Exhibit 10.2


 


NEITHER THIS WARRANT NOR THE SECURITIES FOR WHICH THIS WARRANT
IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, AND,
ACCORDINGLY, MAY NOT BE OFFERED FOR SALE OR SOLD, PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS.


 


WARRANT AGREEMENT


 


To Purchase Shares of the Common Stock of


 


ALBIREO PHARMA, INC.


 


Dated as of ________________ __, 2020 (the
 “Effective Date”)


 


WHEREAS, Albireo Pharma, Inc., a Delaware
corporation (the “Company”), has entered into a Loan and Security Agreement of even date herewith (as amended
and in effect from time to time, the “Loan Agreement”) with Hercules Capital, Inc., a Maryland corporation,
in its capacity as administrative agent and collateral agent for itself and the Lender (as defined below) (the “Warrantholder”),
and the several banks and other financial institutions or entities from time to time party thereto (collectively, the “Lender”);


 


WHEREAS, pursuant to the Loan Agreement, the
Company has agreed to issue to the Warrantholder this Warrant Agreement, evidencing the right to purchase shares of the Company’s
Common Stock (this “Warrant,” “Warrant Agreement,” or this “Agreement”);


 


NOW, THEREFORE, in consideration of the Warrantholder
having executed and delivered the Loan Agreement and provided the financial accommodations contemplated therein, and in consideration
of the mutual covenants and agreements contained herein, the Company and the Warrantholder agree as follows:


 


 SECTION 1.     GRANT OF THE RIGHT TO PURCHASE COMMON STOCK.




 


(a)              
For value received, the Company hereby grants to the Warrantholder, and the Warrantholder is entitled, upon the terms and
subject to the conditions hereinafter set forth, to subscribe for and purchase, from the Company, up to the number of fully paid
and non-assessable shares of Common Stock (as defined below) as determined pursuant to Section 1(b) below, at a purchase price
per share equal to the Exercise Price (as defined below). The number and Exercise Price of such shares are subject to adjustment
as provided in Section 8. As used herein, the following terms shall have the following meanings:


 






    


     


    

 


“Act” means the Securities
Act of 1933, as amended.


 


“Charter” means the Company’s
Certificate of Incorporation or other constitutional document, as may be amended and in effect from time to time.


 


“Common Stock” means the
Company’s common stock, $0.01 par value per share and any class and/or series of Company capital stock for or into which
such common stock may be converted or exchanged in a reorganization, recapitalization or similar transaction.


 


“Exercise Price” means
[the lower of: (i) the closing price of the Company’s Common Stock on April 22, 2020 and (ii) the lowest three-day volume-weighted
average price (“VWAP”) between April 22, 2020 and the date of the Loan Agreement], subject to adjustment from
time to time in accordance with the provisions of this Warrant.1


 


“Liquid Sale” means the
closing of a Merger Event in which the consideration received by the Company and/or its stockholders, as applicable, consists solely
of cash, Marketable Securities or a combination thereof.


 


“Marketable Securities”
in connection with a Merger Event means securities meeting all of the following requirements: (i) the issuer thereof is then subject
to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and is then current in its filing of all required reports and other information under the Act and the Exchange
Act; (ii) the class and series of shares or other security of the issuer that would be received by the Warrantholder in connection
with the Merger Event were the Warrantholder to exercise this Warrant on or prior to the closing thereof is then traded on a national
securities exchange or over-the-counter market; and (iii) following the closing of such Merger Event, the Warrantholder would not
be restricted from publicly re-selling all of the issuer’s shares and/or other securities that would be received by the Warrantholder
in such Merger Event were the Warrantholder to exercise this Warrant in full on or prior to the closing of such Merger Event, except
to the extent that any such restriction (x) arises solely under federal or state securities laws, rules or regulations, and (y)
does not extend beyond six (6) months from the closing of such Merger Event.


 


“Merger Event” means any
of the following: (i) a sale, lease or other transfer of all or substantially all assets of the Company, (ii) any merger or consolidation
involving the Company in which the Company is not the surviving entity or in which the outstanding shares of the Company’s
capital stock are otherwise converted into or exchanged for shares of capital stock or other securities or property of another
entity and in which the holders of a majority of the outstanding shares of capital stock of the Company immediately prior to such
merger or consolidation do not hold a majority of the outstanding shares of capital stock of the surviving entity or other entity
immediately following such merger or consolidation, or (iii) any sale by holders of the outstanding voting equity securities of
the Company in a single transaction or series of related transactions of shares constituting a majority of the outstanding combined
voting power of the Company.


 





 



1The
Exercise Price will be fixed, and inserted here, immediately prior to the Effective Date.


 






    2


     


    



 


“Purchase Price” means,
with respect to any exercise of this Warrant, an amount equal to the then-effective Exercise Price multiplied by the number of
shares of Common Stock as to which this Warrant is then exercised.


 


“Warrant Coverage” means
1% of $10,000,000 (the initial amount of the Tranche 1 Term Loan Advance, as such term is defined in the Loan Agreement).


 


(b)              
Number of Shares. This Warrant shall be exercisable for an aggregate of that number of shares of Common Stock equal
to the quotient of (i) the Warrant Coverage divided by (ii) the Exercise Price, subject to adjustment from time to time in accordance
with the provisions of this Warrant.


 


 SECTION 2.     TERM OF THE AGREEMENT.




 


The term of this Agreement and the right to
purchase Common Stock as granted herein shall commence on the Effective Date and, subject to Section 8(a) below, shall be exercisable
until 5:00 p.m. (Eastern Time) on the seventh (7th) anniversary of the Effective Date.


 


 SECTION 3.     EXERCISE OF THE PURCHASE RIGHTS.




 


(a)              
Exercise. The purchase rights set forth in this Agreement are exercisable by the Warrantholder, in whole or in part,
at any time, or from time to time, prior to the expiration of the term set forth in Section 2, by tendering to the Company at its
principal office a notice of exercise in the form attached hereto as Exhibit I (the “Notice of Exercise”),
duly completed and executed. Promptly upon receipt of the Notice of Exercise and the payment of the Purchase Price in accordance
with the terms set forth below, and in no event later than three (3) business days thereafter, the Company or its transfer agent
shall either (i) issue to the Warrantholder a certificate for the number of shares of Common Stock purchased or (ii) credit the
same via book entry to the Warrantholder, and the Company shall execute the acknowledgment of exercise in the form attached hereto
as Exhibit II (the “Acknowledgment of Exercise”) indicating the number of shares which remain subject
to future purchases under this Warrant, if any.


 


The Purchase Price may be paid at the Warrantholder’s
election either (i) by cash or check, or (ii) by surrender of all or a portion of the Warrant for shares of Common Stock to be
exercised under this Agreement and, if applicable, an amended Agreement setting forth the remaining number of shares purchasable
hereunder, as determined below (“Net Issuance”). If the Warrantholder elects the Net Issuance method, the Company
will issue shares of Common Stock in accordance with the following formula:


 






    3


     


    

 


   X = Y(A-B)


A


 


		Where:	X =          the number of shares of Common Stock to be issued to the Warrantholder.



 


Y =          the number
of shares of Common Stock requested to be exercised under this Agreement.


 


A =          the then-current
fair market value of one (1) share of Common Stock at the time of exercise.


 


B =          the then-effective
Exercise Price.


 


For purposes of the above calculation, the
current fair market value of shares of Common Stock shall mean with respect to each share of Common Stock:


 


(i)           
at all times when the Common Stock shall be traded on a national securities exchange, inter-dealer quotation system or over-the-counter
bulletin board service, the average of the closing prices over a five (5) trading day period ending two (2) trading days before
the day the current fair market value of the securities is being determined;


 


(ii)          
if the exercise is in connection with a Merger Event, the per share value received by the holders of the outstanding shares
of Common Stock pursuant to such Merger Event as determined in accordance with the definitive transaction documents executed among
the parties in connection therewith; or


 


(iii)         
in cases other than as described in the foregoing clauses (i) and (ii), as determined in good faith by the Company’s
Board of Directors.


 


Upon partial exercise by either cash or, upon
request of the Warrantholder and surrender of all or a portion of this Warrant, Net Issuance, prior to the expiration or earlier
termination hereof, the Company shall promptly issue an amended Agreement representing the remaining number of shares purchasable
hereunder. All other terms and conditions of such amended Agreement shall be identical to those contained herein, including, but
not limited to the Effective Date hereof. In no event shall the Company be required to net cash settle an exercise of this Warrant.


 


(b)          
Exercise Prior to Expiration. To the extent this Warrant is not previously exercised as to all shares subject hereto,
and if the then-current fair market value of one share of Common Stock is greater than the Exercise Price then in effect, or, in
the case of a Liquid Sale, where the value per share of Common Stock (as determined as of the closing of such Liquid Sale in accordance
with the definitive agreements executed by the parties in connection with such Merger Event) to be paid to the holders thereof
is greater than the Exercise Price then in effect, this Agreement shall be deemed automatically exercised on a Net Issuance basis
pursuant to Section 3(a) (even if not surrendered) as of immediately before its expiration determined in accordance with Section
2. For purposes of such automatic exercise, the fair market value of one share of Common Stock upon such expiration shall be determined
pursuant to Section 3(a). To the extent this Warrant or any portion hereof is deemed automatically exercised pursuant to this Section
3(b), the Company agrees to promptly notify the Warrantholder of the number of shares of Common Stock if any, the Warrantholder
is to receive by reason of such automatic exercise, and to issue or cause its transfer agent to issue a certificate or a book-entry
credit to the Warrantholder evidencing such shares.


 






    4


     


    

 


 SECTION 4.    RESERVATION OF SHARES.




 


During the term of this Agreement, the Company
will at all times have authorized and reserved a sufficient number of shares of its Common Stock to provide for the exercise of
the rights to purchase Common Stock as provided for herein. If at any time during the term hereof the number of authorized but
unissued shares of Common Stock shall not be sufficient to permit exercise of this Warrant in full, the Company will take such
corporate action as may, in the opinion of its counsel, be reasonably necessary to increase its authorized but unissued shares
of Common Stock to such number of shares as shall be sufficient for such purposes.


 


 SECTION 5.    NO FRACTIONAL SHARES OR SCRIP.




 


No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock to be issued
shall be rounded down to the nearest whole number.


 


 SECTION 6.    NO RIGHTS AS STOCKHOLDER.




 


Without limitation of any provision hereof,
the Warrantholder agrees that this Agreement does not entitle the Warrantholder to any voting rights or other rights as a stockholder
of the Company prior to the exercise of any of the purchase rights set forth in this Agreement.


 


 SECTION 7.    THE WARRANTHOLDER REGISTRY.




 


The Company shall maintain a registry showing
the name and address of the registered holder of this Agreement. The Warrantholder's initial address, for purposes of such registry,
is set forth in Section 12(g) below. The Warrantholder may change such address by giving written notice of such changed address
to the Company.


 


 SECTION 8.    ADJUSTMENT RIGHTS.




 


The Exercise Price and the number of shares
of Common Stock purchasable hereunder are subject to adjustment from time to time, as follows:


 


(a)             
Merger Event. In connection with a Merger Event that is a Liquid Sale, this Warrant shall, on and after the closing
thereof, automatically and without further action on the part of any party or other person, represent the right to receive the
consideration payable on or in respect of all shares of Common Stock that are issuable hereunder as of immediately prior to the
closing of such Merger Event less the Purchase Price for all such shares of Common Stock (such consideration to include both the
consideration payable at the closing of such Merger Event and all deferred consideration payable thereafter, if any, including,
but not limited to, payments of amounts deposited at such closing into escrow and payments in the nature of earn-outs, milestone
payments or other performance-based payments), and such Merger Event consideration shall be paid to the Warrantholder as and when
it is paid to the holders of the outstanding shares of Common Stock. In connection with a Merger Event that is not a Liquid Sale,
the Company shall cause the successor or surviving entity to assume this Warrant and the obligations of the Company hereunder on
the closing thereof, and thereafter this Warrant shall be exercisable for the same number and type of securities or other property
as the Warrantholder would have received in consideration for the shares of Common Stock issuable hereunder had it exercised this
Warrant in full as of immediately prior to such closing, at an aggregate Exercise Price no greater than the aggregate Exercise
Price in effect as of immediately prior to such closing, and subject to further adjustment from time to time in accordance with
the provisions of this Warrant. The provisions of this Section 8(a) shall similarly apply to successive Merger Events.


 






    5


     


    

 


(b)         
Reclassification of Shares. Except for Merger Events subject to Section 8(a), if the Company at any time shall, by
combination, reclassification, exchange or subdivision of securities or otherwise, change any of the securities as to which purchase
rights under this Agreement exist into the same or a different number of securities of any other class or classes of securities,
this Agreement shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as
the result of such change with respect to the securities which were subject to the purchase rights under this Agreement immediately
prior to such combination, reclassification, exchange, subdivision or other change. The provisions of this Section 8(b) shall similarly
apply to successive combination, reclassification, exchange, subdivision or other change.


 


(c)         
Subdivision or Combination of Shares. If the Company at any time shall combine or subdivide its Common Stock, (i)
in the case of a subdivision, the Exercise Price shall be proportionately decreased and the number of shares for which this Warrant
is exercisable shall be proportionately increased, or (ii) in the case of a combination, the Exercise Price shall be proportionately
increased and the number of shares for which this Warrant is exercisable shall be proportionately decreased.


 


(d)         
Dividends. If the Company at any time while this Agreement is outstanding and unexpired shall:


 


(i)        
pay a dividend with respect to the Common Stock payable in additional shares of Common Stock, then the Exercise Price shall
be adjusted, from and after the date of determination of stockholders entitled to receive such dividend, to that price determined
by multiplying the Exercise Price in effect immediately prior to such date of determination by a fraction (A) the numerator of
which shall be the total number of shares of Common Stock outstanding immediately prior to such dividend or distribution, and (B)
the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution,
and the number of shares of Common Stock for which this Warrant is exercisable shall be proportionately increased; or


 






    6


     


    

 


(ii)       
make any other dividend or distribution on or with respect to Common Stock, except any dividend or distribution specifically
provided for in any other clause of this Section 8, then, in each such case, provision shall be made by the Company such that
the Warrantholder shall receive upon exercise or conversion of this Warrant a proportionate share of any such dividend or distribution
as though it were the holder of the Common Stock (or other stock for which the Common Stock is convertible) as of the record date
fixed for the determination of the stockholders of the Company entitled to receive such dividend or distribution.


 


(e)         
Notice of Certain Events. If: (i) the Company shall declare any dividend or distribution upon its outstanding Common
Stock, payable in stock, cash, property or other securities (provided that the Warrantholder in its capacity as lender under the
Loan Agreement consents to such dividend); (ii) the Company shall offer for subscription pro rata to the holders of its Common
Stock any additional shares of stock of any class or other rights; (iii) there shall be any Merger Event; or (iv) there shall be
any voluntary dissolution, liquidation or winding up of the Company; then, in connection with each such event, the Company shall
give the Warrantholder notice thereof at the same time and in the same manner as it gives notice thereof to the holders of outstanding
Common Stock. In addition, if at any time the number of shares of Common Stock (or other securities of any other class or classes
of securities of the Company for which this Warrant is then exercisable) outstanding is reduced such that the number of shares
of Common Stock or other securities issuable upon exercise of this Warrant shall exceed five percent (5%) of the then outstanding
class of such securities, then, within three (3) business days of such event, the Company shall give the Warrantholder written
notice thereof.


 


 SECTION 9. REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE COMPANY.




 


(a)          
Reservation of Common Stock. The Company covenants and agrees that all shares of Common Stock that may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued and outstanding, fully paid
and non-assessable, and will be free of any taxes, liens, charges or encumbrances of any nature whatsoever; provided, that the
Common Stock issuable pursuant to this Agreement may be subject to restrictions on transfer under state and/or federal securities
laws. The Company has made available to the Warrantholder true, correct and complete copies of its Charter and bylaws currently
in effect. The issuance of certificates or book-entry credit for shares of Common Stock upon exercise of this Warrant shall be
made without charge to the Warrantholder for any issuance tax in respect thereof, or other cost incurred by the Company in connection
with such exercise and related issuance of shares of Common Stock. The Company further covenants and agrees that the Company will,
at all times during the term hereof, have authorized and reserved, free from preemptive rights, a sufficient number of shares of
Common Stock to provide for the exercise of the rights represented by this Warrant.


 






    7


     


    

 


(b)         
Due Authority. The execution and delivery by the Company of this Agreement and the performance of all obligations
of the Company hereunder, including the issuance to the Warrantholder of the right to acquire the shares of Common Stock, have
been duly authorized by all necessary corporate action on the part of the Company. This Agreement: (i) does not violate the Company's
Charter or current bylaws; (ii) does not contravene any law or governmental rule, regulation or order applicable to the Company;
and (iii) (except as may be described in Schedule 5.3 to the Loan Agreement), does not and will not contravene any provision of,
or constitute a default under, any indenture, mortgage, contract or other instrument to which the Company is a party or by which
it is bound. This Agreement constitutes a legal, valid and binding agreement of the Company, enforceable in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting
creditors’ rights generally (including, without limitation, fraudulent conveyance laws) and by general principles of equity,
regardless of whether considered in a proceeding in equity or at law.


 


(c)         
Consents and Approvals. No consent or approval of, giving of notice to, registration with, or taking of any other
action in respect of any state, federal or other governmental authority or agency is required with respect to the execution, delivery
and performance by the Company of its obligations under this Agreement.


 


(d)         
Exempt Transaction. Subject to the accuracy of the Warrantholder’s representations in Section 10, the issuance
of this Warrant and the Common Stock upon exercise of this Agreement will constitute a transaction exempt from (i) the registration
requirements of Section 5 of the Act, in reliance upon Section 4(a)(2) thereof, and (ii) the qualification requirements of the
applicable state securities laws.


 


(e)         
Information Rights. At all times (if any) prior to the earlier to occur of (x) the date on which all shares of Common
Stock issued on exercise of this Warrant have been sold, or (y) the expiration or earlier termination of this Warrant, when the
Company shall not be required to file reports pursuant to Section 13 or 15(d) of the Exchange Act or shall not have timely filed
all such required reports, the Warrantholder shall be entitled to the information rights contained in Section 7.1(b) – (f)
of the Loan Agreement, and in any such event Section 7.1(b) – (f) of the Loan Agreement is hereby incorporated into this
Agreement by this reference as though fully set forth herein, provided, however, that the Company shall not be required to deliver
a Compliance Certificate once all Indebtedness (as defined in the Loan Agreement) owed by the Company to the Warrantholder has
been repaid. All information provided by the Company to the Warrantholder pursuant to this Section 9(e) shall constitute Confidential
Information, as defined in the Loan Agreement, so long as it satisfies the requirements of Section 11.12 thereof.


 






    8


     


    

 


(f)          
Registration of Shares. On or prior to the 60th calendar day following the Effective Date, the Company shall file
with the Securities and Exchange Commission a registration statement on Form S-3 registering for resale on a delayed or continuous
basis under Rule 415 of the Act all of the shares of Common Stock issuable on exercise of this Warrant (the “Registration
Statement”). The Company shall use its commercially reasonable efforts to cause the Registration Statement to be declared
effective as soon as possible but, in any event, no later than 180 calendar days after the Effective Date. All fees and expenses
incident to the Company’s performance of or compliance with its obligations under this Section 9(f) (excluding any underwriting
discounts and selling commissions) shall be borne by the Company.


 


(g)         
Rule 144 Compliance. The Company shall, at all times prior to the earlier to occur of (i) the date of sale or other
disposition by the Warrantholder of this Warrant or all shares of Common Stock issued on exercise of this Warrant or (ii) the registration
pursuant to subsection (f) above of the shares issuable on exercise of this Warrant, or (iii) the expiration or earlier termination
of this Warrant if the Warrant has not been exercised in full or in part on such date, use reasonable efforts to timely file all
reports required under the Exchange Act and otherwise timely take all actions necessary to permit the Warrantholder to sell or
otherwise dispose of this Warrant and the shares of Common Stock issued on exercise hereof pursuant to Rule 144 promulgated under
the Act as amended and in effect from time to time, provided that the foregoing shall not apply in the event of a Merger Event
following which the successor or surviving entity is not subject to the reporting requirements of the Exchange Act. If the Warrantholder
proposes to sell Common Stock issuable upon the exercise of this Agreement in compliance with Rule 144, then, upon the Warrantholder’s
written request to the Company, the Company shall furnish to the Warrantholder, within five (5) business days after receipt of
such request, a written statement confirming the Company’s compliance with the filing and other requirements of such Rule.


 


(h)         
Shell Company Status.  The Company is not and has never been a “shell” company as described in Rule
144(i)(1) under the Securities Act.


 


 SECTION 10.            REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.




 


This Agreement has been entered into by the
Company in reliance upon the following representations and covenants of the Warrantholder:


 


(a)          
Investment Purpose. This Warrant and the shares issued on exercise hereof will be acquired for investment and not
with a view to the sale or distribution of any part thereof in violation of applicable federal and state securities laws, and the
Warrantholder has no present intention of selling or engaging in any public distribution of the same except pursuant to an effective
registration statement or an exemption therefrom.


 


(b)          
Private Issue. The Warrantholder understands that (i) the Common Stock issuable upon exercise of this Agreement is
not, as of the Effective Date, registered under the Act or qualified under applicable state securities laws, and (ii) the Company’s
reliance on exemption from such registration is predicated on the representations set forth in this Section 10.


 






    9


     


    

 


(c)          
Financial Risk. The Warrantholder has such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment.


 


(d)         
Accredited Investor. The Warrantholder is an “accredited investor” within the meaning of Rule 501 of
Regulation D promulgated under the Act, as presently in effect (“Regulation D”).


 


(e)          
No Short Sales. The Warrantholder has not at any time on or prior to the Effective Date engaged in any short sales
or equivalent transactions in the Common Stock. The Warrantholder agrees that at all times from and after the Effective Date and
on or before the expiration or earlier termination of this Warrant, it shall not engage in any short sales or equivalent transactions
in the Common Stock.


 


 SECTION 11.           TRANSFERS.




 


Subject to compliance with applicable federal
and state securities laws, this Agreement and all rights hereunder are transferable, in whole or in part, without charge to the
holder hereof (except for transfer taxes) upon surrender of this Agreement properly endorsed. Each taker and holder of this Agreement,
by taking or holding the same, consents and agrees that this Agreement, when endorsed in blank, shall be deemed negotiable, and
that the holder hereof, when this Agreement shall have been so endorsed and its transfer recorded on the Company’s books,
shall be treated by the Company and all other persons dealing with this Agreement as the absolute owner hereof for any purpose
and as the person entitled to exercise the rights represented by this Agreement. The transfer of this Agreement shall be recorded
on the books of the Company upon receipt by the Company of a notice of transfer in the form attached hereto as Exhibit III (the
 “Transfer Notice”), at its principal offices and the payment to the Company of all transfer taxes and other
governmental charges imposed on such transfer. Until the Company receives such Transfer Notice, the Company may treat the registered
owner hereof as the owner for all purposes. Notwithstanding anything herein or in any legend to the contrary, the Company shall
not require an opinion of counsel in connection with any sale, assignment or other transfer by the Warrantholder of this Warrant
(or any portion hereof or any interest herein) or of any shares of Common Stock issued upon any exercise hereof to an affiliate
(as defined in Regulation D) of the Warrantholder, provided that such affiliate is an “accredited investor” as defined
in Regulation D.


 


 SECTION 12.            MISCELLANEOUS.




 


(a)          
Effective Date. The provisions of this Agreement shall be construed and shall be given effect in all respects as
if it had been executed and delivered by the Company on the date hereof. This Agreement shall be binding upon any successors or
assigns of the Company.


 






    10


     


    

 


(b)         
Remedies. In the event of any default hereunder, the non-defaulting party may seek to protect and enforce its rights
either by suit in equity and/or by action at law, including but not limited to an action for damages as a result of any such default,
and/or an action for specific performance for any default where the Warrantholder will not have an adequate remedy at law and where
damages will not be readily ascertainable.


 


(c)          
No Impairment of Rights. The Company will not, by amendment of its Charter or through any other means, avoid or seek
to avoid the observance or performance of any of the terms of this Agreement, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the
rights of the Warrantholder against impairment.


 


(d)         
Additional Documents. The Company agrees to supply such other documents as the Warrantholder may from time to time
reasonably request.


 


(e)          
Attorneys’ Fees. In any litigation, arbitration or court proceeding between the Company and the Warrantholder
relating hereto, the prevailing party shall be entitled to reasonable and documented attorneys’ fees and expenses and all
reasonable and documented costs of proceedings incurred in enforcing this Agreement. For the purposes of this Section 12(e), attorneys’
fees shall include without limitation fees incurred in connection with the following: (i) contempt proceedings; (ii) discovery;
(iii) any motion, proceeding or other activity of any kind in connection with an insolvency proceeding; (iv) garnishment, levy,
and debtor and third party examinations; and (v) post-judgment motions and proceedings of any kind, including without limitation
any activity taken to collect or enforce any judgment.


 


(f)          
Severability. In the event any one or more of the provisions of this Agreement shall for any reason be held invalid,
illegal or unenforceable, the remaining provisions of this Agreement shall be unimpaired, and the invalid, illegal or unenforceable
provision shall be replaced by a mutually acceptable valid, legal and enforceable provision, which comes closest to the intention
of the parties underlying the invalid, illegal or unenforceable provision.


 


(g)          
Notices. Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service
of process or other communication that is required, contemplated, or permitted under this Agreement 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: (a) personal delivery to the party to be notified, (b) when sent by confirmed telex, electronic transmission or facsimile
if sent during normal business hours of the recipient, and if not, then on the next business day, (c) five days after having
been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with written verification of receipt, and shall be addressed
to the party to be notified as follows:


 






    11


     


    

 


If to the Warrantholder:


 


Hercules CAPITAL, INC.


Legal Department


Attention: Chief Legal Officer


400 Hamilton Avenue, Suite 310


Palo Alto, CA 94301


Facsimile: 650-473-9194


Telephone: 650-289-3060


 


With a copy to:


 


Barnes & Thornburg LLP


Attention: Troy Zander


655 W. Broadway, Suite 900


San Diego, CA 92101


Telephone:
650-260-4767


 


If to the Company:


 


Albireo Pharma, Inc.


Attention: Chief Financial Officer


10 Post Office Square, Suite 1000


Boston, MA 02109


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


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


Telephone: (617) 348-4443


 


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


 


(h)            
Entire Agreement; Amendments. This Agreement constitutes the entire agreement and understanding of the parties hereto
in respect of the subject matter hereof, and supersedes and replaces in their entirety any prior proposals, term sheets, letters,
negotiations or other documents or agreements, whether written or oral, with respect to the subject matter hereof. None of the
terms of this Agreement may be amended except by an instrument executed by each of the parties hereto.


 






    12


     


    

 


(i)           
Headings. The various headings in this Agreement are inserted for convenience only and shall not affect the meaning
or interpretation of this Agreement or any provisions hereof.


 


(j)           
Advice of Counsel. Each of the parties represents to each other party hereto that it has discussed (or had an opportunity
to discuss) with its counsel this Agreement and, specifically, the provisions of Sections 12(n), 12(o), 12(p), 12(q) and 12(r).


 


(k)          
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.


 


(l)           
No Waiver. No omission or delay by the Warrantholder 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 the Company at any time designated, shall be a waiver
of any such right or remedy to which the Warrantholder is entitled, nor shall it in any way affect the right of the Warrantholder
to enforce such provisions thereafter during the term of this Agreement.


 


(m)         
Survival. All agreements, representations and warranties contained in this Agreement or in any document delivered
pursuant hereto shall be for the benefit of the Warrantholder or the Company, as the context requires, and shall survive the execution
and delivery of this Agreement and the expiration or other termination of this Agreement.


 


(n)          
Governing Law. This Agreement has been negotiated and delivered to the Warrantholder in the State of California,
and shall be deemed to have been accepted by the Warrantholder in the State of California. Delivery of Common Stock to the Warrantholder
by the Company under this Agreement is due in the State of California. This Agreement 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.


 


(o)         
Consent to Jurisdiction and Venue. All judicial proceedings arising in or under or related to this Agreement may
be brought in any state or federal court of competent jurisdiction located in the State of California. By execution and delivery
of this Agreement, each party hereto generally and unconditionally: (i) consents to personal jurisdiction in Santa Clara County,
State of California (solely with respect to matters arising under or relating to this Agreement); (ii) waives any objection as
to jurisdiction or venue in Santa Clara County, State of California; (iii) agrees not to assert any defense based on lack of jurisdiction
or venue in the aforesaid courts; and (iv) irrevocably agrees to be bound by any judgment rendered thereby in connection with this
Agreement. 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 12(g), and shall be deemed effective and received
as set forth in Section 12(g). 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.


 






    13


     


    

 


(p)         
Mutual Waiver of Jury Trial. 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 arising under or in connection with this Warrant
be resolved by a judge applying such applicable laws. EACH OF THE COMPANY AND THE WARRANTHOLDER 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 THE COMPANY AGAINST THE WARRANTHOLDER OR ITS ASSIGNEE OR BY THE WARRANTHOLDER OR ITS ASSIGNEE
AGAINST THE COMPANY RELATING TO THIS WARRANT. This waiver extends to all such Claims, including Claims that involve persons or
entities other than the Company and the Warrantholder; Claims that arise out of or are in any way connected to the relationship
between the Company and the Warrantholder; and any Claims for damages, breach of contract, specific performance, or any equitable
or legal relief of any kind, arising out of this Agreement.


 


(q)         
Arbitration. If the Mutual Waiver of Jury Trial set forth in Section 12(p) is ineffective or unenforceable, the parties
agree that all Claims shall be submitted to binding arbitration in accordance with the commercial arbitration rules of JAMS (the
 “Rules”), such arbitration to occur before one arbitrator, which arbitrator shall be a retired California state judge
or a retired Federal court judge. Such proceeding shall be conducted in Santa Clara County, State of California, with California
rules of evidence and discovery applicable to such arbitration. The decision of the arbitrator shall be binding on the parties,
and shall be final and nonappealable to the maximum extent permitted by law. Any judgment rendered by the arbitrator may be entered
in a court of competent jurisdiction and enforced by the prevailing party as a final judgment of such court.


 


(r)          
Pre-arbitration Relief. In the event Claims are to be resolved by arbitration, either party may seek from a court
of competent jurisdiction identified in Section 12(o), 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 binding arbitration.


 






    14


     


    

 


(s)         
Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number
of counterparts (including by facsimile or electronic delivery (PDF), 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.


 


(t)          
Specific Performance. The parties hereto hereby declare that it is impossible to measure in money the damages which
will accrue to the Warrantholder by reason of the Company’s failure to perform any of the obligations under this Agreement
and agree that the terms of this Agreement shall be specifically enforceable by the Warrantholder. If the Warrantholder institutes
any action or proceeding to specifically enforce the provisions hereof, any person against whom such action or proceeding is brought
hereby waives the claim or defense therein that the Warrantholder has an adequate remedy at law, and such person shall not offer
in any such action or proceeding the claim or defense that such remedy at law exists.


 


(u)         
Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company
may, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include
the surrender thereof), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.
Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen,
mutilated or destroyed Warrant shall be at any time enforceable by anyone.


 


(v)         
Legends. To the extent required by applicable laws, this Warrant and the shares of Common Stock issuable hereunder
(and the securities issuable, directly or indirectly, upon conversion of such shares of Common Stock, if any) may be imprinted
with a restricted securities legend in substantially the following form:


 


“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES OR “BLUE SKY”
LAWS AND MAY BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED ONLY PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.”


 


[Remainder of Page Intentionally Left Blank]


 




    15


     


    


 


IN WITNESS WHEREOF, the parties hereto have
caused this Warrant Agreement to be executed by its officers thereunto duly authorized as of the Effective Date.


 


	COMPANY:	ALBIREO PHARMA, INC.
	 	 
	 	 
	 	By: 	          
	 	Name:	
	 	Title: 	
	 	 
	 	 
	 	 
	THE WARRANTHOLDER:	HERCULES CAPITAL, INC.
	 	 
	 	 
	 	By:	
	 	Name:	
	 	Title:	





 


[Signature
Page to Warrant to Purchase Stock]


 




    


     


    



 


EXHIBIT I


 


NOTICE OF EXERCISE


 


To:          Albireo Pharma, Inc.


 


		(1)	The undersigned Warrantholder hereby elects to purchase [_______]
shares of the Common Stock of Albireo Pharma, Inc. (the “Company”), pursuant to the terms of the Warrant Agreement
dated as of May __, 2020 (the “Agreement”) between the Company and Hercules Capital, Inc., and tenders herewith payment
of the Purchase Price in full, together with all applicable transfer taxes, if any. [NET ISSUANCE: elects pursuant to Section 3(a)
of the Agreement to effect a Net Issuance.]



 


		(2)	Please issue a certificate or certificates or book-entry credit(s)
representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below.



 


	 	 	
	 	 	(Name)
	 	 	 
	 	 	 
	 	 	(Address)




 


	THE WARRANTHOLDER:	 	HERCULES CAPITAL, INC.
	 	 
	 	 
	 	By: 	        
	 	Name:	
	 	Title:	




 


Exhibit I


 




    


     


    



 


EXHIBIT II


 


(i)         ACKNOWLEDGMENT OF EXERCISE


 


The undersigned [____________________________________], hereby
acknowledges receipt of the “Notice of Exercise” from Hercules Capital, Inc. to purchase [____] shares of the Common
Stock of Albireo Pharma, Inc., pursuant to the terms of the Warrant Agreement by and between Albireo Pharma, Inc. and Hercules
Capital, Inc., dated as of May __, 2020 (the “Agreement”), and further acknowledges that [______] shares remain subject
to purchase under the terms of the Agreement.


 


	 	COMPANY:	ALBIREO PHARMA, INC.
	 	 	 
	 	 	 
	 	 	By:	           
	 	 	 
	 	 	Title:	 
	 	 	 
	 	 	Date:	 


 


Exhibit II


 




    


     


    



 


EXHIBIT III


 


TRANSFER NOTICE


 


(To transfer or assign the foregoing Agreement execute this
form and supply required information. Do not use this form to purchase shares.)


 


FOR VALUE RECEIVED, the foregoing Agreement and all rights evidenced
thereby are hereby transferred and assigned to


 


_________________________________________________________________


(Please Print)


 


whose address is___________________________________________________


 


________________________________________________________________


 


Dated:
____________________________________


 


Holder’s Signature:
_______________________________


 


Holder’s Address:
_______________________________


 


_____________________________________________________


 


Signature Guaranteed:____________________________________________


 


 


NOTE:The signature to this Transfer Notice must correspond
with the name as it appears on the face of the Agreement, without alteration or enlargement or any change whatever. Officers of
corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign
the foregoing Agreement.


 


Exhibit III