Exhibit 10.1


 


LOAN
AND SECURITY AGREEMENT





 


THIS LOAN AND SECURITY
AGREEMENT is made and dated as of June 8, 2020 and is entered into among ALBIREO PHARMA, INC., a Delaware corporation
(the “Parent”), ALBIREO AB, a company duly incorporated under the laws of Sweden (Registration Number 556737-4631)
and a wholly-owned Subsidiary of the Parent (“Albireo AB” and, together with the Parent and any other Person that delivers
a Joinder Agreement pursuant to Section 7.13 of this Agreement from time to time, individually and collectively, jointly and
severally, the “Borrower”), the several banks and other financial institutions or entities from time to time parties
to this Agreement (collectively, referred to as the “Lenders”) and HERCULES CAPITAL, INC., a Maryland corporation,
in its capacity as administrative agent and collateral agent for itself and the Lenders (in such capacity, the “Agent”).


 


RECITALS


 


A.            Borrower
has requested that the Lenders make available to Borrower term loans in an aggregate principal amount of up to Eighty Million Dollars
($80,000,000) (collectively, the “Term Loan”); and


 


B.            The
Lenders are willing to make the Term Loan on the terms and conditions set forth in this Agreement.


 


AGREEMENT


 


NOW, THEREFORE, Borrower,
Agent and the Lenders agree as follows:


 


SECTION 1.

DEFINITIONS AND RULES OF CONSTRUCTION


 


1.1            Unless
otherwise defined herein, the following capitalized terms shall have the following meanings:


 


“Account Control
Agreement(s)” means any agreement entered into by and among the Agent, Borrower and a third party bank or other institution
(including a securities intermediary) in which Borrower maintains a Deposit Account or an account holding Investment Property and
which grants Agent a perfected first priority security interest in the subject account or accounts, or in the case of a jurisdiction
outside of the United States, any agreement in favor of Agent pledging the accounts of the applicable Borrower as security, in
form and substance satisfactory to Agent.


 


“ACH Authorization”
means the ACH Debit Authorization Agreement in substantially the form of Exhibit I.


 


“Acquisition”
means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or of any business, line of business or division or other unit
of operation of a Person, (b) the acquisition of fifty percent (50%) or more of the Equity Interests of any Person, whether
or not involving a merger, consolidation or similar transaction with such other Person, or otherwise causing any Person to become
a Subsidiary of Borrower, or (c) the acquisition of, or the right to use, develop or sell (in each case, including through
licensing), any product, product line or Intellectual Property of or from any other Person.


 






     

     


    

 


“Advance(s)”
or “Term Loan Advance” means any Term Loan funds advanced under this Agreement.


 


“Advance Date”
means the funding date of any Advance.


 


“Advance Request”
means a request for an Advance submitted by Borrower to Agent in substantially the form of Exhibit A.


 


“Affiliate”
means, with respect to any Person, (a) any Person that directly or indirectly controls, is controlled by, or is under common
control with such Person, (b) any Person directly or indirectly owning, controlling or holding with power to vote ten percent
(10%) or more of the outstanding voting securities of such Person, or (c) any Person ten percent (10%) or more of whose outstanding
voting securities are directly or indirectly owned, controlled or held by such Person with power to vote such securities. As used
in the definition of “Affiliate,” the term “control” means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities,
by contract or otherwise.


 


“Agent” has
the meaning given to it in the preamble to this Agreement.


 


“Agreement”
means this Loan and Security Agreement, as amended, restated, amended and restated, supplemented or otherwise modified from time
to time.


 


“Albireo UK”
means Albireo Limited, an entity organized under the laws of England and Wales, and a wholly-owned Subsidiary of Parent.


 


“Amortization Date”
means January 1, 2022; provided, however, if the Interest Only Extension Condition 1 is satisfied, then “Amortization
Date” shall mean July 1, 2022; provided, further, however, if the Interest Only Extension Condition 2 is satisfied,
then “Amortization Date” shall mean July 1, 2023.


 


“Anti-Corruption
Laws” shall mean all laws, rules, and regulations of any jurisdiction applicable to Borrower or any of its Affiliates from
time to time concerning or relating to bribery or corruption, including without limitation the United States Foreign Corrupt Practices
Act of 1977, as amended, the UK Bribery Act 2010 and other similar legislation in any other jurisdictions.


 


“Anti-Terrorism
Laws” means any laws, rules, regulations or orders relating to terrorism or money laundering, including without limitation
Executive Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the laws comprising or implementing the
Bank Secrecy Act, and the laws administered by OFAC.


 


“Assignee”
has the meaning given to it in Section 11.13.


 






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“Blocked Person”
means any Person: (a) listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224,
(b) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise
subject to the provisions of, Executive Order No. 13224, (c) a Person with which any Lender is prohibited from dealing
or otherwise engaging in any transaction by any Anti-Terrorism Law, (d) a Person that commits, threatens or conspires to
commit or supports “terrorism” as defined in Executive Order No. 13224, or (e) a Person that is named a
 “specially designated national” or “blocked person” on the most current list published by OFAC or other
similar list.


 


“Borrower Products”
means all products, software, service offerings, technical data or technology currently being designed, manufactured or sold by
Borrower or which Borrower intends to sell, license, or distribute in the future including any products or service offerings under
development, collectively, together with all products, software, service offerings, technical data or technology that have been
sold, licensed or distributed by Borrower since its incorporation.


 


“Business Day”
means any day other than Saturday, Sunday and any other day on which banking institutions in the State of California or the Commonwealth
of Massachusetts are closed for business.


 


“Cash” means
all cash, cash equivalents and liquid funds.


 


“Change
in Control” means any reorganization, recapitalization, consolidation or merger (or similar transaction or series of
related transactions) of the Borrower, sale or exchange of outstanding shares (or similar transaction or series of related
transactions) of the Borrower in which the holders of the Borrower’s outstanding shares immediately before consummation
of such transaction or series of related transactions do not, immediately after consummation of such transaction or series of
related transactions, retain shares representing more than fifty percent (50%) of the voting power of the surviving entity of
such transaction or series of related transactions (or the parent of such surviving entity if such surviving entity is wholly
owned by such parent), in each case without regard to whether the Borrower is the surviving entity.


 


“Claims”
has the meaning given to it in Section 11.10.


 


“Closing Date Facility
Charge” means Two Hundred Fifty Thousand Dollars ($250,000).


 


“Code” means
the Internal Revenue Code of 1986, as amended.


 


“Collateral”
means the property described in Section 3.


 


“Common Stock”
means the Common Stock, $0.01 par value per share, of the Parent.


 


“Confidential Information”
has the meaning given to it in Section 11.12.


 






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“Contingent Obligation”
means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i) any
Indebtedness, lease, dividend, letter of credit or other obligation of another, including any such obligation directly or indirectly
guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate credit cards or
merchant services issued for the account of that Person; and (iii) all obligations arising under any interest rate, currency
or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designated
to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that
the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determined amount of
the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall
not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement.


 


“Copyright License”
means any written agreement granting any right to use any Copyright or Copyright registration, now owned or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest.


 


“Copyrights”
means all copyrights, whether registered or unregistered, held pursuant to the laws of the United States of America, any State
thereof, or of any other country.


 


“Default”
means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured
or waived, become an Event of Default.


 


“Deposit Accounts”
means any “deposit accounts,” as such term is defined in the UCC, and includes any checking account, savings account,
or certificate of deposit.


 


“Dollar”
and the sign “$” mean lawful money of the United States.


 


“Domestic Subsidiary”
means any Subsidiary that is not a Foreign Subsidiary.


 


“Due Diligence
Fee” means $20,000, which fee is due to the Lenders on or prior to the Closing Date, and shall be deemed fully earned on
such date regardless of the early termination of this Agreement.


 


“EA Pharma Agreement”
means that certain License Agreement, dated as of April 2, 2012, between Albireo AB and Ajinomoto Pharmaceuticals Co., Ltd.,
as may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.


 


“Eligible Assignee”
means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing
in commercial loans and similar extensions of credit in the ordinary course of its activities, provided that such Person is not
a “vulture fund” or a distressed debt fund.


 






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“Elobix AB”
means ELOBIX AB, a company duly incorporated under the laws of Sweden (Registration Number 556946-9421), and a wholly-owned Subsidiary
of Albireo AB.


 


“Equity Interests”
means, with respect to any Person, the capital stock, partnership or limited liability company interest, or other equity securities
or equity ownership interests of such Person.


 


“ERISA” means
the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.


 


“Event of Default”
has the meaning given to it in Section 9.


 


“Excluded Account”
means any (a) deposit account or securities account used exclusively for payroll, employee benefits or employee taxes, the
funds of which shall not exceed the amount required to pay the next payroll or other relevant cycle, and identified to the Agent
in writing by the Borrower as such; (b) escrow account, deposit account and trust account, in each case holding assets that
are pledged or otherwise encumbered pursuant to Permitted Liens or escrow accounts and trust accounts maintained exclusively for
the purpose of establishing or maintaining escrow amounts for third-parties; in each case, to the extent such accounts arise in
connection with transactions expressly permitted hereunder; (c) subject to the limitations of Section 7.16, (i) deposit
account or securities account held by Albireo UK and (ii) deposit account or securities account held by Elobix AB; (d) any
deposit accounts solely to the extent credits thereto derive exclusively from the HCR Agreement and the EA Pharma Agreement; and
(e) other accounts, individually and in the aggregate, with a balance not to exceed $50,000; in each case of (a) through
(d) above, identified to the Agent in writing by the Borrower as such.


 


“FDA” means the U.S. Food and
Drug Administration or any successor thereto.


 


“FDA Odevixibat
Approval” means the approval by the FDA of the New Drug Application for Odevixibat for (i) the treatment of PFIC or
(ii) for the treatment of pruritis associated with PFIC; in each case of (i) and (ii), with a label claim generally consistent
with that sought in the Parent’s New Drug Application filing, as determined in Agent’s reasonable discretion.


 


“Financial Statements”
has the meaning given to it in Section 7.1.


 


“Foreign Subsidiary”
means any Subsidiary other than a Subsidiary organized under the laws of the United States of America, any State thereof, the District
of Columbia, or any other jurisdiction within the United States of America.


 


“GAAP” means
generally accepted accounting principles in the United States of America, as in effect from time to time.


 


“HCR” means
HealthCare Royalty Partners III, L.P. Licensing and its Affiliates.


 


“HCR Agreement”
means that certain Royalty Interest Acquisition Agreement, dated as of December 28, 2017, among Elobix AB, HCR and Albireo
Pharma, Inc., as may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.


 






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“Indebtedness”
means the following: (a) all indebtedness for borrowed money or the deferred purchase price of property or services (excluding
trade credit entered into in the ordinary course of business due within ninety (90) days), including reimbursement and other obligations
with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all capital lease obligations, (d) equity securities of any Person subject to repurchase or redemption
other than at the sole option of such Person, (e) “earnouts”, purchase price adjustments, profit sharing arrangements,
deferred purchase money amounts and similar payment obligations or continuing obligations of any nature arising out of purchase
and sale contracts, solely to the extent required to be recorded as liabilities on a balance sheet of such Person in accordance
with GAAP, (f) non-contingent obligations to reimburse any bank or Person in respect of amounts paid under a letter of credit,
banker’s acceptance or similar instrument, and (g) all Contingent Obligations.


 


“Insolvency
Proceeding” is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or
insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings
seeking reorganization, arrangement, or other similar relief.


 


“Intellectual Property”
means all of Borrower’s: Copyrights; Trademarks; Patents; Licenses; trade secrets and inventions; mask works; Borrower’s
applications therefor and reissues, extensions, or renewals thereof; and Borrower’s goodwill associated with any of the foregoing,
together with Borrower’s rights to sue for past, present and future infringement of Intellectual Property and the goodwill
associated therewith.


 


“Interest Only
Extension Condition 1” shall mean the satisfaction of each of the following events: (a) no Default or Event of Default
shall have occurred and be continuing as of any date of determination; and (b) Parent shall have achieved Performance Milestone
1.


 


“Interest Only
Extension Condition 2” shall mean the satisfaction of each of the following events: (a) no Default or Event of Default
shall have occurred and be continuing as of any date of determination; and (b) Parent shall have achieved Performance Milestone
2.


 


“Inventory”
means “inventory” as defined in Article 9 of the UCC.


 


“Investment”
means (a) any beneficial ownership (including stock, partnership or limited liability company interests) of or in any Person,
(b) any loan, advance or capital contribution to any Person or (c) any Acquisition.


 


“Joinder Agreement”
means, for each Subsidiary (other than Elobix AB, any MSC Subsidiary and the UK Subsidiary), a completed and executed Joinder Agreement
in substantially the form attached hereto as Exhibit G.


 


“Lender”
has the meaning given to it in the preamble to this Agreement.


 


“License”
means any Copyright License, Patent License, Trademark License or other license of rights or interests.


 






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“Lien” means
any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or charge
of any kind, whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional sale
or other title retention agreement, and any lease in the nature of a security interest.


 


“Loan” means,
collectively, the Advances.


 


“Loan Documents”
means this Agreement, the Notes (if any), the ACH Authorization, the Account Control Agreements, the Joinder Agreements, all UCC
Financing Statements, the Swedish Pledge Agreement, the Pledge Agreement, any landlord and bailee agreements and any other documents
executed in connection with the Secured Obligations or the transactions contemplated hereby, as the same may from time to time
be amended, restated, amended and restated, supplemented or otherwise modified from time to time.


 


“Material Adverse
Effect” means a material adverse effect upon: (i) the business, result of operations, properties, assets or financial
condition of Borrower and its Subsidiaries taken as a whole; or (ii) the ability of Borrower to perform or pay the Secured
Obligations in accordance with the terms of the Loan Documents, or the ability of Agent or the Lenders to enforce any of its rights
or remedies with respect to the Secured Obligations; or (iii) the Collateral or Agent’s Liens on the Collateral or the
priority of such Liens.


 


“Maximum Term Loan
Amount” means Eighty Million and No/100 Dollars ($80,000,000).


 


“Maximum Rate”
shall have the meaning assigned to such term in Section 2.3.


 


“MSC Investment Conditions” means
that Parent maintains Qualified Cash in an amount equal to or greater than the lesser of (i) 110% of the aggregate outstanding
Secured Obligations (inclusive of any Prepayment Charge and End of Term Charge that would be due and owing if the outstanding Loans
were prepaid at the time of measurement) or (ii) 100% of the consolidated Cash of Borrower and its Subsidiaries.


 


“MSC Subsidiary” means either
or both of (i) Albireo Security Corp. and Albireo Pharma Security Corporation; each a wholly-owned Subsidiary of Parent incorporated
in the Commonwealth of Massachusetts for the purpose of holding Investments as a Massachusetts security corporation under 830 CMR
63.38B.1 of the Massachusetts tax code and applicable regulations (as the same may be amended, modified or replaced from time to
time).


 


“Net Proceeds Milestone” means
the Parent’s receipt of unrestricted (including, not subject to any redemption, clawback, escrow or similar encumbrance or
restriction) net cash proceeds of at least Eighty Million Dollars ($80,000,000) (x) following the Closing Date and on or prior
to June 30, 2021, from one or more bona fide equity financings, incurrences of Subordinated Indebtedness and/or upfront proceeds
from new business development transactions permitted under this Agreement; and (y) including up to Fifteen Million Dollars
($15,000,000) to be paid to the Parent in connection with an amendment to the HCR Agreement on or about the Closing Date; in each
case of (x) and (y), subject to verification by Agent (including supporting documentation reasonably requested by Agent).


 






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“New Drug Application”
means a new drug application in the United States for authorization to market a product, as defined in the applicable laws and
regulations of, and submitted to, the FDA.


 


“Non-Disclosure
Agreement” means that certain Non-Disclosure Agreement/Confidentiality Agreement by and between Hercules Capital, Inc.
and the Parent dated as of February 26, 2020.


 


“Note(s)”
or “Term Note(s)” means a Promissory Note in substantially the form of Exhibit B.


 


“OFAC” is
the U.S. Department of Treasury Office of Foreign Assets Control.


 


“OFAC Lists”
are, collectively, the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to Executive Order No. 13224,
66 Fed. Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other restricted Persons maintained pursuant to any
of the rules and regulations of OFAC or pursuant to any other applicable Executive Orders.


 


“Patent License”
means any written agreement granting any right with respect to any invention on which a Patent is in existence or a Patent application
is pending, in which agreement Borrower now holds or hereafter acquires any interest.


 


“Patents”
means all letters patent of, or rights corresponding thereto, the United States of America or any other country, all registrations
and recordings thereof, and all applications for letters patent of, or rights corresponding thereto, the United States of America
or any other country.


 


“Performance Milestone
1” means the satisfaction of each of the following events: (a) no Default or Event of Default shall have occurred and
be continuing as of any date of determination; and either (b) (i) the Parent has announced publicly that the Phase 3
PEDFIC1 clinical trial of odevixibat in patients with PFIC has achieved the FDA-supported, protocol-specified primary efficacy
endpoint of a statistically significant change in pruritus between baseline and week twenty-four (24), which along with an acceptable
safety profile and supporting secondary endpoint data, support the filing of an New Drug Application with the FDA as the immediate
next step in clinical development; or (ii) in Lender’s sole discretion, the Parent has announced publicly that the Phase
3 PEDFIC1 clinical trial of odevixibat in patients with PFIC has not achieved a statistically significant improvement on
the FDA-supported protocol-specific primary efficacy endpoint, but the totality of efficacy and safety data demonstrates
an approvable risk-benefit profile for odevixibat in patients with PFIC in a manner that supports the filing of an New Drug Application
with the FDA as the immediate next step in clinical development (based upon FDA communications and the totality of the data package,
as would be reviewed by Agent).


 


“Performance Milestone
2” means the satisfaction of each of the following events: (a) no Default or Event of Default shall have occurred and
be continuing as of any date of determination; (b) the Parent has achieved Performance Milestone 1; (c) the Parent has
achieved the Net Proceeds Milestone; and (d) the Parent has received the FDA Odevixibat Approval.


 






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“Permitted Acquisition”
means any acquisition (including by way of merger) by Parent of all or substantially all of the assets of another Person, or of
a division or line of business of another Person, or capital stock of another Person, in each case located entirely within the
United States of America (or otherwise, with the prior written consent of the Agent, which may be granted or withheld in its sole
and absolute discretion), which is conducted in accordance with the following requirements:


 


(a) such acquisition
is of a business or Person engaged in a line of business related to that of the Parent or its Subsidiaries;


 


(b) if such acquisition
is structured as a stock acquisition, then the Person so acquired shall either (i) become a wholly-owned Subsidiary of the
Parent or of a Subsidiary and the Parent shall comply, or cause such Subsidiary to comply, with 7.13 hereof or (ii) such Person
shall be merged with and into the Parent (with the Parent being the surviving entity);


 


(c) if such acquisition
is structured as the acquisition of assets, such assets shall be acquired by the Parent;


 


(d) the Parent shall have delivered to
the Lenders not less than ten (10) nor more than forty five (45) days prior to the date of such acquisition, notice of such
acquisition together with any available pro forma projected financial information, copies of all material documents relating to
such acquisition, and historical financial statements for such acquired entity, division or line of business, in each case in form
and substance reasonably satisfactory to the Lenders;


 


(e)  both immediately
before and immediately after such acquisition no Event of Default shall have occurred and be continuing; and


 


(f) the sum of the
purchase price of such proposed new acquisition, computed on the basis of total acquisition consideration paid or incurred, or
to be paid or incurred, by the Parent with respect thereto, including the amount of Indebtedness assumed or to which such assets,
businesses or business or ownership interest or shares, or any Person so acquired, is subject, shall not be greater than $500,000
for all such acquisitions during the term of this Agreement.


 






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“Permitted Indebtedness”
means: (i) Indebtedness of Borrower in favor of Lender or Agent arising under this Agreement or any other Loan Document; (ii) Indebtedness
existing on the Closing Date which is disclosed in Schedule 1A; (iii) Indebtedness of the Parent of up to $1,000,000 outstanding
at any time secured by a Lien described in clause (vii) of the defined term “Permitted Liens,” provided such Indebtedness
does not exceed the cost of the Equipment financed with such Indebtedness on the date such Indebtedness is incurred; (iv) unsecured
Indebtedness to trade creditors (including vendor financing, the deferred purchase price for goods and services rendered under
contract manufacturing and/or licensing arrangements) incurred in the ordinary course of business and not past due, and Indebtedness
incurred in the ordinary course of business with corporate credit cards (including, without limitation, travel and entertainment
expenses and similar expenses incurred in the ordinary course of business); (v) Indebtedness that also constitutes a Permitted
Investment; (vi) Subordinated Indebtedness; (vii) reimbursement obligations in connection with letters of credit and
cash management services (including, without limitation, credit cards, debit cards and similar instruments) that are secured by
Cash and issued on behalf of the Borrower or a Subsidiary in an amount not to exceed $1,000,000 at any time outstanding; (viii) other
unsecured Indebtedness of the Parent in an amount not to exceed $500,000 at any time outstanding; (ix) intercompany Indebtedness
as long as (I) either (A) each of the obligor and the obligee under such Indebtedness is the Borrower or a Subsidiary
that is a party to this Agreement or has executed a Joinder Agreement or (B) such Indebtedness constitutes a Permitted Investment;
(II) any intercompany Indebtedness which is evidenced by a promissory note or similar in favor of Borrower or a Subsidiary
that is a party to this Agreement or has executed a Joinder Agreement is pledged as security and delivered in instrument form to,
and duly endorsed in favor of, Agent; and (III) any such intercompany Indebtedness which is an obligation of Borrower or a
Subsidiary that is a party to this Agreement or has executed a Joinder Agreement is subordinated to the Secured Obligations in
form and content reasonably acceptable to Agent; (x) Indebtedness in respect of guarantee or performance bonds, bid bonds,
appeal bonds, surety bonds, performance and completion guarantees, workers’ compensation claims, bank guarantees and banker’s
acceptances, and warehouse receipts, in each case or incurred in the ordinary course of business; (xi) Indebtedness consisting
of the financing of insurance premiums, provided that any Lien granted in connection therewith is limited to any insurance proceeds
paid thereon; (xii) endorsement of instruments or other payment items for deposit in the ordinary course of business and Indebtedness
arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn
against insufficient funds in the ordinary course of business; (xiii) Contingent Obligations of the Parent in respect of Indebtedness
otherwise constituting Permitted Indebtedness; (xiv) any Indebtedness assumed by the Parent in connection with a Permitted
Acquisition, provided the same is Subordinated Indebtedness; and (xv) extensions, refinancings, renewals, modifications, amendments,
restatements, or amendments and restatements of any items of Permitted Indebtedness, provided that the principal amount is not
increased or the terms modified to impose materially more burdensome terms upon Borrower or a Subsidiary thereof, as the case may
be.


 






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“Permitted Investment”
means: (i) Investments existing on the Closing Date which are disclosed in Schedule 1B; (ii) (a) marketable direct
obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within
one year from the date of acquisition thereof, (b) commercial paper maturing no more than one year from the date of creation
thereof and currently having a rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s
Investors Service, (c) certificates of deposit issued by any bank with assets of at least $500,000,000 maturing no more than
one year from the date of investment therein, (d) money market accounts and (e) other liquid investments reasonably acceptable
to the Agent; (iii) repurchases of stock from current or former employees, directors, or consultants of Parent under the terms
of applicable repurchase agreements at the original issuance price of such securities in an aggregate amount not to exceed $1,000,000
in the aggregate, provided that no Event of Default has occurred, is continuing or could exist after giving effect to the repurchases;
(iv) Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions
in the ordinary course of business;  (v) Investments accepted in connection with Permitted Transfers; (vi) Investments
(including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement
of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of Parent’s
business; (vii) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers
and suppliers who are not Affiliates, in the ordinary course of business; provided that this subparagraph (vii) shall not
apply to Investments of Borrower in any Subsidiary; (viii) Investments consisting of
loans to employees, officers or directors relating to the purchase of capital stock of Parent pursuant to employee stock purchase
plans or other similar agreements approved by Parent’s Board of Directors, not to exceed $250,000 in the aggregate;
(ix) Investments consisting of travel advances, employee relocation loans and other employee loans and advances in the ordinary
course of business not to exceed $250,000 outstanding at any time; (x) Investments in newly-formed Subsidiaries, provided
that each such Subsidiary enters into a Joinder Agreement promptly after its formation by Borrower and executes such other documents
as shall be reasonably requested by Agent; (xi) Investments in (x) Foreign
Subsidiaries, other than the Swedish Subsidiaries and the UK Subsidiary, approved in advance in writing by Agent; (y) the
Swedish Subsidiaries for ordinary course expenditures consistent with past practices; and (z) any MSC Subsidiary, so long
as an Event of Default does not exist at the time of such Investment and would not exist after giving effect to such Investment
and provided that Parent is, at all times, in compliance with the MSC Investment Conditions; (xii) joint ventures or
strategic alliances in the ordinary course of Parent’s business consisting of the licensing of technology, the development
of technology or the providing of technical support, provided that any cash Investments by Parent do not exceed $500,000 in the
aggregate; (xiii) such other Investments as are described in any Board-approved investment guidelines to the extent such investment
guidelines have been reviewed by the Agent and the Agent determines, in its sole and absolute discretion, that such Investments
are acceptable; (xiv) Investments of any Person existing at the time such Person becomes a Subsidiary or consolidates, amalgamates
or merges with any Borrower or any Subsidiary; provided that such Investment otherwise qualifies as a Permitted Investment and
was not made in contemplation of such Person becoming a Subsidiary or such consolidation or merger; (xv) Investments constituting
Permitted Acquisitions and, to the extent constituting Investments, any transactions permitted pursuant to Sections 7.7 or 7.9;
(xvi) the in-licensing of over-the-counter software that is commercially available to the public, in the ordinary course of
business; and (xvii) additional Investments of Parent that do not exceed $750,000 in the aggregate.


 






    	 	-11-	 



     


    

 


“Permitted Liens”
means any and all of the following: (i) Liens in favor of Agent or the Lenders; (ii) Liens existing on the Closing Date
which are disclosed in Schedule 1C; (iii) Liens for taxes, fees, assessments or other governmental charges or levies, either
not delinquent or being contested in good faith by appropriate proceedings; provided, that Borrower maintains adequate reserves
therefor in accordance with GAAP (to the extent required thereby); (iv) Liens securing claims or demands of materialmen, artisans,
mechanics, carriers, warehousemen, landlords and other like Persons arising in the ordinary course of Parent’s business and
imposed without action of such parties; provided, that the payment thereof is not past due; (v) Liens arising from judgments,
decrees or attachments in circumstances which do not constitute an Event of Default hereunder; (vi) deposits to secure the
performance of obligations (including by way of deposits to secure letters of credit issued to secure the same) under commercial
supply and/or manufacturing agreements and the following deposits, to the extent made in the ordinary course of business: deposits
under worker’s compensation, unemployment insurance, social security and other similar laws, or to secure the performance
of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure indemnity, performance or other similar
bonds for the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure statutory
obligations (other than Liens arising under ERISA or environmental Liens) or surety or appeal bonds, or to secure indemnity, performance
or other similar bonds; (vii) Liens on Equipment, other capital assets or software or other intellectual property constituting
purchase money Liens and Liens in connection with capital leases securing Indebtedness permitted in clause (iii) of “Permitted
Indebtedness”; (viii) Liens incurred in connection with Subordinated Indebtedness; (ix) leasehold interests in
leases or subleases and licenses or sublicenses granted in the ordinary course of business and not interfering in any material
respect with the business of the lessor or licensor, as applicable; (x) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of custom duties that are promptly paid on or before the date they become due or being
contested in good faith by appropriate proceedings; provided, that the Borrower maintain adequate reserves therefor in accordance
with GAAP; (xi) Liens on insurance proceeds securing the payment of financed insurance premiums that are promptly paid on
or before the date they become due (provided that such Liens extend only to such insurance proceeds and not to any other property
or assets); (xii) statutory and common law rights of set-off and other similar rights as to deposits of cash and securities
in favor of banks, other depository institutions and brokerage firms; (xiii) easements, zoning restrictions, rights-of-way
and similar encumbrances on real property imposed by law or arising in the ordinary course of business so long as they do not materially
impair the value or marketability of the related property; (xiv) (A) Liens on Cash securing obligations permitted under
clause (vii) of the definition of “Permitted Indebtedness” and (B) security deposits in connection with real
property leases, the combination of (A) and (B) in an aggregate amount not to exceed $1,000,000 at any time; (xv) the
filing of Uniform Commercial Code (or equivalent) financing statements solely as a precautionary measure in connection with operating
leases and sale and royalty transactions provided that such Liens and collateral descriptions in such financing statements be limited
to such specific covered assets and not all assets or substantially all assets of any Borrower or Subsidiary; (xvi) licenses
or sublicenses permitted hereunder; and (xvii) Liens existing on property at the time of its acquisition or existing on the
property of any Person at the time such Person becomes a Subsidiary or otherwise securing Indebtedness acquired or assumed pursuant
to clause (xiv) of the definition of “Permitted Indebtedness”; provided, such Lien was not created in contemplation
of such acquisition; (xviii) additional Liens that do not exceed $250,000 in the aggregate; and (xix) Liens incurred
in connection with the extension, renewal or refinancing of the Indebtedness secured by Liens of the type described in clauses (i) through
(xviii) above; provided, that any extension, renewal or replacement Lien shall be limited to the property encumbered by the
existing Lien and the principal amount of the Indebtedness being extended, renewed or refinanced, modified, amended, restated or
amended and restated (as may have been reduced by any payment thereon) does not increase.


 






    	 	-12-	 



     


    

 


“Permitted PRV
Transfer” means one or more sales, transfers or other dispositions of a PRV, subject to the Agent’s and the Required
Lenders’ prior written consent thereto (which may be granted or withheld in their reasonable discretion); provided, that
such consent shall be deemed to have been granted without any further action by the Agent or the Required Lenders in connection
with any such sale, transfer or other disposition, so long as (i) the Parent provides the Agent at least 5 Business Days’
prior written notice thereof, (ii) such sale, transfer or other disposition is conducted on an arms’-length basis with
a non-Affiliate of the Borrower; and (iii) the terms and conditions of such sale, transfer or other disposition are approved
by Parent’s Board of Directors; provided further that, in the event of a Permitted PRV Transfer, and at the sole cost and
expense of Borrower, Agent and the Lenders shall amend this Agreement (and any related UCC financing statement) to carve out from
Collateral the PRV so transferred (it being acknowledged that, notwithstanding the foregoing, any Lien on the PRV shall be released
upon the occurrence of a Permitted PRV Transfer pursuant to Section 3.2).


 


“Permitted Transfers” means:


 


(i)            sales
of Inventory in the ordinary course of business,


 


(ii)           non-exclusive
licenses, sublicenses and similar arrangements for the use of Intellectual Property or Borrower Products and licenses that could
not result in a legal transfer of title of the licensed property that may be exclusive in respects other than territory or may
be exclusive as to territory but only as to discreet geographical areas outside of the United States of America; in each case,
in the ordinary course of business,


 


(iii)          dispositions
of worn-out, obsolete or surplus Equipment in the ordinary course of business,


 


 (iv)          sales, transfers , or other dispositions constituting Permitted Investments,




 


(v)           transfers
pursuant to the terms of the EA Pharma Agreement and the HCR Agreement, to the extent the same are not prohibited by the terms
of this Agreement,


 


(vi)          Permitted
PRV Transfers, and


 


(vii)         other
transfers of assets having a fair market value of not more than $300,000 in the aggregate in any fiscal year.


 


“Person”
means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, other entity or government.


 


“PFIC” means
progressive familial intrahepatic cholestasis, a rare genetic liver disease.


 


“Pledge Agreement”
means the Pledge Agreement dated as of the Closing Date between Parent and Agent, as the same may from time to time be amended,
restated, modified or otherwise supplemented.


 


“Prepayment Charge”
shall have the meaning assigned to such term in Section 2.5.


 


“PRV” means
a priority review voucher issued by the FDA.


 


“Qualified Cash”
means the amount of Parent’s Cash held in accounts in the United States subject to an Account Control Agreement in favor
of Agent.


 


“Receivables”
means (i) all of Borrower’s Accounts, Instruments, Documents, Chattel Paper, Supporting Obligations, letters of
credit, proceeds of any letter of credit, and Letter of Credit Rights, and (ii) all customer lists, software, and business
records related thereto.


 


“Register” has the meaning specified
in Section 11.7.


 






    	 	-13-	 



     


    

 


“Required Lenders”
means, at any time, the holders of more than 50% of the sum of the aggregate unpaid principal amount of the Term Loans then outstanding.


 


“Restricted License” means any
material License or other agreement with respect to which Borrower is the licensee that expressly prohibits Borrower from granting
a security interest in Borrower’s interest in such License or agreement or any other property.


 


“Sanctioned Country”
shall mean, at any time, a country or territory which is the subject or target of any Sanctions.


 


“Sanctioned Person”
shall mean, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office
of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or by the United Nations Security
Council, the European Union or any EU member state, (b) any Person operating, organized or resident in a Sanctioned Country
or (c) any Person controlled by any such Person.


 


“Sanctions”
shall mean economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the
U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or
the U.S. Department of State, or (b) the United Nations Security Council, the European Union (or any of its member states)
or Her Majesty’s Treasury of the United Kingdom.


 


“SEC” means
the Securities and Exchange Commission.


 


“Secured Obligations”
means Borrower’s obligations under this Agreement and any Loan Document, including any
obligation to pay any amount now owing or later arising.


 


“Subordinated Indebtedness”
means Indebtedness subordinated to the Secured Obligations in amounts and on terms and conditions satisfactory to Agent in its
sole discretion and subject to a subordination agreement in form and substance reasonably satisfactory to Agent.


 


“Subsequent Financing”
means the closing of any institutional financing of Parent which becomes effective after the Closing Date which is broadly marketed
to multiple third-party investors. For the avoidance of doubt, sales of shares pursuant to an at-the-market financing facility
shall not be considered a “Subsequent Financing.”


 


“Subsidiary”
means an entity, whether a corporation, partnership, limited liability company, joint venture or otherwise, in which Borrower owns
or controls, directly or indirectly, 50% or more of the outstanding voting securities, including each entity listed on Schedule
5.14 hereto.


 


“Swedish Pledge
Agreement” means, collectively, (a) the Pledge Agreement dated as of the Closing Date between the Parent and Agent in
respect of shares in the capital of Albireo AB; (b) the Pledge Agreement dated as of the Closing Date between Albireo AB and
Agent in respect of shares in the capital of Elobix AB; and (c) the Pledge Agreement dated as of the Closing Date between
Albireo AB and Agent in respect of certain bank accounts; as each may from time to time be amended, restated, amended and restated,
modified or otherwise supplemented.


 






    	 	-14-	 



     


    

  






“Swedish Subsidiaries”
means each of Albireo AB and Elobix AB.


 


“Taxes” means all present or future
taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed
by any governmental authority, including any interest, additions to tax or penalties applicable thereto.


 


“Term Commitment”
means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to the Borrower in a principal amount
not to exceed the amount set forth under the heading “Term Commitment” opposite such Lender’s name on Schedule
1.1.


 


“Term Loan Interest
Rate” means for any day a per annum rate of interest equal to the greater of (i) the sum of (a) 9.15% plus (b) the
prime rate as reported in The Wall Street Journal minus 3.25%, and (ii) 9.15%.


 


“Term Loan Maturity
Date” means January 1, 2024; provided that, if Parent achieves Performance Milestone 1, then “Term Loan Maturity
Date” shall mean July 1, 2024; provided that if such day is not a Business Day, the Term Loan Maturity Date shall be
the immediately preceding Business Day.


 


“Trademark License”
means any written agreement granting any right to use any Trademark or Trademark registration, now owned or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest.


 


“Trademarks”
means all trademarks (registered, common law or otherwise) and any applications in connection therewith, including registrations,
recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States
of America, any State thereof or any other country or any political subdivision thereof.


 


“Tranche” means each Tranche 1
Term Advance, Tranche 2 Term Advance and Tranche 3 Term Advance.


 


“Tranche 2 Facility
Charge” means a facility charge of one-half of one percent (0.50%) of the aggregate amount of the funded Tranche 2 Term Loan
Advances, which is payable in accordance with Section 4.3.


 


“Tranche 2 Term
Loan Requirements” means (a) Parent’s achievement of Performance Milestone 1, and (b) payment of the applicable
Tranche 2 Facility Charge.


 


“Tranche 3 Facility
Charge” means a facility charge of one percent (1.00%) of the aggregate amount of the funded Tranche 3 Term Loan Advances,
which is payable in accordance with Section 4.4.


 


“Tranche 3 Term
Loan Requirements” means (a) receipt of all necessary approvals from Lender’s investment committee, in its sole
discretion, and (b) payment of the applicable Tranche 3 Facility Charge.


 






    	 	-15-	 



     


    

 


“UCC” means
the Uniform Commercial Code as the same is, from time to time, in effect in the State of California; provided, that in the event
that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect
to, Agent’s Lien on any Collateral is governed by the Uniform Commercial Code as the same is, from time to time, in effect
in a jurisdiction other than the State of California, then the term “UCC” shall mean the Uniform Commercial Code as
in effect, from time to time, in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such provisions.


 


“UK Subsidiary” means Albireo
Limited, an entity organized under the laws of England and Wales and a wholly-owned Subsidiary of Parent.


 


“U.S. Person” means any Person
that is a “United States person” as defined in Section 7701(a)(30) of the Code.


 


“Warrant”
means any warrant entered into in connection with the Loan, as may be amended, restated, amended and restated, supplemented or
otherwise or modified from time to time.


 


Unless otherwise specified,
all references in this Agreement or any Annex or Schedule hereto to a “Section,” “subsection,” “Exhibit,”
 “Annex,” or “Schedule” shall refer to the corresponding Section, subsection, Exhibit, Annex, or Schedule
in or to this Agreement. Unless otherwise specifically provided herein, any accounting term used in this Agreement or the other
Loan Documents shall have the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder
shall be computed in accordance with GAAP, consistently applied. Unless otherwise defined herein or in the other Loan Documents,
terms that are used herein or in the other Loan Documents and defined in the UCC shall have the meanings given to them in the UCC.
For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable
event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes
the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original
Person to the subsequent Person and (b) if any new Person comes into existence, such new Person shall be deemed to have been
organized on the first date of its existence by the holders of its Equity Interests at such time.


 


SECTION 2.


THE
LOAN


 


2. 1        [Reserved].


 


2.2       Term
Loan.


 


(a)          Advances.


 


(i)            Subject
to the terms and conditions of this Agreement, beginning on the Closing Date through December 15, 2020, Lenders will severally
(and not jointly) make a Term Loan Advance to Borrower in the aggregate principal amount of Fifteen Million Dollars ($15,000,000)
(the “Tranche 1 Term Loan Advance”); provided that (x) Lenders shall severally (and not jointly) make a Tranche
1 Term Loan Advance to Albireo AB on the Closing Date in the principal amount of Ten Million Dollars ($10,000,000) and (y) prior
to December 15, 2020, Borrower may request, and the Lenders shall severally (and not jointly) make, a Tranche 1 Term Loan
Advance to Parent and/or Albireo AB (as specified in writing by Borrower) in the principal amount of Five Million Dollars ($5,000,000).


 






    	 	-16-	 



     


    

 


(ii)           Subject
to the terms and conditions of this Agreement, beginning on January 1, 2021 through December 15, 2021, Borrower may request
and, subject to the satisfaction of the Tranche 2 Term Loan Requirements, Lenders will severally (and not jointly) make one or
more additional Term Loan Advances (the “Tranche 2 Term Loan”) to Parent and/or Albireo AB (as specified in writing
by Borrower) in an aggregate principal amount of up to Twenty Million Dollars ($20,000,000) in minimum increments of Ten Million
Dollars ($10,000,000) (the “Tranche 2 Term Loan Advance”).


 


(iii)          Subject
to the terms and conditions of this Agreement, on or before March 31, 2022, Parent may request and, subject to the satisfaction
of the Tranche 3 Term Loan Requirements, Lenders shall severally (and not jointly) make one or more additional Term Loan Advances
(the “Tranche 3 Term Loan”) to Parent and/or Albireo AB (as specified in writing by Borrower) in an aggregate principal
amount of up to Forty-Five Million Dollars ($45,000,000) in minimum increments of Five Million Dollars ($5,000,000) (each, a “Tranche
3 Term Loan Advance”).


 


The aggregate principal amount
of outstanding Term Loan Advances may be up to the Maximum Term Loan Amount.


 


(b)          Advance
Request. To obtain a Term Loan Advance, Borrower shall complete, sign and deliver an Advance Request (at least five (5) Business
Days before the Advance Date, other than with respect to the Term Loan Advance on the Closing Date, for which such Advance Request
shall be delivered at least one (1) Business Day before the Closing Date, or such shorter period of time as the Agent may
agree) to Agent. The Lenders shall fund the Term Loan Advance in the manner requested by the Advance Request provided that each
of the conditions precedent to such Term Loan Advance is satisfied as of the requested Advance Date.


 


(c)          Interest.
The principal balance of each Term Loan Advance shall bear interest thereon from such Advance Date at the Term Loan Interest Rate
based on a year consisting of 360 days, with interest computed daily based on the actual number of days elapsed. The Term Loan
Interest Rate will float and change on the day the prime rate (as reported in The Wall Street Journal) changes from time to time.


 






    	 	-17-	 



     


    

 


(d)          Payment.
Borrower will pay interest on each Term Loan Advance on the first Business Day of each month, beginning the month after the corresponding
Advance Date. Borrower shall repay the aggregate Term Loan principal balance that is outstanding on the day immediately preceding
the Amortization Date in equal monthly installments of principal and interest (mortgage style) beginning on the Amortization Date
and continuing on the first Business Day of each month thereafter until the Secured Obligations (other than any inchoate indemnity
obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) are repaid. The
entire Term Loan principal balance and all accrued but unpaid interest hereunder, shall be due and payable on the Term Loan Maturity
Date. Borrower shall make all payments under this Agreement without setoff, recoupment or deduction and regardless of any counterclaim
or defense. If a payment hereunder becomes due and payable on a day that is not a Business Day, the due date thereof shall be the
immediately preceding Business Day. Lender will initiate debit entries to the Parent’s account as authorized on the ACH Authorization
(i) on each payment date of all periodic obligations payable to the Lenders under each Term Loan Advance and (ii) reasonable
and documented out-of-pocket legal fees and costs incurred by Agent or the Lenders in connection with Section 11.11 of this
Agreement; provided that, with respect to clause (i) above, in the event that the Lenders or Agent informs Parent that the
Lenders will not initiate a debit entry to the Parent’s account for a certain amount of the periodic obligations due on a
specific payment date, Borrower shall pay to the Lenders such amount of periodic obligations in full in immediately available funds
on such payment date; provided, further, that, with respect to clause (i) above, if the Lenders or Agent informs the Parent
in writing in advance that the Lenders will not initiate a debit entry as described above later than the date that is three (3) Business
Days prior to such payment date, Borrower shall pay to the Lenders such amount of periodic obligations in full in immediately available
funds on the date that is three (3) Business Days after the date on which the Lenders or Agent notifies the Parent of such;
provided, further, that, with respect to clause (ii) above, in the event that the Lenders or Agent informs the Parent in writing
in advance that the Lenders will not initiate a debit entry to the Parent’s account for certain amount of such out-of-pocket
legal fees and costs incurred by Agent or the Lenders, Borrower shall pay to the Lenders such amount in full in immediately available
funds within three (3) Business Days.


 


2.3       Maximum
Interest. Notwithstanding any provision in this Agreement or any other Loan Document, it is the parties’ intent not to contract
for, charge or receive interest at a rate that is greater than the maximum rate permissible by law that a court of competent jurisdiction
shall deem applicable hereto (which under the laws of the State of California shall be deemed to be the laws relating to permissible
rates of interest on commercial loans) (the “Maximum Rate”). If a court of competent jurisdiction shall finally determine
that Borrower has actually paid to the Lenders an amount of interest in excess of the amount that would have been payable if all
of the Secured Obligations had at all times borne interest at the Maximum Rate, then such excess interest actually paid by Borrower
shall be applied as follows: first, to the payment of the Secured Obligations consisting of the outstanding principal; second,
after all principal is repaid, to the payment of Lender’s accrued interest, costs, expenses, professional fees and any other
Secured Obligations; and third, after all Secured Obligations are repaid, the excess (if any) shall be refunded to Parent.


 






    	 	-18-	 



     


    

 


2.4       Default
Interest. In the event any payment is not paid on the scheduled payment date, an amount equal to four percent (4%) of the past
due amount shall be payable on demand. In addition, upon the occurrence and during the continuation of an Event of Default hereunder,
all unpaid Secured Obligations, including principal, interest, compounded interest, and professional fees, shall bear interest
at a rate per annum equal to the Term Loan Interest Rate, plus four percent (4%) per annum. In the event any interest is not paid
when due hereunder, delinquent interest shall be added to principal and shall bear interest on interest, compounded at the Term
Loan Interest Rate or the rate set forth in Section 2.4, as applicable.


 


2.5       Prepayment.
At its option upon at least seven (7) Business Days prior notice to Agent (or such shorter notice period as agreed to by Agent),
Borrower may prepay all, but not less than all, or a portion (in minimum increments of Five Million Dollars ($5,000,000)), of the
outstanding Advances by paying the entire principal balance (or such portion thereof) plus all accrued and unpaid interest thereon,
together with a prepayment charge equal to the following percentage of the Advance amount being prepaid: if such notice of prepayment
is made (a) on or prior to the date that is six (6) months following the Closing Date, 3.0%; (b) after the date
that is six (6) months following the Closing Date, but on or prior to the date that is twenty-four (24) months following the
Closing Date, 2%; or (c) after the date that is twenty-four (24) months following the Closing Date, 1% (each, a “Prepayment
Charge”). If at any time Borrower elects to make a prepayment, and at such time, there are outstanding Advances under multiple
Tranches, the Prepayment Charge shall be determined by applying the amount of such prepayment in the following order: first, to
the outstanding principal amount (and accrued but unpaid interest thereon) of Advances outstanding under the Tranche with the latest
initial funding date; second, to the outstanding principal amount (and accrued but unpaid interest thereon) of Advances outstanding
under the Tranche with the next latest initial funding date and so on until the entire principal balance of all Advances made hereunder
(and all accrued but unpaid interest thereon) is paid in full. Borrower agrees that the Prepayment Charge is a reasonable calculation
of Lender’s lost profits in view of the difficulties and impracticality of determining actual damages resulting from an early
repayment of the Advances. Borrower shall prepay the outstanding amount of all principal and accrued interest through the prepayment
date and the Prepayment Charge upon the occurrence of a Change in Control. Notwithstanding the foregoing, Agent and the Lenders
agree to waive the Prepayment Charge if Agent and the Lenders (in its sole and absolute discretion) agree in writing to refinance
the Advances prior to the Term Loan Maturity Date. Any amounts paid under this Section shall be applied by Agent to the then
unpaid amount of any Secured Obligations (including principal and interest) in such order and priority as Agent may choose in its
sole discretion. For the avoidance of doubt, if a payment hereunder becomes due and payable on a day that is not a Business Day,
the due date thereof shall be the immediately preceding Business Day.


 






    	 	-19-	 



     


    

 


2.6       End
of Term Charge. On the earliest to occur of (i) the Term Loan Maturity Date, (ii) the date that Borrower prepays the
outstanding Secured Obligations (other than any inchoate indemnity obligations and any other obligations which, by their terms,
are to survive the termination of this Agreement) in whole or in part, or (iii) the date that the Secured Obligations become
due and payable, Borrower shall pay Lenders a charge equal to 6.95% of the aggregate Term Loan Advances repaid or prepaid (the
 “End of Term Charge”). Notwithstanding the required payment date of such End of Term Charge, the applicable pro rata
portion of the End of Term Charge shall be deemed earned by the Lenders as of each date a Term Loan Advance is made. For the avoidance
of doubt, if a payment hereunder becomes due and payable on a day that is not a Business Day, the due date thereof shall be the
immediately preceding Business Day.


 


2.7       Taxes;
Increased Costs. The Borrower, the Agent and the Lenders each hereby agree to the terms and conditions set forth on Addendum 1
attached hereto.


 


2.8       Notes.
If so requested by the Lenders by written notice to Parent, then Borrower shall execute and deliver to the Lenders (and/or, if
applicable and if so specified in such notice, to any Person who is an assignee of Lender pursuant to Section 11.13) (promptly
after the Borrower’s receipt of such notice) a Note or Notes to evidence Lender’s Loans.


 


2.9       Pro
Rata Treatment. Each payment (including prepayment) on account of any fee and any reduction of the Term Loans shall be made pro
rata according to the Term Commitments of the relevant Lender.


 


2.10     Treatment
of Prepayment Charge and End of Term Charge. Borrower agrees that, subject to the terms and conditions hereto, any Prepayment Charge
and any End of Term Charge payable shall be presumed to be the liquidated damages sustained by each Lender as the result of the
early termination, and Borrower agrees that it is reasonable under the circumstances currently existing and existing as of the
Closing Date. The Prepayment Charge and the End of Term Charge shall also be payable, subject to the terms and conditions hereto,
in the event the Secured Obligations (and/or this Agreement) are satisfied or released by foreclosure (whether by power of judicial
proceeding), deed in lieu of foreclosure, or by any other means. Borrower expressly waives (to the fullest extent it may lawfully
do so) the provisions of any present or future statute or law that prohibits or may prohibit the collection of the foregoing Prepayment
Charge and End of Term Charge in connection with any such acceleration. Borrower agrees (to the fullest extent that each may lawfully
do so): (a) each of the Prepayment Charge and the End of Term Charge is reasonable and is the product of an arm’s length
transaction between sophisticated business people, ably represented by counsel; (b) each of the Prepayment Charge and the
End of Term Charge shall be payable, subject to the terms and conditions hereto, notwithstanding the then prevailing market rates
at the time payment is made; (c) there has been a course of conduct between the Lenders and Borrower giving specific consideration
in this transaction for such agreement to pay the Prepayment Charge and the End of Term Charge as a charge (and not interest) in
the event of prepayment or acceleration; (d) Borrower shall be estopped from claiming differently than as agreed to in this
paragraph. Borrower expressly acknowledges that their agreement to pay each of the Prepayment Charge and the End of Term Charge
to the Lenders as herein described was on the Closing Date and continues to be a material inducement to the Lenders to provide
the Term Loans.


 






    	 	-20-	 



     


    

 


SECTION 3.


SECURITY
INTEREST


 


3.1       As
security for the prompt and complete payment when due (whether on the payment dates or otherwise) of all the Secured Obligations,
and subject to Section 3.3, in addition to the Collateral provided under the Swedish Pledge Agreement, Parent grants to Agent
a security interest in all of Parent’s right, title, and interest in and to the following personal property whether now
owned or hereafter acquired (collectively with the Collateral under the Swedish Pledge Agreement, the “Collateral”):
(a) Receivables; (b) Equipment; (c) Fixtures; (d) General Intangibles (other than Intellectual Property);
(e) Inventory; (f) Investment Property; (g) Deposit Accounts; (h) Cash; (i) Goods; and all other tangible
and intangible personal property of Parent (other than Intellectual Property) whether now or hereafter owned or existing, leased,
consigned by or to, or acquired by, Parent and wherever located, and any of Parent’s property in the possession or under
the control of Agent; and, to the extent not otherwise included, all Proceeds of each of the foregoing and all accessions to,
substitutions and replacements for, and rents, profits and products of each of the foregoing; provided, however,
that the Collateral shall include all Accounts and General Intangibles that consist of rights to payment and proceeds from the
sale, licensing or disposition of all or any part, or rights in, the Intellectual Property (the “Rights to Payment”).
Notwithstanding the foregoing, if a court of competent jurisdiction (including a U.S. Bankruptcy Court) shall finally determine
that a security interest in the underlying Intellectual Property is necessary to have a security interest in the Rights to Payment,
then the Collateral shall automatically, and effective as of the Closing Date, include the Intellectual Property to the extent
necessary to permit perfection of Agent’s security interest in the Rights to Payment.


 


3.2       Notwithstanding
the broad grant of the security interest set forth in Section 3.1, above, the Collateral shall not include (a) nonassignable
licenses or contracts, which by their terms require the consent of the licensor thereof or another party, (b) any leasehold
real property interest, license, lease or other contract or agreement or any property subject to a purchase money security interest
or similar arrangement to the extent that a grant of a security interest therein would violate or invalidate such lease, license,
contract or agreement or purchase money arrangement or create a right of termination in favor of any other party thereto (but
only to the extent such prohibition on transfer or grant of a security interest is enforceable under applicable law, including,
without limitation, Sections 9406, 9407 and 9408 of the UCC), (c) any property to the extent that, and for as long as, such
grant of a security interest is prohibited by any applicable law, rule or regulation, (d) Excluded Accounts, (e) motor
vehicles or other assets in which a security interest may be perfected only though compliance with a certificate of title statute,
(f) any interest of Borrower as a lessee under an equipment lease or other capital assets constituting purchase money Liens
to the extent permitted pursuant hereto if Borrower is prohibited by the terms thereof from granting a security interest therein
or under which such an assignment or Lien would cause a default to occur thereunder; provided, however, that upon termination
or cessation of such prohibition, such interest shall immediately become Collateral without any action by Borrower, Agent or Lenders,
(g) the Royalty Interest (as defined in the HCR Agreement) and the right to receive Royalty Interest Payments (as defined
in the HCR Agreement) or (h) subject to the terms and limitations of Section 3.1, Intellectual Property.


 






    	 	-21-	 



     


    

 


3.3       Release
of Swedish Security. Notwithstanding any other provisions in this Agreement or in any Loan Document, the release of any duly perfected
Lien which is created or expressed to be created pursuant to a Loan Document which is governed by Swedish law or any disposal or
other transfer of any asset which is, or is expressed to be, the subject of any perfected Lien which is governed by Swedish law
will always be subject to the prior written consent of the Agent, such consent to be given at the Agent’s sole discretion
(acting reasonably, with such consent not to be unreasonably delayed) other than following the discharge in full of the Secured
Obligations. Each Lender hereby authorizes the Agent to consent to and give effect to such release of such Lien at its discretion
without any further consent, sanction, authority from or notification or further reference to the Lenders.


 


3.4       At
such time as the Secured Obligations have been paid in full (other than any inchoate indemnity obligations and any other obligations
which, by their terms, are to survive the termination of this Agreement), the Collateral shall be released from the Liens created
by the Loan Documents and the Agent shall, at Borrower’s sole cost and expense, shall execute and deliver to the Borrower
all releases or other documents reasonably necessary or desirable for the release of the Liens created hereby on such Collateral.
Notwithstanding anything to the contrary contained herein, the Agent and the Lenders consent to the automatic release of any Lien
in Collateral that is sold, transferred, conveyed or otherwise disposed of by the Borrower or any Subsidiary thereof to any Person
in a transaction permitted by, and subject to the terms and conditions of, the Loan Documents.


 


3.5       Swedish
law limitations. The obligations and liabilities of Albireo AB under this Agreement and the other Loan Documents shall be limited
if and to the extent required by an application of the provisions of the Swedish Companies Act (Aktiebolagslagen (2005:551))
regulating (i) distribution of assets (Chapter 17, Sections 1-4 (or their equivalents from time to time)) (including profits
and dividends and any other form of transfer of value (värdeöverföring) within the meaning of the Swedish
Companies Act) and/or (ii) prohibited loans, guarantees and security (Chapter 21, Section 1-3 (or their equivalents from
time to time)) and it is agreed that the obligations and liabilities of Albireo AB only applies to the extent permitted by the
above mentioned provisions of the Swedish Companies Act.


 


SECTION 4.


CONDITIONS
PRECEDENT TO LOAN


 


The obligations of
the Lenders to make the Loan hereunder are subject to the satisfaction by Borrower of the following conditions:


 


4.1       Initial
Advance. On or prior to the Closing Date, Borrower shall have delivered to Agent the following:


 


(a)          executed
copies of the Loan Documents (other than landlord waivers (or similar) for each of Borrower’s domestic leased location shall
be delivered to Agent within thirty (30) days of the Closing Date), Account Control Agreements, a legal opinion of Borrower’s
US counsel, in form and substance reasonably acceptable to Agent, and all other documents and instruments reasonably required by
Agent to effectuate the transactions contemplated hereby or to create and perfect the Liens of Agent with respect to all Collateral,
in all cases in form and substance reasonably acceptable to Agent;


 






    	 	-22-	 



     


    

 


(b)          an
original Warrant in form and substance reasonably acceptable to Agent;


 


(c)          certified
copy of resolutions of Borrower’s board of directors evidencing approval of (i) the Loan and other transactions evidenced
by the Loan Documents and (ii) in relation to Parent, the Warrant and transactions evidenced thereby;


 


(d)          certified
copies of the Certificate of Incorporation and the Bylaws (or equivalent governing documents), as amended through the Closing Date,
of the Borrower;


 


(e)          a
certificate of good standing (or the foreign equivalent, if and as applicable) for the Parent from its state of incorporation and
similar certificates from all other jurisdictions in which it does business and where the failure to be qualified could have a
Material Adverse Effect;


 


(f)           payment
of the Due Diligence Fee (which each of the Agent and the Lenders acknowledges has already occurred), the Closing Date Facility
Charge and reimbursement of Agent’s and the Lenders’ reasonable and documented expenses reimbursable pursuant to this
Agreement, which amounts may be deducted from the initial Advance;


 


(g)          all
certificates of insurance and copies of each insurance policy required hereunder; and


 


(h)          such
other documents as Agent may reasonably request.


 


4.2       All
Advances. On each Advance Date:


 


(a)          Agent
shall have received (i) an Advance Request for the relevant Advance as required by Section 2.2(b), duly executed by Parent’s
Chief Executive Officer or Chief Financial Officer, (ii) an original Warrant in form and substance reasonably acceptable to
Agent, exercisable for a number of shares equal to 1% of the relevant Advance divided by the share price as reflected in the Warrant
issued as of the Closing Date, and (iii) any other documents Agent may reasonably request; provided that, if Agent and the
Lenders make any Advance, then the requirement set forth in clause (iii) shall be deemed to have been satisfied to Agent’s
knowledge with respect to such Advance.


 


(b)          The
representations and warranties set forth in this Agreement shall be true and correct in all material respects on and as of the
Advance Date with the same effect as though made on and as of such date, except to the extent such representations and warranties
expressly relate to an earlier date.


 






    	 	-23-	 



     


    

 


(c)          Borrower
shall be in compliance with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed
or performed, and at the time of and immediately after such Advance no Event of Default shall have occurred and be continuing.


 


(d)          Each
Advance Request shall be deemed to constitute a representation and warranty by Borrower on the relevant Advance Date as to the
matters specified in paragraphs (b) and (c) of this Section 4.2 and as to the matters set forth in the Advance
Request.


 


4.3       With
respect to any Tranche 2 Term Loan Advance, evidence, satisfactory to the Agent in its sole, reasonable discretion, of completion
by Borrower of the Tranche 2 Term Loan Requirements.


 


4.4       With
respect to any Tranche 3 Term Loan Advance, if at all, evidence, satisfactory to the Agent in its sole discretion, of completion
by Borrower of the Tranche 3 Term Loan Requirements.


 


4.5       No
Default. As of the Closing Date and each Advance Date, (i) no fact or condition exists that could (or could, with the passage
of time, the giving of notice, or both) constitute an Event of Default and (ii) no event that has had or could reasonably
be expected to have a Material Adverse Effect has occurred and is continuing.


 


SECTION 5.


REPRESENTATIONS
AND WARRANTIES OF BORROWER


 


Borrower represents
and warrants that:


 


5.1       Corporate
Status. Albireo Pharma, Inc. is a corporation duly organized, legally existing and in good standing under the laws of the
State of Delaware, and is duly qualified as a foreign corporation in all jurisdictions in which the nature of its business or location
of its properties require such qualifications and where the failure to be qualified could reasonably be expected to have a Material
Adverse Effect. Albireo AB is a private limited liability company duly incorporated and legally existing under the laws of Sweden.
Elobix AB is a private limited liability company duly incorporated and legally existing under the laws of Sweden. Borrower’s
present name, former names (if any), locations, place of formation, tax identification number (if any), organizational identification
number and other information are correctly set forth in Exhibit C, as may be updated by Parent in a written notice (including
any Compliance Certificate) provided to Agent after the Closing Date.


 


5.2       Collateral.
Borrower owns the Collateral and the Intellectual Property owned by it, free of all Liens, except for Permitted Liens. Borrower
has the power and authority to grant to Agent a Lien in the Collateral as security for the Secured Obligations.


 






    	 	-24-	 



     


    

 


5.3       Consents.
Borrower’s execution, delivery and performance of this Agreement and all other Loan Documents, and the Parent’s execution
of the Warrant, (i) have been duly authorized by all necessary corporate action of Borrower or the Parent, as applicable,
(ii) will not result in the creation or imposition of any Lien upon the Collateral, other than Permitted Liens and the Liens
created by this Agreement and the other Loan Documents, (iii) do not violate any provisions of Borrower’s respective
Certificates or Articles of Incorporation or Association (as applicable), bylaws, or any law, regulation, order, injunction, judgment,
decree or writ to which Borrower is subject and (iv) except as described on Schedule 5.3, do not violate any contract or agreement
or require the consent or approval of any other Person which has not already been obtained, except for consents and approvals the
failure of which to obtain could not reasonably be expected to have a Material Adverse Effect. The individual or individuals executing
the Loan Documents and the Warrant are duly authorized to do so.


 


5.4       Material
Adverse Effect. No event that has had or could reasonably be expected to have a Material Adverse Effect has occurred and is continuing.
Borrower is not aware of any event likely to occur that is reasonably expected to result in a Material Adverse Effect.


 


5.5       Actions
Before Governmental Authorities. There are no actions, suits or proceedings at law or in equity or by or before any governmental
authority now pending or, to the knowledge of Borrower, threatened in writing against or affecting Borrower or its property, that
are reasonably expected to result in a Material Adverse Effect.


 


5.6       Laws.
Neither Borrower nor any of its Subsidiaries is in violation of any law, rule or regulation, or in default with respect to
any judgment, writ, injunction or decree of any governmental authority, where such violation or default is reasonably expected
to result in a Material Adverse Effect. Borrower is not in default in any manner under any provision of any agreement or instrument
evidencing Indebtedness, or any other agreement to which it is a party or by which it is bound that could reasonably be expected
to result in a Material Adverse Effect.


 


Neither Borrower
nor any of its Subsidiaries is an “investment company” or a company “controlled” by an “investment
company” under the Investment Company Act of 1940, as amended. Neither Borrower nor any of its Subsidiaries is engaged as
one of its primary activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of
Governors). Borrower and each of its Subsidiaries has complied in all material respects with the Federal Fair Labor Standards Act.
Neither Borrower nor any of its Subsidiaries is a “holding company” or an “affiliate” of a “holding
company” or a “subsidiary company” of a “holding company” as each term is defined and used in the
Public Utility Holding Company Act of 2005. Neither Borrower’s nor any of its Subsidiaries’ properties or assets has
been used by Borrower or such Subsidiary or, to Borrower’s knowledge, by previous Persons, in disposing, producing, storing,
treating, or transporting any hazardous substance other than in material compliance with applicable laws. Borrower and each of
its Subsidiaries has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all
notices to, all governmental authorities that are necessary to continue their respective businesses as currently conducted, except
where the failure to do so could not reasonably be expected to result in a Material Adverse Effect.


 






    	 	-25-	 



     


    

 


None of Borrower,
any of its Subsidiaries, or to the Borrower’s knowledge, any of Borrower’s or its Subsidiaries’ Affiliates or,
to the Borrower’s knowledge, any of their respective agents acting or benefiting in any capacity in connection with the transactions
contemplated by this Agreement is (i) in violation of any Anti-Terrorism Law, (ii) engaging in or conspiring to engage
in any transaction that evades or avoids, or has the purpose of evading or avoiding or attempts to violate, any of the prohibitions
set forth in any Anti-Terrorism Law, or (iii) is a Blocked Person. None of Borrower, any of its Subsidiaries, or to the knowledge
of Borrower and any of their Affiliates or agents, acting or benefiting in any capacity in connection with the transactions contemplated
by this Agreement, (x) conducts any business or engages in making or receiving any contribution of funds, goods or services
to or for the benefit of any Blocked Person, or (y) deals in, or otherwise engages in any transaction relating to, any property
or interest in property blocked pursuant to Executive Order No. 13224, any similar executive order or other Anti-Terrorism
Law. None of the funds to be provided under this Agreement will be used, directly or indirectly, (a) for any activities in
violation of any applicable anti-money laundering, economic sanctions and anti-bribery laws and regulations or (b) for any
payment to any governmental official or employee, political party, official of a political party, candidate for political office,
or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage,
in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.


 


5.7       Information
Correct and Current. No written information, report, Advance Request, financial statement, exhibit or schedule furnished (other
than financial or business projections or other information of a forward-looking nature), by or on behalf of Borrower to Agent
in connection with any Loan Document or included therein or delivered pursuant thereto contained, or, when taken as a whole, contains
or will contain any material misstatement of fact or, when taken together with all other such information or documents, omitted,
omits or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances under
which they were, are or will be made, not materially misleading at the time such statement was made or deemed made. Additionally,
any and all financial or business projections provided by Borrower to Agent, whether prior to or after the Closing Date, shall
be (i) provided in good faith and based on the most current data and information available to Borrower, and (ii) the
most current of such projections provided to Borrower’s Board of Directors (it being understood that such projections are
subject to significant uncertainties and contingencies, many of which are beyond the control of Borrower, that no assurance is
given that any particular projections will be realized, and that actual results may differ).


 


5.8       Tax
Matters. Except as described on Schedule 5.8 and except those being contested in good faith with adequate reserves under GAAP,
(a) Borrower has filed all federal, state and local tax returns that it is required to file, (b) Borrower has duly paid
or fully reserved for all taxes or installments thereof (including any interest or penalties) as and when due, which have or may
become due pursuant to such returns, (c) Borrower has paid or fully reserved for any tax assessment received by Borrower for
the three (3) years preceding the Closing Date, if any (including any taxes being contested in good faith and by appropriate
proceedings) and (d) to the best of Borrower’s knowledge, no proposed or pending Tax assessments, deficiencies, audits
or other proceedings with respect to Borrower or any Subsidiary have had, or could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.


 






    	 	-26-	 



     


    

 


5.9       Intellectual
Property Claims. Except for Permitted Liens, Borrower is the sole owner of, or otherwise has the right to use, the Intellectual
Property that it uses in, and that is material to, Borrower’s business. Except as described on Schedule 5.9, (i) each
of the material Copyrights, Trademarks and Patents is, to the knowledge of Borrower, valid and enforceable, (ii) no material
part of the Intellectual Property has been judged invalid or unenforceable, in whole or in part, by a court of competent jurisdiction,
and (iii) no claim has been made to Borrower in writing that any material part of the Intellectual Property violates the rights
of any third party except to the extent such claim could not reasonably be excepted to result in a Material Adverse Effect. Exhibit D
is a true, correct and complete list of each of Borrower’s registered Patents, registered Trademarks, registered Copyrights,
and material agreements under which Borrower licenses Intellectual Property from third parties (other than shrink-wrap software
licenses), together with application or registration numbers, as applicable, owned by Borrower or any Subsidiary, in each case
as of the Closing Date. Borrower is not in breach of, nor has Borrower failed to perform any obligations under, any of the foregoing
contracts, licenses or agreements and, to Borrower’s knowledge, no third party to any such contract, license or agreement
is in breach thereof or has failed to perform any obligations thereunder, in each case, except where such breach or failure to
perform could not reasonably be expected to have a Material Adverse Effect.


 


5.10     Intellectual
Property. Except as described on Schedule 5.10, Borrower has all material rights with respect to Intellectual Property necessary
in the operation or conduct of Borrower’s business as currently conducted by Borrower. Without limiting the generality of
the foregoing, and in the case of Licenses, except for restrictions that are unenforceable under Division 9 of the UCC, Borrower
has the right, to the extent required to operate Borrower’s business, to freely transfer, license or assign Intellectual
Property necessary or material in the operation or conduct of Borrower’s business as currently conducted by Borrower, without
condition, restriction or payment of any kind (other than license payments in the ordinary course of business) to any third party,
and Borrower owns or has the right to use, pursuant to valid licenses, all software development tools, library functions, compilers
and all other third-party software and other items that are material to Borrower’s business and used in the design, development,
promotion, sale, license, manufacture, import, export, use or distribution of Borrower Products. Borrower is not a party to, nor
is it bound by, any Restricted License.


 


No material software or other
materials used by Borrower or any of its Subsidiaries (or used in any Borrower Products or any Subsidiaries’ products) are
subject to an open-source or similar license (including but not limited to the General Public License, Lesser General Public License,
Mozilla Public License, or Affero License) (collectively, “Open Source Licenses”) in a manner that would cause such
software or other materials to have to be (i) distributed to third parties at no charge or a minimal charge (royalty-free
basis); (ii) licensed to third parties to modify, make derivative works based on, decompile, disassemble, or reverse engineer;
or (iii) used in a manner that could require disclosure or distribution in source code form.


 






    	 	-27-	 



     


    

 


5.11     Borrower
Products. Except as described on Schedule 5.11, no Intellectual Property owned by Borrower or Borrower Product has been or is subject
to any actual or, to the knowledge of Borrower, threatened in writing litigation, proceeding (including any proceeding in the United
States Patent and Trademark Office or any corresponding foreign office or agency) or outstanding decree, order, judgment, settlement
agreement or stipulation that restricts in any manner Borrower’s use, transfer or licensing thereof or that may affect the
validity, use or enforceability thereof, in each case, which could reasonably be expected to have a Material Adverse Effect. To
the best of the Borrower’s knowledge, there is no decree, order, judgment, agreement, stipulation, arbitral award or other
provision entered into in connection with any litigation or proceeding that obligates Borrower to grant licenses or ownership interest
in any future Intellectual Property related to the operation or conduct of the business of Borrower or Borrower Products. Borrower
has not received any written notice or claim or, to the knowledge of Borrower, any oral notice or claim, challenging or questioning
Borrower’s ownership in any Intellectual Property (or written notice of any claim challenging or questioning the ownership
in any licensed Intellectual Property of the owner thereof) or suggesting that any third party has any claim of legal or beneficial
ownership with respect thereto nor, to Borrower’s knowledge, in each case, is there a reasonable basis for any such claim.
To the best of Borrower’s knowledge, neither Borrower’s use of its Intellectual Property nor the production and sale
of Borrower Products infringes the Intellectual Property or other rights of others.


 


5.12     Financial
Accounts. Exhibit E, as may be updated by the Parent in a written notice provided to Agent after the Closing Date, is a true,
correct and complete list of (a) all banks and other financial institutions at which Borrower or any Subsidiary maintains
Deposit Accounts and (b) all institutions at which Borrower or any Subsidiary maintains an account holding Investment Property,
and such exhibit correctly identifies the name, address and telephone number of each bank or other institution, the name in which
the account is held, a description of the purpose of the account, and the complete account number therefor.


 


5.13     Employee
Loans. Except as set forth on Schedule 5.13, which may be updated from time to time by Parent, and subject to the review and approval
of Agent, Borrower has no outstanding loans to any employee, officer or director of the Borrower nor has Borrower guaranteed the
payment of any loan made to an employee, officer or director of the Borrower by a third party.


 


5.14     Subsidiaries.
Borrower does not own any stock, partnership interest or other securities of any Person, except for Permitted Investments. Attached
as Schedule 5.14, as may be updated by Parent in a written notice provided after the Closing Date, is a true, correct and complete
list of each Subsidiary.


 






    	 	-28-	 



     


    

 






SECTION 6.

INSURANCE; INDEMNIFICATION


 


6.1            Coverage.
Borrower shall cause to be carried and maintained commercial general liability insurance, on an occurrence form, against risks
customarily insured against in Borrower’s line of business. Such risks shall include the risks of bodily injury, including
death, property damage, personal injury, advertising injury, and contractual liability per the terms of the indemnity found in
Section 6.3. Borrower must maintain a minimum of $2,000,000 of commercial general liability insurance for each occurrence.
Borrower has and agrees to maintain a minimum of $2,000,000 of directors’ and officers’ insurance for each occurrence
and $5,000,000 in the aggregate. So long as there are any Secured Obligations outstanding (other than any inchoate indemnity obligations
and any other obligations which, by their terms, are to survive the termination of this Agreement), Borrower shall also cause
to be carried and maintained insurance upon the Collateral, insuring against all risks of physical loss or damage howsoever caused,
in an amount not less than the full replacement cost of the Collateral, provided that such insurance may be subject to standard
exceptions and deductibles. If Borrower fails to obtain the insurance called for by this Section 6.1 or fails to pay any
premium thereon or fails to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan Document
or which may be required to preserve the Collateral, Agent may obtain such insurance or make such payment, and all amounts so
paid by Agent are immediately due and payable, bearing interest at the then highest rate applicable to the Secured Obligations,
and secured by the Collateral. Agent will make reasonable efforts to provide Borrower with notice of Agent obtaining such insurance
at the time it is obtained or within a reasonable time thereafter. No payments by Agent are deemed an agreement to make similar
payments in the future or Agent’s waiver of any Event of Default.


 


6.2            Certificates.
Borrower shall deliver to Agent certificates of insurance that evidence Borrower’s compliance with its insurance obligations
in Section 6.1 and the obligations contained in this Section 6.2. Borrower’s insurance certificate shall state
Agent (shown as “Hercules Capital, Inc., as Agent”) is an additional insured for commercial general liability,
a lenders loss payable for all risk property damage insurance, subject to the insurer’s approval, and a lenders loss payable
for property insurance and additional insured for liability insurance for any future insurance that Borrower may acquire from such
insurer. Attached to the certificates of insurance will be additional insured endorsements for liability and lender’s loss
payable endorsements for all risk property damage insurance; such endorsements to be provided to Agent no later than ten (10) Business
Days after the Closing Date; provided that the failure timely to so deliver such endorsements shall constitute an immediate, non-curable
Event of Default. All certificates of insurance will provide for a minimum of thirty (30) days advance written notice to Agent
of cancellation (other than cancellation for non-payment of premiums, for which ten (10) days’ advance written notice
shall be sufficient) or any other change adverse to Agent’s interests. Any failure of Agent to scrutinize such insurance
certificates for compliance is not a waiver of any of Agent’s rights, all of which are reserved. Borrower shall provide Agent
with copies of each insurance policy, and upon entering or amending any insurance policy required hereunder, Borrower shall provide
Agent with copies of such policies and shall promptly deliver to Agent updated insurance certificates with respect to such policies
no later than concurrently with the monthly financial statements delivered pursuant to Section 7.1(a).


 






    	 	-29-	 



     


    

 


6.3            Indemnity.
Borrower agrees to indemnify and hold Agent, the Lenders and their officers, directors, employees, agents, in-house attorneys,
representatives and shareholders (each, an “Indemnified Person”) harmless from and against any and all claims, costs,
expenses, damages and liabilities (including such claims, costs, expenses, damages and liabilities based on liability in tort,
including strict liability in tort), including reasonable and documented attorneys’ fees and disbursements and other costs
of investigation or defense (including those incurred upon any appeal) (collectively, “Liabilities”), that may be
instituted or asserted against or incurred by such Indemnified Person as the result of credit having been extended, suspended
or terminated under this Agreement and the other Loan Documents or the administration of such credit, or in connection with or
arising out of the transactions contemplated hereunder and thereunder, or any actions or failures to act in connection therewith,
or arising out of the disposition or utilization of the Collateral, excluding in all cases Liabilities to the extent resulting
solely from any Indemnified Person’s gross negligence or willful misconduct. Borrower agrees to pay, and to save Agent and
the Lenders harmless from, any and all liabilities with respect to, or resulting from any delay by Borrower in paying, any and
all excise, sales or other similar taxes (excluding taxes imposed on or measured by the net income of Agent or the Lenders) that
may be payable or determined to be payable with respect to any of the Collateral or this Agreement. In no event shall Borrower
or any Indemnified Person be liable on any theory of liability for any special, indirect, consequential or punitive damages (including
any loss of profits, business or anticipated savings). This Section 6.3 shall survive the repayment of indebtedness under,
and otherwise shall survive the expiration or other termination of, this Agreement.


 


SECTION 7.

COVENANTS OF BORROWER


 


Borrower agrees as
follows:


 


7.1            Financial
Reports. Parent shall furnish to Agent the financial statements and reports listed hereinafter (the “Financial Statements”):


 


(a)            as
soon as practicable (and in any event within 30 days) after the end of each calendar month, unaudited interim and year-to-date
financial statements as of the end of such month (prepared on a consolidated and consolidating basis, if applicable), including
balance sheet and related statements of income accompanied by a report detailing any material contingencies (including the commencement
of any material litigation by or against Borrower) or any other occurrence that could reasonably be expected to have a Material
Adverse Effect, all certified by Parent’s Chief Executive Officer or Chief Financial Officer;


 


(b)            as
soon as practicable (and in any event within 45 days) after the end of the last day of each of the first three fiscal quarters
of each fiscal year, unaudited interim and year-to-date financial statements as of the end of such calendar quarter (prepared
on a consolidated and consolidating basis, if applicable), including balance sheet and related statements of income and cash flows
accompanied by a report detailing any material contingencies (including the commencement of any material litigation by or against
Borrower) or any other occurrence that could reasonably be expected to have a Material Adverse Effect, certified by Parent’s
Chief Executive Officer or Chief Financial Officer to the effect that they have been prepared in accordance with GAAP, except
(i) for the absence of footnotes, and (ii) that they are subject to normal year-end adjustments;


 






    	 	-30-	 



     


    

 


(c)            as
soon as practicable (and in any event within ninety (90) days) after the end of each fiscal year, unqualified audited financial
statements as of the end of such year (prepared on a consolidated and consolidating basis, if applicable), including balance sheet
and related statements of income and cash flows, and setting forth in comparative form the corresponding figures for the preceding
fiscal year, certified by a firm of independent certified public accountants selected by Parent and reasonably acceptable to Agent
(Agent hereby acknowledges that Ernst & Young LLP is an acceptable firm of independent certified public accountants);


 


(d)            as
soon as practicable (and in any event within 30 days) after the end of each month, a Compliance Certificate in the form of Exhibit F;


 


(e)            promptly
after the public distribution or filing thereof, as the case may be, copies of any proxy statements, financial statements or reports
that Parent has made available to holders of its Common Stock and, within 30 days of the filing thereof, copies of any regular,
periodic and special reports or registration statements that Parent files with the SEC or any governmental authority that may be
substituted therefor, or any national securities exchange; provided, however, that the filing of any such proxy statements, financial
statements, reports or registration statements with the SEC on EDGAR shall be deemed to satisfy this requirement;


 


(f)            promptly
following each meeting of Parent’s board of directors, the following shall be made available for inspection by the Agent
at Parent’s premises at reasonable times and upon reasonable notice: copies of presentation materials relating to research,
clinical development, regulatory activities, and commercial timelines that Parent provides to its directors in connection with
meetings of such board of directors, provided that all in all cases Parent may exclude any information it deems necessary, in Parent’s
sole discretion, including, but not limited to, materials related to executive compensation, confidential information, any attorney-client
privileged information and any information that would raise a conflict of interest with Agent or Lenders, and materials prepared
exclusively for executive sessions of the independent directors and committees of such board of directors;


 


(g)            any
budget of the Borrower promptly following its approval by Borrower’s Board of Directors, as well as budgets, operating plans
and other financial information reasonably requested by Agent; and


 


(h)            immediate
notice if Borrower or any Subsidiary has knowledge that Borrower, or any Subsidiary or Affiliate of Borrower, is listed on the
OFAC Lists or (a) is convicted on, (b) pleads nolo contendere to, (c) is indicted on, or (d) is arraigned
and held over on charges involving money laundering or predicate crimes to money laundering.


 


Borrower shall not (without the
consent of Agent, such consent not to be unreasonably withheld or delayed), make any change in its accounting policies or reporting
practices, except as required by GAAP. If Borrower makes any change to its fiscal years or fiscal quarters, the Borrower shall
promptly notify Agent of such change. As of the Closing Date, the fiscal year of Borrower ends on December 31.


 






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The executed Compliance Certificate
may be sent via email to Agent at legal@htgc.com, kkosofsky@htgc.com, jmiotti@htgc.com and jferraro@htgc.com.
All Financial Statements required to be delivered to Agent pursuant to clauses (a), (b) and (c) shall be sent via
e-mail to financialstatements@htgc.com with a copy to legal@htgc.com, kkosofsky@htgc.com, jmiotti@htgc.com
and jferraro@htgc.com; provided, that if e-mail is not available or sending such Financial Statements via e-mail is not
possible, they shall be faxed to Agent at: (650) 473-9194, attention Account Manager: Albireo Pharma, Inc.


 


Notwithstanding the foregoing,
documents required to be delivered pursuant to the terms hereof (to the extent any such documents are included in materials otherwise
filed with the SEC or posted on the Parent’s website) may be delivered electronically and if so delivered, shall be deemed
to have been delivered on the date on which Parent provides a link thereto to Agent.


 


7.2            Management
Rights. Borrower shall permit any representative that Agent or the Lenders authorizes, including their attorneys and accountants,
to inspect the Collateral and examine and make copies and abstracts of the books of account and records of Borrower at reasonable
times and upon reasonable notice during normal business hours; provided, however, that so long as no Event of Default has
occurred and is continuing, such examinations shall be limited to no more often than once per fiscal year. In addition, any such
representative shall have the right to meet with management and officers of Borrower to discuss such books of account and records
at reasonable times and upon reasonable notice during normal business hours. In addition, Agent or the Lenders shall be entitled
at reasonable times and intervals to consult with and advise the management and officers of Borrower concerning significant business
issues affecting Borrower; provided that management and officers of Borrower shall not be bound to accept any such advisement.
Such consultations shall not unreasonably interfere with Borrower’s business operations. The parties intend that the rights
granted Agent and the Lenders shall constitute “management rights” within the meaning of 29 C.F.R. Section 2510.3-101(d)(3)(ii),
but that any advice, recommendations or participation by Agent or the Lenders with respect to any business issues shall not be
deemed to give Agent or the Lenders, nor be deemed an exercise by Agent or the Lenders of, control over Borrower’s management
or policies.


 


7.3            Further
Assurances. Borrower shall from time to time following Agent’s request execute, deliver and file, alone or with Agent, any
financing statements, security agreements, collateral assignments, notices, control agreements, promissory notes or other documents
to perfect, give the highest priority to Agent’s Lien on the Collateral or otherwise evidence Agent’s rights herein
(subject to Permitted Liens). Borrower shall from time to time procure any instruments or documents as may be reasonably requested
by Agent, and take all further action that may be necessary, or that Agent may reasonably request, to perfect and protect the Liens
granted hereby and thereby. In addition, and for such purposes only, Parent hereby authorizes Agent to execute and deliver on behalf
of Parent and to file such financing statements (including an indication that the financing statement covers “all assets
or all personal property” of Parent in accordance with Section 9-504 of the UCC), collateral assignments, notices, control
agreements, security agreements and other documents without the signature of Parent either in Agent’s name or in the name
of Agent as agent and attorney-in-fact for Parent. Borrower shall protect and defend Borrower’s title to the Collateral and
Agent’s Lien thereon against all Persons claiming any interest adverse to Borrower or Agent other than Permitted Liens.


 






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7.4            Indebtedness.
Borrower shall not create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, or permit any Subsidiary
so to do, other than Permitted Indebtedness, or prepay any Indebtedness or take any actions which impose on Borrower an obligation
to prepay any Indebtedness, except for (a) the conversion of Indebtedness into equity securities and the payment of cash in
lieu of fractional shares in connection with such conversion, (b) purchase money Indebtedness pursuant to its then applicable
payment schedule, (c) prepayment by any Subsidiary of (i) intercompany Indebtedness owed by such Subsidiary to any Borrower,
or (ii) if such Subsidiary is not a Borrower, intercompany Indebtedness owed by such Subsidiary to another Subsidiary that
is not Borrower, (d) prepayments of Subordinated Indebtedness to the extent permitted by any subordination agreement applicable
thereto, or (e) as otherwise permitted hereunder or approved in writing by Agent.


 


7.5            Collateral.
Borrower shall at all times keep the Collateral, the Intellectual Property and all other property and assets used in Borrower’s
business or in which Borrower now or hereafter holds any interest free and clear from any legal process (which could reasonably
be expected to result in damages or liability in excess of Two Million Dollars ($2,000,000) individually or in the aggregate) or
Liens whatsoever (except for Permitted Liens), and shall give Agent prompt written notice of any legal process affecting the Collateral,
any material Intellectual Property, such other property and assets, or any Liens thereon, provided however, that the Collateral
and such other property and assets may be subject to Permitted Liens except that there shall be no Liens whatsoever on Intellectual
Property other than (i) customary restrictions on assignment, sublicense or transfer that may exist in any license agreement
where Borrower or a Subsidiary is the licensee (and not the licensor) and (ii) licenses of Intellectual Property that constitute
Permitted Transfers where Borrower or a Subsidiary is the licensor. Borrower shall not agree with any Person other than Agent or
the Lenders not to encumber its property other than pursuant to any such restrictions that are customary in leases, subleases or
any license agreement where Borrower or a Subsidiary is the licensee (and not the licensor). Borrower shall not enter into or suffer
to exist or become effective any agreement that prohibits or limits the ability of Borrower to create, incur, assume or suffer
to exist any Lien upon any of its property (including Intellectual Property), whether now owned or hereafter acquired, to secure
its obligations under the Loan Documents to which it is a party other than (a) this Agreement and the other Loan Documents,
(b) any agreements governing any purchase money Liens or capital lease obligations otherwise permitted hereby (in which case,
any prohibition or limitation shall only be effective against the assets financed thereby), (c) imposed by Law and (d) customary
restrictions on the assignment of leases, licenses and other agreements. Borrower shall cause its Subsidiaries to protect and defend
such Subsidiary’s title to its assets from and against all Persons claiming any interest adverse to such Subsidiary, and
Borrower shall cause its Subsidiaries at all times to keep such Subsidiary’s property and assets free and clear from any
legal process or Liens whatsoever (except for Permitted Liens, provided however, that there shall be no Liens whatsoever on Intellectual
Property other than (i) customary restrictions on assignment, sublicense or transfer that may exist in any license agreement
where Borrower or a Subsidiary is the licensee (and not the licensor) and (ii) licenses of Intellectual Property that constitute
Permitted Transfers where Borrower or a Subsidiary is the licensor), and shall give Agent prompt written notice of any legal process
adversely affecting such Subsidiary’s assets.


 






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7.6            Investments.
Borrower shall not directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries
so to do, other than Permitted Investments.


 


7.7            Distributions.
Borrower shall not, and shall not allow any Subsidiary to, (a) repurchase or redeem any class of stock or other Equity Interest
other than pursuant to employee, director or consultant repurchase plans or other similar agreements, provided, however, in each
case the repurchase or redemption price does not exceed the original consideration paid for such stock or Equity Interest, or (b) declare
or pay any cash dividend or make a cash distribution on any class of stock or other Equity Interest, except that, a Subsidiary
may pay dividends or make distributions to Borrower or (c) waive, release or forgive any Indebtedness owed by any employees,
officers or directors in excess of $250,000 in the aggregate.


 


7.8            Transfers.
Except for Permitted Transfers, Borrower shall not, and shall not allow any Subsidiary to, voluntarily or involuntarily transfer,
sell, lease, license, lend or in any other manner convey any equitable, beneficial or legal interest in any material portion of
its assets.


 


7.9            Mergers
and Consolidations. Borrower shall not merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with or
into any other business organization (other than mergers or consolidations of (a) a Subsidiary which is not Borrower into
another Subsidiary or into Borrower or (b) Borrower into another Borrower), except in connection with Permitted Investments,
including without limitation, Permitted Acquisitions.


 


7.10          Taxes.
Borrower shall, and shall cause each of its Subsidiaries to, pay when due all material Taxes of any nature whatsoever now or hereafter
imposed or assessed against Borrower or the Collateral or upon Borrower’s ownership, possession, use, operation or disposition
thereof or upon Borrower’s rents, receipts or earnings arising therefrom. Borrower shall, and shall cause each of its Subsidiaries
to, accurately file on or before the due date therefor (taking into account proper extensions) all federal and material state income
Tax returns and other material Tax returns required to be filed. Notwithstanding the foregoing, Borrower and its Subsidiaries may
contest, in good faith and by appropriate proceedings diligently conducted, Taxes for which Borrower and its Subsidiaries maintain
adequate reserves in accordance with GAAP.


 






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7.11          Corporate
Changes. Neither Borrower nor any Subsidiary shall change its corporate name, legal form or jurisdiction of formation without
ten (10) days’ prior written notice to Agent. Neither Borrower nor any Subsidiary shall suffer a Change in Control.
Neither Borrower nor any Subsidiary shall relocate its chief executive office or its principal place of business unless: (i) it
has provided prior written notice to Agent; and (ii) such relocation shall be within the continental United States of America.
Borrower shall not relocate any item of Collateral (other than (v) sales of Inventory in the ordinary course of business,
(w) Collateral in transit or out for repair, (x) relocations of Borrower Products to contract manufacturing organizations,
distribution service firms, contract research organizations, clinical sites, clinical investigators and other institutions necessary
for the conducts of clinical studies, in each case, in the ordinary course of business, (y) relocations of Equipment having
an aggregate value of up to $500,000 in any fiscal year, and (z) relocations of Collateral from a location described on Exhibit C
to another location described on Exhibit C) unless (i) it has provided prompt written notice to Agent, (ii) such
relocation is within the continental United States of America and, (iii) if such relocation is to a third party bailee, it
has delivered a bailee agreement in form and substance reasonably acceptable to Agent. Notwithstanding the foregoing, Parent shall
use its best efforts to cause the UK Subsidiary to be dissolved, and shall provide evidence of the same, in form and content reasonably
acceptable to Agent, prior to December 31, 2020.


 


7.12          Deposit
Accounts. Borrower shall not maintain any Deposit Accounts, or accounts holding Investment Property, except (i) for Excluded
Accounts or (ii) with respect to which Agent has an Account Control Agreement.


 


7.13          Borrower
shall notify Agent of each Subsidiary formed subsequent to the Closing Date and, within 15 days of formation, shall cause such
Subsidiary to execute and deliver to Agent a Joinder Agreement.


 


7.14          MSC
Investment Conditions. At any time that any MSC Subsidiary has any assets or liabilities, Parent shall satisfy the MSC Investment
Conditions at all times.


 


7.15          Notification
of Event of Default. Borrower shall notify Agent immediately of the occurrence of any Event of Default.


 


7.16          Foreign
Deposits. Borrower shall not, and shall not permit any Subsidiary, from and after twenty (20) days after the Closing Date, to maintain
cash balances in any country other than the United States exceeding Ten Million Dollars ($10,000,000) (or the foreign equivalent
thereof) individually or in the aggregate.


 


7.17          Use
of Proceeds. Borrower agrees that the proceeds of the Loans shall be used solely to refinance existing indebtedness, to pay related
fees and expenses in connection with this Agreement and for working capital and general corporate purposes. The proceeds of the
Loans will not be used in violation of Anti-Corruption Laws or applicable Sanctions.


 


7.18          UK
Subsidiary. Borrower shall not cause or permit the UK Subsidiary to maintain cash or other assets, at any time after the Closing
Date, in an aggregate amount in excess of $180,000.


 






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7.19          Minimum
Cash. From and after January 1, 2021 and until the occurrence of Performance Milestone 2, Parent shall at all times maintain
minimum unrestricted Cash of Ten Million Dollars ($10,000,000) plus the amount of Borrower’s and its Subsidiaries’
accounts payable that have not been paid within ninety (90) days from the invoice date of the relevant account payable and are
not being contested by the Borrower or its Subsidiaries in good faith; provided that, if Borrower draws a Tranche 2 Term Loan
Advance but has not achieved the Net Proceeds Milestone by June 30, 2021, then Parent shall at all times after such date
maintain minimum unrestricted Cash of Twenty-Five Million Dollars ($25,000,000) plus the amount of Borrower’s and
its Subsidiaries’ accounts payable that have not been paid within ninety (90) days from the invoice date of the relevant
account payable and are not being contested by the Borrower or its Subsidiaries in good faith; in each case, in an account subject
to an Account Control Agreement in favor of Agent.


 


7.20          Compliance
with Laws.


 


Borrower
shall maintain, and shall cause its Subsidiaries to maintain, compliance in all material respects with all applicable laws, rules or
regulations (including any law, rule or regulation with respect to the making or brokering of loans or financial accommodations),
and shall, or cause its Subsidiaries to, obtain and maintain all required governmental authorizations, approvals, licenses, franchises,
permits or registrations reasonably necessary in connection with the conduct of Borrower’s business.


 


Neither Borrower
nor any of its Subsidiaries shall, nor shall Borrower or any of its Subsidiaries permit any Affiliate controlled by the Borrower
or any Subsidiary to, directly or indirectly, knowingly enter into any documents, instruments, agreements or contracts with any
Person listed on the OFAC Lists. Neither Borrower nor any of its Subsidiaries shall, nor shall Borrower or any of its Subsidiaries,
permit any Affiliate controlled by the Borrower or any Subsidiary to, directly or indirectly, (i) conduct any business or
engage in any transaction or dealing with any Blocked Person, including, without limitation, the making or receiving of any contribution
of funds, goods or services to or for the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any transaction
relating to, any property or interests in property blocked pursuant to Executive Order No. 13224 or any similar executive
order or other Anti-Terrorism Law, or (iii) engage in or conspire to engage in any transaction that evades or avoids, or has
the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in Executive Order No. 13224
or other Anti-Terrorism Law.


 


Borrower has
implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and
their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and Borrower, its
Subsidiaries and their respective officers and employees. To the knowledge of Borrower, its directors and agents are in compliance
with Anti-Corruption Laws and applicable Sanctions in all material respects.


 


None of the
Borrower, any of its Subsidiaries or any of their respective directors, officers or employees, or to the knowledge of Borrower,
any agent for Borrower or its Subsidiaries that will act in any capacity in connection with or benefit from the credit facility
established hereby, is a Sanctioned Person. No Loan, use of proceeds or other transaction contemplated by this Agreement will violate
Anti-Corruption Laws or applicable Sanctions.


 






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7.21          Intellectual
Property. Borrower shall (i) protect, defend and maintain the validity and enforceability of its material Intellectual Property;
(ii) promptly advise Agent in writing of material infringements of its Intellectual Property; and (iii) not allow any
Intellectual Property material to Borrowers’ business to be abandoned, forfeited or dedicated to the public without Agent’s
written consent.


 


7.22          Transactions
with Affiliates. Borrower shall not and shall not permit any Subsidiary to, directly or indirectly, enter into or permit to exist
any transaction of any kind with any Affiliate of Borrower or such Subsidiary on terms that are less favorable to Borrower or such
Subsidiary, as the case may be, than those that might be obtained in an arm’s length transaction from a Person who is not
an Affiliate of Borrower or such Subsidiary, other than transactions constituting a Permitted Investment, Permitted Indebtedness,
a Permitted Transfer or a transaction permitted pursuant to Sections 7.7 or 7.9.


 


SECTION 8.

RIGHT TO INVEST


 


8.1            The
Lenders or their permitted assignee or nominee shall have the right, in their discretion, to participate in any Subsequent Financing
in an amount of up to Two Million Dollars ($2,000,000) in the aggregate for all such participations, on the same terms, conditions
and pricing afforded to others participating in any such Subsequent Financing. The Lenders shall respond promptly, and in any event
within five (5) Business Days, to any invitation to participate in any Subsequent Financing, and shall treat any correspondence
or communication from the Company or its representatives regarding such participation as Confidential Information pursuant to Section 11.12
of this Agreement. This Section 8.1, and all rights and obligations hereunder, shall immediately terminate (a) upon the
satisfaction in full (other than any inchoate indemnity obligations and any other obligations which, by their terms, are to survive
the termination of this Agreement), in cash, of the Secured Obligations under, or other termination of, this Agreement and (b) once
neither Hercules Capital, Inc. nor any of its Affiliates is a Lender under this Agreement.


 


SECTION 9.

EVENTS OF DEFAULT


 


The occurrence of any
one or more of the following events shall be an Event of Default:


 


9.1            Payments.
Borrower fails to pay any amount due under this Agreement or any of the other Loan Documents on the due date; provided, however,
that an Event of Default shall not occur on account of a failure to pay due solely to an administrative or operational error of
Agent or the Lenders or Parent’s bank if Parent had the funds to make the payment when due and makes the payment within three
(3) Business Days following Borrower’s knowledge of such failure to pay; or


 






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9.2            Covenants.
Borrower breaches or defaults in the performance of any covenant or Secured Obligation under this Agreement, or any of the other
Loan Documents, and (a) with respect to a default under any covenant under this Agreement (other than under Sections 6, 7.4,
7.5, 7.6, 7.7, 7.8, 7.9, 7.14, 7.15, 7.17, 7.18, 7.19, 7.20, 7.21 and 7.22) any other Loan Document, such default continues for
more than ten (10) days after the earlier of the date on which (i) Agent or the Lenders has given notice of such default
to Borrower and (ii) Borrower has actual knowledge of such default or (b) with respect to a default under any of Sections
6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.14, 7.15, 7.17, 7.18, 7.19, 7.20, 7.21 and 7.22, the occurrence of such default; or


 


9.3            Material
Adverse Effect. A circumstance has occurred that could reasonably be expected to have a Material Adverse Effect; or


 


9.4            Representations.
Any representation or warranty made by Borrower in any Loan Document shall have been false or misleading in any material respect
when made or when deemed made; or


 


9.5            Insolvency.
Borrower (A) (i) shall make an assignment for the benefit of creditors; or (ii) shall be unable to pay its debts
as they become due, or be unable to pay or perform under the Loan Documents, or shall become insolvent; or (iii) shall file
a voluntary petition in bankruptcy; or (iv) shall file any petition, answer, or document seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or
regulation pertinent to such circumstances; or (v) shall seek or consent to or acquiesce in the appointment of any trustee,
receiver, or liquidator of Borrower or of all or any substantial part (i.e., 33-1/3% or more) of the assets or property of Borrower;
or (vi) shall cease operations of its business as its business has normally been conducted, or terminate substantially all
of its employees; or (vii) Borrower or its directors or majority shareholders shall take any action initiating any of the
foregoing actions described in clauses (i) through (vi); or (B) either (i) forty-five (45) days shall have
expired after the commencement of an involuntary action against Borrower seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute, law or regulation, without such action being dismissed
or all orders or proceedings thereunder affecting the operations or the business of Borrower being stayed; or (ii) a stay
of any such order or proceedings shall thereafter be set aside and the action setting it aside shall not be timely appealed; or
(iii) Borrower shall file any answer admitting or not contesting the material allegations of a petition filed against Borrower
in any such proceedings; or (iv) the court in which such proceedings are pending shall enter a decree or order granting the
relief sought in any such proceedings; or (v) forty-five (45) days shall have expired after the appointment, without the consent
or acquiescence of Borrower, of any trustee, receiver or liquidator of Borrower or of all or any substantial part of the properties
of Borrower without such appointment being vacated; or


 


9.6            Attachments;
Judgments. Any portion of Borrower’s assets, with a fair market value, individually or in the aggregate, of at least $1,000,000,
is attached or seized, or a levy is filed against any such assets, or a judgment or judgments is/are entered for the payment of
money (not covered by independent third party insurance as to which liability has not been rejected by such insurance carrier),
individually or in the aggregate, of at least $1,000,000, or Borrower is enjoined or in any way prevented by court order from conducting
any part of its business, and such attachment, seizure, levy, judgment or enjoinment is not, within thirty (30) days after the
occurrence thereof, discharged or stayed (whether through the posting of a bond or otherwise); or


 






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9.7            Other
Obligations. The occurrence of any default under any agreement or obligation of Borrower involving any Indebtedness in excess of
$1,000,000 after giving effect to any applicable grace period thereunder, which has resulted in a right by a third party to accelerate
the maturity of such Indebtedness.


 


SECTION 10.

REMEDIES


 


10.1          General.
Upon and during the continuance of any one or more Events of Default, Agent may, and at the direction of the Required Lenders shall,
accelerate and demand payment of all or any part of the Secured Obligations together with a Prepayment Charge and declare them
to be immediately due and payable (provided, that upon the occurrence of an Event of Default of the type described in Section 9.5,
all of the Secured Obligations (including, without limitation, the Prepayment Charge and the End of Term Charge) shall automatically
be accelerated and made due and payable, in each case without any further notice or act). Borrower hereby irrevocably appoints
Agent as its lawful attorney-in-fact to: (a) exercisable following the occurrence of an Event of Default, (i) sign Borrower’s
name on any invoice or bill of lading for any account or drafts against account debtors; (ii) demand, collect, sue, and give
releases to any account debtor for monies due, settle and adjust disputes and claims about the accounts directly with account debtors,
and compromise, prosecute, or defend any action, claim, case, or proceeding about any Collateral (including filing a claim or voting
a claim in any bankruptcy case in Agent’s or Borrower’s name, as Agent may elect); (iii) make, settle, and adjust
all claims under Borrower’s insurance policies; (iv) pay, contest or settle any Lien, charge, encumbrance, security
interest, or other claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge
the same; (v) transfer the Collateral into the name of Agent or a third party as the UCC permits; (vi) receive, open
and dispose of mail addressed to Borrower; (vii) endorse Borrower’s name on any checks, payment instruments, or other
forms of payment or security; and (viii) notify all account debtors to pay Agent directly. Borrower hereby appoints Agent
as its lawful attorney-in-fact, following the occurrence of an Event of Default, to sign Borrower’s name on any documents
necessary to perfect or continue the perfection of Agent’s security interest in the Collateral regardless of whether an Event
of Default has occurred until all Secured Obligations have been satisfied in full (other than any inchoate indemnity obligations
and any other obligations which, by their terms, are to survive the termination of this Agreement) and the Loan Documents have
been terminated. Agent’s foregoing appointment as Borrower’s attorney in fact, and all of Agent’s rights and
powers, coupled with an interest, are irrevocable until all Secured Obligations have been fully repaid and performed and the Loan
Documents have been terminated. Agent may, and at the direction of the Required Lenders shall, exercise all rights and remedies
with respect to the Collateral under the Loan Documents or otherwise available to it under the UCC and other applicable law, including
the right to release, hold, sell, lease, liquidate, collect, realize upon, or otherwise dispose of all or any part of the Collateral
and the right to occupy, utilize, process and commingle the Collateral. All Agent’s rights and remedies shall be cumulative
and not exclusive.


 






    	 	-39-	 



     


    

 


10.2          Collection;
Foreclosure. Upon the occurrence and during the continuance of any Event of Default, Agent may, and at the direction of the Required
Lenders shall, at any time or from time to time, apply, collect, liquidate, sell in one or more sales, lease or otherwise dispose
of, any or all of the Collateral, in its then condition or following any commercially reasonable preparation or processing, in
such order as Agent may elect. Any such sale may be made either at public or private sale at its place of business or elsewhere.
Borrower agrees that any such public or private sale may occur upon ten (10) calendar days’ prior written notice to
Borrower. Agent may require Borrower to assemble the Collateral and make it available to Agent at a place designated by Agent that
is reasonably convenient to Agent and Borrower. The proceeds of any sale, disposition or other realization upon all or any part
of the Collateral shall be applied by Agent in the following order of priorities:


 


First, to Agent and the Lenders
in an amount sufficient to pay in full Agent’s and the Lenders’ reasonable costs and professionals’ and advisors’
fees and expenses as described in Section 11.11;


 


Second, to the Lenders in an amount equal to the then
unpaid amount of the Secured Obligations (including principal, interest, and the Default Rate interest), in such order and priority
as Agent may choose in its sole discretion; and


 


Finally, after the full and final
payment in Cash of all of the Secured Obligations (other than any inchoate indemnity obligations and any other obligations which,
by their terms, are to survive the termination of this Agreement), to any creditor holding a junior Lien on the Collateral, or
to Borrower or its representatives or as a court of competent jurisdiction may direct.


 


Agent shall be deemed to have acted reasonably
in the custody, preservation and disposition of any of the Collateral if it complies with the obligations of a secured party under
the UCC.


 


10.3          No
Waiver. Agent shall be under no obligation to marshal any of the Collateral for the benefit of Borrower or any other Person, and
Borrower expressly waives all rights, if any, to require Agent to marshal any Collateral.


 


10.4          Cumulative
Remedies. The rights, powers and remedies of Agent hereunder shall be in addition to all rights, powers and remedies given by statute
or rule of law and are cumulative. The exercise of any one or more of the rights, powers and remedies provided herein shall
not be construed as a waiver of or election of remedies with respect to any other rights, powers and remedies of Agent.


 





 






    	 	-40-	 



     


    

 


SECTION 11.

MISCELLANEOUS


 


11.1          Severability.
Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective
only to the extent and duration of such prohibition or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.


 


11.2          Notice.
Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service of process or other communication
(including the delivery of Financial Statements) that is required, contemplated, or permitted under the Loan Documents or with
respect to the subject matter hereof shall be in writing, and shall be deemed to have been validly served, given, delivered, and
received upon the earlier of: (i) the day of transmission by electronic mail or hand delivery or delivery by an overnight
express service or overnight mail delivery service; or (ii) the third calendar day after deposit in the United States of America
mails, with proper first class postage prepaid, in each case addressed to the party to be notified as follows:



 



 


(a)           If
to Agent:


 


HERCULES CAPITAL, INC.


Legal Department 


Attention: Chief Legal Officer
and Kristen Kosofsky 


400 Hamilton Avenue, Suite 310 


Palo Alto, CA 94301 


email: legal@htgc.com and kkosofsky@htgc.com


 


(b)           If
to the Lenders:


 


HERCULES CAPITAL, INC. 


Legal Department 


Attention: Chief Legal Officer
and Kristen Kosofsky 


400 Hamilton Avenue, Suite 310 


Palo Alto, CA 94301 


email: legal@htgc.com and kkosofsky@htgc.com 


Telephone: 650-289-3060


 


(c)           If
to Borrower:


 


Albireo Pharma, Inc. 


Attention: Simon Harford 


10 Post Office Square, Suite 1000 


Boston, MA 02109 


email: simon.harford@albireopharma.com 


Telephone: 857-254-4184


 


with copies (which shall not
constitute notice) to:


 


Albireo Pharma, Inc. 


Attention: Chief Legal Officer 


10 Post Office Square, Suite 1000 


Boston, MA 02109 


email: Jason.duncan@albireopharma.com 


Telephone: 857-254- 4181


 


and to:


 


Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.


Attention: Megan Gates, Esq. 


One Financial Center 


Boston, Massachusetts 02111 


email: mngates@mintz.com 


Telephone: (617) 348-4443


 


or to such other address
as each party may designate for itself by like notice.


 






    	 	-41-	 



     


    

 


11.3     Entire
Agreement; Amendments.


 


(a)           This
Agreement and the other Loan Documents constitute the entire agreement and understanding of the parties hereto in respect of the
subject matter hereof and thereof, and supersede and replace in their entirety any prior proposals, term sheets, nondisclosure
or confidentiality agreements, letters, negotiations or other documents or agreements, whether written or oral, with respect to
the subject matter hereof or thereof (including Agent’s revised proposal letter dated April 16, 2020).


 


(b)           Neither
this Agreement, any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance
with the provisions of this Section 11.3(b). The Required Lenders and Borrower party to the relevant Loan Document may, or,
with the written consent of the Required Lenders, the Agent and the Borrower party to the relevant Loan Document may, from time
to time, (i) enter into written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose
of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of
the Borrower hereunder or thereunder or (ii) waive, on such terms and conditions as the Required Lenders or the Agent, as
the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any default
or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification
shall (A) forgive the principal amount or extend the final scheduled date of maturity of any Loan, extend the scheduled date
of any amortization payment in respect of any Term Loan, reduce the stated rate of any interest or fee payable hereunder) or extend
the scheduled date of any payment thereof, in each case without the written consent of each Lender directly affected thereby; (B) eliminate
or reduce the voting rights of any Lender under this Section 11.3(b) without the written consent of such Lender; (C) reduce
any percentage specified in the definition of Required Lenders, consent to the assignment or transfer by the Borrower of any of
its rights and obligations under this Agreement and the other Loan Documents, release all or substantially all of the Collateral
or release Borrower from its obligations under the Loan Documents, in each case without the written consent of all Lenders and,
in relation to any release of Collateral which is governed by Swedish law only, the Agent in accordance with Section 3.4;
or (D) amend, modify or waive any provision of Section 11.17 or Addendum 3 without the written consent of the Agent.
Any such waiver and any such amendment, supplement or modification shall apply equally to each Lender and shall be binding upon
Borrower, the Lenders, the Agent and all future holders of the Loans.


 


11.4         No
Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event
an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement.


 






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11.5         No
Waiver. The powers conferred upon Agent and the Lenders by this Agreement are solely to protect its rights hereunder and under
the other Loan Documents and its interest in the Collateral and shall not impose any duty upon Agent or the Lenders to exercise
any such powers. No omission or delay by Agent or the Lenders at any time to enforce any right or remedy reserved to it, or to
require performance of any of the terms, covenants or provisions hereof by Borrower at any time designated, shall be a waiver
of any such right or remedy to which Agent or the Lenders is entitled, nor shall it in any way affect the right of Agent or the
Lenders to enforce such provisions thereafter.


 


11.6         Survival.
All agreements, representations and warranties contained in this Agreement and the other Loan Documents or in any document delivered
pursuant hereto or thereto shall be for the benefit of Agent and the Lenders and shall survive the execution and delivery of this
Agreement. Sections 6.3, 11.13, 11.14 and 11.17 shall survive the termination of this Agreement.


 


11.7         Successors
and Assigns. The provisions of this Agreement and the other Loan Documents shall inure to the benefit of and be binding on Borrower
and its permitted assigns (if any). Borrower shall not assign its obligations under this Agreement or any of the other Loan Documents
without Agent’s express prior written consent, and any such attempted assignment shall be void and of no effect. Agent and
the Lenders may assign, transfer, or endorse its rights hereunder and under the other Loan Documents without prior notice to Borrower,
and all of such rights shall inure to the benefit of Agent’s and the Lenders’ successors and assigns; provided that
as long as no Event of Default has occurred and is continuing, neither Agent nor any Lender may assign, transfer or endorse its
rights hereunder or under the Loan Documents to any party that is a direct competitor of Borrower (as reasonably determined by
Agent), it being acknowledged that in all cases, any transfer to an Affiliate of any Lender or Agent shall be allowed. Notwithstanding
the foregoing, (x) in connection with any assignment by a Lender as a result of a forced divestiture at the request of any
regulatory agency, the restrictions set forth herein shall not apply and Agent and the Lenders may assign, transfer or indorse
its rights hereunder and under the other Loan Documents to any Person or party and (y) in connection with a Lender’s
own financing or securitization transactions, the restrictions set forth herein shall not apply and Agent and the Lenders may assign,
transfer or indorse its rights hereunder and under the other Loan Documents to any Person or party providing such financing or
formed to undertake such securitization transaction and any transferee of such Person or party upon the occurrence of a default,
event of default or similar occurrence with respect to such financing or securitization transaction; provided that no such sale,
transfer, pledge or assignment under this clause (y) shall release such Lender from any of its obligations hereunder or substitute
any such Person or party for such Lender as a party hereto until Agent shall have received and accepted an effective assignment
agreement from such Person or party in form satisfactory to Agent executed, delivered and fully completed by the applicable parties
thereto, and shall have received such other information regarding such assignee as Agent reasonably shall require. The Agent, acting
solely for this purpose as an agent of the Borrower, shall maintain at one of its offices in the United States a register for the
recordation of the names and addresses of the Lenders(s), and the Term Commitments of, and principal amounts (and stated interest)
of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in
the Register shall be conclusive absent manifest error, and the Borrower, the Agent and the Lenders(s) shall treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.


 






    	 	-43-	 



     


    

 


11.8         Governing
Law. This Agreement and the other Loan Documents (other than the Swedish Pledge Agreement) have been negotiated and delivered to
Agent and the Lenders in the State of California, and shall have been accepted by Agent and the Lenders in the State of California.
Payment to Agent and the Lenders by Borrower of the Secured Obligations is due in the State of California. This Agreement and the
other Loan Documents shall be governed by, and construed and enforced in accordance with, the laws of the State of California,
excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.


 


11.9         Consent
to Jurisdiction and Venue. All judicial proceedings (to the extent that the reference requirement of Section 11.10 is not
applicable) arising in or under or related to this Agreement or any of the other Loan Documents may be brought in any state or
federal court located in the State of California. By execution and delivery of this Agreement, each party hereto generally and
unconditionally: (a) consents to nonexclusive personal jurisdiction in Santa Clara County, State of California; (b) waives
any objection as to jurisdiction or venue in Santa Clara County, State of California; (c) agrees not to assert any defense
based on lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement or the other Loan Documents. Service of process on any party hereto in any action arising
out of or relating to this Agreement shall be effective if given in accordance with the requirements for notice set forth in Section 11.2,
and shall be deemed effective and received as set forth in Section 11.2. Nothing herein shall affect the right to serve process
in any other manner permitted by law or shall limit the right of either party to bring proceedings in the courts of any other jurisdiction.


 


11.10       Mutual
Waiver of Jury Trial / Judicial Reference.


 


(a)                Because
disputes arising in connection with complex financial transactions are most quickly and economically resolved by an experienced
and expert Person and the parties wish applicable state and federal laws to apply (rather than arbitration rules), the parties
desire that their disputes be resolved by a judge applying such applicable laws. EACH OF BORROWER, AGENT AND THE LENDERS SPECIFICALLY
WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM
OR ANY OTHER CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWER AGAINST AGENT, THE LENDERS OR THEIR RESPECTIVE ASSIGNEE
OR BY AGENT, THE LENDERS OR THEIR RESPECTIVE ASSIGNEE AGAINST BORROWER. This waiver extends to all such Claims, including Claims
that involve Persons other than Agent, Borrower and the Lenders; Claims that arise out of or are in any way connected to the relationship
among Borrower, Agent and the Lenders; and any Claims for damages, breach of contract, tort, specific performance, or any equitable
or legal relief of any kind, arising out of this Agreement, any other Loan Document.


 






    	 	-44-	 



     


    

 


(b)               If
the waiver of jury trial set forth in Section 11.10(a) is ineffective or unenforceable, the parties agree that all Claims
shall be resolved by reference to a private judge sitting without a jury, pursuant to Code of Civil Procedure Section 638,
before a mutually acceptable referee or, if the parties cannot agree, a referee selected by the Presiding Judge of the Santa Clara
County, California. Such proceeding shall be conducted in Santa Clara County, California, with California rules of evidence
and discovery applicable to such proceeding.





 


(c)                In
the event Claims are to be resolved by judicial reference, either party may seek from a court identified in Section 11.9,
any prejudgment order, writ or other relief and have such prejudgment order, writ or other relief enforced to the fullest extent
permitted by law notwithstanding that all Claims are otherwise subject to resolution by judicial reference.


 


11.11       Professional
Fees. Borrower promises to pay Agent’s and the Lenders’ fees and reasonable and documented out-of-pocket expenses necessary
to finalize the loan documentation, including but not limited to reasonable and documented attorneys’ fees, UCC searches,
filing costs, and other miscellaneous expenses. In addition, Borrower promises to pay any and all reasonable and documented attorneys’
and other professionals’ fees and expenses incurred by Agent and the Lenders after the Closing Date in connection with or
related to: (a) the Loan; (b) the administration, collection, or enforcement of the Loan; (c) the amendment or modification
of the Loan Documents; (d) any waiver, consent, release, or termination under the Loan Documents; (e) the protection,
preservation, audit, field exam, sale, lease, liquidation, or disposition of Collateral or the exercise of remedies with respect
to the Collateral; (f) any legal, litigation, administrative, arbitration, or out of court proceeding in connection with or
related to Borrower or the Collateral, and any appeal or review thereof; and (g) any bankruptcy, restructuring, reorganization,
assignment for the benefit of creditors, workout, foreclosure, or other action related to Borrower, the Collateral, the Loan Documents,
including representing Agent or the Lenders in any adversary proceeding or contested matter commenced or continued by or on behalf
of Borrower’s estate, and any appeal or review thereof.


 


11.12       Confidentiality.
Agent and the Lenders acknowledge that certain items of Collateral and information provided to Agent and the Lenders by Borrower
are confidential and proprietary information of Borrower, if and to the extent such information either (x) is marked as confidential
by Borrower at the time of disclosure, or (y) should reasonably be understood to be confidential (the “Confidential
Information”). Accordingly, Agent and the Lenders agree that any Confidential Information it may obtain in the course of
acquiring, administering or perfecting Agent’s security interest in the Collateral shall not be disclosed to any other Person
or entity in any manner whatsoever, in whole or in part, without the prior written consent of Borrower, except that Agent and the
Lenders may disclose any such information: (a) to its Affiliates, partners, investors, lenders, directors, officers, employees,
agents, advisors, accountants, counsel, representatives and other professional advisors if Agent or the Lenders in their sole discretion
determines that any such party should have access to such information in connection with such party’s responsibilities in
connection with the Loan or this Agreement and, provided that such recipient of such Confidential Information either (i) agrees
to be bound by the confidentiality provisions of this paragraph or (ii) is otherwise subject to confidentiality restrictions
that reasonably protect against the disclosure of Confidential Information; (b) if such information is generally available
to the public or to the extent such information becomes publicly available other than as a result of a breach of this Section or
becomes available to Agent or any Lender, or any of their respective Affiliates on a non-confidential basis from a source other
than the Borrower; (c) if required or appropriate in any report, statement or testimony submitted to any governmental authority
having or claiming to have jurisdiction over Agent or the Lenders and any rating agency; (d) if required or appropriate in
response to any summons or subpoena or in connection with any litigation, to the extent permitted or deemed advisable by Agent’s
or Lender’s counsel; (e) to comply with any legal requirement or law applicable to Agent or the Lenders or demanded
by any governmental authority; (f) to the extent reasonably necessary in connection with the exercise of, or preparing to
exercise, or the enforcement of, or preparing to enforce, any right or remedy under any Loan Document, including Agent’s
sale, lease, or other disposition of Collateral after an Event of Default or any action or proceeding relating to any Loan Document;
(g) to any participant or assignee of Agent or the Lenders or any prospective participant or assignee; provided, that such
participant or assignee or prospective participant or assignee is subject to confidentiality restrictions that reasonably protect
against the disclosure; (h) to the extent consisting of general portfolio information that does not identify Borrower; or
(i) otherwise with the prior consent of Borrower; provided, that any disclosure made in violation of this Agreement shall
not affect the obligations of Borrower or any of its Affiliates or any guarantor under this Agreement or the other Loan Documents.
Agent’s and Lenders’ obligations under this Section 11.12 shall supersede all of their respective obligations
under the Non-Disclosure Agreement.


 






    	 	-45-	 



     


    

 


11.13       Assignment
of Rights. Borrower acknowledges and understands that Agent or the Lenders may, subject to Section 11.7, sell and assign all
or part of its interest hereunder and under the Loan Documents to any Eligible Assignee. After such assignment the term “Agent”
or “Lender” as used in the Loan Documents shall mean and include such Eligible Assignee, and such Eligible Assignee
shall be vested with all rights, powers and remedies of Agent and the Lenders hereunder with respect to the interest so assigned;
but with respect to any such interest not so transferred, Agent and the Lenders shall retain all rights, powers and remedies hereby
given. No such assignment by Agent or the Lenders shall relieve Borrower of any of its obligations hereunder. The Lenders agree
that in the event of any transfer by it of the Note(s)(if any), it will endorse thereon a notation as to the portion of the principal
of the Note(s), which shall have been paid at the time of such transfer and as to the date to which interest shall have been last
paid thereon.


 


11.14       Revival
of Secured Obligations. This Agreement and the Loan Documents shall remain in full force and effect and continue to be effective
if any petition is filed by or against Borrower for liquidation or reorganization, if Borrower becomes insolvent or makes an assignment
for the benefit of creditors, if a receiver or trustee is appointed for all or any significant part of Borrower’s assets,
or if any payment or transfer of Collateral is recovered from Agent or the Lenders. The Loan Documents and the Secured Obligations
and Collateral security shall continue to be effective, or shall be revived or reinstated, as the case may be, if at any time payment
and performance of the Secured Obligations or any transfer of Collateral to Agent, or any part thereof is rescinded, avoided or
avoidable, reduced in amount, or must otherwise be restored or returned by, or is recovered from, Agent, Lender or by any obligee
of the Secured Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise,
all as though such payment, performance, or transfer of Collateral had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, avoided, avoidable, restored, returned, or recovered, the Loan Documents and the Secured Obligations
shall be deemed, without any further action or documentation, to have been revived and reinstated except to the extent of the full
and final payment to Agent or the Lenders in Cash.


 






    	 	-46-	 



     


    

 


11.15       Counterparts.
This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original, but all of which
counterparts shall constitute but one and the same instrument.


 


11.16       No
Third Party Beneficiaries. No provisions of the Loan Documents are intended, nor will be interpreted, to provide or create any
third-party beneficiary rights or any other rights of any kind in any Person other than Agent, Lender and Borrower unless specifically
provided otherwise herein, and, except as otherwise so provided, all provisions of the Loan Documents will be personal and solely
among Agent, the Lenders and the Borrower.


 


11.17      Agency.


 


(a)            Each
Lender hereby irrevocably appoints Hercules Capital, Inc. to act on its behalf as the Agent hereunder and under the other
Loan Documents and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to the
Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.


 


(b)            Each
Lender agrees to indemnify the Agent in its capacity as such (to the extent not reimbursed by Borrower and without limiting the
obligation of Borrower to do so), according to its respective Term Commitment percentage (based upon the total outstanding Term
Commitments) in effect on the date on which indemnification is sought under this Section 11.17, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever
that may at any time be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of, this Agreement,
any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated
hereby or thereby or any action taken or omitted by the Agent under or in connection with any of the foregoing; The agreements
in this Section shall survive the payment of the Loans and all other amounts payable hereunder.


 


(c)            Agent
in Its Individual Capacity. The Person serving as the Agent hereunder shall have the same rights and powers in its capacity as
a Lender as any other Lender and may exercise the same as though it were not the Agent and the term “Lender” shall,
unless otherwise expressly indicated or unless the context otherwise requires, include each such Person serving as Agent hereunder
in its individual capacity.


 






    	 	-47-	 



     


    

 


(d)            Exculpatory
Provisions. The Agent shall have no duties or obligations except those expressly set forth herein and in the other Loan Documents.
Without limiting the generality of the foregoing, the Agent shall not:


 


		(i)	be subject to any fiduciary or other implied duties, regardless of whether any default or any Event
of Default has occurred and is continuing;



 


		(ii)	have any duty to take any discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby or by the other Loan Documents that the Agent is required to exercise as directed
in writing by the Lenders, provided that the Agent shall not be required to take any action that, in its opinion or the opinion
of its counsel, may expose the Agent to liability or that is contrary to any Loan Document or applicable law; and



 


		(iii)	except as expressly set forth herein and in the other Loan Documents, have any duty to disclose,
and the Agent shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates
that is communicated to or obtained by any Person serving as the Agent or any of its Affiliates in any capacity.



 


(e)           The
Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Lenders or
as the Agent shall believe in good faith shall be necessary, under the circumstances or (ii) in the absence of its own gross
negligence or willful misconduct.


 


(f)           The
Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other
document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of
any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any default or Event
of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or
any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Section 4 or elsewhere
herein, other than to confirm receipt of items expressly required to be delivered to the Agent.


 


(g)           Reliance
by Agent. Agent may rely, and shall be fully protected in acting, or refraining to act, upon, any resolution, statement, certificate,
instrument, opinion, report, notice, request, consent, order, bond or other paper or document that it has no reason to believe
to be other than genuine and to have been signed or presented by the proper party or parties or, in the case of cables, telecopies
and telexes, to have been sent by the proper party or parties. In the absence of its gross negligence or willful misconduct, Agent
may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates
or opinions furnished to Agent and conforming to the requirements of this Agreement or any of the other Loan Documents. Agent may
consult with counsel, and any opinion or legal advice of such counsel shall be full and complete authorization and protection in
respect of any action taken, not taken or suffered by Agent hereunder or under any Loan Documents in accordance therewith. Agent
shall have the right at any time to seek instructions concerning the administration of the Collateral from any court of competent
jurisdiction. Agent shall not be under any obligation to exercise any of the rights or powers granted to Agent by this Agreement,
this Agreement and the other Loan Documents at the request or direction of the Lenders unless Agent shall have been provided by
the Lenders with adequate security and indemnity against the costs, expenses and liabilities that may be incurred by it in compliance
with such request or direction.


 






    	 	-48-	 



     


    

 


11.18       Publicity.
None of the parties hereto nor any of its respective member businesses and Affiliates shall, without the other parties’ prior
written consent (which shall not be unreasonably withheld or delayed), publicize or use (a) the other party’s name (including
a brief description of the relationship among the parties hereto), logo or hyperlink to such other parties’ web site, separately
or together, in written and oral presentations, advertising, promotional and marketing materials, client lists, public relations
materials or on its web site (together, the “ Publicity Materials”); (b) the names of officers of such other parties
in the Publicity Materials; and (c) such other parties’ name, trademarks, servicemarks in any news or press release
concerning such party; provided however, notwithstanding anything to the contrary herein, no such consent shall be required (i) to
the extent necessary to comply with the requests of any regulators, legal requirements or laws applicable to such party, pursuant
to any listing agreement with any national securities exchange (so long as such party provides prior notice to the other party
hereto to the extent reasonably practicable provided, that all parties acknowledge and agree that no prior notice is required for
Borrower to describe this Agreement and the transactions hereunder in their filings with the SEC) and (ii) to comply with
Section 11.12.


 


11.19       Multiple
Borrowers.


 


(a)            Borrower’s
Agent. Each of the Borrowers hereby irrevocably appoints Albireo Pharma, Inc. as its agent, attorney-in-fact and legal representative
for all purposes, including requesting disbursement of the Term Loan, receiving account statements and other notices and communications
to Borrowers (or any of them) from the Agent or any Lender and providing any consent or approval contemplated hereunder. The Agent
may rely, and shall be fully protected in relying, on any request for the Term Loan, disbursement instruction, report, information
or any other notice or communication made or given by Albireo Pharma, Inc., whether in its own name or on behalf of one or
more of the other Borrowers, and the Agent shall not have any obligation to make any inquiry or request any confirmation from or
on behalf of any other Borrower as to the binding effect on it of any such request, instruction, report, information, other notice
or communication, nor shall the joint and several character of the Borrowers’ obligations hereunder be affected thereby.


 






    	 	-49-	 



     


    

 


(b)            Waivers.
Borrower hereby waives: (i) any right to require the Agent to institute suit against, or to exhaust its rights and remedies
against, any other Borrower or any other person, or to proceed against any property of any kind which secures all or any part of
the Secured Obligations, or to exercise any right of offset or other right with respect to any reserves, credits or deposit accounts
held by or maintained with the Agent or any Indebtedness of the Agent or any Lender to any other Borrower, or to exercise any other
right or power, or pursue any other remedy the Agent or any Lender may have; (ii) any defense arising by reason of any disability
or other defense of any other Borrower or any guarantor or any endorser, co-maker or other person, or by reason of the cessation
from any cause whatsoever of any liability of any other Borrower or any guarantor or any endorser, co-maker or other person, with
respect to all or any part of the Secured Obligations, or by reason of any act or omission of the Agent or others which directly
or indirectly results in the discharge or release of any other Borrower or any guarantor or any other person or any Secured Obligations
or any security therefor, whether by operation of law or otherwise; (iii) any defense arising by reason of any failure of
the Agent to obtain, perfect, maintain or keep in force any Lien on, any property of any Borrower or any other person; (iv) any
defense based upon or arising out of any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, liquidation
or dissolution proceeding commenced by or against any other Borrower or any guarantor or any endorser, co-maker or other person,
including without limitation any discharge of, or bar against collecting, any of the Secured Obligations (including without limitation
any interest thereon), in or as a result of any such proceeding. Until all of the Secured Obligations have been paid, performed,
and discharged in full, nothing shall discharge or satisfy the liability of any Borrower hereunder except the full performance
and payment of all of the Secured Obligations. If any claim is ever made upon the Agent for repayment or recovery of any amount
or amounts received by the Agent in payment of or on account of any of the Secured Obligations, because of any claim that any such
payment constituted a preferential transfer or fraudulent conveyance, or for any other reason whatsoever, and the Agent repays
all or part of said amount by reason of any judgment, decree or order of any court or administrative body having jurisdiction over
the Agent or any of its property, or by reason of any settlement or compromise of any such claim effected by the Agent with any
such claimant (including without limitation the any other Borrower), then and in any such event, Borrower agrees that any such
judgment, decree, order, settlement and compromise shall be binding upon Borrower, notwithstanding any revocation or release of
this Agreement or the cancellation of any note or other instrument evidencing any of the Secured Obligations, or any release of
any of the Secured Obligations, and Borrower shall be and remain liable to the Agent and the Lenders under this Agreement for the
amount so repaid or recovered, to the same extent as if such amount had never originally been received by the Agent or any Lender,
and the provisions of this sentence shall survive, and continue in effect, notwithstanding any revocation or release of this Agreement.
Borrower hereby expressly and unconditionally waives all rights of subrogation, reimbursement and indemnity of every kind against
any other Borrower, and all rights of recourse to any assets or property of any other Borrower, and all rights to any collateral
or security held for the payment and performance of any Secured Obligations, including (but not limited to) any of the foregoing
rights which Borrower may have under any present or future document or agreement with any other Borrower or other person, and including
(but not limited to) any of the foregoing rights which any Borrower may have under any equitable doctrine of subrogation, implied
contract, or unjust enrichment, or any other equitable or legal doctrine.


 



    	 	-50-	 



     


    




 


(c)            Consents.
Borrower hereby consents and agrees that, without notice to or by Borrower and without affecting or impairing in any way the obligations
or liability of Borrower hereunder, the Agent may, from time to time before or after revocation of this Agreement, do any one
or more of the following in its sole discretion: (i) accept partial payments of, compromise or settle, renew, extend the
time for the payment, discharge, or performance of, refuse to enforce, and release all or any parties to, any or all of the Secured
Obligations; (ii) grant any other indulgence to any Borrower or any other Person in respect of any or all of the Secured
Obligations or any other matter; (iii) accept, release, waive, surrender, enforce, exchange, modify, impair, or extend the
time for the performance, discharge, or payment of, any and all property of any kind securing any or all of the Secured Obligations
or any guaranty of any or all of the Secured Obligations, or on which the Agent at any time may have a Lien, or refuse to enforce
its rights or make any compromise or settlement or agreement therefor in respect of any or all of such property; (iv) substitute
or add, or take any action or omit to take any action which results in the release of, any one or more other Borrowers or any
endorsers or guarantors of all or any part of the Secured Obligations, including, without limitation one or more parties to this
Agreement, regardless of any destruction or impairment of any right of contribution or other right of Borrower; (v) apply
any sums received from any other Borrower, any guarantor, endorser, or co-signer, or from the disposition of any Collateral or
security, to any Indebtedness whatsoever owing from such person or secured by such Collateral or security, in such manner and
order as the Agent determines in its sole discretion, and regardless of whether such Indebtedness is part of the Secured Obligations,
is secured, or is due and payable. Borrower consents and agrees that the Agent shall be under no obligation to marshal any assets
in favor of Borrower, or against or in payment of any or all of the Secured Obligations. Borrower further consents and agrees
that the Agent shall have no duties or responsibilities whatsoever with respect to any property securing any or all of the Secured
Obligations. Without limiting the generality of the foregoing, the Agent shall have no obligation to monitor, verify, audit, examine,
or obtain or maintain any insurance with respect to, any property securing any or all of the Secured Obligations.


 


(d)            Independent
Liability. Borrower hereby agrees that one or more successive or concurrent actions may be brought hereon against Borrower, in
the same action in which any other Borrower may be sued or in separate actions, as often as deemed advisable by Agent. Borrower
is fully aware of the financial condition of each other Borrower and is executing and delivering this Agreement based solely upon
its own independent investigation of all matters pertinent hereto, and Borrower is not relying in any manner upon any representation
or statement of the Agent or any Lender with respect thereto. Borrower represents and warrants that it is in a position to obtain,
and Borrower hereby assumes full responsibility for obtaining, any additional information concerning any other Borrower’s
financial condition and any other matter pertinent hereto as Borrower may desire, and Borrower is not relying upon or expecting
the Agent to furnish to it any information now or hereafter in the Agent’s possession concerning the same or any other matter.


 






    	 	-51-	 



     


    

 


(e)            Subordination.
All Indebtedness of Borrower now or hereafter arising held by another Borrower is subordinated to the Secured Obligations and
the Borrower holding the Indebtedness shall take all actions reasonably requested by Agent to effect, to enforce and to give notice
of such subordination.


 


(f)            Service
of Process. The Borrower and each Subsidiary that is organized outside of the United States of America shall appoint Corporation
Service Company, or other agent acceptable to Agent, as its agent for the purpose of accepting service of any process in the United
States of America. Borrower shall take all actions, including payment of fees to such agent, to ensure that each such appointment
remains effective at all times.


 


11.20       Participations.
Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain
a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each
participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”);
provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity
of any participant or any information relating to a participant's interest in any commitments, loans, its other obligations under
any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan,
letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.
The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose
name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding
any notice to the contrary. For the avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for maintaining
a Participant Register. Borrower agrees that each participant shall be entitled to the benefits of the provisions in Addendum 1
attached hereto (subject to the requirements and limitations therein, including the requirements under Section 7 of Addendum
1 attached hereto (it being understood that the documentation required under Section 7 of Addendum 1 attached hereto shall
be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment
pursuant to Section 11.7; provided that such participant shall not be entitled to receive any greater payment under Addendum
1 attached hereto, with respect to any participation, than its participating Lender would have been entitled to receive, except
to the extent such entitlement to receive a greater payment results from a change in law that occurs after the participant acquired
the applicable participation.


 


(SIGNATURES TO FOLLOW)


 






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IN WITNESS WHEREOF,
Borrower, Agent and the Lenders have duly executed and delivered this Loan and Security Agreement as of the day and year first
above written.


 


	 	BORROWERS:
	 	 
	 	ALBIREO PHARMA, INC.



 


	 	Signature:	 /s/ Ronald Cooper






	 	Print Name: Ronald Cooper
	 	Title: President and Chief
    Executive Officer




 


[Signature Page to Loan and Security
Agreement]


 






     

     


    

 


IN WITNESS WHEREOF,
Borrower, Agent and the Lenders have duly executed and delivered this Loan and Security Agreement as of the day and year first
above written.


 





	 	BORROWERS:
	 	 
	 	ALBIREO AB



 


	 	Signature: 	/s/ Ronald Cooper






	 	Print Name: Ronald Cooper
	 	Title: Chief Executive Officer




 


[Signature Page to Loan and Security
Agreement]


 






     

     


    

 


Accepted in Palo Alto, California:


 


	 	AGENT:
	 	 
	 	HERCULES CAPITAL, INC.



 


	 	Signature: 	/s/ Jennifer Choe






	 	Print Name: Jennifer Choe
	 	Title: Associate General Counsel




 


	 	LENDER:
	 	 
	 	HERCULES CAPITAL, INC.



 


	 	Signature:	 /s/ Jennifer Choe






	 	Print Name: Jennifer Choe
	 	Title: Associate General Counsel




 


[Signature Page to Loan and Security Agreement]