ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this "Agreement") is dated as of February 11, 2009 by and between Pharmos Corporation ("Pharmos US"), Pharmos Ltd. ("Pharmos IL" and together with Pharmos US, the "Seller") and Reperio Pharmaceuticals Ltd., an Israeli company ("Buyer") (Seller and Buyer shall sometimes be referred to collectively as the “Parties”, and severally as a “Party”).

WHEREAS, Seller has been engaged in the research and development of CB2 synthetic small molecular drugs;

WHEREAS, Seller is the owner of the patent applications specified in Exhibit A (the "Applications") and the related Know How (as defined below).

WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase from Seller all right, title and interest in and to the Applications, any Patent Rights thereto, and the Know How (as defined below), on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises, the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt, adequacy, and sufficiency of all of which are hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:

“Additional Ingredient” shall mean any compound or substance which (i) is contained in a product and (ii) when administered to a patient has a therapeutic or prophylactic clinical effect independent of a Product (as defined below), either directly or by acting synergistically with or otherwise enhancing the effect of other compounds or substances other than the Product (as defined below) contained in such product.

"Affiliate" shall mean, with respect to a Party, any person, organization or entity controlling, controlled by or under common control with, such Party. For purposes of this definition only, “control” of another person, organization or entity shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the activities, management or policies of such person, organization or entity, whether through the ownership of voting securities, by contract or otherwise. Without limiting the foregoing, control shall be presumed to exist when a person, organization or entity (i) owns or directly controls more than fifty percent (50%) of the outstanding voting shares or other ownership interest of the other organization or entity, or (ii) possesses, directly or indirectly the power to elect or appoint more than fifty percent (50%) of the members of the governing body of the organization or other entity.

"Assets" means: (i) the Patent Rights; (ii) the Know How; (iii) any quantity of those compounds described in or covered by the Applications, held by Seller; (iv) any documentation in connection with the Sponsored Programs in either digital and/or hard copy, including without

limitation, the actual OCS grants received starting 2004, as reflected in the financial files prepared by the independent auditor of the Seller; and (v) the Contracts.

"Contracts" means the agreements with any of the following: (i) Prof. Manuel Guzman, Department of Biochemistry and Molecular Biology. School of Biology, Complutense University, Madrid, Spain, and (ii) CHDI Foundation Inc, the Huntingdon's Disease Research Group, US attached hereto as Exhibit B .

“Closing” shall have the meaning ascribed thereto in Section 1.5 hereof; including the closing of the transactions contemplated thereby;

“Combination Product” shall mean a product, compound or substance which comprises a Product (as defined below) and at least one Additional Ingredient.

"Exit Event" shall mean (a) a merger of the Buyer with any third party, following which the Buyer is not the surviving entity; (b) the sale of all or substantially all of the Buyer’s assets in one transaction or series of related transactions; or (c) the sale of all or substantially all of the issued and outstanding share capital of the Buyer by its then current shareholders to any third party.

“Encumbrances” means any and all leases, charges, claims, equitable interests, liens, options, rights of refusal, pledges, mortgage, assignments, security interests, sales contracts, license agreements or arrangements, any liability whatsoever to make any payment by way of royalties, fees or otherwise, restrictions, obligations or encumbrances of any kind with the exception of the Assumed Liabilities as defined below.

"Know How" means the know how, information, technology, formulae, data, designs, drawings, specifications, associated to and inventions described in the Applications, any other proprietary information required or useful for the exploitation of the Patent Rights and any intellectual property rights related thereto including: (i) all technical reports and documentation, chemical data and laboratory data and notebooks available at Pharmos IL relating solely to the Application, the compounds described therein and the process of the development thereof; (ii) the research and development programs conducted at Pharmos IL, with the support of the OCS resulting in the inventions described in the Applications and the supporting documentation; (iii) any customer and supplier lists (including contact details), pricing and cost information, and business and marketing plans, proposals and information relating solely to the compounds covered under the Applications; (iv) any material, data, correspondences and information in connection with the discussions and negotiations between Seller and any potential partner or collaborator, including without limitations,  the entities specified in Section 1.4(b) in connection with the Assets; and (v) any material, data, correspondences and information in connection with the Contracts and the activities taken thereunder. Certain items specified above are subject to confidentiality undertaking by Seller and shall be assigned subject to Buyer assuming such limitation.

“Liabilities” means (i) any and all indebtedness of Seller, whether or not evidenced by any contract, and (ii) all liabilities, duties and obligations of, and claims against, or relating to Seller, or to the operation of the business or the ownership, possession or use of any of the Assets

or any other assets by the Seller on or prior to the Closing, in each case whether accrued, unaccrued, matured, unmatured, absolute, contingent, known or unknown, asserted or unasserted and whether now existing or arising at any time prior to, at, or after the Closing.

“License Payment” shall mean any payments or other consideration that Buyer receives from an unaffiliated third party ("Licensee"), in consideration of or under a license, or the grant of an option to obtain a license, of some or all of the rights in the Patent Rights (whether or not any such grant of right is actually referred to as a license but specifically excluding any M&A type of transaction), including without limitation royalty payment, license fees, milestone payments and license maintenance fees but specifically excluding: (i) reimbursement for research and development and patent related expenses; (ii) payments specifically committed to cover future costs to be incurred by Buyer under further research and development program; and (iii) Royalties payable in accordance with Section 1.4 below in connection with sales by the Buyer ("Transaction"). In the event that the Transaction with the Licensee involves additional technology and/or intellectual property of the Buyer, then License Payment shall be determined by multiplying the amount received by the Buyer from the Licensee under the Transaction by the fraction of C/(C+D) where “C” is the fair market value of the Patent Rights; and “D” is the fair market value of all other technology and intellectual property included in the Transaction with Licensee.  In such event, the Parties shall negotiate in good faith to arrive at a determination of the respective fair market values of the Patent Rights and all other technology and intellectual property included in the Transaction.

"Patent Rights" means the Applications including, without limitation, all provisional applications, continuations, continuations-in-part, divisions, reissues, renewals, and all patents granted thereon, and all patents-of-addition, reissue patents, reexaminations and extensions or restorations by existing or future extension or restoration mechanisms, including, without limitation, supplementary protection certificates or the equivalent thereof.

"Sponsored Programs" the research and development programs conducted at Pharmos IL, with the support of the Office of the Chief Scientist of the Israeli Ministry of Industry, Trade and Labor (the “OCS”) and specified in Exhibit C.

Section 1.1                                 Sale and Purchase of the Assets .  On and subject to the terms and conditions set forth hereunder and in reliance upon the representations and warranties of the Parties set forth herein, effective as of and contingent upon the Closing, Seller shall and hereby does sell, transfer, convey, assign and deliver to Buyer, and Buyer shall purchase from Seller, all of Seller's Assets, rights, title and/or interest in the Assets as of the Closing.  The Assets shall be conveyed free and clear of all liabilities, obligations, or Encumbrances other than the Assumed Liabilities specified in Section 1.3 below; Following the Closing the Seller shall not have any right title or interest whatsoever in any of the Assets, other than that the Buyer shall and hereby grants the Seller or any successor or assignee a non exclusive right to use the information covered under items (iv) and (v) of the definition "Know How" for any use or purpose without limitation to the extent such information is applicable other than to the Assets. Nothing contained

herein shall derogate from Seller's undertaking under Section 7.2 below or be deemed or interpreted as a grant of license or right in and to any of the other Assets.

Section 1.2                                 Consideration . In consideration of the transfer and assignment of the Assets, Buyer shall, at the Closing: (i) assume the Assumed Liabilities as specified in Section 1.3 below; (ii) pay Pharmos US an amount equal to US$ 200,000 (Two Hundred Thousand US Dollars), V.A.T, if applicable, not included (the “Upfront Payment”); and (iii) issue to Pharmos US 11,111 ordinary shares of the Buyer with nominal value of NIS0.01 each (the " Shares "),  constituting 10% (ten percent) of the issued and outstanding share capital of the Buyer as of the date hereof. Thereafter, Pharmos US shall be further entitled to Royalty Payment and License Payment as set forth in Section 1.4 below.

Section 1.3                                 Assumed Liabilities .   At the Closing, the Buyer shall and hereby does assume and agree to pay, perform and discharge when due all liabilities and obligations of Seller under the Sponsored Programs to the extent such liability or obligation relates to the inventions described in the Applications and specified in the letter provided to the OCS in the form attached hereto as Exhibit D (the "Assumed Liabilities") and as may be further amended with the consent of the Parties and the OCS and reflected in the final approval of the OCS, which will be attached as Exhibit D and replace the attached letter. Other than as set forth herein, Buyer shall not assume or have any responsibility or obligation, with respect to any Liability of the Seller.

Section 1.4                                 The Contingent Payments . Following the Closing, the Buyer shall pay Pharmos US additional amounts, as follows:

(a)            Royalties .  Royalty payment equal to 3.5% (three and a half) of the gross amount invoiced or billed by the Buyer or its Affiliate on its behalf (but not any of its Licensees or assignees) in connection with the sale of any product, process or service that is derived from, comprises of or incorporates the Patent Rights and/or the Know How or any part thereof, or that uses the Patent Rights and/or the Know How as a basis for subsequent modifications of the compounds covered under the Patent Rights and that are standard in drug development including, without limitation, the construction of modified compounds based on the Patent Rights that work essentially in a chemically analogues manner to the Patent Rights (the "Product" and the "Royalties" respectively).

Notwithstanding anything to the contrary set forth herein, in the event a Product is sold by the Buyer in the form of a Combination Product, Royalties from such Combination Product, shall be determined by multiplying the gross amount invoiced or billed by the Buyer (but not any of its Licensees or assignees) in connection with the sale of the Combination Product during the applicable royalty reporting period, by the fraction A/(A+B) where: “A” is the average sale price of the Product contained in the Combination Product when sold separately by the Buyer; and “B” is the average price of the other Additional Ingredients included in the Combination Product when sold separately by its supplier, in each case during the applicable royalty reporting period or if sales of both the Product and/or other Additional Ingredients did not occur in such period, then in the most recent royalty reporting period in which sales of both occurred.  In the event that such average sale price cannot be determined for either the Product and all other Additional Ingredients included in the Combination Product, Royalties from such Combination Product, shall be determined by multiplying the gross amount

invoiced or billed by the Buyer (but not any of its licensees or assignees) in connection with the sale of the Combination Product during the applicable royalty reporting period, by the fraction of C/(C+D) where “C” is the fair market value of the Product; and “D” is the fair market value of all other Additional Ingredients included in the Combination Product.  In such event, the Parties shall negotiate in good faith to arrive at a determination of the respective fair market values of the Product and all other Additional Ingredients included in the Combination Product.

(b)            License Payment . Buyer or its Affiliate on its behalf shall pay an amount equal to 10% (ten percent) of all License Payment actually received by the Buyer or its Affiliate on its behalf from a Licensee. Notwithstanding the foregoing, the rate shall be equal to 25% (twenty five percent) if the License Payment is received by the Buyer or its Affiliate on its behalf from any of the following companies: P&G, BTG, J&J, AstraZeneca or Bayer under a Transaction consummated at any time prior to the second anniversary of the execution of this Agreement.

(c)            Payment upon Exit Event . Upon the occurrence of an Exit Event, if the closing thereof is held at any time prior to lapse of 18 months following the execution of this Agreement (the "Initial Period"), the Buyer shall pay an amount equal to 10% (ten percent) of the aggregate pre-tax consideration amount to be received by the Buyer or its shareholders (as applicable), in cash or in kind, subject to and upon the closing of the Exit Event, whether any such amount is paid at the initial closing of such Event or thereafter through an earn-out or escrow arrangement (the "Consideration"). Notwithstanding the foregoing, the rate shall be equal to 25% (twenty five percent) if the Exit Event is entered into with any of the following companies: P&G, BTG, J&J, AstraZeneca or Bayer. Following the Initial Period, Buyer shall pay an amount equal to 5% (five percent) of the fair market value assigned to the Assets as part of the Exit Event out of the aggregate Consideration received by the Buyer or its shareholders. Upon the payment of the foregoing Consideration, the assignee and/or the Buyer shall be released from the obligations set forth above in connection with payment of Royalties and License Payment in connection with the Assets assigned under such transaction. In the event that the Consideration includes any success or milestone based payments or royalties from future sales of products, then the rate shall be increased to 10% (ten percent).

(d)            Sale of Assets . In the event that the Buyer sells its right and title in and to any of the Assets and such sale does not constitute an Exit Event (i.e. does not involve the sale of all or substantially all of the assets of the Buyer), then, Buyer shall pay an amount equal to 5% (five percent) of the aggregate pre-tax consideration amount to be received by the Buyer, in cash or in kind, upon the closing of such transaction or thereafter, as further detailed hereafter. In the event that the foregoing transaction includes any success or milestone based payments or royalties from future sales of products, then the transaction shall be deemed a Transaction entitling Seller to receive License Payment in accordance with Section 1.4(b) above. Payment in several installments (based on passage of time alone), payment under escrow arrangement for indemnification purposes or any other payment mechanism that is not milestone, success or sales related shall not cause the payment to be deemed License Payment and shall be covered under this Section, provided that Seller shall be entitled to its share from any such future amount. In any event the assignee shall be released from any payment obligation to the Seller, and the Buyer shall be subject to any payment pursuant to this Section 1.4(d).

(e)            Payment and Termination of Obligation . Payment of Royalties shall be made within 30 days following the end of a calendar year with respect to the preceding

year on a Product-by-Product and country-by-country basis until the expiry of the last of any Patent Rights covering the respective Product in such jurisdiction. Payment on account of License Payment shall be made within 10 days following the actual receipt of any non-contingent, non refundable License Payment by the Buyer and as long as the Buyer or its Affiliate receives any payment from a Licensee under a respective Transaction in connection with the Patent Rights. Payment upon Exit Event shall be made following the actual receipt of non-contingent, non-refundable amount on account of Consideration by the Buyer or its shareholders, as applicable. Payment in connection with the sale of the Assets or any part thereof, under Section 2.4(d) shall be made following the actual receipt of non-contingent, non-refundable amount by the Buyer.

(f)            Reports . The Buyer shall report to Pharmos US in writing within 30 days following the first commercial sale of a Product or the closing of a definitive agreement for a Transaction with a Licensee which may result in License Payment. Within 30 days following the end of each calendar year the Buyer shall provide Pharmos US with a report signed by the Buyer’s chief financial officer of all amounts due to Pharmos US in connection with Royalties and License Payment during the preceding year pursuant to this Section 1.4 including a breakdown of the number and type of products sold, discounts, returns, the country and currency in which the sales were made, invoice dates and all other data enabling the Royalties and License Payment payable to be calculated accurately. The annual report shall accompany the annual payment of Royalties and shall also include the Buyer's sales and Royalty forecasts for the following calendar year, if available. The Buyer shall require any Licensee to provide it with royalty reports detailed as customary in license agreements of such type.   Upon request, the Buyer shall produce such reports to Pharmos US.

(g)            Currency and Method of Payment . All payments to be made to Pharmos US pursuant to this Agreement shall be made in U.S. dollars and by wire transfer to such bank account as Pharmos US may direct from time to time. Foreign currency shall be converted into U.S. dollars using the average applicable interbank transfer rate determined by reference to the currency trading rates published by The Wall Street Journal (Eastern U.S. edition), over all business days of the calendar year for which the payment is due.

(h)            Audit . The Buyer shall keep and shall cause its Licensee to keep true and complete records regarding sales of Products in accordance with generally accepted accounting principles, in their respective countries of operation and to retain such records within the preceding period of five years and, if this Agreement is terminated for any reason whatsoever, for five (5) years after the end of the calendar year in which such termination becomes effective. Such records shall contain sufficient detail to enable the determination of any Royalties and License Payment due to Pharmos US hereunder.  Upon reasonable written notice to the Buyer, Pharmos US, through a designated independent auditor, shall have access during normal business hours to all such records of the Buyer and to any audit prepared by the Buyer  under an agreement with its Licensees, if any, once for each calendar year. The independent auditor appointed by Pharmos US shall report to Pharmos US on such records only to the extent reasonably necessary to enable Pharmos US to assess whether the obligation of the Buyer with respect to the maintenance of such records has been fulfilled and/or to determine the amount of any Royalties or License Payment due to Pharmos US hereunder. The independent auditor shall be obligated to maintain the confidentiality of such records. Any discrepancy shall be amended based on such report. Pharmos US shall bear the costs of such audit, unless the audit performed

reveals underpayment of more than 10% in a calendar year, in which case Buyer shall bear the full costs of such audit.

(i)            Late Payments .  Buyer shall pay interest to Seller on the aggregate amount of any payments that are not paid on or before the date such payments are due under this Agreement at a rate per annum equal to three percent (3%) above the London Interbank Offer Rate (LIBOR) as determined for each month on the last business day of that month, assessed from the day payment was initially due   until the date of payment.

(j)            Withholding Tax . If applicable laws require that taxes be withheld from any amounts due to Seller hereunder, Buyer shall (a) deduct these taxes from the remittable amount, (b) pay the taxes to the proper taxing authority, and (c) promptly deliver to Seller a statement including the amount of tax withheld and justification therefor, and such other information as may be necessary for tax credit purposes.

Section 1.5                                 The Closing .

The Closing shall take place immediately upon the satisfaction or waiver of the conditions precedent set forth in this Agreement, or at such other time and place as may be agreed by the Parties (the “Closing”). Upon the Closing the following transactions shall occur and all transactions at the Closing shall be deemed to take place simultaneously, and no transaction shall be deemed to have been completed and no documents or certificates shall be deemed to have been delivered until all other transactions are completed and all other documents and certificates are delivered:

(a)           Buyer shall pay Pharmos US the Upfront Payment by wire transfer to the following bank account:  Account No. 200-001-298-118-6, at Wachovia Bank, NA, 1889 State Route 27, Edison, NJ 08817, USA, ABA No. 021200025; or as shall be otherwise agreed upon between the Parties and shall provide Pharmos US with a share certificate evidencing the issuance of the Shares;

(b)           Seller shall deliver to Buyer an executed bill of sale for the Assets and executed letter of assignments for the Applications and the Contracts in the form attached hereto as Schedule 1.5(b), accompanied by any consent required under the Contracts in connection with the assignment thereof;

(c)           Seller shall deliver to Buyer an executed power of attorney in the form reasonably acceptable to Parties;

(d)            The Parties shall execute such assignments and other instruments of conveyance as the Buyer may reasonably request to effectively consummate the transactions to be consummated at the Closing (it being understood that the Buyer and the Seller shall not be required to make any representations, warranties or covenants, expressed or implied, in any such assignments and other instruments); and

(e)           Seller shall sell, assign, transfer and deliver to Buyer, Seller’s entire, right, title and interest in the Assets and provide Buyer with any item of the Assets which is in tangible form (including documents, materials and hard copy data).

Seller represents and warrants to Buyer that the following statements are true, correct and complete as of the date hereof and as of the Closing:

Section 2.1                                 Authority Relative to This Agreement .  Seller has full power and authority to execute, deliver, and perform this Agreement and to consummate the transactions contemplated hereby.  This Agreement has been duly executed and delivered by Seller and constitutes, and each other agreement, instrument, or document executed or to be executed by Seller in connection with the transactions contemplated hereby has been, or when executed will be, duly executed and delivered by Seller, a valid and legally binding obligation of Seller, enforceable against Seller in accordance with their respective terms, except that such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and (b) equitable principles which may limit the availability of certain equitable remedies (such as specific performance) in certain instances.

Section 2.2                                 Organization and Good Standing . Each of Pharmos US and Pharmos IL is duly organized, in good standing and validly existing under the laws of its jurisdiction of incorporation, and has the requisite power and authority to own its properties and to carry on its business.

Section 2.3                                 Noncontravention .  The execution, delivery, and performance by Seller of this Agreement and the consummation by it of the transactions contemplated hereby do not and will not: (a) violate or be in conflict with (i) any law, rule, regulation, or order of any governmental agency applicable to Seller, (ii) the organizational documents of Seller, (iii) any agreement, judgment, license, order, or permit applicable to or binding upon Seller, or (iv) any provision of any bond, debenture, note, mortgage, indenture, lease, contract, agreement, or other instrument or obligation to which Seller is a party or by which Seller or any of its properties may be bound. (b) constitute (with or without the giving of notice or the passage of time or both) a default under, or give rise (with or without the giving of notice or the passage of time or both) to any right of termination, cancellation, or acceleration thereunder, (c) result in the acceleration of any indebtedness owed by Seller, or (d) result in or require the creation of any encumbrance upon any assets or properties of Seller, or (e) give rise to any claim by or right of a creditor of the Seller under bankruptcy or insolvency laws,  in each case, where such conflict, acceleration or encumbrance would have a material adverse effect upon the condition of the Assets, the ability of the Seller to perform its undertakings hereunder or the binding effect of this Agreement.

Section 2.4                                 Title to the Assets .

(a) To its best knowledge, Seller is the sole and exclusive owner of all rights, title and interests in and to the Assets free and clear of all Encumbrances.

(b) To its best knowledge, the delivery to Buyer of the instruments of transfer of ownership contemplated by this Agreement will, at the Closing, vest good and marketable title to the Assets in Buyer, free and clear of all Encumbrances.

Section 2.5                                 Encumbrances .  Seller has good and transferable title to the Assets, f