Exhibit 4.10


 


THE SECURITIES REPRESENTED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), THE ISRAELI
SECURITIES LAW OF 1968 (THE “SECURITIES LAW”) OR ANY APPLICABLE STATE SECURITIES LAWS. IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, THE SECURITIES LAW AND SUCH STATE LAWS, THESE SECURITIES MAY NOT BE OFFERED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
1933 ACT, THE SECURITIES LAW AND SUCH STATE LAWS.


 


Terms
of Convertible Loan 


 


These Terms of Convertible Loan detail
the terms of the Convertible Loan into which an Acquisition Financing Loan made by certain Lenders to Borrower was converted pursuant
the terms of the Loan Agreement in respect of such Acquisition Financing Loan.


 


 


1.          Definitions.


 


“Borrower”
- RedHill Biopharma Ltd.


 


“Convertible Financing Lenders”-       all
lenders, including Lender, providing convertible loans to Borrower on terms similar to those of these Terms of convertible Loan.


 


“Loan”
-        The amount of the Acquisition Financing Loan converted into the loan described herein.


 


“Lender” -     The
maker of the Acquisition Financing Loan. 


 


2.        Interest.
The Loan shall bear interest on its outstanding principal amount in US Dollars, at a per annum rate equal to eight percent (8.0%),
compounded annually (“Interest”). Interest shall accrue and not be payable until the Loan is converted
pursuant to the provisions of Section 4 below. The principal amount of the Loan together with accrued Interest is hereinafter referred
as the “Loan Amount”.


 


3.        Use
of Proceeds. Borrower undertakes that the entire amount of the Loan shall be used to fund Borrower’s, acquisition
of products, research and development activities and general working capital.


 


4.        Mandatory
Conversion. 


 


		(a)	Unless previously converted, in the event that at any time following the funding of the Loan hereunder
and prior to December 31, 2011, Borrower shall close an equity investment, or series of related equity investments, in a minimum
aggregate amount of Three Million US Dollars ($3,000,000) (excluding conversion of the Loan) (the “Financing Round”),
the entire outstanding Loan Amount shall automatically convert into shares of the class of equity securities of Borrower issued
in the Financing Round on the same terms as the Financing Round but at a price per share which shall be equal to seventy percent
(70%) of the price per share paid by the investors in the Financing Round (the “Lender Price Per Share”)
and Borrower shall issue to Lender the number of shares of the class of equity securities issued in the Financing Round ("Financing
Conversion Shares") as is obtained by dividing (i) the outstanding Loan Amount as of the closing date of the Financing
Round by (ii) the Lender Price Per Share. In the event that the Financing Round is achieved through a series of equity financings
and the transactions consummated in such equity financings are not on identical terms and conditions or involve the issuance of
more than one type of securities, then Lender shall be entitled to the most favorable class or series of equity securities issued
in such financing and/or the most favorable terms and conditions.



 



    	 



    	 



    

 


		(b)	Unless previously converted, on December 31, 2011 the Loan Amount shall be automatically converted
into the class of equity securities of Borrower having the most seniority in terms of distribution of assets upon liquidation,
outstanding at such time (the “Senior Conversion Shares”), at a price per share reflecting a pre-money
valuation of Borrower (on a fully-diluted basis) of Seven Million US Dollars ($7,000,000) and Borrower shall issue to Lender the
number of Senior Conversion Shares determined by dividing the outstanding Loan Amount by the product of (i) Seven Million US Dollars
($7,000,000) divided by (ii) the aggregate number of issued and outstanding shares of equity securities of Borrower, on a fully-diluted
and as-converted basis.



 


		(c)	Unless previously converted, immediately prior to the consummation
of: (i) a consolidation or merger of Borrower with or into any person (other than an affiliate of Borrower) or
pursuant to which the outstanding equity of Borrower is converted into cash, securities or other property, in each case
other than a transaction in which the shareholders of Borrower prior to the transaction will hold
more than 50% of the voting securities (on an as-converted basis) of the surviving entity after the transaction; (ii)
a sale or other disposition of all or substantially all of Borrower’s assets to any person, other than an affiliate of Borrower;
or (iii) a transaction in which any person or related group (other than Borrower and/or its affiliates) acquires more than fifty
percent (50%) of the issued and outstanding shares, or more than fifty percent (50%) of the outstanding voting power of Borrower;
(each of the transactions in clauses (i)-(iii), a “Change in Control Transaction”), then immediately
prior to the closing or effectiveness of the Change in Control Transaction the outstanding Loan Amount shall be converted into
Ordinary Shares of Borrower (the “Change in Control Conversion Shares”) at a price per share equal to
70% of the price per share in the Change in Control Transaction determined as follows: (A) in respect of a Change in Control Transaction
described in clause (c)(i) above, the price per share shall be the aggregate consideration actually to be distributed to and received
by the shareholders of Borrower in the Change in Control Transaction, divided by the aggregate number of issued and outstanding
shares of equity securities of Borrower, on a fully-diluted and as-converted basis, participating in such distribution; (B) in
respect of a Change in Control Transaction described in clause (c)(ii) above, the price per share shall be the aggregate consideration
available for distribution to the holders of the equity securities of Borrower as a result of the Change in Control Transaction,
as determined by the board of directors of Borrower, divided by the aggregate number of issued and outstanding equity securities
of Borrower, on a fully diluted and as-converted basis, eligible to participate in such distribution and (C) in respect of a Change
in Control Transaction described in clause (c)(iii) above the price per share shall be the price per share in such Change in Control
Transaction. The value of securities or other payments-in-kind, if any, distributed to the holders of shares shall be determined
by the board of directors of Borrower, in its sole discretion.



 



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		(d)	Unless previously converted, immediately prior to the consummation
of an initial public offering by Borrower of its shares pursuant to an effective registration statement, prospectus or similar
document under the US Securities Act of 1933, as amended, under the Israeli Securities Law of 1968
or any equivalent law of another jurisdiction (“IPO”), the outstanding Loan Amount shall be converted
into Ordinary Shares of Borrower (the “IPO Conversion Shares”) at a price per share equal to 70% of the
price per share in the IPO (for the avoidance of doubt, it is hereby clarified that in the event the IPO is conducted on the Tel-Aviv
Stock Exchange (“TASE”) the outstanding Loan Amount shall be converted into Ordinary Shares of Borrower
at a price per share equal to 70% of the minimum price per share determined in the Company's Prospectus (including any complimentary
notice, as applicable). In the event that that the securities of Borrower offered in the IPO consist of “units” comprising
Ordinary Shares and other securities, then the price per share in the IPO shall be the effective price per share as part of the
unit as published in the Company's Prospectus or as determined by the board of directors of the Company. For the avoidance of doubt,
it is hereby clarified that in the event the IPO is conducted on the TASE, the effective price per share shall be calculated in
accordance with the TASE's rules and regulations. In any other event the effective price per share shall be calculated based on
the Black-Scholes model. 



 


		(e)	In the event that the Lender Price Per Share, the price per share in a Change in Control Transaction
or the price per share in an IPO is expressed in any currency other than US Dollars, conversion of the Loan Amount shall be in
accordance with the rate of exchange last published by the Bank of Israel and known at the time of consummation of the relevant
transaction and in the event of an IPO on the TASE on the date of publication of the Company's Prospectus.



 


		(f)	Lender acknowledges and agrees that in the event of a public offering of the Company’s securities
any securities issued to Lender upon conversion of the Loan Amount may be subject to a lock-up period.



 


		(g)	It is agreed that in no event shall the price per share paid by Lender for the shares upon conversion
in accordance with this Section 4 (the “Conversion Price Per Share”) exceed a price per share reflecting
a pre-money valuation of Borrower (on a fully-diluted basis) of Twelve Million US Dollars ($12,000,000).



 


		(h)	Upon conversion of the Loan Amount as aforesaid, the Loan and all Interest accrued thereon shall
be deemed fully repaid, and the issuance of the Financing Conversion Shares, Change in Control Conversion Shares, IPO Conversion
Shares or the Senior Conversion Shares, as the case may be, shall be deemed as full and complete satisfaction of all Borrower’s
obligations under this Agreement and Lender shall have no further rights under this Agreement or with respect to the Loan and Interest
accrued thereon.



 


		(i)	For the avoidance of doubt, it is hereby expressly agreed that each of the conversion events described
in paragraphs (a) through (d) this Section 4 is independent of each other such event and the Loan Amount shall be subject to conversion
upon achievement of the conditions set forth in any of such paragraphs.



 


5.        Grant
of Warrant. Upon conversion of the Loan Amount, Borrower shall grant Lender a warrant substantially in the form of the
Warrant Certificate attached hereto as Exhibit A (the “Warrant”) to purchase additional
Financing Conversion Shares, Change in Control Conversion Shares, IPO Conversion Shares or Senior Conversion Shares, as the case
may be.


 


6.        Default.
The entire Loan Amount will immediately become due and payable upon any of the following events of
default:


 



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		(a)	the commencement by Borrower of any liquidation proceedings or the adoption of a winding up resolution
by Borrower, or the appointment of a receiver or trustee over the whole or a substantial part or Borrower's assets, or the calling
by Borrower of a meeting of creditors for the purpose of entering into a scheme or arrangement with them, and if any of the aforementioned
actions or proceedings is not canceled within 60 days of its initiation; or



 


		(b)	the levy of an attachment or the institution of execution proceedings against the whole or a substantial
part of Borrower's assets, where such attachment or execution proceeding is not discharged within sixty (60) days. Borrower shall
notify Lender within 72 hours of any such attachment or proceeding.



 


7.        Confidentiality.
Lender undertakes that all information concerning Borrower, which comes into its possession or to
its attention, whether pursuant to this Agreement, as a shareholder of Borrower or otherwise, including audited and unaudited financial
statements of Borrower, and all other financial, technical and other information relating to Borrower, will be kept in the strictest
confidence and will not, without the prior written consent of Borrower, be used by it or be disclosed to, or discussed with, any
third party provided, however, in the event that Lender is required by law or stock exchange rule to include financial information
obtained pursuant to this Agreement in reports to governmental authorities or stock exchanges, Lender shall be entitled to make
such disclosure to the minimum extent required, and provided, further, that in connection with periodic reports to Lender's shareholders
or partners, Lender may, without first obtaining the prior written consent of Borrower, make general statements, not containing
technical, commercially sensitive or other confidential information, regarding the general nature of Borrower, and may provide
summary and general information regarding Borrower’s revenues and profits to Lender's lawyers and accountants, and in its
reports to its shareholders and partners, but may not annex to such reports the full financial information to be provided by Borrower
hereunder except as required by applicable law and regulations. Notwithstanding the above, the undertaking of confidentiality will
not apply to:


 


(i)        Information
which is in the public domain at the time of disclosure or subsequently becomes part of the public domain, except by breach by
a party hereto of its obligations hereunder; or


 


(ii)       Information
which is received from a third party, provided that such information was not obtained by said third party directly or indirectly
from Borrower pursuant to obligations of confidentiality; or


 


(iii)      Information
which must be disclosed under applicable laws or regulations but only to the extent so required; provided, however, that in the
event a party feels that circumstances exist which require such disclosure, it shall notify Borrower thereof, and provide Borrower
with a copy of such proposed disclosure or notice, promptly and, where possible, in a manner which will enable Borrower to oppose
such disclosure within the period of time allotted under such laws or regulations for submission of the disclosure or notice.


 


8.        Governing
Law and Forum. These Terms of Convertible Loan, their interpretation, validity and breach shall be governed by the laws
of the State of Israel, without regard to its conflict of laws rules, and any claim or dispute with respect thereto shall be submitted
to the exclusive jurisdiction of the competent courts of Tel-Aviv, Israel, and each of Borrower and Lender hereby submits irrevocably
to the jurisdiction of such court to the exclusion of any other jurisdiction and agrees to the service of process by post in accordance
with the provisions of Section 11(i) below.


 



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9.        MiscellaneoUS


 


(a)          Further
Cooperation. Each of Borrower and Lender agree to execute any and all documents necessary in order to consummate, implement
and give full force and effect to this Agreement, and to all matters, actions and transactions envisaged and contemplated herein
including, filings with governmental or regulatory bodies, corporate resolutions and such other documentation as may be reasonably
necessary from time to time.


 


(b)          No Partnership.
Each of Borrower and Lender are independent contractors. There is no relationship of partnership, joint venture, employment, franchise
or agency between Borrower and Lender. Neither of Borrower or Lender will have the power to bind the other or incur obligations
on the other's behalf without the other's prior written consent.


 


(c)          Construction.
A reference to a Section, Exhibit or Schedule shall mean a Section in or Exhibit or Schedule to these Terms of Convertible Loan,
unless otherwise expressly stated. The titles and headings herein are for reference purposes only and shall not have any significance
in the interpretation of these Terms of Convertible Loan nor in any manner limit the construction of these Terms of Convertible
Loan which shall be considered as a whole. The words “include,” “includes” and “including”
when used herein shall be deemed in each case to be followed by the words “without limitation.” Whenever the context
may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form
of names and pronouns shall include the plural and vice-versa. The plural of any defined term shall have a meaning correlative
to such defined term and words denoting any gender shall include all genders and the neuter. Where a word or phrase is defined
herein, each of its other grammatical forms shall have a corresponding meaning. Each of Borrower and Lender have participated jointly
in the negotiation and drafting of these Terms of Convertible Loan. If any ambiguity or question of intent or interpretation arises,
these Terms of Convertible Loan shall be construed as if drafted jointly by the parties, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any provision of these Terms of Convertible Loan.


 


(d)          Successors
and Assigns. Except as otherwise provided herein, the terms and conditions of these Terms of Convertible Loan shall inure to
the benefit of and be binding upon the respective successors and assigns of Borrower and Lender. Nothing in these Terms of Convertible
Loan, express or implied, is intended to confer upon any party other than Borrower and Lender or their respective successors and
assigns, any rights, remedies, obligations, or liabilities under or by reason of these Terms of Convertible Loan, except as expressly
provided herein.


 


(e)          None of the
rights, privileges, or obligations set forth in, arising under, or created by these Terms of Convertible Loan may be assigned without
the prior consent in writing of Borrower and Lender, with the exception of: (a) assignments between Convertible Financing Lenders,
and (b) assignments from Lender to any other entity which controls, is controlled by or is under common control with, Lender; provided,
however, that no such assignment or transfer shall become effective unless each such transferee has provided Borrower with a confirmation
in writing that it is bound by all terms and conditions of this Agreement and all the agreements contemplated hereby.


 


(f)          Severability.
If one or more provisions of these Terms of Convertible Loanis held to be illegal, invalid or unenforceable under applicable law,
such provision shall be excluded from these Terms of Convertible Loan, and the balance of these Terms of Convertible Loan shall
be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms; provided, however,
that in such event these Terms of Convertible Loan shall be interpreted so as to give effect, to the greatest extent consistent
with and permitted by applicable law, to the meaning and intention of the excluded provision as determined by such court of competent
jurisdiction.


 



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(g)          Waivers.
The failure of Borrower or Lender at any time or times to require performance of any provision hereof or to enforce any right with
respect thereto, shall in no manner affect the right of such party at a later time to enforce the same and shall in no way be construed
to be a waiver of such provision or right.


 


(h)          Entire
Agreement; Amendments. These Terms of Convertible Loan and the exhibits attached hereto constitute the full and entire understanding
and agreement among Borrower and Lender with regard to the subjects hereof and thereof, and no previous agreements, memoranda of
agreements, letters, negotiations, promises, consents, undertakings, representations, warranties or documents which were applied,
exchanged, or signed by or between Borrower and Lender prior to these Terms of Convertible Loan shall have any force or effect.
Any term of these Terms of Convertible Loan may be amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively) in the context of a similar amendment or waiver
in respect of the Conversions Lender Loans, with the written consent of Borrower and Conversion Financing Lenders who have provided
a majority of the outstanding aggregate total amount provided as Conversion Lender Loans.


 


(i)          Notices.
All notices and other communications required or permitted hereunder shall be in writing, shall be effective when given, and shall
in any event be deemed to be given upon receipt or, if earlier, (a) five (5) business days after the business day of deposit
with an express courier, freight prepaid, (b) upon delivery, if delivered by hand; or (c) one (1) business day after
the business day of facsimile transmission or e-mail, if delivered by facsimile transmission or sent by e-mail. All such notices
and other communications shall be addressed to the following addresses or such other address as the recipient party may designate
by ten (10) days advance written notice to the other party pursuant to the provisions above:


 


If
to Lender, as set forth on the signature page of the Loan Agreement between Borrower and Lender regarding an Acquisition Financing
Loan.


 


If
to Borrower:


 


RedHill
Biopharma Ltd.


42
Givati Street


Ramat-Gan
52232, Israel


Fax:
972-3-7255723


Email:
ori@redhillbio.com


Attn:
Ori Shilo


 


(j)          Publicity. Lender shall
not, subject to the requirements or law, regulations or order, issue any press release or undertake any publicity concerning the
existence or any of the terms or provisions of these Terms of Convertible Loan or any of the transactions contemplated hereby or
thereby without the prior written consent of Borrower.


 


(k)          Fees and Expenses. Lender
and Borrower shall each bear their own expenses and legal fees incurred by them or on their behalf with respect to ”and the
transactions contemplated hereby.


 


Date: August 31, 2010


 


*                   *                 *


 



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Exhibit
A


 


Warrant Certificate


 


THE WARRANT AND THE SECURITIES ISSUABLE
UPON THE EXERCISE OF THIS WAARANT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933
ACT”), THE ISRAELI SECURITIES LAW OF 1968 (THE “SECURITIES LAW”) OR ANY APPLICABLE STATE SECURITIES
LAWS. IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, THE SECURITIES LAW AND SUCH STATE LAWS, THESE SECURITIES
MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT, THE SECURITIES LAW AND SUCH STATE LAWS.


 


WARRANT TO PURCHASE SHARES


 


RedHill Biopharma Ltd., an Israeli company
(the “Company”), hereby grants to _________________________ (the “Holder”), the right to
purchase from the Company such number and class of shares of the Company, set forth below, subject to the terms and conditions
set forth below. The parties acknowledge that this Warrant is granted in connection with the conversion of a loan extended by Holder
to the Company pursuant to the terms and conditions of that certain Terms of Convertible Loan dated August 31, 2010 (the “Loan”
and the “Loan Agreement”, respectively). Unless otherwise required by the context, all capitalized terms used
herein and not otherwise defined shall have the respective meanings ascribed to them in the Loan Agreement.


 


		1.	Number of Shares Available for Purchase and Exercise
Price



 


This Warrant may be exercised
to purchase up to that number of shares of the Company of the class determined as provided below (the “Warrant Shares”)
equal to $[ ],000, which is equal to thirty percent (30%) of the original principal amount of the Loan (without any interest or
linkage), divided by the Warrant Price (as defined below). For the purposes of this Warrant, the class of shares comprising the
Warrant Shares shall be the class comprising the Financing Conversion Shares, Change in Control Conversion Shares, IPO Conversion
Shares or Senior Conversion Shares (as such terms are defined in the Loan Agreement), as the case may be, issued to the Holder
in connection with the conversion of the Loan and shall be referred to as the “Conversion Class of Shares”.
Notwithstanding the foregoing, from and after immediately prior to the consummation of an IPO (as defined in the Loan Agreement),
the outstanding Conversion Class of Shares shall be Ordinary Shares of the Company.


 



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The exercise price for
each Warrant Share (the “Warrant Price”) shall be calculated as follows: (i) in the event Holder exercises this
Warrant within six (6) months following the Conversion Event (as such term is defined in Section 5 of the Loan Agreement) (the
“Initial Exercise Period”), the Warrant Price shall be equal to 130% of the Conversion Price Per Share (as defined
in the Loan Agreement) at which the Loan was converted in the Conversion Event; (ii) in the event Holder exercises this Warrant
within six (6) months following the end of the Initial Exercise Period (the “Second Exercise Period”), the Exercise
Price shall be equal to 140% of the Conversion Price Per Share at which the Loan was converted in the Conversion Event; and (iii)
in the event Holder exercises the Warrant following the end of the Second Exercise Period, the Exercise Price shall be equal to
150% of the Conversion Price Per Share at which the Loan was converted in the Conversion Event.


 


		2.	Term



 


This Warrant may be exercised,
in whole, or in part (subject to Section 4 below), during the period beginning on the date of the Conversion Event and ending on
the earlier to occur of: (a) thirty-six (36) months following the date of closing under the Loan Agreement or (b) a Change in Control
Transaction (as defined in the Loan Agreement) (the “Exercise Period”).


 


		3.	Exercise of Warrant



 


This Warrant may be exercised
in whole or in part on any number of occasions during the Exercise Period. The Warrant may be exercised by the surrender of the
Warrant to the Company at its principal office together with the Notice of Exercise annexed hereto duly completed and executed
on behalf of the Holder. This Warrant may be exercised for cash only. To exercise, the Notice of Exercise must be accompanied by
payment in full of the amount of the aggregate Warrant Price payable for the Warrant Shares being purchased upon such exercise
in immediately available funds, in U.S. Dollars or NIS equivalent thereof, based on the representative rate of exchange last published
by the Bank of Israel and known at the time of payment.


 


The Company agrees that the Warrant Shares
so purchased shall be issued as soon as practicable thereafter, and that the Holder shall be deemed the record owner of such Warrant
Shares as of and from the close of business on the date on which this Warrant shall be surrendered, together with payment in full
as required above. In the event of a partial exercise, the Company shall concurrently issue to the Holder a replacement Warrant
on the same terms and conditions as this Warrant, but representing the number of Warrant Shares remaining after such partial exercise.


 


		4.	Fractional Shares



 


No fractional shares
will be issued in connection with any exercise hereunder, and the number of Warrant Shares issued shall be rounded down to the
nearest whole number.


 



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		5.	Warrant Confers No Rights of Shareholder



 


Except as otherwise set
forth in this Warrant, the Holder shall not have any rights as a shareholder of the Company with regard to the Warrant Shares prior
to actual exercise of this Warrant resulting in the purchase of Warrant Shares and the issuance of such shares.


 


		6.	Investment Representation



 


Neither this Warrant
nor the Warrant Shares issuable upon the exercise of this Warrant have been, as of the date hereof, registered under the 1933 Act,
the Securities Law or any other securities laws. The Holder agrees that any Warrant Shares issuable upon exercise of this Warrant
will be acquired for investment and not with a view to distribution and such Warrant Shares will not be registered under the Securities
Act, the Securities Act or any applicable state securities laws and that such Warrant Shares may have to be held indefinitely unless
they are subsequently registered or qualified under the 1933 Act, the Securities Law and applicable state or foreign securities
laws, or based on an opinion of counsel reasonably satisfactory to the Company that an exemption from such registration and qualification
is available. The Holder, by acceptance hereof, consents to the placement of legend(s) on all securities hereunder as to the applicable
restrictions on transferability in order to ensure compliance with the 1933 Act and the Securities Law, unless in the opinion of
counsel for the Company such legend is not required in order to ensure compliance with the 1933 Act and the Securities Law. The
Company may issue stop transfer instructions to its transfer agent in connection with such restrictions. Adjustment of Warrant
Price and Number of Shares


 


		7.	Adjustment.



 


The
number and kind of securities purchasable initially upon the exercise of this Warrant and the Warrant Price shall be subject to
adjustment from time to time upon the occurrence of certain events during the Exercise Period, as follows:


 


		a.	Adjustment for Shares Splits and Combinations.
If the Company at any time or from time to time during the Exercise Period effects a subdivision of the Conversion Class of Shares,
the number of shares issuable upon exercise of this Warrant immediately before the subdivision shall be proportionately increased
and conversely, if the Company at any time or from time to time combines the outstanding Conversion Class of Shares, the number
of shares issuable upon exercise of this Warrant immediately before the combination shall be proportionately decreased. Any adjustment
under this Section 7(a) shall become effective at the close of business on the date the subdivision or combination becomes effective.



 



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		b.	Adjustment for Reclassification, Exchange and Substitution.
If the shares of the Conversion Class of Shares issuable upon the exercise of this Warrant are changed into the same or a different
number of shares of any class or classes of shares, whether by recapitalization, conversion, reclassification or otherwise (other
than a subdivision or combination of shares or shares dividend or a reorganization, merger, consolidation or sale of assets,
provided for elsewhere in this Section), then and in any such event the Holder shall have the right thereafter to exercise this
Warrant into the kind and amount of shares and other securities receivable upon such recapitalization, reclassification or other
change, by holders of the number of shares of the Conversion Class of Shares for which this Warrant might have been exercised
immediately prior to such recapitalization, reclassification or change, all subject to further adjustment as provided herein and
under the Company’s Articles of Association.



 


		c.	Reorganization Mergers, Consolidations or Sales
of Assets. If at any time or from time to time during the Exercise Period there is a capital reorganization of the Conversion
Class of Shares (other than a recapitalization, subdivision, combination, reclassification or exchange of shares provided for
elsewhere in this Subsection), or a merger or consolidation of the Company with or into another corporation, or the sale of all
or substantially all of the Company’s shares or properties and assets to any other person, then, as a part of such reorganization,
merger, consolidation or sale, then, as a part of such reorganization, provision shall be made so that the Holder shall thereafter
be entitled to receive upon exercise of this Warrant, the number of shares or other securities or property of the Company, or
of the successor corporation resulting from such merger or consolidation or sale to which a holder of the shares of the Conversion
Class of Shares deliverable upon conversion would have been entitled on such capital reorganization merger, consolidation or sale.
In any such case (except to the extent any cash or property is received in such transaction), appropriate adjustment shall be
made in the application of the provisions of this Subsection and the Company’s Articles of Association with respect to the
rights of the Holder after the reorganization merger, consolidation or sale to the end that the provisions of this Subsection
and the Company’s Articles of Association (including adjustment of the number of shares of the Conversion Class of Shares
issuable upon exercise of this Warrant) shall be applicable after that event and be as nearly equivalent to the provisions hereof
as may be practicable.



 


		d.	Adjustment of Warrant Price. Upon each
relevant adjustment in the number of the Conversion Class of Shares purchasable hereunder, the Warrant Price shall be proportionately
increased or decreased, as the case may be, in a manner that is the inverse of the manner in which the number of the Conversion
Class of Shares purchasable hereunder shall be adjusted.



 



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		e.	Notice of Adjustments. Whenever the Warrant
Price or the number of Warrant Shares purchasable hereunder shall be adjusted pursuant to this Section 7, the Company shall provide
the Holder with a certificate setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment,
the method by which such adjustment was calculated, and the Warrant Price and the number of Warrant Shares purchasable hereunder
after giving effect to such adjustment.



 


		8.	Transfer



 


The
transfer of this Warrant shall be restricted in the same manner as the transfer of shares of the Conversion Class of Shares is
restricted by the provisions of the Articles of Association. Without derogating from the foregoing, following the initial public
offering of the shares of the Company, the transfer of this Warrant shall be subject to the prior written approval of the Company's
board of directors. In the event of a public offering of the Company’s securities the Warrant Shares issued to the Holder
upon exercise of this Warrant may be subject to a lock-up period along with the other shareholders of the Company. 


 


		9.	Representations
                                                                                                                                                                             and
                                                                                                                                                                             Warranties.



 


The Company
represents and warrants to the Holder as follows:


 


		a.	This Warrant has been duly authorized and executed by
the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms.



 


		b.	Subject to the creation of the Conversion Class of Shares, the Warrant Shares shall be duly authorized
and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid
and nonassessable and not subject to any preemptive rights.



 


		c.	Subject to the creation of the Conversion Class of Shares, the execution and delivery of this Warrant
are not, and the issuance of the Warrant Shares upon exercise of this Warrant in accordance with the terms hereof will not be,
inconsistent with the Company’s Articles of Association.



 



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		10.	Loss,
                                                                                                                                                                              Theft,
                                                                                                                                                                              Destruction
                                                                                                                                                                              or
                                                                                                                                                                              Mutilation
                                                                                                                                                                              of
                                                                                                                                                                              Warrant



 


Upon receipt
by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of any Warrant or Shares
certificate, and in case of loss, theft or destruction, of indemnity, or security reasonably satisfactory to it, and upon reimbursement
to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of such Warrant or Shares certificate,
if mutilated, the Company will make and deliver a new Warrant or Shares certificate of like tenor and dated as of such cancellation,
in lieu of such Warrant or Shares certificate.


 


		11.	Tax
                                                                                                                                                                              



 


Any
tax arising with respect to the grant or exercise of the Warrant, the payment for, or disposition of the Warrant Shares covered
thereby, or from any other event or act in connection therewith, shall be borne solely by the Holder. The Company shall be entitled
to withhold taxes according to the requirements of any applicable laws, rules, and regulations, including withholding taxes at
source. The Holder shall indemnify the Company and hold the Company harmless against and from any and all liability for any such
tax or interest or penalty thereon.


 


		12.	Notices



 


Any notice
or other communication hereunder shall be in writing and shall be deemed to have been given upon delivery, if personally delivered
or three (3) business days (five (5) business days if sent internationally) after deposit if deposited in the mail for mailing
by registered or certified mail (airmail if sent internationally), postage prepaid, and addressed as follows:


 


			If to Holder:



 


			



 


			To the address set forth on the signature page hereto



 


			



 


If
to Company:


 


42 Givati
Street





Ramat-Gan
52232, Israel





Tel:
972-3-6761706





Fax:
972-3-7255723





Email:
ori@redhillbio.com





Attn:
Ori Shilo


 




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Each of the
above addressees may change its address for purposes of this paragraph by giving to the other addressees notice of such new address
in conformance with this paragraph.


 


		13.	Applicable Law; Jurisdiction



 


This Warrant
shall be governed by and construed in accordance with the laws of the State of Israel as applicable to contracts between two residents
of the State of Israel entered into and to be performed entirely within the State of Israel. Any dispute arising under or in relation
to this Warrant shall be resolved exclusively in the competent court for Tel Aviv-Jaffa district, and each of the parties hereby
submits irrevocably to the exclusive jurisdiction of such court.


 


		14.	Entire Agreement



 


This Warrant
constitutes the entire agreement between the parties hereto with regard to the subject matters hereof, and supersedes any prior
communications, agreements and/or understandings between the parties hereto with regard to the subject matters hereof.


 


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blank]


 



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IN WITNESS WHEREOF, the Company has executed
this Warrant Certificate as of the date set forth below.


 


Dated: August 31 2010


 


RedHill Biopharma Ltd. 


 





	By:	 	 
	Name: 	Ori Shilo	 
	Title: 	VP Finance	 
	 	 
	Agreed and accepted:	 
	 	 
	Holder	 
	 	 
	By:	 	 
	Name:	 	 
	Title:	 	 




 


Address


 



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