacks, Medicare rebates and rebates to purchasers
       actually allowed and taken and in amounts customary in the trade;
       (ii) insurance and freight costs separately billed to the purchaser
       and actually paid or prepaid by the purchaser; (iii) returns from
       purchasers for exchange or credit (provided that Drug Product
       delivered to such purchaser in such circumstance shall be deemed a
       separate sale subject to this Agreement); and (iv) sales and other
       taxes (exclusive of taxes on income) levied by any governmental
       authority directly on sales of Drug Products which are collected by
       BLP from a purchaser and in turn paid by BLP to the taxing
       authority.

            1.2  "BLP Month" means each fiscal month of BLP established
       during the term of this Agreement and communicated to Pharmos prior
       to the beginning of each BLP fiscal year for the succeeding twelve
       (12) BLP fiscal months.

            1.3  "BLP Technical Documentation" means all written data and
       information embodying BLP Technology, including, without limitation,
       Master Batch Records, SOPs, Protocols and Studies.

            1.4  "CGMP" means the good manufacturing practice regulations
       promulgated by the FDA pursuant to the FDC Act currently in effect
       and as such regulations may be modified or supplemented from time to
       time during the term of this Agreement.


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            1.5  "Commercial Sale" means the transfer or sale for value by
       BLP of Drug Product to an unaffiliated third party.

            1.6  "Competitor" means each of ********** *************** ***
       ***** ************ ********* ****************** ********************
       ********* *********** [Confidential Information omitted and filed
       separately with the SEC] and any other entity which currently
       manufactures and sells ophthalmic pharmaceutical products in the
       Territory and has derived gross revenues of more than $************
       [Confidential Information omitted and filed separately with the SEC]
       from such sales in the fiscal year of such entity immediately prior
       to the year in which either party to this Agreement desires to make
       any assignment of this Agreement or any of their respective rights
       hereunder.

            1.7  "Development Product" means either of LEA or LET until
       such time as an NDA is submitted to the FDA with respect to LEA or
       LET, as the case may be, pursuant to the terms of this Agreement.

            1.8  "DMF" means appropriate Drug Master File(s) covering the
       manufacture of Drug Product at the Facility.

            1.9  "Drug Product" means (i) the Initial Drug Product, and
       (ii) any Development Product on which an NDA is submitted to the FDA
       by Pharmos during the term of this Agreement.

            1.10 "Drug Substance" means Loteprednol Etabonate. The Drug
       Substance is specifically covered by claim ** of U.S. Patent
       ********* [Confidential Information omitted and filed separately
       with the SEC].

            1.11 "Facility" means BLP's facility located in Tampa, Florida.

            1.12 "Field" means the topical ophthalmic use of Drug Product.

            1.13 "FDA" means the Food and Drug Administration of the United
       States of America and/or any other federal or state governmental or
       regulatory agencies as may regulate or control the sale of cosmetics
       and/or drugs, including Drug Product, within the Territory.

            1.14 "FDA Communications" means any action, request, order,
       instruction, communication, complaint, notice, public announcement
       or inquiry by the FDA or any submission, filing, letter or other
       communication by Pharmos, BLP or any manufacturer of Drug Substance
       to the FDA, with respect to Drug Product, Placebo Product,
       Development Product or Drug Substance which is sent by or is
       received by either party (or, in the case of Pharmos, by any
       manufacturer of Drug Substance), or which comes to either party's or
       its agent's attention, including, but not limited, to field actions,
       investigations or recalls of Drug Product or Placebo Product in the
       Territory.

            1.15 "FDC Act" means the Federal Food, Drug, and Cosmetic Act,
       as amended from time to time, and all regulations promulgated
       pursuant thereto.

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            1.16 "Initial Drug Product" means the product including the
       Drug Substance described in the Initial NDA.

            1.17 "Initial Marketing Plan" means a plan for the marketing,
       sale and distribution of the Initial Drug Product prepared by BLP
       pursuant to the terms of this Agreement.

            1.18 "Initial NDA" means the NDA (#******) [Confidential
       Information omitted and filed separately with the SEC] submitted by
       Pharmos to the FDA on March 30, 1995, including any amendments,
       supplements, schedules and exhibits thereto.

            1.19 "Intellectual Property" means patents, patent applications
       (including international equivalents), trademarks, trade names,
       trade dress, trademark registrations and applications therefore, and
       copyrights, copyright registrations and applications therefore
       pertaining to the Drug Product and Drug Substance.

            1.20 "Label" has the meaning ascribed under the FDC Act.

            1.21 "LEA" means an ophthalmic suspension or solution of Drug
       Substance for treatment of allergies.

            1.22 "LET" means one (1) combination of Drug Substance and
       Tobramycin (or such other antibiotic mutually agreed to by the
       parties).

            1.23 "Master Batch Records" means the master batch records
       prepared by BLP in accordance with CGMP requirements which now or
       hereafter govern the Processing of Drug Substance into Drug Product.

            1.24 "NDA" means (i) the Initial NDA, and (ii) any new drug
       application covering a Development Product which may be submitted by
       Pharmos to the FDA during the term of, and as contemplated by, this
       Agreement.

            1.25 "NDA Submission Package" means all pre-clinical,
       laboratory, clinical, biocompatibility and other testing data;
       labeling; processing, material and packaging specifications; and
       supplements or amendments to any of the foregoing; and all other
       information in the possession of and used by Pharmos for submitting,
       obtaining and maintaining approval of an NDA in accordance with the
       requirements of the FDC Act.

            1.26 "Patent Rights" means those United States patents and
       patent applications relating to Drug Substance listed on Schedule
       1.26 attached hereto, which shall be supplemented from time to time
       hereafter, as necessary to reflect any U.S. Patents owned or
       controlled by Pharmos after the date hereof, and which cover the
       Processing, use, sale or importation of the Drug Substance.

            1.27 "Placebo Product" means a Drug Product excluding the Drug
       Substance.


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            1.28 "Prior Agreements" means each of the Processing Agreement
       and Product Development and Clinical Manufacturing Services
       Agreement, each dated as of October 21, 1994, between Pharmos and
       BLP.

            1.29 "Process" and "Processing" and other forms of such word or
       phrase shall refer to the processing, handling, storage and/or
       disposal of the Drug Substance and Placebo Product, and other raw
       materials included within a Drug Product or used in connection
       therewith, and the processing, handling, storage and/or packaging of
       a Drug Product.

            1.30 "Product Year" means, with respect to each Drug Product,
       each twelve (12) BLP Month period during the Term commencing with
       the first day of the first full BLP Month in which a Commercial Sale
       of such Drug Product shall occur, provided, that the first Product
       Year shall include any portion of the BLP Month preceding the first
       Product Year.

            1.31 "Protocols" means those testing methods and standards
       developed and used by BLP in performing the Services, subject to the
       approval of Pharmos which shall
       not be unreasonably withheld.

            1.32 "Sales Forecast" means BLP's forecast of Adjusted Sales
       for a Drug Product for each Product Year throughout the term of this
       Agreement.

            1.33 "Services" means those services described on Schedule 1.33
       attached hereto to be performed by BLP with respect to the Initial
       Drug Product and any other Drug Product or Development Product
       during the term of this Agreement.

            1.34 "SOPs" means BLP's methods and procedures for Processing
       Drug Substance into Drug Product, including, without limitation,
       those SOPs specifically identified by BLP and delivered to Pharmos
       as Schedule 1.34 to this Agreement within ten (10) days of the date
       hereof.

            1.35 "Specifications" as it relates to each Drug Product shall
       refer to the Drug Product specifications contained in the NDA
       Submission Package (which shall be mutually agreed to by the parties
       hereto) for such Drug Product, as such specifications may be amended
       from time to time by a supplement to a NDA mutually agreed to by the
       parties or as required by FDA. "Specifications" as it relates to a
       Development Product shall refer to the specifications for such
       Development Product contained in Pharmos' Investigational New Drug
       Application for such Development Product until such time as an NDA
       is submitted to the FDA with respect to such Development Product.
       "Specifications" as it relates to Drug Substance shall refer to the
       specifications for bulk Drug Substance contained or referenced in
       the NDA for any Drug Product.



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            1.36 "Studies" means those studies conducted by BLP in the
       course of performing Services necessary to submit and file an NDA
       for a Drug Product with the FDA and to obtain FDA approval of such
       NDA, and shall further include any "Phase IV" studies with respect
       to each such Drug Product.

            1.37 "Technology" means the technical knowledge and
       confidential information which Pharmos or BLP owns or controls
       pertaining to, in the case of Pharmos, the Drug Substance and the
       formulation of the Drug Substance, or in the case of BLP, to the
       Processing of Drug Product, including technical knowledge pertaining
       to the design, assembly, installation, operation and maintenance of
       machinery, tooling and equipment required for, and the plant layout
       necessary for such Processing.

            1.38 "Territory" means the United States, including its
       possessions and military bases abroad.

            1.39 "Testing Laboratory" means a testing laboratory mutually
       agreed to by Pharmos and BLP.

                                    ARTICLE II

                    MARKETING AND DISTRIBUTION OF DRUG PRODUCT


            2.1  Marketing Plans. 
                 _______________

            (a)  On or before ***************** [Confidential Information
       omitted and filed separately with the SEC], BLP shall deliver to
       Pharmos a written marketing plan for the Initial Drug Product (the
       "Marketing Plan") for the first three (3) Product Years.  The
       Marketing Plan shall be set forth in reasonable and customary
       detail, and shall include in such plans commercially reasonable
       descriptions of intended pre-marketing and marketing investments,
       tactics and efforts, promotion and distribution efforts and
       mechanisms, descriptions and estimated timing of any anticipated
       Phase IV studies, compilations of market research and analysis
       performed by or for BLP, and other related matters customarily
       included by BLP in such plans for the marketing, promotion and sale
       of a new ophthalmic drug product.  BLP shall further include in the
       Marketing Plan a Sales Forecast for each of the first ten (10)
       Product Years for the Initial Drug Product.

            (b)  On or before the date 60 days prior to the anticipated
       submission of an NDA with respect to each Development Product which
       the parties reasonably anticipate shall become a Drug Product under
       the terms of this Agreement, BLP shall deliver to Pharmos a written
       marketing plan for such Development Product (the "Additional
       Marketing Plans") for the first three (3) Product Years of each such
       Development Product.  Pharmos agrees to use good faith efforts to
       notify BLP at least 180 days before the anticipated submission of an
       NDA to the FDA with respect to each Development Product.  The
       Additional Marketing Plans shall be set forth in substantially the

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       same level of detail, and shall include substantially the same
       information, plans, budgets and other information, as required with
       respect to the Marketing Plan set forth in subsection (a) above.
       BLP shall further include in each Additional Marketing Plan a Sales
       Forecast for each of the first ten (10) Product Years for each
       Development Product.

            2.2  Marketing Committee.
                 ___________________

            Pharmos and BLP agree to form a Marketing and Commercialization
       Committee with respect to the marketing, promotion and sale of Drug
       Product under this Agreement.  This Committee will consist of two
       (2) members appointed by Pharmos and three (3) members appointed by
       BLP.  The Committee will consider and make recommendations to
       Pharmos and BLP regarding all matters related to the marketing,
       promotion and sale of Drug Product, including issues with respect to
       pricing, promotion and other similar matters.  The Committee shall
       have further responsibility for the development and presentation of
       Additional Marketing Plans described in Section 2.1 above.  The
       Committee shall also attempt in the first instance to resolve any
       matters which may be disputed between Pharmos and BLP with respect
       to such marketing, promotion and sales matters which are not
       otherwise addressed in this Agreement or any other agreements
       between the parties, provided  that the failure of the Committee to
       resolve any such dispute shall not constitute a default under, or
       breach of, this Agreement.

            2.3  Grant of Exclusive Distribution Rights.
                 ______________________________________

            (a)  Except as otherwise provided in this Agreement, BLP shall
       have the exclusive right to market, sell and distribute Drug Product
       within the Field and within the Territory and within the Field by
       any legal means.  Subject to the terms of this Agreement, BLP agrees
       to use not less than the same effort used by BLP with respect to its
       own proprietary ophthalmic products to effect the sale of Drug
       Product in a manner designed to achieve or exceed the Sales Forecast
       for each Product Year during the term of this Agreement.

            (b)  BLP agrees that (i) it shall, subject to reduction for any
       credits against advances allowed to BLP pursuant to Section 2.4(a)
       below, pay to Pharmos in each Product Year, whether by way of
       payment of Product Price (as defined in Section 2.4(a) below) or
       otherwise, an amount not less than the amount set forth on Schedule
       2.3(b) attached to this Agreement with respect to such Product Year
       for the Initial Drug Product (the "Exclusivity Amount") (provided
       that from and after such time as Pharmos exercises its co-marketing
       rights with respect to a Drug Product pursuant to Section 2.6 below,
       the Exclusivity Amount with respect to such Drug Product payable for
       the Product Year or portion thereof in which Pharmos exercises its
       co-marketing rights under this Agreement and for each subsequent
       Product Year or portion thereof thereafter shall be reduced by an
       amount equal to the Exclusivity Amount multiplied by a fraction


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       having (X) a numerator equal to the total number of scripts for such
       Drug Product written in the Product Year or portion thereof in
       question for Pharmos in the Territory, and (Y) a denominator equal
       to the total number of scripts for such Drug Product written in such
       Product Year for both Pharmos and BLP in the aggregate in the
       Territory, as reported by National Prescription Audit, a program
       offered by IMS ("IMS") or such other nationally recognized source as
       the parties may mutually agree if IMS is no longer available as a
       source of such information), and (ii) if the reduction contemplated
       in subpart (i) shall occur, BLP and Pharmos agree to review such
       reduction on an annual basis to adjust the reduction to reflect the
       difference in the periods covered by the IMS report and any BLP
       months occurring in such periods.

            (c)  BLP agrees that it shall pay to Pharmos in each Product
       Year an Exclusivity Amount with respect to all Drug Products other
       than the Initial Drug Product determined on the same basis as used
       for the Initial Drug Product and subject to reduction and adjustment
       as set forth in subparts (i) and (ii) of subsection (b) above.  BLP
       and Pharmos further agree that the Exclusivity Amounts with respect
       to each of LEA and LET shall not be less than or exceed the
       respective amounts set forth on Schedule 2.3(c) attached to this
       Agreement, the exact amounts of which with respect to each
       Development Product shall be determined by mutual, good faith
       agreement of the parties on or before the 30th day following
       submission of an NDA with respect to such Development Product.

            2.4  Product Price.
                 _____________

            (a)  As consideration for Drug Substance to be purchased by BLP
       for Processing into Drug Product under this Agreement, and subject
       to reduction as set forth in subpart (b) below, BLP shall pay
       Pharmos an amount equal to ****% [Confidential Information omitted
       and filed separately with the SEC] of BLP's Adjusted Sales of each
       Drug Product sold by BLP in any BLP Month (the "Product Price") in
       accordance with Section 2.5 below.  Notwithstanding the foregoing,
       and without regard to any adjustments pursuant to subsection (b)
       below, and further subject to Section 2.10 below, BLP shall be
       entitled to credit ****% [Confidential Information omitted and filed
       separately with the SEC] of any Product Price payable to Pharmos
       against advances previously made to Pharmos by BLP pursuant to
       Section 2.7 below until such advances have been recouped in full by
       BLP, provided, however, that if BLP fails to provide any required
       advance pursuant to Section 2.7 below or any development funding
       with respect to such Drug Product for any reason other than the
       reasons set forth in Section 2.9(i), (ii), (iii) or (iv) below, the
       rate of recoupment of advances set forth above shall thereafter be
       reduced to ****% [Confidential Information omitted and filed
       separately with the SEC] of any Product Price payable to Pharmos.

            (b)  If Pharmos exercises the co-marketing rights reserved to
       Pharmos in Section 2.6 below for any reason, the Product Price for
       Drug Substance to be processed into a particular Drug Product and


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       payable in any BLP Month by BLP to Pharmos will be reduced by an
       amount equal to the Product Price for the relevant Drug Product
       multiplied by a fraction having (i) a numerator equal to the total
       number of scripts for such Drug Product written in such BLP Month
       for Pharmos in the Territory, and (ii) a denominator equal to the
       total number of scripts for such Drug Product written in such BLP
       Month for both Pharmos and BLP in the aggregate in the Territory, as
       reported by IMS or such other nationally recognized source as the
       parties may mutually agree if IMS is no longer available as a source
       of such information, provided that in no event shall the Product
       Price for a particular Drug Product payable in any BLP Month be
       reduced to less than ****% [Confidential Information omitted and
       filed separately with the SEC] of BLP's Adjusted Sales of each such
       Drug Product in such BLP Month.  If a reduction under this
       subsection (b) shall occur, BLP and Pharmos agree to review such
       reduction on the same basis and timing as set forth in subpart (ii)
       of Section 2.3(b) above. 

            2.5  Payment.
                 _______

            Within the earlier of thirty (30) days following the end of
       each BLP Month during the term of this Agreement and five (5)
       business days following publication and distribution of the IMS data
       referred to in Section 2.4(b) above related to such BLP Month, if
       applicable (each a "Payment Date"), beginning with the end of the
       first full BLP Month following the first Commercial Sale of Drug
       Product by BLP in the Territory, BLP shall pay Pharmos the Product
       Price for Drug Substance Processed into Drug Product sold by BLP in
       the preceding BLP Month (and any portion of any preceding BLP
       Month), less any recoupment contemplated in Section 2.4(a) above. In
       addition, on each Payment Date, BLP shall deliver to Pharmos
       information which sets forth the aggregate sales and Adjusted Sales
       of each Drug Product in dollars and units of such Drug Product for
       the preceding BLP Month and any portion of any preceding BLP Month,
       and further sets forth the aggregate of all advances previously made
       to Pharmos pursuant to Section 2.7 below and the amount of credits
       against such advances taken by BLP with respect to such preceding
       BLP Month.  If the total payments received by Pharmos (including any
       amounts credited against advances) for a Product Year with respect
       to a Drug Product pursuant to this Section 2.5 shall not equal or
       exceed the Exclusivity Amount for such Drug Product for such Product
       Year, then on the last Payment Date of such Product Year BLP shall
       have the option to pay Pharmos an additional sum equal to such
       Exclusivity Amount less the sum of the total payments (including any
       amounts credited against advances) previously paid to Pharmos by BLP
       in such Product year pursuant to this Section 2.5 with respect to
       such Drug Product.

            2.6  Co-Marketing Rights.
                 ___________________

            (a)  Subject to the earlier exercise of co-marketing rights
       which may occur pursuant to subpart (c) below, the parties agree


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       that Pharmos shall be entitled upon written notice to BLP to co-
       market, distribute and sell each Drug Product under labeling
       belonging to Pharmos in the Territory commencing on the second (2nd)
       anniversary of the earlier to occur of (i) the first Commercial Sale
       of such Drug Product by BLP, or (ii) the later of (X) April 1, 1996,
       or (Y) the ninetieth day following FDA approval of the NDA for such
       Drug Product (unless BLP has been restrained from making commercial
       sales of such Drug Product through no fault of BLP within such
       ninety (90) day period, in which case such ninety (90) day period
       shall be deemed to have commenced on the first day on which such
       restraint no longer exists).

            (b)  Upon the written request of BLP, Pharmos agrees that it
       will delay exercise of the rights reserved to Pharmos in subsection
       (a) above with respect to any Drug Product for a period of up to 365
       days if (i) LET has not entered Phase III clinical studies on or
       before the second anniversary of this Agreement based on an R&D Plan
       (defined below) previously approved by the parties, or (ii) LEA has
       not entered Phase III clinical studies on or before the second
       anniversary of this Agreement based on an R&D Plan previously
       approved by the parties, or (iii) Phase II clinical studies for
       either LET or LEA have not substantially complied with the
       protocols, or satisfied safety and efficacy targets, defined in the
       relevant R&D Plan for each such substance, provided that no delay
       shall occur pursuant to this 
       subsection (b) if the events described in subparts (i), (ii) or
       (iii) shall failed to have occurred solely as a result of the
       failure of BLP to provide Pharmos with appropriate clinical trial
       materials of LEA or LET, as the case may be, in conformity with
       their respective Specifications (other than such failure resulting
       from the failure of Pharmos to deliver appropriate Drug Substance
       for the production of such clinical Trial materials). 

            (c)  In addition to the co-marketing rights described above,
       from and after the last Payment Date for a Product Year in which BLP
       fails to pay the Exclusivity Amount for a particular Drug Product,
       Pharmos shall be entitled to (i) co-market such Drug Product in the
       Territory, and (ii) subject to delivery of a written notice
       delivered to BLP no later than sixty (60) days following the last
       day of the Product Year in question, at any time thereafter grant to
       any third party or parties the right to market such Drug Product in
       the Territory on a non-exclusive basis, and the marketing and sale
       rights granted to BLP under this Agreement with respect to such Drug
       Product shall become and thereafter remain non-exclusive.

            2.7  Advances of Product Price.
                 _________________________

            BLP agrees to pay Pharmos the following sums as advances
       against payments of Product Price for Drug Substance Processed into
       Drug Product which may become due to Pharmos under this Agreement:

            (i)  $1,000,000 by the close of business on June 30, 1995,
       against purchases of Drug Substance to be Processed into Initial
       Drug Product;

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<PAGE>

            (ii) $1,000,000, against purchases of Drug Substance to be
       Processed into Initial Drug Product ($277,141 of which has been
       previously advanced by BLP to Pharmos), payable in equal
       installments of $100,000 (or any portion thereof remaining unpaid)
       on the last day of each month commencing with the last day of the
       month following the month in which this Agreement is executed and on
       each month thereafter until paid in full, with any sums not
       previously paid under this subpart (ii) to be paid by BLP to Pharmos
       within ten (10) days of the approval of the NDA for the Initial Drug
       Product by the FDA;

            (iii)     $1,000,000 on January 15, 1996, against purchases of
       Drug Substance to be Processed into LEA;

            (iv) $1,000,000 on March 15, 1996, against purchases of Drug
       Substance to be Processed into LET;

            (v)  $********* [Confidential Information omitted and filed
       separately with the SEC] within thirty (30) days of the filing of an
       NDA on the earlier of LEA or LET, against purchases of Drug
       Substance to be Processed into such Drug Product; and

            (vi) $********* [Confidential Information omitted and filed
       separately with the SEC] within thirty (30) days of the approval of
       an NDA on the later of LEA or LET, against purchases of Drug
       Substance to be Processed into such Drug Product.
       Unless otherwise specified below, such advances will be credited
       against payment of Product Price for Drug Substance to be Processed
       into the referenced Drug Product.  Notwithstanding the foregoing,
       the payments contemplated under subsections (ii), (iii) and (iv)
       above will be deferred if Pharmos receives written notification from
       the FDA that the NDA for the Initial Drug Product is not approvable
       (or Pharmos or BLP otherwise becomes aware of such circumstance),
       and will resume immediately upon the revocation of such notice or
       the cure of such circumstance to the reasonable satisfaction of BLP.
       In addition, if Pharmos has not initiated Phase III studies with
       respect to LEA on or before June 15, 1996, or with respect to LET on
       or before September 15, 1996, in either case in accordance with
       their respective R&D Plans as approved by the Research and
       Development Committee pursuant to Section 5.1 below, then BLP shall
       have the right to credit the advances made with respect to LEA
       and/or LET, as appropriate, against purchases of Drug Substance to
       be Processed into Initial Drug Product.  If the parties shall not
       have agreed on the protocols and/or safety and efficacy targets to
       be included in the R&D Plans for LEA or LET by the dates referenced
       in (iii) and/or (iv) above, the parties shall submit their
       respective positions on such matters to a mutually agreeable
       consultant with relevant expertise with ophthalmic drug products for
       recommendations on the matter(s) in dispute, and at such time as the
       parties shall mutually resolve such disagreement the advances
       referred to in such subsections shall be made within thirty (30)
       days of the commencement of the respective Phase III clinical trials
       based on the respective R&D Plans approved by both parties in their
       reasonable discretion.

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            2.8  Packaging.
                 _________

            (a)  The parties acknowledge that the Initial Drug Product will
       be sold under BLP's own label using the brand name "LotemaxTM" (the
       "Brand Name"), provided that to the extent permitted by applicable
       law, the packaging of the Product shall include a mutually
       acceptable reference to Pharmos as follows: "Manufactured by BLP
       under Agreement with Pharmos".  The parties acknowledge that the
       Brand Name shall be owned by Pharmos, and further agree that neither
       shall acquire rights in or to any trademarks or trade names of the
       other, except that BLP shall have the right to use the Brand Name in
       connection with its marketing, sale and distribution of Initial Drug
       Product in the Territory and within the Field, pursuant to the
       Trademark License attached as Exhibit 2.8 to this Agreement (the
       "Trademark License").  BLP shall submit all Drug Product
       advertising, promotional and packaging material (excluding Labels
       for the Drug Product which comply with the NDA) to Pharmos for prior
       approval, which shall not be unreasonably withheld. Failure of
       Pharmos to disapprove of any such material within ten (10) days of
       receipt shall be deemed to constitute Pharmos' consent. All artwork,
       advertising and packaging used by each party is and shall remain the
       exclusive property of each party.  Such artwork, advertising and
       packaging or any reproduction thereof owned by one party may not be
       used by the other party following the termination of this Agreement;
       provided, however that BLP shall provide Pharmos with its marketing
       plans and/or sales training materials pertaining to the Drug Product
       for informational purposes only.   At Pharmos' request, and subject
       to Article X hereof, Pharmos shall have the right to attend and
       participate in meetings associated with the development of BLP's
       marketing plans and training programs pertaining to marketing and
       distribution of Drug Product.

            (b)  Pharmos and BLP agree to use good faith efforts to review
       the advisability of granting to each other mutually satisfactory,
       royalty-free trademark license agreements with respect to any
       trademarks owned by either party with respect to any Development
       Product prior to the first Commercial Sale of the Development
       Product marketed using such trademark, provided that in no event
       shall either party be entitled to any use of any trademark used or
       reserved for use by the other party in connection with any good or
       service or which includes all or any part of a party's or its
       Affiliate's corporate name or identity. 

            2.9  Termination of Certain Rights.
                 _____________________________

            The parties agree that if BLP fails to provide any required
       advance pursuant to Section 2.7 above with respect to a Drug Product
       (or Development Product, as the case may be) or any development
       funding with respect to such Drug Product or Development Product, as
       the case may be, because BLP has notified Pharmos in writing that
       (i) such Drug Product or Development Product is reasonably
       determined by BLP not to have achieved the safety or efficacy

                                     - 11 -
<PAGE>
       targets mutually agreed to by the parties, (ii) BLP reasonably
       determines that further investment in such Drug Product or
       Development Product is not financially justifiable, (iii) BLP
       reasonably determines that material adverse changes in the market or
       potential market for such Drug Product or Development Product have
       occurred, or (iv) BLP reasonably determines upon the written advice
       of independent counsel that the commercial sale of such Drug Product
       would infringe on the patent rights of third parties not otherwise
       licensed to or owned by Pharmos or BLP, then (X) BLP shall have no
       further rights or obligations with respect to such Drug Product
       under this Agreement of any kind, and (Y) the failure of BLP to make
       any such payments in the circumstances described above or for any
       other reason with respect to such Drug Product or Development
       Product shall not be deemed to be a breach of BLP's obligations
       under this Agreement.  Notwithstanding the foregoing, this Agreement
       shall terminate and BLP shall lose any and all rights it may have in
       or to the marketing of any Drug Product and any Development Product
       if BLP shall determine and notify Pharmos that any of the
       circumstances described above apply to the Initial Drug Product.

            2.10 Additional Obligations. 
                 ______________________

            (a)  The parties acknowledge that the obligations of BLP to pay
       the Exclusivity Amounts set forth above with respect to the Initial
       Drug Product and any subsequent Drug Product are dependent on the
       ability of Pharmos to provide BLP with sufficient quantities of Drug
       Substance to be Processed into Drug Product to substantially meet
       the Sales Forecast for Drug Product.  Pharmos acknowledges and
       agrees that until such time as BLP shall have made sufficient
       Adjusted Sales of Drug Product in order to recoup in full the
       advances made by BLP to Pharmos under Section 2.7 above, the failure
       of Pharmos to supply BLP with  substantially all of its requirements
       of Drug Substance as required under this Agreement shall constitute
       a material breach of this Agreement, and that as a result of such
       breach BLP may suffer damage at least in the amount of any
       outstanding and unrecouped advances paid to Pharmos under Section
       2.7 above.  Notwithstanding the foregoing or any other provision of
       this Agreement to the contrary, BLP agrees to forebear and not
       exercise any of its remedies hereunder as a result of Pharmos'
       breach of its supply obligations under this Agreement, and will
       allow Pharmos to cure such breach, subject to the following:

                 (i)  from and after any such breach, and for so long as
            (X) Pharmos is unable for any reason to supply BLP with Drug
            Substance sufficient to enable BLP to meet its Sales Forecast
            for Drug Product in any BLP Month, and (Y) BLP has not recouped
            in full any advances made by BLP to Pharmos under Section 2.7
            above, then notwithstanding Section 2.4(b) above BLP shall be
            entitled to credit **% [Confidential Information omitted and
            filed separately with the SEC] of any Product Price payable to
            Pharmos against advances previously paid to Pharmos by BLP
            pursuant to Section 2.7 until such advances have been recouped
            in full by BLP; and


                                     - 12 -
<PAGE>

                 (ii) BLP shall be permitted to immediately take out of
            consignment for Processing into Drug Product quantities of Drug
            Substance sufficient to generate Drug Product that, when sold,
            will generate Adjusted Sales of Drug Product in an amount
            sufficient to allow BLP to recoup any remaining advances paid
            to Pharmos under Section 2.7.

       If such inventory of Drug Substance is insufficient to permit BLP to
       Process the quantities of Drug Product as stated above, and Pharmos
       has not otherwise provided BLP, within ten (10) days following the
       date of the breach by Pharmos described above in this subsection (a)
       with quantities of Drug Substance sufficient to generate Drug
       Product that, when sold, will generate Adjusted Sales sufficient to
       allow BLP to recoup any remaining advances made to Pharmos under
       Section 2.7, Pharmos shall pay to BLP the difference between the sum
       of (X) any outstanding advances that have been recouped by BLP under
       Section 2.4, plus the amount of advances that would be recouped upon
       the sale of any Drug Product (including Drug Product work in
       process) remaining in the possession of BLP at the time of the
       breach described above in this subsection (a), and (Y) the total
       amount of outstanding and unrecouped advances on the date of
       Pharmos' default hereunder.  If Pharmos fails to satisfy the
       foregoing payment obligation within ninety (90) days following the
       expiration of the ten (10) day period set forth above, BLP will be
       relieved of its forbearance commitment, and in such event may
       exercise any remedies available to it under this Agreement, and
       further provided that (1) BLP may defer any prospective obligations
       to make advances under Section 2.7 and make payments of Exclusivity
       Amounts until Pharmos resumes performance of its supply obligations
       hereunder, and BLP is reasonably satisfied that there will be no
       substantial future interruption; and (2) the period of time which
       must elapse under this Agreement until Pharmos obtains co-exclusive
       rights with respect to each Drug Product will be tolled and extended
       by the number of days starting with the day on which the payment
       obligation of Pharmos hereunder shall arise until the date on which
       Pharmos shall perform such payment obligation or shall have
       otherwise cured the breach of its obligations under this Section
       2.10 to the reasonable satisfaction of BLP.

            (b)  Pharmos acknowledges that, following BLP's recoupment in
       full of all advances paid by BLP to Pharmos under Section 2.7, the
       failure of Pharmos to supply BLP with substantially all of its
       requirements of Drug Substance as required under this Agreement
       shall constitute a material breach of this Agreement, and that as a
       result of such breach BLP may suffer damage.  Notwithstanding the
       foregoing or any other provision of this Agreement to the contrary,
       BLP agrees to forebear and not exercise any of its remedies
       hereunder with respect to such breach until such time as Pharmos is
       unable to provide BLP with sufficient Drug Substance to ensure that
       BLP has on hand at least enough Drug Substance to satisfy
       substantially all of BLP's rolling six (6) month requirements for
       Drug Substance (or if such amount of Drug Substance on hand at BLP
       goes below BLP's rolling six (6) month requirement and the parties


                                     - 13 -
<PAGE>
       cannot mutually agree after good faith consultation that a
       resumption of supply is reasonably imminent), unless Pharmos has
       concluded a supply contract with a second manufacturer of Drug
       Substance under Section 2.11 within ninety (90) days following the
       day on which the inventory of Drug Substance on hand at BLP falls
       below six (6) months and the parties cannot mutually agree after
       good faith consultation that a resumption of supply is reasonably
       imminent, it being understood that in such event Pharmos shall be
       deemed to have cured the breach described above in this subsection
       (b).  If Pharmos has failed to cure such breach as set forth above
       the Product Price for each Drug Product payable in each BLP Month in
       which such breach occurred or is continuing shall be reduced to
       ****% [Confidential Information omitted and filed separately with
       the SEC] of BLP's Adjusted Sales of Drug Product in such BLP Month.
       Notwithstanding anything in this subsection (b) to the contrary, BLP
       agrees that it will not terminate this Agreement as a result of
       Pharmos' breach hereunder.

            2.11 Second Source.
                 _____________

            Pharmos agrees that, in consultation with BLP, Pharmos shall
       use good faith efforts in order to identify, qualify and conclude a
       supply contract with a second manufacturer for the Drug Substance on
       terms acceptable to Pharmos in its reasonable discretion.  BLP
       agrees that it shall bear ******* percent (**%) [Confidential
       Information omitted and filed separately with the SEC] of Pharmos'
       verifiable out of pocket fees and expenses reasonably incurred in
       such efforts ("Second Source Costs"), payable within thirty (30)
       days of receipt by BLP of appropriate invoices for, and reasonable
       documentation of, such expenses from Pharmos.  BLP may credit
       against its obligation to contribute **% [Confidential Information
       omitted and filed separately with the SEC] of the Second Source
       Costs BLP's direct and verifiable labor cost of research and
       development and other technical services ("R&D") requested by
       Pharmos and/or reasonably and actually rendered by BLP's R&D
       personnel in connection with Pharmos' efforts under this Section
       2.11 based upon the proportion of R&D hours actually expended with
       respect to such matters relative to total R&D hours reasonably
       available at BLP computed on the basis of a 5-day, 40 hour work
       week.  Pharmos may also count in the calculation of Second Source
       Costs incurred by Pharmos under this Section 2.11 Pharmos' direct
       and verifiable labor costs of R&D reasonably and actually incurred
       by Pharmos' R&D personnel under this Section 2.11 on the same basis
       as set forth above.

            2.12 Generic Versions of Drug Product. 
                 ________________________________

            (a)  Notwithstanding anything in this Agreement to the
       contrary, if the Patent Rights are held to be invalid or
       unenforceable in a final decision (which has not been appealed) by a
       court of competent jurisdiction as a result of any action or
       proceeding brought by a third party (an "Invalidity Event"), or upon


                                     - 14 -
<PAGE>
       the last to expire of the Patent Rights with respect to a particular
       Drug Product (an "Expiration Event"), BLP shall have the right in
       each instance to manufacture, use, sell, promote and distribute a
       generic equivalent to any such Drug Product (each a "Generic").  If
       BLP submits an Abbreviated New Drug Application for a Generic with
       respect to any Drug Product (an "ANDA"), it shall notify Pharmos in
       writing at least ninety (90) days prior to the anticipated date of
       submission.  If at the time of the actual submission of such ANDA
       Pharmos has not granted to BLP any specific rights in or to the NDA
       describing the Drug Product which is the branded form of the
       Generic, or to any Patent Rights that may remain in effect at the
       time of such submission, then at the option of Pharmos exercised in
       its discretion, Pharmos may by written notice to BLP delivered
       within sixty (60) days of such submission either (i) in the case of
       an Invalidity Event or Expiration Event, cause the marketing rights
       granted to BLP under Section 2.3 above to become and thereafter
       remain non-exclusive, or (ii) in the case of an Invalidity Event,
       terminate BLP's rights under this Agreement with respect to the Drug
       Product which is the equivalent to the Generic, such exercise to be
       effective in the case of this subpart (ii) no earlier than the date
       of approval of the Generic. 

            (b)  If prior to submission of an ANDA with respect to a
       Generic for a Drug Product BLP has requested the grant of the rights
       set forth in the third sentence of subsection (a) above with respect
       to such Generic, then such Generic shall be deemed to be a "Drug
       Product" for all purposes of this Agreement and any other agreement
       between Pharmos and BLP which may then be in full force and effect.
       Pharmos agrees that if BLP requests the grant of rights contemplated
       in this Section 2.11, it shall grant such rights under the terms and
       conditions of this Agreement without the payment of any additional
       compensation by BLP to Pharmos other than the payment of the Product
       Price to which Pharmos is entitled with respect to any sale of a
       Drug Product by BLP under this Agreement.  Notwithstanding anything
       in this Agreement to the contrary, BLP agrees that it shall have no
       right, except as permitted hereunder, to market, distribute or sell
       any Generic under any NDA.

                                    ARTICLE III

                            PROCESSING OF DRUG PRODUCT

            3.1  Processing.
                 __________

            Except as otherwise provided herein, and in consideration of
       the rights granted to BLP hereunder, during the term of this
       Agreement BLP shall Process Drug Substance into Drug Product in
       accordance with the applicable Specifications, CGMP requirements,
       the applicable NDA, the FDC Act and otherwise in accordance with
       this Agreement.  BLP further agrees to Process Drug Product and
       Placebo Product for sale by Pharmos and third parties pursuant to
       the terms of the Processing Agreement if and to the extent Pharmos
       shall exercise the co-marketing rights set forth in Section 2.6
       above in accordance with Section 2.6 above.

                                     - 15 -
<PAGE>
            3.2  Drug Substance Consignment.
                 __________________________

            (a)  During the term of this Agreement, Pharmos shall deliver
       on consignment to BLP (at Pharmos' sole cost and expense) for
       Processing into Drug Product and subsequent distribution of Drug
       Product by BLP, a supply of Drug Substance as and when ordered by
       BLP in accordance with the procedures set forth in this Section 3.2.
       All Drug Substance delivered to BLP by Pharmos (i) shall continue to
       be the sole and exclusive property of Pharmos and full and complete
       title therein shall remain with Pharmos until such time as BLP shall
       remove Drug Substance from its warehouse and commences Processing of
       such Drug Substance, and (ii) shall be kept reasonably segregated
       and separate from all other products and materials stored or
       warehoused at the Facility. BLP agrees that Pharmos may file, and
       BLP shall execute, Uniform Commercial Code financing statements
       evidencing the ownership by Pharmos of Drug Substance on consignment
       in the possession of BLP from time to time.  BLP shall keep complete
       and accurate records detailing the receipt of each shipment of Drug
       Substance received by BLP and each unit of Drug Product Processed by
       BLP under this Agreement.  To the extent practicable and at no
       additional premium cost to BLP, BLP agrees to cause Pharmos to be
       named as an additional insured with respect to any policies of
       insurance carried by BLP and covering the loss of any Drug Substance
       held on consignment by BLP from Pharmos for Processing under this
       Agreement due to fire or other casualty of the type customarily
       insured at the Facility.

            (b)  By the twentieth day of every other calendar month after
       the initial forecast described below, BLP shall submit to Pharmos a
       written forecast listing BLP's reasonably estimated requirements of
       Drug Substance for the subsequent twelve (12) month period,
       presented in six two (2) month intervals, on a rolling basis.  BLP's
       initial twelve (12) month rolling forecast for the Initial Drug
       Product shall be provided to Pharmos no later than thirty (30) days
       following FDA approval of the Initial NDA. Unless otherwise agreed
       in writing by the parties, BLP's estimated bi-monthly requirements
       of Drug Substance set forth in each rolling forecast shall be
       delivered or caused to be delivered by Pharmos to BLP F.O.B. the
       Facility, commencing within thirty (30) days of the date each
       written forecast is forwarded to Pharmos, and continuing thereafter
       on a timely basis.  Each shipment of Drug Substance delivered to BLP
       hereunder shall be accompanied by a certificate of analysis which
       evidences testing of the Drug Substance for conformity to
       Specifications (except for bioburden, the testing for which shall be
       the responsibility of BLP). The parties agree that consigned Drug
       Substance will be delivered to BLP in such batch sizes as the
       parties shall mutually agree from time to time in order to minimize
       waste and loss in the Processing of Drug Substance into Drug Product
       by BLP.

            (c)  Drug Substance shall be received by BLP subject to BLP's
       inspection and may be rejected if found not to conform to the
       Specifications or otherwise fail to be as warranted hereunder.


                                     - 16 -
<PAGE>
       Within two (2) business day of delivery of Drug Substance, BLP shall
       inspect such shipment of Drug Substance for visually obvious defects
       and report such defects immediately to Pharmos.  Within thirty (30)
       days of delivery to BLP, BLP may undertake its own quality control
       tests to ensure that the Drug Substance delivered is in accordance
       with the terms of this Agreement.  Pharmos' representatives may be
       present at the Facility during the conduct of such quality control
       tests by BLP.  BLP shall be deemed to have accepted each shipment of
       Drug Substance delivered by Pharmos if Pharmos does not receive
       written notice to the contrary within thirty (30) days of delivery.

            (d)  All claims for shortages or other damage not visually
       obvious shall be reported in writing to Pharmos within thirty (30)
       days after the date of arrival of each shipment of Drug Substance at
       the Facility.  At Pharmos' request, BLP shall promptly supply either
       some of the Drug Substance which is allegedly defective or some
       other evidence of deficiency which Pharmos shall reasonably specify.
       If Drug Substance does not meet Specifications, or is subject to any
       claim, defect or shortage, the rejected Drug Substance shall not be
       used by BLP and shall be returned promptly by BLP to Pharmos at
       Pharmos' expense, or such other mutually agreed upon response shall
       be undertaken.  Pharmos shall replace such rejected Drug Substance
       with such quantity of Drug Substance which conforms to the
       Specifications as soon as practicable. In the event of any dispute
       between BLP and Pharmos as to whether any of the Drug Substance
       delivered to BLP conforms with the Specifications, samples of the
       Drug Substance in dispute shall be sent to the Testing Laboratory,
       whose findings shall be binding on the parties except in cases of
       gross and manifest error on the part of the Testing Laboratory;
       provided, however that if the Testing Laboratory determines that the
       Drug Substance is not defective, the parties agree that BLP's sole
       obligation shall be to use reasonable, good faith efforts to
       reconcile its quality assurance testing results with the findings of
       the Testing Laboratory. If BLP is unable to reconcile such results,
       BLP shall have no obligation to use the rejected Drug Substance. The
       cost of such testing with the Testing Laboratory shall be borne by
       the losing party.

            (e)  BLP shall store the inventory of consigned Drug Substance
       and Drug Product Processed pursuant to this Agreement in compliance
       with all applicable FDA and FDC Act requirements, with sound
       commercial practices common to the industry, and with the same
       degree of care which BLP applies to its own raw materials and
       finished products; and such inventories shall be reserved
       exclusively for the Processing of Drug Substance into Drug Product
       under this Agreement.  BLP shall be entitled from time to time to
       withdraw from the consigned inventory of Drug Substance in its
       possession, in appropriate batch sizes, a sufficient quantity of
       Drug Substance necessary for BLP to meet its Processing needs, or to
       make such other use of the Drug Substance necessary to comply with
       CGMP requirements and/or the FDC Act.

            (f)  Notwithstanding anything in this Article III to the
       contrary, Pharmos warrants to BLP that the Drug Substance, when


                                     - 17 -
<PAGE>
       shipped to BLP, will conform to the Specifications, will not be
       adulterated or misbranded within the meaning of the FDC Act, and
       will have a remaining shelf life of no less than *************
       months [Confidential Information omitted and filed separately with
       the SEC].

                                    ARTICLE IV

                         DRUG PRODUCT DEVELOPMENT AND R&D

            4.1  Services.
                 ________

            BLP shall exercise its commercial and scientific good faith
       efforts to continue to perform the Services with respect to the
       Initial Drug Product, and will perform such Services with respect to
       any subsequent Drug Product, and to develop a DMF covering the
       Processing of the Drug Substance into the Initial Drug Product and
       any subsequent Drug Product, provided that BLP shall not be
       obligated to perform such Services or develop a DMF with respect to
       any Drug Product or Development Product with respect to which BLP
       shall have lost all marketing rights under this Agreement.  Such
       efforts shall be consistent with those employed by BLP for its own
       proprietary drug products.  BLP shall allow Pharmos to continue to
       reference any DMF in the course of seeking and obtaining FDA
       approval of the Initial NDA and any subsequent NDA, and shall
       provide Pharmos with a DMF reference letter in each case; provided,
       however, that BLP shall have no obligation to disclose to Pharmos
       the contents of any DMF.  BLP further agrees to continue to provide
       Pharmos with BLP Technical Documentation as Pharmos may reasonably
       deem necessary or appropriate solely in order for Pharmos to obtain
       and thereafter maintain FDA approval of the Initial NDA and any
       subsequent NDA as Pharmos may from time to time reasonably request
       during the Term.

            4.2  Performance of Services.
                 _______________________

            BLP agrees to perform the Services with respect to Drug
       Products and Drug Substance in accordance with CGMP requirements.
       Except for the foregoing, and as otherwise specifically stated in
       this Agreement, BLP makes no other agreement with respect to the
       performance of the Services, and BLP shall have no liability
       whatsoever for Pharmos' failure to obtain FDA approval of any NDA.
       Pharmos shall be solely responsible for obtaining approval of the
       NDA by FDA at its sole expense and cost, and, subject to Section 4.1
       above, BLP shall be solely responsible for providing the Services at
       its sole expense and cost.








                                     - 18 -
<PAGE>
                                     ARTICLE V

                             RESEARCH AND DEVELOPMENT

            5.1  Development Products.
                 ____________________

            As soon as is mutually convenient for the parties, Pharmos and
       BLP agree to use good faith efforts to prepare a mutually agreeable
       research and development plan for each Development Product (each an
       "R&D Plan").  Each R&D Plan shall be of scope customary in the trade
       for the development of new drug compounds, and shall include without
       limitation proposed formulations, safety and efficacy targets and
       anticipated budgets.  If the parties shall not have agreed on the
       R&D Plan for a particular Development Product after good faith
       efforts, the parties shall submit their respective positions on such
       R&D Plan to a mutually agreeable consultant with relevant expertise
       with ophthalmic drug products for recommendations on the matter(s)
       in dispute, which recommendations shall be approved by both parties
       in their reasonable discretion.

            5.2  Pharmos' Development Obligations.
                 ________________________________

            If mutually agreed to by the parties, Pharmos shall use good
       faith, scientifically reasonable efforts to execute
       each R&D Plan substantially in accordance with its terms and in
       consultation with BLP.  In connection therewith, Pharmos shall be
       responsible for the preparation and conduct of all Phase I, II and
       III studies and other clinical trials as may be included in the
       subject R&D Plan, the preparation, submission and maintenance of any
       NDA's in connection therewith in the name of Pharmos, the provision
       to BLP of Drug Substance necessary for use in the generation of
       suitable materials for the conduct of related clinical trials, and
       generally otherwise do all such things with respect to a Development
       Product as previously done by Pharmos in connection with the Initial
       Drug Product.  Except as specifically set forth in this Agreement or
       as otherwise agreed in writing by Pharmos and BLP, all actions taken
       by Pharmos in connection with its obligations under this Section
       shall be at the sole cost and expense of Pharmos.

            5.3  BLP's Development Obligations. 
                 _____________________________

            (a)  If and when mutually agreed to by the parties, BLP shall
       use good faith, scientifically reasonable efforts to support the
       activities of Pharmos under Section 5.2 above in connection with the
       development of each Development Product.  In connection therewith,
       BLP shall prepare and provide Pharmos with copies of any validation
       and stability studies (including related documentation) and related
       DMF's as may be contemplated by the relevant R&D Plan, and shall be
       responsible for performing any Phase IV studies which may be
       necessary to comply with FDA rules or regulation or which BLP
       reasonably determines to be advisable to support the marketing and


                                     - 19 -
<PAGE>
       sales of Drug Product.  In addition, and subject to the provision of
       suitable Drug Substance by Pharmos as contemplated in Section 6.2
       above, BLP shall supply Pharmos with suitable clinical materials in
       accordance with CGMP requirements for use in Phase I, II and III
       clinical studies of a Development Product, and such materials shall
       meet all other applicable legal and regulatory requirements for use
       in the Territory.  Except as specifically set forth in this
       Agreement or as otherwise agreed in writing by Pharmos and BLP, all
       actions taken by BLP in connection with its obligations under this
       Section 5.3 shall be at the sole cost and expense of BLP, provided
       that BLP shall not be obligated to incur more than $150,000 of
       direct out-of-pocket expenses in connection with its obligations to
       provide Pharmos with clinical trial materials of each Development
       Product under this Section.

            (b)  Notwithstanding the foregoing, if BLP loses any rights
       which it may have to market and sell a Development Product under
       this Agreement for any reason, BLP shall not be obligated to provide
       the support activities described in subsection (a) above with
       respect to such Development Product, provided that if BLP so elects
       not to provide such support activities with respect to such
       Development Product, Pharmos may by written request to BLP purchase
       all or any part such support activities from BLP at a commercially
       reasonable cost and on commercially reasonable terms mutually agreed
       to by the parties.

            5.4  Research Funding.
                 ________________

            Notwithstanding anything in this Article V to the contrary, the
       parties agree that BLP shall contribute to Pharmos    fifty percent
       (50%)     of Pharmos' out-of-pocket costs of the Phase III clinical
       studies for each Development Product conducted pursuant to R&D Plans
       approved by the parties net of any third party funding, provided
       that in no event shall BLP be responsible for more than $*********
       [Confidential Information omitted and filed separately with the SEC]
       in such cost contribution for each Development Product, and provided
       further that in no event shall BLP be obligated to contribute to
       Pharmos for each Development Product in calendar year 1996 in excess
       of $********* [Confidential Information omitted and filed separately
       with the SEC], with the balance, if any, to be paid in calendar year
       1997.  Pharmos agrees to provide BLP with reasonably detailed,
       customary statements for all sums to be contributed by BLP under
       this Section 5.4 no more often than monthly, and BLP agrees to pay
       such sums within thirty (30) days of each such request for
       contribution.

            5.5  Third Party Funding.
                 ___________________

            Pharmos agrees that it will use good faith efforts to make an
       application or applications for a Bird F Foundation grant to support
       the research and development of either or both of the Development
       Products in accordance with their respective R&D Plans.


                                     - 20 -
<PAGE>
            5.6  R&D Committee.
                 _____________

            Pharmos and BLP agree to form a Research and Development
       Committee with respect to the performance of the R&D Plans.  The
       Committee will consist of three (3) members appointed by Pharmos and
       two (2) members appointed by BLP.  The Committee will monitor and
       evaluate the performance of the R&D Plans by both parties.  The
       Committee shall also attempt in the first instance to resolve any
       matters which may be disputed between Pharmos and BLP with respect
       to research and development matters which are not otherwise
       addressed in this Agreement or any other agreements between the
       parties, provided that the failure of the Committee to resolve any
       such dispute shall not constitute a default under, or breach of,
       this Agreement.

            5.7  Good Faith Efforts.
                 __________________

            The parties acknowledge that the outcome of research and
       development activities, grant applications and other matters which
       may affect such outcomes are not predictable and that either party
       may encounter scientific, legal or commercial obstacles to the
       development of LET and/or LEA.  In such event, the party
       encountering the obstacle shall exercise good faith best efforts to
       remove such obstacle; provided, however, that the failure of either
       party to remove such obstacle following the exercise of such efforts
       shall not constitute a breach of, or a default under this Agreement
       in the event that such obstacle is beyond the reasonable control of
       either party and/or the remedy of such obstacle would be
       commercially impractical or require a commercially unreasonable
       expenditure of financial resources.  Notwithstanding the foregoing,
       BLP and Pharmos acknowledge and agree that BLP shall not have any
       rights or obligations with respect to a Development Product under
       this Agreement (including without limitation any rights or
       obligations under Articles II or IV, or Sections 5.3 or 5.4, of this
       Agreement) if either (i) BLP and Pharmos fail to agree on a mutually
       acceptable R&D Plan with respect to such Development Product, or
       (ii) BLP shall fail in any instance to meet its obligations with
       respect to advances and/or development contributions with respect to
       such Development Product as set forth in Sections 2.7, 5.3 and 5.4
       above (provided that in the case of subpart (i) above if the parties
       are unable to agree on the protocols and/or safety and efficacy
       targets to be included in an R&D Plan, the parties shall first
       submit their respective positions on such matters to a mutually
       agreeable consultant with relevant ophthalmic drug product expertise
       for recommendations on the matter(s) in dispute).

            5.8  Inventions.
                 __________

            Any inventions which result from the efforts of either party
       taken in accordance with this Article V shall be owned as follows:
       (i) by Pharmos if such invention pertains solely to the Drug


                                     - 21 -
<PAGE>
       Substance or Drug Product; (ii) by BLP if such invention pertains
       solely to Processing Drug Substance into Drug Product; and (iii)
       jointly by both parties if such invention pertains to any other use
       other than as set forth in subparts (i) and (ii) above.  The parties
       agree to execute such instruments and assignments as either party
       may reasonably request of the other in order to carry out the
       intention of the preceding sentence.  Each party shall be
       responsible for all costs and expenses with respect to patent
       prosecution for any invention owned solely by such party.  Neither
       party shall file a patent application for, or grant to any third
       party any rights in or to, any invention described in subpart (iii)
       above except upon the mutual agreement of the parties not
       unreasonably withheld.


                                    ARTICLE VI

                              ADDITIONAL OBLIGATIONS

            6.1  Notice of FDA Communication.
                 ___________________________

            Each party shall promptly, but in no event more than three (3)
       business days after receipt thereof, advise the other, and provide
       copies or transcriptions, if available, of any FDA Communication
       regarding the Drug Product and/or the Drug Substance, any NDA, BLP's
       DMF relating to the Drug Product, or any other related matters.

            6.2  Adverse Drug Reaction Reports.
                 _____________________________

            BLP shall establish a system for monitoring, investigating and
       following-up on adverse reaction reports involving the Drug Product
       Processed by BLP under this Agreement. If either party becomes aware
       that the Drug Product Processed by BLP contains a defect which could
       or did cause death or injury, each party shall immediately by FAX
       and telephone provide the other with a complete written description
       of all relevant details known to such party concerning any such
       incident, including but not limited to, a description of any defect
       and such other information which may be necessary to report the
       incident to the FDA. BLP will be responsible for preparing adverse
       drug reaction reports, administering adverse drug reaction files
       relating to the Drug Product and filing all such reports with FDA,
       at its sole expense, with respect to Drug Product Processed by BLP
       under this Agreement.  The obligations of BLP under this Section 6.2
       with respect to a particular Drug Product shall terminate at such
       time as BLP is no longer entitled to market and sell such Drug
       Product unless and to the extent otherwise required by applicable
       laws, rules or regulations.







                                     - 22 -
<PAGE>
            6.3  Complaint Handling.
                 __________________

            If Pharmos or BLP receives any complaint, claims or adverse
       reaction reports regarding Drug Product, including notices from the
       FDA regarding any alleged regulatory non-compliance of the Drug
       Product, each party shall, within five (5) business days of receipt
       with respect to medical reports and ten (10) business days of
       receipt with respect to any other product reports (or in either case
       such shorter periods as may be required by applicable laws, rules,
       or regulations), provide the other with all information contained in
       the complaint, report, or notice and such additional information
       regarding the specific Drug Product as may be reasonably requested,
       except knowledge of Drug Product incidents described in Section 6.2
       above, which shall be communicated by FAX and telephone report.
       Pharmos shall comply, at a minimum, with FDA and CGMP requirements
       for complaint handling. Pharmos will decide which complaints are to
       be submitted to the FDA according to applicable law, and shall
       provide a copy of any such submission to BLP.

            6.4  New Territories.
                 _______________

            BLP and Pharmos shall enter into discussions regarding
       additional territories for distribution of Drug Product by BLP, on
       terms mutually agreed to by the parties, including Mexico, Canada
       and/or Europe (the "New Territories").  If Pharmos requests BLP to
       incur out-of-pocket costs with respect to activities that do not
       otherwise constitute Services relating to the Territory before BLP
       and Pharmos mutually agree on the terms governing the distribution
       of Drug Product by BLP in the New Territories, Pharmos shall
       reimburse BLP for such costs on a monthly basis, within thirty (30)
       days of the end of each month. If BLP and Pharmos are unable to
       mutually agree on terms governing distribution of Drug Product by
       BLP in the New Territories, BLP agrees to Process and supply Drug
       Product to Pharmos on the terms set forth in the Processing
       Agreement.

                                    ARTICLE VII

                           INTELLECTUAL PROPERTY RIGHTS

            7.1  Representations of Pharmos.
                 __________________________

            Pharmos represents and warrants to BLP that (i) Pharmos has the
       right to provide Drug Substance to BLP for the Processing of Drug
       Substance into Drug Product under this Agreement and (ii) to the
       best of Pharmos' knowledge after diligent investigation under the
       circumstances, the manufacture, use or sale of Drug Product
       incorporating the Drug Substance does not infringe or violate any
       intellectual property rights of others.  Pharmos represents and
       warrants to BLP that, to the best of Pharmos' knowledge after
       diligent investigation under the circumstances, the Patent Rights


                                     - 23 -
<PAGE>
       covering the Drug Substance are valid and enforceable, and there are
       no other U.S. Patents with claims that cover the Drug Substance or
       Drug Product.  No right or license is granted to Pharmos, expressly
       or by implication, under any patent, proprietary right, tradename,
       trademark, service mark or copyright of BLP or Bausch & Lomb
       Incorporated.  Under no circumstance shall Pharmos use BLP's or
       Bausch & Lomb Incorporated's name, tradenames, trademarks, service
       marks or copyrights, in connection with the Drug Product or Placebo
       Product, unless BLP specifically has given prior written approval
       for any such particular use.

            7.2  Representations of BLP.
                 ______________________

            BLP represents and warrants to Pharmos that (i) BLP has the
       right to Process Drug Substance into Drug Product and otherwise
       perform its obligations under this Agreement, and (ii) to the best
       of BLP's knowledge after diligent investigation under the
       circumstances, BLP has all intellectual property rights (or can
       acquire such rights under commercially reasonable terms) to perform
       the Processing of Drug Substance into Drug Product.  No right or
       license is granted to BLP, expressly or by implication, under any
       patent, proprietary right, tradename, trademarks, service mark or
       copyright of Pharmos. Under no circumstance shall BLP use Pharmos'
       name, tradenames, trademarks, service marks or copyrights in
       connection with the Drug Product or Placebo Product unless Pharmos
       specifically has given prior written approval for any such
       particular use.

                                   ARTICLE VIII

                                  CONFIDENTIALITY

            8.1  Confidential Information.
                 ________________________

            Pharmos and BLP agree that all Technology and other proprietary
       or confidential information owned by each other, including any
       Technology and proprietary or confidential information previously
       described in or by the Prior Agreements (collectively, the
       "Confidential Information"), and provided to or possessed by the
       other party, shall be kept strictly confidential and each party
       agrees further that:

                 (a)  all such information so possessed or accessed shall
       remain the exclusive property of the other party;

                 (b)  it shall maintain, and shall use reasonable and
       prudent efforts to cause its employees and agents to maintain, all
       such information as confidential;

                 (c)  it shall not, and shall use reasonable and prudent
       efforts to ensure that its employees and agents do not copy,
       publish, disclose to others, or preempt and use for any purposes


                                     - 24 -
<PAGE>
       (other than for purposes of fulfilling its obligations pursuant to
       this Agreement) any such information;

                 (d)  it shall return such information to the other party
       upon termination of this Agreement; and
                 (e)  it shall maintain, and shall use reasonable and
       prudent efforts to cause its employees and agents to maintain, all
       such information in a clean, orderly, and businesslike fashion and
       in accordance with any applicable governmental regulations.

            8.2  Exception.
                 _________

            Provided that BLP and Pharmos provides the other party with
       written notice in advance of the need to disclose any of the
       Confidential Information obtained from the other party in connection
       with this Agreement, Section 10.1 shall not apply to  information
       disclosed by either party:

                 (a)  to any governmental or other regulatory authority in
       response to a subpoena; or

                 (b)  to ensure compliance with local state or federal
       laws; or

                 (c)  as may be required to ensure compliance with law or
       in connection with a litigation or legal process; or

                 (d)  to the extent that any of the information is in or
       enters the public domain or is received from a third party without
       breach of any obligation of confidentiality to BLP or Pharmos or is
       independently developed by BLP or Pharmos.

                                    ARTICLE IX

                            INDEPENDENCE OF THE PARTIES

            BLP and Pharmos shall at all times act as independent parties
       without the right or authority to bind the other with respect to any
       agreement, representation or warranty made with or to any third
       party. Except as other-wise stated herein, BLP and Pharmos each
       shall be responsible for all costs, expenses, taxes and liabilities
       arising from the conduct of its own business, as well as for the
       activities of its officers, directors, agents or employees, and each
       shall hold harmless and indemnify the other from any such
       obligations.









                                     - 25 -
<PAGE>
                                     ARTICLE X

                               TERM AND TERMINATION

            10.1 Term.
                 ____

            The initial term of this Agreement shall commence on the date
       hereof and shall continue until the last to expire of the Patent
       Rights.

            10.2 Termination.
                 ___________

            Except as otherwise stated herein, this Agreement may be
       terminated upon the happening of one or more of the following
       events:

            (i)  By either party in the case of a material or persistent
       breach by the other party of any one or more of the material terms
       of this Agreement which is not remedied within thirty (30) days
       after written notice of the breach by the terminating party, or if
       such breach cannot reasonably be cured with such thirty (30) day
       period, the breaching party has failed to commence such cure within
       such period and diligently prosecute such cure to completion within
       a reasonable time thereafter;

            (ii) Immediately by either party in the event that the other
       party attempts to assign this Agreement in any manner or
       circumstance other than those expressly permitted in Article XIV
       below;

            (iii) Immediately by Pharmos if BLP files a petition in
       bankruptcy or a petition in bankruptcy is filed against BLP which is
       not vacated within sixty (60) days, or BLP becomes insolvent or
       makes an assignment for the benefit of creditors generally or any
       arrangement pursuant to any bankruptcy or insolvency law;

            (iv) Immediately by BLP if a Competitor directly or indirectly
       (X) becomes the beneficial owner of more than *********** percent
       (**%) [Confidential Information omitted and filed separately with
       the SEC] of Pharmos' total voting securities, (Y) purchases all or
       substantially all of the assets of Pharmos related to the Drug
       Substance, or (Z) otherwise acquires Control (as defined in Section
       14.1(b) below) over the business and affairs of Pharmos; and

            (v)  Immediately by Pharmos if a Competitor directly or
       indirectly (X) becomes the beneficial owner of more than ***********
       percent (**%) [Confidential Information omitted and filed separately
       with the SEC] of BLP's total equity securities, (Y) purchases all or
       substantially all of the assets of BLP with respect to the
       Processing of Drug Product, or (Z) otherwise acquires Control over
       the business and affairs of BLP.



                                     - 26 -
<PAGE>
            10.3 Effect of Termination.
                 _____________________

            Within thirty (30) days following the effective date of
       termination of this Agreement, BLP will provide Pharmos with a
       detailed accounting of (i) the amount of consigned Drug Substance
       held by or for BLP in the form in which it was delivered to BLP by
       Pharmos, (ii) the amount of Drug Product being Processed by BLP for
       sale by BLP, and (iii) the amount of Drug Product then held in
       inventory by BLP (including Drug Product which has not been
       subjected to BLP's quality assurance testing procedures).  Unless
       otherwise mutually agreed by the parties prior to the effective date
       of termination and subject to any other rights granted to BLP by
       Pharmos, (X) BLP will return to Pharmos all Drug Substance held on
       consignment by BLP for Pharmos, and (Y) BLP shall be entitled to
       finish the Processing of all Drug Substance in BLP's possession for
       use by BLP, and to market and sell all finished goods inventory of
       Drug Product in its possession, for a period of six (6) months
       following termination at a price and on terms no less favorable to
       BLP as the price and terms generally offered to purchasers of Drug
       Product by BLP prior to termination.

            10.4 Effect on Other Obligations.
                 ___________________________

            No termination of this Agreement shall have any effect on, or
       relieve either party from, (i) the obligation to make any payment or
       perform any act arising prior to the effective date of termination,
       and (ii) the performance of their respective obligations under the
       Processing Agreement in accordance with the terms and conditions of
       the Processing Agreement. 


                                    ARTICLE XI

                                   FORCE MAJEURE

            Notwithstanding anything in this Agreement to the contrary
       (except with respect to Section 2.10 above until such time as BLP
       shall have recouped an aggregate of $********* [Confidential
       Information omitted and filed separately with the SEC] of advances
       paid to Pharmos pursuant to Section 2.7 above), neither party shall
       be liable for delay or failure in the performance of any of its
       obligations under this Agreement if and to the extent such delay or
       failure is due to circumstances beyond the reasonable control of
       such party, including but not limited to fires, floods, explosions,
       accidents, acts of God, war, riot, strike, lockout or other
       concerted acts of workers, acts of government and shortages of
       materials; provided, however, that the party claiming that "force
       majeure" has affected its performance shall give notice to the other
       party within ten (10) days of becoming aware of the occurrence of
       force majeure, giving full particulars of the cause or event and the
       date of first occurrence thereof, and provided further that until
       such time as BLP shall have recouped all advances paid to Pharmos


                                     - 27 -
<PAGE>
       pursuant to Section 2.7 above, any FDA enforcement action other than
       with respect to Processing by BLP shall not constitute "force
       majeure."  The party claiming force majeure shall use its best
       efforts to eliminate or prevent the cause so as to continue
       performing its obligations under this Agreement.


                                    ARTICLE XII

                                  INDEMNIFICATION

            12.1 Indemnification of BLP.
                 ______________________

            Pharmos shall indemnify, defend, save and hold BLP and each of
       its Affiliates, officers, directors, employees and agents harmless
       from and against all claims, liabilities, costs and expenses,
       resulting from third party claims, including without limitation
       reasonable attorneys' fees and disbursements, arising as a result of
       (a) any material breach of any warranty hereunder or material non-
       fulfillment or non-performance by Pharmos of any agreement, covenant
       or obligation of Pharmos under this Agreement; (b) any actual or
       alleged defect in any Drug Product Processed by BLP and delivered to
       Pharmos hereunder other than arising out of BLP's failure to Process
       Drug Product in accordance with the terms of this Agreement; (c) any
       actual or alleged infringement or violation of any patent, trade
       secret or proprietary right governing the Drug Substance or a Drug
       Product (exclusive of any actual or alleged infringement or
       violation of any patent, trade secret or proprietary rights used by
       BLP in Processing Drug Product); (d) FDA enforcement action,
       inspections or Drug Product recalls or market withdrawals except
       where arising out of or resulting from BLP's failure to Process Drug
       Product in accordance with the terms of this Agreement; (e) Pharmos'
       acts relating to the promotion, marketing and/or distribution of
       Drug Product, except where arising out of or resulting from BLP's
       failure to Process Drug Product in accordance with the terms of this
       Agreement or, if applicable, the Processing Agreement; and (f)
       breach by Pharmos of the terms of any agreement pursuant to which
       Pharmos has obtained any rights in connection with or related to the
       Drug Substance and Drug Product.

            12.2 Indemnification of Pharmos.
                 __________________________

            BLP shall indemnify, defend, save and hold Pharmos and each of
       its Affiliates, officers, directors, employees and agents harmless
       from and against all claims, liabilities, costs and expenses
       resulting from third party claims, including without limitation
       reasonable attorneys' fees and disbursements, arising as a result of
       (a) any material breach of any warranty hereunder or material non-
       fulfillment or non-performance by BLP of any agreement, covenant or
       obligation of BLP under this Agreement; (b) any actual or alleged
       defect in any Drug Product Processed and delivered to Pharmos
       hereunder arising out of BLP's failure to Process Drug Product in


                                     - 28 -
<PAGE>
       accordance with the terms of this Agreement; (c) any actual or
       alleged infringement or violation of any patent, trade secret or
       proprietary rights used by BLP in Processing Drug Product; and (d)
       FDA enforcement action, inspection or Drug Product recalls or market
       withdrawals resulting from BLP's failure to Process the Drug Product
       in accordance with the terms of this Agreement.

            12.3 Notice.
                 ______

            As a prerequisite for indemnification hereunder as soon as the
       party claiming indemnification has actual notice of the matter for
       which indemnification is sought, it shall give prompt notice of such
       matter to the party claimed to be responsible for indemnification
       with the right to conduct any investigation reasonably necessary and
       to control the defense, appeal and settlement of the matter with the
       cooperation of the indemnitee, its employees and agents as may be
       reasonably requested by the indemnitor.

            12.4 Survival.
                 ________

            The indemnification contained herein shall survive any
       termination of this Agreement.

                                   ARTICLE XIII
                                      NOTICES

            Any notice, request, instruction or other communication
       required or permitted to be given under this agreement shall be in
       writing and shall be given by sending such notice properly addressed
       to the other party's address shown below (or any other address as
       either party may indicate by notice in writing to the other from
       time to time) (i) by hand or by prepaid registered or certified
       mail, return receipt requested, in either of such cases which notice
       shall be deemed delivered upon receipt, (ii) via telecopy or
       telegram, in either of such cases which notice shall be deemed
       delivered upon receipt, or (iii) via nationally recognized overnight
       courier, in which case such notice shall be deemed delivered upon
       receipt. All such notices shall be deemed given when received:


            If to Pharmos, at:  Pharmos Corporation
                                2 Innovation Drive
                                Alachua, Florida 32615
                                Attn: President

            With a copy to:     Fitzpatrick Eilenberg & Zivian
                                666 Third Avenue, 30th Floor
                                New York, New York 10017
                                Attn: Adam D. Eilenberg, Esq.





                                     - 29 -
<PAGE>
            If to BLP, at:      Bausch & Lomb Pharmaceuticals, Inc.
                                8500 Hidden River Parkway
                                Tampa, Florida 33637
                                Attn: President

            With a copy to:     Bausch & Lomb Incorporated
                                One Chase Square
                                Rochester, NY 14601
                                Attn: General Counsel



                                    ARTICLE XIV

                                    ASSIGNMENT

            14.1 No Assignment.
                 _____________

            (a)  Except as otherwise specifically set forth in this
       Agreement above, neither party may assign any of their rights or
       obligations under this Agreement without the prior written consent
       of the other party hereto, which consent shall not be unreasonably
       withheld, provided that subject to other applicable conditions
       stated in this Agreement, (i) either party may assign this
       Agreement, in whole or in part, to an Affiliate (as defined below)
       of such party upon prior written notice to the other party, (ii) in
       the case of an assignment or attempted assignment by BLP to an
       Affiliate, Pharmos has been given the right to inspect and
       reasonably approve or disapprove of the facility operated by such
       BLP affiliate, (iii) Pharmos may assign this Agreement to a
       purchaser of all or substantially all of the business of Pharmos if
       such purchaser is not a Competitor, and (iv) neither party shall be
       deemed to have unreasonably withheld its consent to a request from
       the other party to assign any of such other party's rights or
       obligations under this Agreement to a Competitor.

            (b)  Neither party shall be deemed to have unreasonably
       withheld its consent with respect to any assignment which such party
       reasonably believes may adversely affect the status, validity or
       maintenance of any NDA. No assignment, whether approved or
       otherwise, shall relieve the assigning party of its responsibility
       for the performance of its obligations hereunder by its assignee.
       "Affiliate" means any entity controlling, controlled by or under
       common control with a referenced entity. "Control" means the direct
       or indirect right to control the business or affairs of the
       referenced entity, whether by the exercise of voting rights, by
       control of board of directors or other body with management or
       similar authority, by contract, by law or otherwise.







                                     - 30 -
<PAGE>
                                    ARTICLE XV

                                   MISCELLANEOUS

            15.1 Enforceability.
                 ______________

            The parties hereto agree that this Agreement shall be legally
       binding upon, and shall inure to the benefit of, each of them and
       their respective legal representatives, successors and permitted
       assigns.

            15.2 Entire Agreement.
                 ________________

            This Agreement including Schedules and Exhibits, contains the
       entire understanding of the parties relating to the subject matter
       hereof, and supersedes all prior discussions and agreements between
       them with respect to the specific subject matter herein contained,
       and, except as set forth herein, neither party shall be bound by any
       definition, condition, warranty, or representation other than as
       expressly stated in this Agreement or as subsequently set forth in
       any instrument in writing signed by an authorized officer of the
       party to be charged.

            15.3 Governing Law.
                 _____________

            This Agreement shall be governed by and interpreted in
       accordance with the laws of the United States and the State of New
       York as applied by the courts therein.

            15.4 Waiver.
                 ______

            No waiver by either party of any breach or default in
       performance by the other party, and no failure, refusal or neglect
       of either party to exercise any right, power or option given to it
       hereunder or to insist upon strict compliance with or performance of
       the other party's obligations under this Agreement, shall constitute
       a waiver of the provisions of this Agreement with respect to any
       subsequent breach thereof or a waiver by that party of its right at
       any time thereafter to require strict compliance with the provisions
       thereof.

            15.5 Counterparts.
                 ____________

            This Agreement may be executed in any number of counterparts,
       each of which shall be deemed an original but all of which together
       shall constitute one and the same agreement.





                                     - 31 -
<PAGE>
            15.6 Audit.
                 _____

            BLP shall keep accurate books and records (for a period of two
       (2) years from creation) reflecting fully and adequately BLP
       Adjusted Sales under this Agreement, in sufficient detail to permit
       verification thereof. During the term of this Agreement and for a
       period of two (2) years thereafter, BLP will permit these books and
       records to be examined and copied from time to time upon reasonable
       prior written notice, during normal working hours by Pharmos or any
       representative of Pharmos.  Such examination shall be made at
       Pharmos' expense, except that if such examination discloses a
       discrepancy of *% [Confidential Information omitted and filed
       separately with the SEC] or more in any amount due Pharmos under
       this Agreement, BLP shall reimburse Pharmos for the out-of-pocket
       cost of such examination, including any reasonable professional fees
       and expenses incurred by Pharmos.  In connection with any
       examination or copying of books and records in accordance with this
       Section, Pharmos or such representative of Pharmos shall examine
       only such information as is required to verify BLP's compliance
       under this Agreement.  Pharmos agrees to cause each representative
       to hold all such information in confidence and not use such
       information for any purpose other than for purposes of assisting
       Pharmos in the enforcement of its rights under this Agreement.

            15.7 Public Announcement.
                 ___________________

            Unless otherwise required by applicable laws, rules or
       regulations or by the FDA, neither party shall issue a press release
       or make any public announcement concerning this Agreement without
       the prior approval of the other party, which approval shall not be
       unreasonably withheld.

            15.8 Prior Agreements.
                 ________________

            The parties agree that the Prior Agreements are hereby
       terminated and of no further force or effect upon the execution and
       delivery of this Agreement and the Processing Agreement.















                                     - 32 -
<PAGE>
            IN WITNESS WHEREOF, the parties hereto have read and executed
       this Marketing Agreement and have set their hands and seals hereto
       as of the day and year first above written.



                                     BAUSCH & LOMB PHARMACEUTICALS, INC

                                     By:     s/ Alan P. Dozier              
                                             ________________________________

                                     Title:  President                  



                                     PHARMOS CORPORATION

                                     By:     s/ G. Riesenfeld               
                                             ________________________________

                                     Title:  Executive Vice President\C.O.O.


<PAGE>

                                   Schedule 1.26

                                   Patent Rights


            1.   U.S. Patent *********, expiration date *****************.

            2.   U.S. Patent Application ******** dated ****************.

       [Confidential Information omitted and filed separately with the SEC]

<PAGE>

                                   Schedule 1.33

                                     Services

            -    Preparation of Protocols governing (i) stability testing
       of Drug Product, Development Product and Drug Substance, (ii) Drug
       Substance particle size reduction, (iii) sterilization of Drug
       Substance, and (iv) validation of the foregoing.

            -    Manufacture and supply of clinical trial material of Drug
       Product for use in clinical trials.

            -    Stability testing of Drug Substance and Drug Product, and
       validation thereof.

            -    Validation of Drug Substance particle size reduction
       unless otherwise arranged by Pharmos.

            -    Validation of sterilization of Drug Substance.

            -    Response to FDA questions/comments on and IND or NDA filed
       by Pharmos relating to data and information provided by BLP to
       Pharmos.

            -    Validate the manufacturing process for LEA and LET.

<PAGE>
                                  Schedule 2.3(b)

                     Initial Drug Product Exclusivity Amounts

                 Product Year              Amount
                 ____________         ___________


                 1                   $ **********
                 2                     **********
                 3                     **********
                 4                     **********
                 5                     **********
                 6                     **********
                 7, 8, 9 and 10        **********
                 11 and thereafter     **********       

       [Confidential Information omitted and filed separately with the SEC]

<PAGE>
                                  Schedule 2.3(c)

                              LEA Exclusivity Amounts

                 Product Year         Min Amount      Max Amount
                 ____________         __________      __________

                 1                    $*********      $*********
                 2                     *********       *********
                 3                     *********       *********
                 4                     *********       *********
                 5                     *********       *********
                 6, 7, 8, 9 and 10     *********       *********
                 11 and thereafter     *********       *********


                              LET Exclusivity Amounts

                 Product Year          Min Amount      Max Amount
                 ____________          __________      __________

                 1                     $*********      $*********
                 2                      *********       *********
                 3                      *********       *********
                 4                      *********       *********
                 5                      *********       *********
                 6                      *********       *********
                 7, 8, 9 and 10         *********       *********
                 11 and thereafter      *********       *********

       [Confidential Information omitted and filed separately with the SEC]