Exhibit 10.1.3


 


INTERCEPT PHARMACEUTICALS, INC.


 


Incentive Stock Option Agreement

Granted Under 2003 Stock Incentive Plan


 


		1.	Grant of Option.



 


This agreement evidences the grant by INTERCEPT
PHARMACEUTICALS, INC., a Delaware corporation (the “Company”), on ___________ (the “Grant Date”), to
__________, an employee of the Company (the “Participant”), of an option to purchase, in whole or in part, on the
terms provided herein and in the Company’s 2003 Stock Incentive Plan (the “Plan”), a total of _______ shares
(the “Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”),
at $____ per Share. Unless earlier terminated, this option shall expire at 5:00 p.m., Eastern time, on __________ (the “Final
Exercise Date”).


 


It is intended that the option evidenced
by this agreement shall be an incentive stock option as defined in Section 422 of the Internal Revenue Code of 1986, as amended,
and any regulations promulgated thereunder (the “Code”). Except as otherwise indicated by the context, the term “Participant”,
as used in this option, shall be deemed to include any person who acquires the right to exercise this option validly under its
terms.


 


		2.	Vesting Schedule.



 


This option will be exercisable as to ___
of the original number of Shares as of _____, and the remaining ___ shall vest in _________________________ thereafter until
__________.


 


The right of exercise shall be cumulative
so that to the extent the option is not exercised in any period to the maximum extent permissible it shall continue to be exercisable,
in whole or in part, with respect to all Shares for which it is vested until the earlier of the Final Exercise Date or the termination
of this option under Section 3 hereof or the Plan.


 


		3.	Exercise of Option.



 


(a)          Form
of Exercise. Each election to exercise this option shall be in writing in the form of notice attached hereto as Exhibit
A, signed by the Participant, and received by the Company at its principal office, accompanied by this agreement, and payment
in full in the manner provided in the Plan. The Participant may purchase less than the number of shares covered hereby, provided
that no partial exercise of this option may be for any fractional share.


 


(b)          Continuous
Relationship with the Company Required. Except as otherwise provided in this Section 3, this option may not be exercised
unless the Participant, at the time he or she exercises this option, is, and has been at all times since the Grant Date, an employee,
officer or director of, or a consultant or advisor to, the Company or any other entity the employees, officers, directors, consultants,
or advisors of which are eligible to receive option grants under the Plan (an “Eligible Participant”).


 



    	 



    	 



    

 


(c)          Termination
of Relationship with the Company. If the Participant ceases to be an Eligible Participant for any reason, then, except as provided
in paragraphs (d) and (e) below, the right to exercise this option shall terminate three months after such cessation
(but in no event after the Final Exercise Date), provided that this option shall be exercisable only to the extent
that the Participant was entitled to exercise this option on the date of such cessation. Notwithstanding the foregoing, if the
Participant, prior to the Final Exercise Date, violates the non-competition or confidentiality provisions of any employment contract,
confidentiality and nondisclosure agreement or other agreement between the Participant and the Company, the right to exercise this
option shall terminate immediately upon such violation.


 


(d)          Exercise
Period Upon Death or Disability. If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of
the Code) prior to the Final Exercise Date while he or she is an Eligible Participant and the Company has not terminated such relationship
for “cause” as specified in paragraph (e) below, this option shall be exercisable, within the period of one year following
the date of death or disability of the Participant, by the Participant (or in the case of death by an authorized transferee), provided
that this option shall be exercisable only to the extent that this option was exercisable by the Participant on the date
of his or her death or disability, and further provided that this option shall not be exercisable after the Final Exercise Date.


 


(e)          Discharge
for Cause. If the Participant, prior to the Final Exercise Date, is discharged by the Company for “cause” (as defined
below), the right to exercise this option shall terminate immediately upon the effective date of such discharge. “Cause”
shall mean willful misconduct by the Participant or willful failure by the Participant to perform his or her responsibilities to
the Company (including, without limitation, breach by the Participant of any provision of any employment, consulting, advisory,
nondisclosure, non-competition or other similar agreement between the Participant and the Company), as determined by the Company,
which determination shall be conclusive. The Participant shall be considered to have been discharged for “Cause” if
the Company determines, within 30 days after the Participant’s resignation, that discharge for cause was warranted.


 


		4.	Company Right of First Refusal.



 


(a)          Notice
of Proposed Transfer. If the Participant proposes to sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by
operation of law or otherwise (collectively, “transfer”) any Shares acquired upon exercise of this option, then the
Participant shall first give written notice of the proposed transfer (the “Transfer Notice”) to the Company. The Transfer
Notice shall name the proposed transferee and state the number of such Shares the Participant proposes to transfer (the “Offered
Shares”), the price per share and all other material terms and conditions of the transfer.


 



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(b)          Company
Right to Purchase. For 30 days following its receipt of such Transfer Notice, the Company shall have the option to purchase
all or part of the Offered Shares at the price and upon the terms set forth in the Transfer Notice. In the event the Company elects
to purchase all or part of the Offered Shares, it shall give written notice of such election to the Participant within such 30-day
period. Within 10 days after his receipt of such notice, the Participant shall tender to the Company at its principal offices the
certificate or certificates representing the Offered Shares to be purchased by the Company, duly endorsed in blank by the Participant
or with duly endorsed stock powers attached thereto, all in a form suitable for transfer of the Offered Shares to the Company.
Promptly following receipt of such certificate or certificates, the Company shall deliver or mail to the Participant a check in
payment of the purchase price for such Offered Shares; provided that if the terms of payment set forth in the Transfer
Notice were other than cash against delivery, the Company may pay for the Offered Shares on the same terms and conditions as were
set forth in the Transfer Notice; and provided further that any delay in making such payment shall not invalidate
the Company’s exercise of its option to purchase the Offered Shares.


 


(c)          Shares
Not Purchased By Company. If the Company does not elect to acquire all of the Offered Shares, the Participant may, within the
30-day period following the expiration of the option granted to the Company under subsection (b) above, transfer the Offered Shares
which the Company has not elected to acquire to the proposed transferee, provided that such transfer shall not be
on terms and conditions more favorable to the transferee than those contained in the Transfer Notice. Notwithstanding any of the
above, all Offered Shares transferred pursuant to this Section 4 shall remain subject to the right of first refusal set forth in
this Section 4 and such transferee shall, as a condition to such transfer, deliver to the Company a written instrument confirming
that such transferee shall be bound by all of the terms and conditions of this Section 4.


 


(d)          Consequences
of Non-Delivery. After the time at which the Offered Shares are required to be delivered to the Company for transfer to the
Company pursuant to subsection (b) above, the Company shall not pay any dividend to the Participant on account of such Offered
Shares or permit the Participant to exercise any of the privileges or rights of a stockholder with respect to such Offered Shares,
but shall, in so far as permitted by law, treat the Company as the owner of such Offered Shares.


 


(e)          Exempt
Transactions. The following transactions shall be exempt from the provisions of this Section 4:


 


(1)         any
transfer of Shares to or for the benefit of any spouse, child or grandchild of the Participant, or to a trust for their benefit;


 


(2)         any
transfer pursuant to an effective registration statement filed by the Company under the Securities Act of 1933, as amended (the
“Securities Act”); and


 


(3)         the
sale of all or substantially all of the shares of capital stock of the Company (including pursuant to a merger or consolidation);


 


provided, however, that in the case of a transfer
pursuant to clause (1) above, such Shares shall remain subject to the right of first refusal set forth in this Section 4 and such
transferee shall, as a condition to such transfer, deliver to the Company a written instrument confirming that such transferee
shall be bound by all of the terms and conditions of this Section 4.


 


(f)          Assignment
of Company Right. The Company may assign its rights to purchase Offered Shares in any particular transaction under this Section
4 to one or more persons or entities.


 



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(g)          Termination.
The provisions of this Section 4 shall terminate upon the earlier of the following events:


 


(1)         the
closing of the sale of shares of Common Stock in an underwritten public offering pursuant to an effective registration statement
filed by the Company under the Securities Act; or


 


(2)         the
sale of all or substantially all of the capital stock, assets or business of the Company, by merger, consolidation, sale of assets
or otherwise (other than a merger or consolidation in which all or substantially all of the individuals and entities who were beneficial
owners of the Common Stock immediately prior to such transaction beneficially own, directly or indirectly, more than 75% of the
outstanding securities entitled to vote generally in the election of directors of the resulting, surviving or acquiring corporation
in such transaction).


 


(h)          No
Obligation to Recognize Invalid Transfer. The Company shall not be required (1) to transfer on its books any of the Shares
which shall have been sold or transferred in violation of any of the provisions set forth in this Section 4, or (2) to treat as
owner of such Shares or to pay dividends to any transferee to whom any such Shares shall have been so sold or transferred.


 


(i)           Legends.
The certificate representing Shares shall bear a legend substantially in the following form (in addition to, or in combination
with, any legend required by applicable federal and state securities laws and agreements relating to the transfer of the Company
securities):


 


"The shares represented by this certificate are
subject to a right of first refusal in favor of the Company, as provided in a certain stock option agreement with the Company."


 


		5.	Agreement in Connection with Public Offering.



 


The Participant agrees, in connection with
the initial underwritten public offering of the Company’s securities pursuant to a registration statement under the Securities
Act, (i) not to sell, make short sale of, loan, grant any options for the purchase of, or otherwise dispose of any shares of Common
Stock held by the Participant (other than those shares included in the offering) without the prior written consent of the Company
or the underwriters managing such initial underwritten public offering of the Company’s securities for a period of 180 days
from the effective date of such registration statement, and (ii) to execute any agreement reflecting clause (i) above as may be
requested by the Company or the managing underwriters at the time of such offering.


 


		6.	Tax Matters.



 


(a)          Withholding.
No Shares will be issued pursuant to the exercise of this option unless and until the Participant pays to the Company, or makes
provision satisfactory to the Company for payment of, any federal, state or local withholding taxes required by law to be withheld
in respect of this option.


 



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(b)          Disqualifying
Disposition. If the Participant disposes of Shares acquired upon exercise of this option within two years from the Grant Date
or one year after such Shares were acquired pursuant to exercise of this option, the Participant shall notify the Company in writing
of such disposition.


 


		7.	Nontransferability of Option.



 


This option may not be sold, assigned, transferred,
pledged or otherwise encumbered by the Participant, either voluntarily or by operation of law, except by will or the laws of descent
and distribution, and, during the lifetime of the Participant, this option shall be exercisable only by the Participant.


 


		8.	Provisions of the Plan.



 


This option is subject to the provisions
of the Plan, a copy of which is furnished to the Participant with this option.


 


[the next page is the signature page]


 



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IN WITNESS WHEREOF, the Company has caused
this option to be executed under its corporate seal by its duly authorized officer. This option shall take effect as a sealed instrument.


 





	Dated: 	 	 	INTERCEPT PHARMACEUTICALS, INC.
	 	 	 	 	 
	 	 	 	By	 
	 	 	 	 	Mark E. Pruzanski, M.D.
	 	 	 	 	CEO and President




 



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PARTICIPANT’S ACCEPTANCE


 


The undersigned hereby accepts the foregoing
option and agrees to the terms and conditions thereof. The undersigned hereby acknowledges receipt of a copy of the Company’s
2003 Stock Incentive Plan.


 


	 	PARTICIPANT:
	 	 
	 	 
	 	 
	 	Address:	 
	 	 
	 	 	 


 



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EXHIBIT A


 


NOTICE OF STOCK OPTION EXERCISE


 


Date: ____________


 


Intercept Pharmaceuticals, Inc. (the “Company”)


18 Desbrosses Street


New York, NY 10013


 


Attention: Chief Executive Officer


 


Dear Sir or Madam:


 


I am the holder of a Incentive Stock Option
granted to me under the Company’s 2003 Stock Incentive Plan for the purchase of _______ shares of Common Stock of the Company
at a purchase price of $_____ per share.


 


I hereby exercise my option to purchase
_________ shares of Common Stock (the “Shares”), for which I have enclosed __________ in the amount of __________.
Please register my stock certificate as follows:


 


	Name(s):	 	 
	 	 	 
	 	 	 
	 	 	 
	Address:	 	 
	 	 	 
	Tax I.D. #:	 	 


 


I represent, warrant and covenant as follows:


 


1.           I
am purchasing the Shares for my own account for investment only, and not with a view to, or for sale in connection with, any distribution
of the Shares in violation of the Securities Act of 1933 (the “Securities Act”), or any rule or regulation under the
Securities Act.


 


2.           I
have had such opportunity as I have deemed adequate to obtain from representatives of the Company such information as is necessary
to permit me to evaluate the merits and risks of my investment in the Company.


 


3.           I
have sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in the purchase
of the Shares and to make an informed investment decision with respect to such purchase.


 



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4.           I
can afford a complete loss of the value of the Shares and am able to bear the economic risk of holding such Shares for an indefinite
period.


 


5.           I
understand that (i) the Shares have not been registered under the Securities Act and are “restricted securities” within
the meaning of Rule 144 under the Securities Act, (ii) the Shares cannot be sold, transferred or otherwise disposed of unless they
are subsequently registered under the Securities Act or an exemption from registration is then available; (iii) in any event, the
exemption from registration under Rule 144 will not be available for at least one year and even then will not be available unless
a public market then exists for the Common Stock, adequate information concerning the Company is then available to the public,
and other terms and conditions of Rule 144 are complied with; and (iv) there is now no registration statement on file with the
Securities and Exchange Commission with respect to any stock of the Company and the Company has no obligation or current intention
to register the Shares under the Securities Act.


 


	Very truly yours,
	 
	 


 



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