Document:

Exhibit 10.11

Execution Copy

 

 

 

 

EMPLOYMENT
AGREEMENT

 

THIS EMPLOYMENT AGREEMENT
(the “Agreement”), made effective as of May 14, 2013, is entered into by Intercept Pharmaceuticals, Inc. (the “Company”)
and David Shapiro (“Executive”).

 

WHEREAS, the Company
and the Executive were parties to an Employment Agreement dated April 1, 2008, which was amended by an Amendment to Employment
Agreement, dated April 12, 2013 (as amended, the “Prior Agreement”); and

 

WHEREAS, the Company
desires to continue to employ Executive, and Executive desires to continue to be employed by the Company on the terms hereinafter
set forth, which will supersede the Prior Agreement.

 

NOW THEREFORE, in consideration
of the mutual covenants and promises contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties to this Agreement, the parties agree as follows:

 

1.Term of Employment.
The Company hereby agrees to continue to employ Executive, and Executive hereby accepts continued employment with the Company,
upon the terms set forth in this Agreement, for the period commencing on the date hereof (the “Commencement Date”)
and ending on May 13, 2014, unless sooner terminated in accordance with the provisions of Section 4 (such period, the “Initial
Term”); provided, however, that on each anniversary of the Commencement Date, the term of employment under
this Agreement shall be automatically extended for an additional one-year period (each such period, a “Subsequent Period”)
unless terminated sooner pursuant to Section 4 or if, at least sixty (60) days prior to the applicable anniversary date, either
Executive or the Company provides written notice to the other party electing not to extend. The Initial Term together with each
Subsequent Term, if any, are referred to hereinafter as the “Agreement Term.”

 

2.Title; Capacity.
During the Agreement Term, the Company will continue to employ Executive as its Chief Medical Officer and Executive Vice President,
Development to perform the duties and responsibilities inherent in such position and such other duties and responsibilities as
the Chief Executive Officer of the Company (the “CEO”) shall from time to time reasonably assign to him. On an annual
basis, the Company’s Board of Directors (the “Board”), in consultation with Executive and the CEO, will set reasonably
attainable, specific goals pursuant to the objectives of the Company as in effect from time to time. Executive shall report directly
to the CEO and shall be subject to the supervision of, and shall have such authority as is delegated to him by, the CEO, which
authority shall be sufficient to perform his duties hereunder. Executive will be based within the San Diego, California metropolitan
area. Subject to Section 4.3 below, the location of Executive’s employment is subject to change during the course of the
Agreement Term as determined by the CEO in consultation with the Executive. Executive hereby accepts such employment and agrees
to undertake the duties and responsibilities inherent in such position and such other duties as may be reasonably assigned to him.
Executive shall devote his full business time, energies and attention in the performance of the foregoing services. Notwithstanding
the foregoing, nothing herein shall preclude Executive from (i) performing services for such other companies as the Company may
designate or permit, (ii) serving, with the prior written consent of the Board, which consent shall not be unreasonably withheld,
as an officer or member of the boards of directors or advisory boards (or their equivalents in the case of a non-corporate entity)
of non-competing businesses, (iii) serving as an officer or a member of charitable, educational or civic organizations, (iv) engaging
in charitable activities and community affairs, and (v) managing Executive's personal investments and affairs; provided, however,
that the activities set out in clauses (i) – (v) shall be limited by Executive so as not to materially interfere, individually
or in the aggregate, with the performance of Executive's duties and responsibilities hereunder.

 

    	 

    	 

    

3.Compensation
and Benefits.

 

3.1Salary.
The Company shall pay Executive an initial annualized base salary of $380,000.00 payable in accordance with the Company’s
regular payroll practices. Such base salary shall be subject to annual review and increase (but not decrease) as may be determined
and approved by the Board or the Company’s Compensation Committee in its sole discretion.

 

3.2Automobile
Allowance. The Executive will be provided with a monthly automobile allowance in the amount of $1,000. The Executive shall
be responsible for payment of all automobile-related expenses and the Company shall have no obligation beyond the payment of the
monthly allowance set forth above. The Executive agrees to obtain commercially reasonable automobile insurance covering the operation
of any vehicle he uses during the course of his employment with the Company.

 

3.3Bonuses.
At the end of a given fiscal year, Executive will be eligible to receive a bonus equal to up to 35% of his base salary in effect
at the end of such fiscal year. The amount of any such bonus shall be based on factors including, but not limited to, Executive’s
achievement, as determined by the Board or the Compensation Committee in its sole discretion, of reasonable goals and milestones
established in advance by the Board or the Compensation Committee in consultation with the CEO and Executive. The period for calculation
of the bonus shall be consistent with the Company’s fiscal year. Such bonus, if any, will be paid to Executive on or after
January 1 and in any case no later than March 15 of the immediately succeeding fiscal year. The bonus shall be paid in cash; provided
that, if requested by Executive and approved by the Board, some or all of the bonus may be paid in equity under the Company’s
stockholder approved stock plan then in effect (valued at the fair market value thereof), or any combination of the foregoing.
To the extent that the Company is required pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection
Act to develop and implement a policy (the “Policy”) providing for the recovery from the Executive of any payment of
incentive-based compensation paid to the Executive that was based upon erroneous data contained in an accounting statement, this
Agreement shall be deemed amended and the Policy incorporated herein by reference as of the date that the Company takes all necessary
corporate action to adopt the Policy, without requiring any further action of the Company or the Executive, provided that any such
Policy shall only be binding on the Executive if the same Policy applies to the Company's other executive officers.

 

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3.4Equity Awards.
At the sole discretion of the Board or the Company’s Compensation Committee, stock options or other equity-based awards may
be granted to Executive from time to time.

 

3.5Fringe Benefits.
Executive shall be entitled to participate in all bonus and benefit programs that the Company establishes and makes available to
its executives and/or employees from time to time, including, but not limited to, health care plans, dental care plans, supplemental
retirement plans, life insurance plans, disability insurance plans and incentive compensation plans, to the extent that Executive
is eligible under, and subject to the terms and conditions of, the applicable plan documents governing such programs. The Company
shall pay 100% of the premium cost for health insurance coverage for Executive, his spouse and children, provided that
his spouse and dependents are not covered by an equivalent health insurance plan provided by his spouse’s employer. Executive
shall be eligible to accrue up to four (4) weeks of paid vacation each calendar year (to be taken at such times and in such number
of days as Executive shall determine in consultation with the CEO and in a manner so as not to impair or otherwise interfere with
Executive’s ability to perform his duties and responsibilities hereunder). The vacation days for
which Executive is eligible shall accrue at the rate of 1.67 days per month that Executive is employed during such calendar year.
Vacation accrual will be capped at 1.75 times Executive’s annual vacation accrual. When Executive’s accrued vacation
reaches the cap, he will not accrue additional vacation time until some of the previously accrued vacation is used and the accrued
amount falls below the cap, unless the Company is acquired by another business venture, in which case none of the previous year’s
accrued vacation will be subject to a cap. Executive shall also be eligible for paid holidays and up to five (5) paid sick
days annually, in accordance with the Company’s policies for its senior executives as in effect from time to time. At the
end of each calendar year, all unused sick days shall be forfeited.

 

3.6Reimbursement
of Expenses. The Company shall reimburse Executive for reasonable travel, entertainment and other expenses incurred or paid
by him in connection with, or related to the performance of his duties, responsibilities or services under this Agreement, upon
presentation by Executive of documentation, expense statements, vouchers and/or such other supporting information as the Company
may request. Executive must submit proper documentation for each such expense within sixty (60) days after the later of (i) his
incurrence of such expense or (ii) his receipt of the invoice for such expense. The Company will reimburse Executive for that expense
within thirty (30) days after receipt of the documentation.

 

3.7Withholdings.
Payments made under this Section 3 shall be subject to applicable federal, state and local taxes and withholdings, if any.

 

4.Termination
of Employment Period. The Agreement Term shall terminate upon the occurrence of any of the following:

 

4.1Expiration
of the Agreement Term. This Agreement shall expire at the end of the Agreement Term; provided, that notice is
given in accordance with Section 1 of this Agreement.

 

4.2Termination
by the Company for Cause. At the election of the Company, for Cause (as defined below), immediately following written notice
by the Company to Executive, which notice shall identify in reasonable detail the Cause upon which termination is based. For the
purposes of this Agreement, “Cause” for termination shall be deemed to exist upon:

 

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(a)a good faith
finding by the Company that (i) Executive has engaged in material dishonesty, willful misconduct or gross negligence; (ii) Executive
has breached or has threatened to breach his Invention, Non-Disclosure, and Non-Solicitation Agreement; or (iii) Executive has
materially breached this Agreement, and Executive has failed to cure such conduct or breach within thirty (30) days after his receipt
of written notice from the Company of such breach; or

 

(b)Executive’s
conviction, guilty plea, or entry of nolo contendere to any crime involving moral turpitude, fraud or embezzlement, or any felony.

 

4.3Termination
By Executive for Good Reason. Executive may terminate the Agreement Term for Good Reason. For purposes of this Agreement, “Good
Reason” means the occurrence, without Executive’s written consent, of any of the events or circumstances set forth
in clauses (a) through (c) below. In addition, notwithstanding the occurrence of any of the events enumerated in clauses (a) through
(c), such occurrence shall not be deemed to constitute Good Reason if, within thirty (30) days after the Company’s receipt
of written notice from Executive of the occurrence or existence of an event or circumstance enumerated in clauses (a) through (c),
such event or circumstance has been remedied by the Company.  Executive shall not be deemed to have terminated his employment
for Good Reason unless he first delivers a written notice of termination to the Company identifying in reasonable detail the acts
or omissions constituting Good Reason within ninety (90) days after their occurrence and the provision of this Agreement relied
upon, such acts or omissions are not cured by the Company within thirty (30) days of the receipt of such notice, and Executive
actually ends his employment within one-hundred and twenty (120) days after the Company’s failure to cure. 

 

(a)any other action
or omission by the Company which results in a material diminution in Executive’s position, status, offices, titles, authority,
responsibilities, or reporting requirements;

 

(b)a change by
the Company in the location at which Executive performs his principal duties for the Company to a different location that is (i)
outside a radius of fifty (50) miles from Executive’s principal residence immediately prior to the date on which such change
occurs, or (ii) more than fifty (50) miles from the location at which Executive performed his principal duties for the Company
immediately prior to the date on which such change occurs; or

 

(c)any material
breach by the Company of this Agreement.

 

4.4Death or Disability.
This Agreement shall terminate upon Executive’s death or disability. As used in this Agreement, the determination of “disability”
shall occur when Executive, due to a physical or mental disability, for a period of 60 consecutive days, or 120 days in the aggregate
whether or not consecutive, during any 360-day period, is unable to perform the services contemplated under this Agreement. A determination
of disability shall be made by a physician satisfactory to both Executive and the Company; provided, that, if Executive
and the Company do not agree on a physician, Executive and the Company shall each select a physician and these two together shall
select a third physician, whose determination as to disability shall be binding on all parties.

 

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4.5Termination
by Executive Without Good Reason or Termination by the Company Without Cause. At the election of Executive without Good Reason
or by the Company without Cause, upon not less than thirty (30) days’ prior written notice to the other party.

 

5.Effect of
Termination.

 

5.1Payments Upon
Termination for Any Reason. In the event Executive’s employment is terminated pursuant to Section 4, the Company shall
pay to Executive (or his estate or legal representative, if applicable), on the date of his termination of employment with the
Company, the compensation and benefits under Sections 3.1, 3.2, 3.4 and 3.5 that are accrued and unpaid through such termination
date (including, without limitation, an amount equal to all accrued but unused vacation pay and unreimbursed expenses). In the
event of termination of Executive’s employment by Executive by reason of non-renewal of the Agreement Term pursuant to Sections
1 and 4.1, the Company for Cause pursuant to Section 4.2, by reason of Executive’s death or disability pursuant to Section
4.4, or by Executive without Good Reason pursuant to Section 4.5, Executive shall not receive any compensation or benefits other
than as expressly stated in this Section 5.1 and as otherwise required by law.

 

5.2Termination
by the Company Without Cause, by the Company by Reason of Non-Renewal of Agreement Term, or by Executive for Good Reason. Subject
to Section 5.3 below, in addition to the payments and provisions under Section 5.1, in the event of termination of Executive’s
employment by the Company by reason of non-renewal of the Agreement Term pursuant to Sections 1 and 4.1, by Executive for Good
Reason pursuant to Section 4.3, or by the Company without Cause pursuant to Section 4.5, provided that Executive executes a release
of claims substantially in the form attached hereto as Exhibit A (the “Release”), which Release must be effective
and irrevocable prior to the sixtieth (60th) day following the termination of the Executive's employment (the “Review
Period”), the Company shall provide Executive with the following:

 

(a) twelve (12)
months of Executive’s base salary in effect at the time of termination of employment, payable as a single lump sum on the
Company’s first regular payroll date following the date the Release is effective and irrevocable (such date, the “Payment
Date”); and

 

(b)the Company
will, for a period of twelve (12) months following Executive’s termination from employment, continue Executive’s participation
in the Company’s group health plan and dental plan and shall pay that portion of the premiums that the Company paid on behalf
of Executive and his dependents during Executive’s employment, provided, however, that if the Company’s
health insurance plan and/or dental plan does not permit such continued participation in such plan after Executive’s termination
of employment, then the Company shall pay that portion of the premiums associated with COBRA continuation coverage that the Company
paid on behalf of Executive and his dependents during Executive’s employment ,
including any administrative fee, on Executive’s behalf for such twelve-month period; and provided, further,
that if Executive becomes employed with another employer during the period in which continued health insurance and/or dental insurance
is being provided pursuant to this Section, the Company shall not be required to continue such health and dental benefits, or if
applicable, to pay the costs of COBRA, if Executive becomes covered under a health insurance plan of the new employer. (For purposes
of this Section 5.2(b), the term “Executive” shall include, to the extent applicable, Executive’s spouse and
any of his dependents covered under the Company’s group health plan and/or dental plan prior to his termination of employment.)

 

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5.3Termination
in the Event of a Change in Control.

 

(a)In addition
to the payments and provisions under Section 5.1 but in lieu of, and not in addition to, the payments required pursuant to Section
5.2 above and 5.5 below, in the event Executive’s employment with the Company is terminated by the Company by reason of non-renewal
of the Agreement Term pursuant to Sections 1 and 4.1, by Executive for Good Reason pursuant to Section 4.3, or by the Company without
Cause pursuant to Section 4.5, in any such case, in anticipation of and/or within twelve (12) months following a Change in Control
(as defined below), provided that Executive (or his legal representative, if applicable) executes a Release and the Release becomes
effective and irrevocable prior to the end of the Review Period, Executive shall be entitled to the following:

 

(i)a lump sum cash
amount equal to twelve (12) months of Executive’s base salary in effect at the time of Executive’s termination, such
payment to be made on the Payment Date;

 

(ii)for up to twelve
(12) months after Executive’s date of termination, the Company shall continue Executive’s participation in the Company’s
group health and dental plan and shall pay that portion of the premiums that the Company paid on behalf of Executive and his dependents
during Executive’s employment; provided, however, that if the Company’s health insurance plan and/or
dental insurance plan does not permit Executive’s continued participation in such plan after his termination of employment,
then the Company shall pay that portion of the premiums associated with COBRA continuation coverage that the Company paid on behalf
of Executive and his dependents during Executive’s employment,
including administrative fees, on Executive’s behalf for so long as COBRA continuation coverage is available,
up to twelve (12) months; and provided, further, that if Executive becomes employed with another employer during
the period in which continued health insurance and/or dental insurance is being provided pursuant to this Section, the Company
shall not be required to continue the relevant benefits, or if applicable, to pay the relevant costs of COBRA, if Executive becomes
covered under a health insurance plan and/or dental plan of the new employer. (For purposes of this Section 5.3(a)(ii), the term
“Executive” shall include, to the extent applicable, Executive’s spouse and any of his dependents covered under
the Company’s group health plan and/or dental plan prior to his termination of employment.)

 

(b)As used herein,
“Change in Control” shall occur or be deemed to occur if any of the following events occur:

 

(i)any sale, lease,
exchange or other transfer (in one transaction or a series of transactions) of all or substantially all of the assets of the Company;
or

 

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(ii)any consolidation
or merger of the Company (including, without limitation, a triangular merger) where the shareholders of the Company immediately
prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own, directly or indirectly,
shares representing in the aggregate more than fifty percent (50%) of the combined voting power of all the outstanding securities
of the corporation issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any); or

 

(iii)a third person,
including a “person” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) (but other than (x) the Company, (y) any employee benefit plan of the Company, or (z) investors purchasing equity securities
of the Company pursuant to a financing or a series of financings approved by the Board of Directors of the Company) becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly, of Controlling Securities (as defined
below). “Controlling Securities” shall mean securities representing 25% or more of the total number of votes that may
be cast for the election of the directors of the Company.

 

5.4Effect of Termination
on Stock Options and Other Equity Compensation.

 

(a)In the event
of Executive’s termination by Executive by reason of non-renewal of the Agreement Term pursuant to Sections 1 and 4.1, by
the Company for Cause pursuant to Section 4.2, or by Executive without Good Reason pursuant to Section 4.5, all unvested stock
options and other equity–based awards granted to Executive before and after the date of this Agreement shall be immediately
forfeited upon the effective date of such termination of employment or as otherwise provided in the award agreement; provided,
that, Executive shall have until the earlier of expiration date of the option or ninety (90) days from the date of termination
of Executive to exercise all vested options unless the stock plan pursuant to which the option is granted requires earlier termination
in connection with a liquidation or sale of the Company.

 

(b)In the event
of Executive’s termination by the Company by reason of non-renewal of the Agreement term pursuant to Sections 1 and 4.1,
Executive for Good Reason pursuant to Section 4.3 or by the Company without Cause pursuant to Section 4.5, and provided that Executive
(or his legal representative, if applicable) executes a Release and the Release becomes effective and irrevocable prior to the
end of the Review Period, that number of Executive’s unvested stock options and other equity-based awards that would otherwise
have vested from the effective date of Executive’s termination to the first anniversary of such date shall vest as of the
date the Release is effective and irrevocable and Executive (or his estate or legal representative, if applicable) shall have until
the earlier of the expiration date of the option or one (1) year from the date of termination of Executive’s employment to
exercise all vested options unless the stock plan pursuant to which the option is granted requires earlier termination in connection
with a liquidation or sale of the Company.

 

(c)In the event
Executive’s employment with the Company is terminated by the Company by reason of non-renewal of the Agreement Term pursuant
to Sections 1 and 4.1, by Executive for Good Reason pursuant to Section 4.3, or by the Company without Cause pursuant to Section
4.5, in any such case, in anticipation of and/or within twelve (12) months following a Change in Control, in lieu of the acceleration
provided for pursuant to Section 5.4(b) above, provided that Executive (or his legal representative, if applicable) executes a
Release and the Release becomes effective and irrevocable prior to the end of the Review Period, all of Executive’s unvested
stock options and other equity-based awards then in effect shall immediately vest as of the date the Release is effective and irrevocable
and Executive (or his estate or legal representative, if applicable) shall have until the earlier of the expiration date of the
option or one (1) year from the date of termination of Executive’s employment to exercise all vested options unless the stock
plan pursuant to which the option is granted requires earlier termination in connection with a liquidation or sale of the Company.

 

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5.5Review Period.
In the event that the Review Period begins in one taxable year of the Executive and ends in a later taxable year, any payments
contingent upon Executive’s execution without revocation of the Release prior to the end of the Review Period will be made
or commence to be paid on the first payroll date in the later taxable year. In no event will any payments be made or commence to
be paid later than the ninetieth (90th) day following the Executive’s date of termination.

 

5.6Limitation
on Benefits. The Company will make the payments under this Agreement without regard to whether the deductibility of such payments
(or any other payments or benefits) would be limited or precluded by Section 280G of the Internal Revenue Code of 1986, as amended
(the “Code”) and without regard to whether such payments would subject Executive to the federal excise tax levied on
certain “excess parachute payments” under Code Section 4999 of the Code; provided, however, that if the Total After-Tax
Payments (as defined below) would be increased by the reduction or elimination of any payment and/or other benefit (including the
vesting of the options) under this Agreement, then the amounts payable under this Agreement will be reduced or eliminated as follows,
if possible: (i) first, by reducing or eliminating any cash payments or other benefits (other than the vesting of the options)
and (ii) second, by reducing or eliminating the vesting of that options that occurs as a result of such Change in Control (as provided
above), to the extent necessary to maximize the Total After-Tax Payments. The Company’s independent, certified public accounting
firm will determine whether and to what extent payments or vesting under this agreement are required to be reduced in accordance
with the preceding sentence. For purposes of this Agreement, “Total After-Tax Payments” means the total of all “parachute
payments” (as that term is defined in Section 280G(b)(2) of the Code) made to or for the benefit of Executive (whether made
under the Agreement or otherwise), after reduction for all applicable federal taxes (including, without limitation, the tax described
in Section 4999 of the Code). The Company agrees to pay for all costs associated with the determination of the payments or vesting
required to be reduced and for the avoidance of doubt, shall not be required to pay any taxes, penalties, interest or other expenses
to which Executive may be subject.

 

5.7Withholdings.
Payments made under this Section 5 shall be subject to applicable federal, state and local taxes and withholdings.  If the
payment of any COBRA or health insurance premiums would otherwise violate the nondiscrimination rules or cause the reimbursement
of claims to be taxable under the Patient Protection and Affordable Care Act of 2010, together with the Health Care and Education
Reconciliation Act of 2010 (collectively, the “Act”) or Section 105(h) of the Code, the Company paid premiums shall
be treated as taxable payments and be subject to imputed income tax treatment to the extent necessary to eliminate any discriminatory
treatment or taxation under the Act or Section 105(h) of the Code.

 

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6.Notices.
All notices, requests, consents and other communications hereunder will be in writing, will be addressed, if to the Company, at
its principal corporate offices to the attention of the Legal Department, and if to Executive, at his address set forth on the
signature page hereto, or in either case, such other address as a party may designate by notice hereunder, and will be either (i) delivered
by hand, (ii) sent by overnight courier, or (iii) sent by registered or certified mail, return receipt requested, postage
prepaid. All notices, requests, consents and other communications hereunder will be deemed to have been given either (i) if
by hand, at the time of the delivery thereof to the receiving party at the address of such party set forth above, (ii) if
sent by overnight courier, on the next business day following the day such notice is delivered to the courier service, or (iii)
if sent by registered or certified mail, on the fifth business day following the day such mailing is made.

 

7.Absence of
Restrictions. Executive represents and warrants that he is not bound by any employment contracts, restrictive covenants
or other restrictions that prevent him from entering into employment with, or carrying out his responsibilities for, the Company,
or which are in any way inconsistent with any of the terms of this Agreement.

 

8.Entire Agreement.
This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether
written or oral relating to the subject matter of this Agreement, with the exception of the Invention, Non-Disclosure, and Non-Solicitation
Agreement, dated as of March 31, 2008, by and between the Company and Executive. Notwithstanding the foregoing, the parties to
this Agreement acknowledge that stock options and other equity awards may be granted by the Company to Executive under and pursuant
to the Intercept Pharmaceuticals, Inc. 2012 Equity Incentive Plan and any amendments thereto, as well as any additional plans,
and the award agreements related to such plans.

 

9.Amendment.
This Agreement may be amended or modified only by a written instrument executed by both the Company and Executive.

 

10.Governing
Law; Consent to Jurisdiction. This Agreement shall be construed, interpreted and enforced in accordance with the laws of the
State of New York without regard to conflict of law principles. Any action, suit or other legal proceeding arising under or relating
to any provision of this Agreement shall be commenced only in a court of the State of New York (or, if appropriate, a federal court
located within the State of New York), and the Company and Executive each consents to the jurisdiction of such a court. The Company
and Executive each hereby irrevocably waive any right to a trial by jury in any action, suit or other legal proceeding arising
under or relating to any provision of this Agreement.

 

11.Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors
and assigns, including any corporation with which, or into which, the Company may be merged or which may succeed to the Company’s
assets or business, provided, however, that the obligations of Executive are personal and shall not be assigned by
him. Notwithstanding the foregoing, if Executive dies the compensation and benefits stated in this Agreement will be paid to his
beneficiary or his estate if no beneficiary.

 

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12.Miscellaneous.

 

12.1No Waiver.
No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other
right. A waiver or consent given on any one occasion shall be effective only in that instance and shall not be construed as a bar
or waiver of any right on any other occasion.

 

12.2Captions.
The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the
scope or substance of any section of this Agreement.

 

12.3Severability.
In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability
of the remaining provisions shall in no way be affected or impaired thereby.

 

12.4Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument. This Agreement may be delivered by facsimile, and facsimile signatures shall be treated
as original signatures for all applicable purposes.

 

12.5Blue Penciling.
To the extent that any provision herein or in any plan of nonqualified deferred compensation that this document is a part of contravenes
the requirements of Code Section 409A or the regulations thereunder), such provision shall be appropriately modified in accordance
with available IRS guidance (including without limitation IRS Notice 2010-6 and related guidance) so that Executive is not subject
to the adverse effects of Code Section 409A but will nevertheless retain, to the extent possible, the economic benefit of the provision.

 

12.6Section 409A.

 

(a)The payments
under this Agreement are intended either to be exempt from Section 409A of the Code under the short-term deferral, separation pay,
or other applicable exception, or to otherwise comply with Section 409A. The parties agree that this Agreement shall be administered
in a manner consistent with such intent. For purposes of Section 409A, all payments under this Agreement shall be considered separate
payments. If any amount or benefit payable to the Executive under this Agreement upon a “termination of employment”
is determined by the Company to constitute a “deferral of compensation” for purposes of Section 409A (after taking
into account any applicable exceptions), such amount or benefit shall not be paid or provided until the Executive has also experienced
a “separation from service” from the Company within the meaning of Section 409A. Notwithstanding any provision
to the contrary, to the extent Executive is considered a specified employee under Section 409A and would be entitled during the
six-month period beginning on Executive’s separation from service to a payment that is not otherwise excluded under Section
409A, such payment will not be made until the earlier of the six-month anniversary of Employee’s separation from service
or death; provided that the first payment made after the delay
shall include all amounts that would have been paid earlier but for such six (6) month delay. At the
request of the Executive, the Company shall set aside those payments that would otherwise be made in such six-month period in a
trust that is in compliance with Rev. Proc. 92-64. 

 

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(b)If an expense
reimbursement or provision of in-kind benefit provided to the Executive under this Agreement is not exempt from Section 409A of
the Code, the following rules apply: (i) in no event shall any reimbursement be paid after the last day of the taxable year following
the taxable year in which the expense was incurred; (ii) the amount of reimbursable expenses incurred or provision of in-kind benefits
in one tax year shall not affect the expenses eligible for reimbursement or the provision of in-kind benefits in any other tax
year; and (iii) the right to reimbursement for expenses or provision of in-kind benefits is not subject to liquidation or exchange
for any other benefit.

 

(c)The parties
agree to negotiate in good-faith the amendment of this Agreement, as necessary, to avoid any violations of Section 409A in
a manner that preserves the original intent of the parties to the extent reasonably possible. Notwithstanding the foregoing, the
Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no
event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred
by Executive on account of non-compliance with Section 409A.

 

 

 

[signature page follows]

    	11

    	 

    

 

IN WITNESS WHEREOF,
the parties hereto have executed this Agreement as of the day and year set forth above.

 

	 	THE COMPANY:
	 	 
	 	INTERCEPT PHARMACEUTICALS, INC.
	 	 
	 	 
	 	 
	 	By: 	/s/ Mark Pruzanski
	 	 	Name:  Mark Pruzanski, MD

Title:    President and Chief Executive Officer

 

 

	 	EXECUTIVE:
	 	 
	 	 
	 	 
	 	/s/ David Shapiro
	 	Name: David Shapiro
	 	 	 
	 	 	 
	 	Address for Notice Purposes:
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

 

 

    	12

    	 

    

  

Exhibit A

 

RELEASE
OF CLAIMS

 

FOR AND IN CONSIDERATION
OF the payments and benefits (the “Separation Benefits”) to be provided to me in connection with the separation
of my employment, in accordance with the Employment Agreement between Intercept Pharmaceuticals, Inc. (the “Company”)
and me dated as May 14, 2013 (the “Agreement”), which Separation Benefits are conditioned on my signing this
Release of Claims (“Release”) and which I will forfeit unless I execute and do not revoke this Release of Claims, I,
on my own behalf and on behalf of my heirs and estate, voluntarily, knowingly and willingly release and forever discharge the Company,
its subsidiaries, affiliates, parents, and stockholders, together with each of those entities’ respective officers, directors,
stockholders, employees, agents, fiduciaries and administrators (collectively, the “Releasees”) from any and
all claims and rights of any nature whatsoever which I now have or in the future may have against them up to the date I execute
this Release, whether known or unknown, suspected or unsuspected. This Release includes, but is not limited to, any rights or claims
relating in any way to my employment relationship with the Company or any of the other Releasees or the termination thereof, any
contract claims (express or implied, written or oral), including, but not limited to, the Agreement, or any rights or claims under
any statute, including, without limitation, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the
Older Workers’ Benefit Protection Act, the Rehabilitation Act of 1973 (including Section 504 thereof), Title VII of the 1964
Civil Rights Act, the Civil Rights Act of 1866 (42 U.S.C. § 1981), the Civil Rights Act of 1991, the Equal Pay Act, the National
Labor Relations Act, the Worker Adjustment and Retraining Notification Act, the Family Medical Leave Act, the Lilly Ledbetter Fair
Pay Act, the Genetic Information Non-Discrimination Act, the New York State Human Rights Law, the New York City Human Rights Law,
the California Fair Employment and Housing Act and the Employee Retirement Income Security Act of 1974, all as amended, and any
other federal, state or local law. This Release specifically includes, but is not limited to, any claims based upon the right to
the payment of wages, incentive and performance compensation, bonuses, equity grants, vacation,
pension benefits, 401(k) Plan benefits, stock benefits or any other employee benefits, or any other rights arising under federal,
state or local laws prohibiting discrimination and/or harassment on the basis of race, color, age, religion, sexual orientation,
religious creed, sex, national origin, ancestry, alienage, citizenship, nationality, mental or physical disability, denial of family
and medical care leave, medical condition (including cancer and genetic characteristics), marital status, military status, gender
identity, harassment or any other basis prohibited by law.

 

Section
1542 Waiver. In giving this Release, which includes claims which may be unknown to me at present, I hereby acknowledge
that I have read and understand Section 1542 of the Civil Code of the State of California which reads as follows:

 

A
general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially affected his settlement with the debtor.

 

    	13

    	 

    

I hereby expressly waive and relinquish
all rights and benefits under this section and any law or legal principle of similar effect in any jurisdiction with respect to
the claims released hereby.

 

As
a condition of the Company entering into this Release, I further represent that I have not filed against the Company or
any of the other Releasees, any complaints, claims or lawsuits with any arbitral tribunal, administrative agency, or court
prior to the date hereof, and that I have not transferred to any other person any such complaints, claims or lawsuits. I
understand that by signing this Release , I waive my right to any monetary recovery in connection with a local, state or
federal governmental agency proceeding and I waive my right to file a claim seeking monetary damages in any arbitral
tribunal, administrative agency, or court. This Release does not: (i) prohibit or restrict me from communicating, providing
relevant information to or otherwise cooperating with the U.S. Equal Employment Opportunity Commission or any other
governmental authority with responsibility for the administration of fair employment practices laws regarding a possible
violation of such laws or responding to any inquiry from such authority, including an inquiry about the existence of this
Release or its underlying facts, or (ii) require me to notify the Company of such communications or inquiry.
Furthermore, notwithstanding the foregoing, this Release does not include and will not preclude: (a) rights or claims to
vested benefits under any applicable retirement and/or pension plans; (b) rights under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”); (c) claims for unemployment compensation; (d) rights to defense and
indemnification, if any, from the Company for actions or inactions taken by me in the course and scope of my employment with
the Company and its parents, subsidiaries and/or affiliates; (e) any rights I may have to obtain contribution as permitted by
law in the event of entry of judgment against the Company as a result of any act or failure to act for which I and the
Company are held jointly liable; (f) the right to any equity awards that vested prior to or because of the termination of my
employment; and/or (g) any actions to enforce the Agreement.

 

I acknowledge that,
in signing this Release, I have not relied on any promises or representations, express or implied, other than those that are set
forth expressly herein or in the Agreement and that are intended to survive separation from employment, in accordance with the
terms of the Agreement.

 

I further acknowledge
that:

 

		(1)	I first received this Release on the date of the Agreement to which it is attached as Exhibit A;

 

		(2)	I understand that, in order for this Release to be effective, I may not sign it prior to the date
of my separation of employment with the Company but that if I wish to receive the Separation Benefits, I must sign and return this
Release prior to the sixtieth (60th) day following my separation of employment;

 

		(3)	I have carefully read and understand this Release;

 

		(4)	The Company advised me to consult with an attorney and/or any other advisors of my choice before
signing this Release;

 

    	14

    	 

    

		(5)	I understand that this Release is legally binding and
by signing it I give up certain rights;

 

		(6)	I have voluntarily chosen to enter into this Release and have not been forced or pressured in any
way to sign it;

 

		(7)	I acknowledge and agree that the Separation Benefits are contingent on execution of this Release,
which releases all of my claims against the Company and the Releasees, and I knowingly
and voluntarily agree to release the Company and the Releasees from any and all claims I may have, known or unknown,
in exchange for the benefits I have obtained by signing, and that these benefits are in addition to any benefit I would have otherwise
received if I did not sign this Release;

 

		(8)	I have seven (7) days after I sign this Release to revoke it by notifying the Company in writing.
The Release will not become effective or enforceable until the seven (7) day revocation period has expired;

 

		(9)	This Release includes a waiver of all rights and claims
I may have under the Age Discrimination in Employment Act of 1967 (29 U.S.C. §621 et seq.); and

 

		(10)	This Release does not waive any rights or claims that may arise after this Release becomes effective,
which is seven (7) days after I sign it, provided that I do not exercise my right to revoke this Agreement.

 

Intending to be legally
bound, I have signed this Release as of the date written below.

 

 

 

	Signature:_____________________	______________________________
	David Shapiro	   Date signed

 

 

 

    	15Exhibit 10.12

Execution Copy

 

 

 

 

EMPLOYMENT
AGREEMENT

 

THIS EMPLOYMENT AGREEMENT
(the “Agreement”), made effective as of May 14, 2013, is entered into by Intercept Pharmaceuticals, Inc. (the “Company”)
and Barbara Duncan (“Executive”).

 

WHEREAS, the Company
and the Executive were parties to an Employment Agreement, dated May 16, 2009, which was amended by an Amendment to Employment
Agreement, dated April 12, 2013 (as amended, the “Prior Agreement”); and

 

WHEREAS, the Company
desires to continue to employ Executive, and Executive desires to continue to be employed by the Company on the terms hereinafter
set forth, which will supersede the Prior Agreement.

 

NOW THEREFORE, in consideration
of the mutual covenants and promises contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties to this Agreement, the parties agree as follows:

 

1.Term of Employment.
The Company hereby agrees to continue to employ Executive, and Executive hereby accepts continued employment with the Company,
upon the terms set forth in this Agreement, for the period commencing on the date hereof (the “Commencement Date”)
and ending on May 13, 2014, unless sooner terminated in accordance with the provisions of Section 4 (such period, the “Initial
Term”); provided, however, that on each anniversary of the Commencement Date, the term of employment under
this Agreement shall be automatically extended for an additional one-year period (each such period, a “Subsequent Period”)
unless terminated sooner pursuant to Section 4 or if, at least thirty (30) days prior to the applicable anniversary date, either
Executive or the Company provides written notice to the other party electing not to extend. The Initial Term together with each
Subsequent Term, if any, are referred to hereinafter as the “Agreement Term.”

 

2.Title; Capacity.
During the Agreement Term, the Company will continue to employ Executive as its Chief Financial Officer to perform the duties and
responsibilities inherent in such position and such other duties and responsibilities as the Chief Executive Officer of the Company
(the “CEO”) shall from time to time reasonably assign to her. On an annual basis, the Company’s Board of Directors
(the “Board”) in consultation with Executive and the CEO, will set reasonably attainable, specific goals pursuant to
the objectives of the Company as in effect from time to time. Executive shall report directly to the CEO and shall be subject to
the supervision of, and shall have such authority as is delegated to her by, the CEO, which authority shall be sufficient to perform
her duties hereunder. Executive will be based at the Company’s headquarters in New York, New York. Subject to Section 4.3
below, the location of Executive’s employment is subject to change during the course of the Agreement Term as determined
by the Board in consultation with the Executive. Executive hereby accepts such employment and agrees to undertake the duties and
responsibilities inherent in such position and such other duties as may be reasonably assigned to her. Executive shall devote her
full business time, energies and attention in the performance of the foregoing services. Notwithstanding the foregoing, nothing
herein shall preclude Executive from (i) performing services for such other companies as the Company may designate or permit, (ii)
serving, with the prior written consent of the Board, which consent shall not be unreasonably withheld, as an officer or member
of the boards of directors or advisory boards (or their equivalents in the case of a non-corporate entity) of non-competing businesses,
(iii) serving as an officer or a member of charitable, educational or civic organizations, (iv) engaging in charitable activities
and community affairs, and (v) managing Executive's personal investments and affairs; provided, however, that the activities set
out in clauses (i) – (v) shall be limited by Executive so as not to materially interfere, individually or in the aggregate,
with the performance of Executive's duties and responsibilities hereunder.

 

    	 

    	 

    

3.Compensation
and Benefits.

 

3.1 Salary.
The Company shall pay Executive an initial annualized base salary of $335,000.00, payable in accordance with the Company’s
regular payroll practices. Such base salary shall be subject to annual review and increase (but not decrease) as may be determined
and approved by the Board or the Company’s Compensation Committee in its sole discretion.

 

3.2Bonuses.
At the end of a given fiscal year, Executive will be eligible to receive a bonus equal to up to 35% of her base salary in effect
at the end of such fiscal year. The amount of any such bonus shall be based on factors including, but not limited to, Executive’s
achievement, as determined by the Board or the Compensation Committee in its sole discretion, of reasonable goals and milestones
established in advance by the Board or the Compensation Committee in consultation with the CEO and Executive. The period for calculation
of the bonus shall be consistent with the Company’s fiscal year. Such bonus, if any, will be paid to Executive on or after
January 1 and in any case no later than March 15 of the immediately succeeding fiscal year. The bonus shall be paid in cash; provided
that, if requested by Executive and approved by the Board, some or all of the bonus may be paid in equity under the Company’s
stockholder approved stock plan then in effect (valued at the fair market value thereof), or any combination of the foregoing.
To the extent that the Company is required pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection
Act to develop and implement a policy (the “Policy”) providing for the recovery from the Executive of any payment of
incentive-based compensation paid to the Executive that was based upon erroneous data contained in an accounting statement, this
Agreement shall be deemed amended and the Policy incorporated herein by reference as of the date that the Company takes all necessary
corporate action to adopt the Policy, without requiring any further action of the Company or the Executive, provided that any such
Policy shall only be binding on the Executive if the same Policy applies to the Company's other executive officers.

 

3.3Equity Awards.
At the sole discretion of the Board or the Company’s Compensation Committee, stock options or other equity-based awards may
be granted to Executive from time to time.

 

3.4Fringe Benefits.
Executive shall be entitled to participate in all bonus and benefit programs that the Company establishes and makes available to
its executives and/or employees from time to time, including, but not limited to, health care plans, dental care plans, supplemental
retirement plans, life insurance plans, disability insurance plans and incentive compensation plans, to the extent that Executive
is eligible under, and subject to the terms and conditions of, the applicable plan documents governing such programs. The Company
shall pay 100% of the premium cost for health insurance coverage for Executive, her spouse and children, provided that
her spouse and dependents are not covered by an equivalent health insurance plan provided by her spouse’s employer. Executive
shall be eligible to accrue up to four (4) weeks of paid vacation each calendar year (to be taken at such times and in such number
of days as Executive shall determine in consultation with the CEO and in a manner so as not to impair or otherwise interfere with
Executive’s ability to perform her duties and responsibilities hereunder). The vacation days for
which Executive is eligible shall accrue at the rate of 1.67 days per month that Executive is employed during such calendar year.
Vacation accrual will be capped at 1.75 times Executive’s annual vacation accrual. When Executive’s accrued vacation
reaches the cap, she will not accrue additional vacation time until some of the previously accrued vacation is used and the accrued
amount falls below the cap, unless the Company is acquired by another business venture, in which case none of the previous year’s
accrued vacation will be subject to a cap. Executive shall also be eligible for paid holidays and up to five (5) paid sick
days annually, in accordance with the Company’s policies for its senior executives as in effect from time to time. At the
end of each calendar year, all unused sick days shall be forfeited.

 

    	2

    	 

    

3.5Reimbursement
of Expenses. The Company shall reimburse Executive for reasonable travel, entertainment and other expenses incurred or paid
by her in connection with, or related to the performance of her duties, responsibilities or services under this Agreement, upon
presentation by Executive of documentation, expense statements, vouchers and/or such other supporting information as the Company
may request. Executive must submit proper documentation for each such expense within sixty (60) days after the later of (i) her
incurrence of such expense or (ii) her receipt of the invoice for such expense. The Company will reimburse Executive for that expense
within thirty (30) days after receipt of the documentation.

 

3.6Withholdings.
Payments made under this Section 3 shall be subject to applicable federal, state and local taxes and withholdings, if any.

 

4.Termination
of Employment Period. The Agreement Term shall terminate upon the occurrence of any of the following:

 

4.1Expiration
of the Agreement Term. This Agreement shall expire at the end of the Agreement Term; provided, that notice is
given in accordance with Section 1 of this Agreement.

 

4.2Termination
by the Company for Cause. At the election of the Company, for Cause (as defined below), immediately following written notice
by the Company to Executive, which notice shall identify in reasonable detail the Cause upon which termination is based. For the
purposes of this Agreement, “Cause” for termination shall be deemed to exist upon:

 

(a)a good faith
finding by the Company that (i) Executive has engaged in material dishonesty, willful misconduct or gross negligence; (ii) Executive
has breached or has threatened to breach her Invention, Non-Disclosure, and Non-Solicitation Agreement; or (iii) Executive has
materially breached this Agreement, and Executive has failed to cure such conduct or breach within thirty (30) days after her receipt
of written notice from the Company of such breach; or

 

    	3

    	 

    

(b)Executive’s
conviction, guilty plea, or entry of nolo contendere to any crime involving moral turpitude, fraud or embezzlement, or any felony.

 

4.3Termination
By Executive for Good Reason. Executive may terminate the Agreement Term for Good Reason. For purposes of this Agreement, “Good
Reason” means the occurrence, without Executive’s written consent, any of the events or circumstances set forth in
clauses (a) through (c) below. In addition, notwithstanding the occurrence of any of the events enumerated in clauses (a) through
(c), such occurrence shall not be deemed to constitute Good Reason if, within thirty (30) days after the Company’s receipt
of written notice from Executive of the occurrence or existence of an event or circumstance enumerated in clauses (a) through (c),
such event or circumstance has been remedied by the Company.  Executive shall not be deemed to have terminated her employment
for Good Reason unless she first delivers a written notice of termination to the Company identifying in reasonable detail the acts
or omissions constituting Good Reason within ninety (90) days after their occurrence and the provision of this Agreement relied
upon, such acts or omissions are not cured by the Company within thirty (30) days of the receipt of such notice, and Executive
actually ends her employment within one-hundred and twenty (120) days after the Company’s failure to cure. 

 

(a)any other action
or omission by the Company which results in a material diminution in Executive’s position, status, offices, titles, authority,
responsibilities, or reporting requirements;

 

(b)a change by
the Company in the location at which Executive performs her principal duties for the Company to a different location that is (i)
outside a radius of fifty (50) miles from Executive’s principal residence immediately prior to the date on which such change
occurs, or (ii) more than fifty (50) miles from the location at which Executive performed her principal duties for the Company
immediately prior to the date on which such change occurs; or

 

(c)any material
breach by the Company of this Agreement.

 

4.4Death or Disability.
This Agreement shall terminate upon Executive’s death or disability. As used in this Agreement, the determination of “disability”
shall occur when Executive, due to a physical or mental disability, for a period of 60 consecutive days, or 120 days in the aggregate
whether or not consecutive, during any 360-day period, is unable to perform the services contemplated under this Agreement. A determination
of disability shall be made by a physician satisfactory to both Executive and the Company; provided, that, if Executive
and the Company do not agree on a physician, Executive and the Company shall each select a physician and these two together shall
select a third physician, whose determination as to disability shall be binding on all parties.

 

4.5Termination
by Executive Without Good Reason or Termination by the Company Without Cause. At the election of Executive without Good Reason
or by the Company without Cause, upon not less than thirty (30) days’ prior written notice to the other party.

 

    	4

    	 

    

5.Effect of
Termination.

 

5.1Payments Upon
Termination for Any Reason. In the event Executive’s employment is terminated pursuant to Section 4, the Company shall
pay to Executive (or her estate or legal representative, if applicable), on the date of her termination of employment with the
Company, the compensation and benefits under Sections 3.1, 3.4 and 3.5 that are accrued and unpaid through such termination date
(including, without limitation, an amount equal to all accrued but unused vacation pay and unreimbursed expenses). In the event
of termination of Executive’s employment by Executive by reason of non-renewal of the Agreement Term pursuant to Sections
1 and 4.1, the Company for Cause pursuant to Section 4.2, by reason of Executive’s death or disability pursuant to Section
4.4, or by Executive without Good Reason pursuant to Section 4.5, Executive shall not receive any compensation or benefits other
than as expressly stated in this Section 5.1 and as otherwise required by law.

 

5.2Termination
by the Company Without Cause, by the Company by Reason of Non-Renewal of Agreement Term, or by Executive for Good Reason. Subject
to Section 5.3 below, in addition to the payments and provisions under Section 5.1, in the event of termination of Executive’s
employment by the Company by reason of non-renewal of the Agreement Term pursuant to Sections 1 and 4.1, by Executive for Good
Reason pursuant to Section 4.3, or by the Company without Cause pursuant to Section 4.5, provided that Executive executes a release
of claims substantially in the form attached hereto as Exhibit A (the “Release”), which Release must be effective and
irrevocable prior to the sixty (60th) day following the termination of the Executive's employment (the “Review
Period”), the Company shall provide Executive with the following:

 

(a) twelve (12)
months of Executive’s base salary in effect at the time of termination of employment, payable according to the Company’s
payroll commencing on the first payroll date following the date the Release is effective and irrevocable (the “Payment Date”);
and

 

(b)the Company
will, for a period of twelve (12) months following Executive’s termination from employment, continue Executive’s participation
in the Company’s group health plan and dental plan and shall pay that portion of the premiums that the Company paid on behalf
of Executive and her dependents during Executive’s employment, provided, however, that if the Company’s
health insurance plan and/or dental plan does not permit such continued participation in such plan after Executive’s termination
of employment, then the Company shall pay that portion of the premiums associated with COBRA continuation coverage that the Company
paid on behalf of Executive and her dependents during Executive’s employment,
including any administrative fee, on Executive’s behalf for such twelve-month period; and provided, further,
that if Executive becomes employed with another employer during the period in which continued health insurance and/or dental insurance
is being provided pursuant to this Section, the Company shall not be required to continue such health and dental benefits, or if
applicable, to pay the costs of COBRA, if Executive becomes covered under a health insurance plan of the new employer. (For purposes
of this Section 5.2(b), the term “Executive” shall include, to the extent applicable, Executive’s spouse and
any of her dependents covered under the Company’s group health plan and/or dental plan prior to her termination of employment.)

 

    	5

    	 

    

5.3Termination
in the Event of a Change in Control.

 

(a)In addition
to the payments and provisions under Section 5.1 but in lieu of, and not in addition to, the payments required pursuant to Section
5.2 above and 5.5 below, in the event Executive’s employment with the Company is terminated by the Company by reason of non-renewal
of the Agreement Term pursuant to Sections 1 and 4.1, by Executive for Good Reason pursuant to Section 4.3, or by the Company without
Cause pursuant to Section 4.5, in any such case, in anticipation of and/or within twelve (12) months following a Change in Control
(as defined below), provided that Executive (or her legal representative, if applicable) executes a Release and the Release becomes
effective and irrevocable prior to the end of the Review Period, Executive shall be entitled to the following:

 

(i)a lump sum cash
amount equal to twelve (12) months of Executive’s base salary in effect at the time of Executive’s termination, such
payment to be made on the Payment Date;

 

(ii)for up to twelve
(12) months after Executive’s date of termination, the Company shall continue Executive’s participation in the Company’s
group health and dental plan and shall pay that portion of the premiums that the Company paid on behalf of Executive and her dependents
during Executive’s employment; provided, however, that if the Company’s health insurance plan and/or
dental insurance plan does not permit Executive’s continued participation in such plan after her termination of employment,
then the Company shall pay that portion of the premiums associated with COBRA continuation coverage that the Company paid on behalf
of Executive and her dependents during Executive’s employment,
including administrative fees, on Executive’s behalf for so long as COBRA continuation coverage is available,
up to twelve (12) months; and provided, further, that if Executive becomes employed with another employer during
the period in which continued health insurance and/or dental insurance is being provided pursuant to this Section, the Company
shall not be required to continue the relevant benefits, or if applicable, to pay the relevant costs of COBRA, if Executive becomes
covered under a health insurance plan and/or dental plan of the new employer. (For purposes of this Section 5.3(a)(ii), the term
“Executive” shall include, to the extent applicable, Executive’s spouse and any of her dependents covered under
the Company’s group health plan and/or dental plan prior to her termination of employment.)

 

(b)As used herein,
“Change in Control” shall occur or be deemed to occur if any of the following events occur:

 

(i)any sale, lease,
exchange or other transfer (in one transaction or a series of transactions) of all or substantially all of the assets of the Company;
or

 

(ii)any consolidation
or merger of the Company (including, without limitation, a triangular merger) where the shareholders of the Company immediately
prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own, directly or indirectly,
shares representing in the aggregate more than fifty percent (50%) of the combined voting power of all the outstanding securities
of the corporation issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any); or

 

    	6

    	 

    

(iii)a third person,
including a “person” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) (but other than (x) the Company, (y) any employee benefit plan of the Company, or (z) investors purchasing equity securities
of the Company pursuant to a financing or a series of financings approved by the Board of Directors of the Company) becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly, of Controlling Securities (as defined
below). “Controlling Securities” shall mean securities representing 25% or more of the total number of votes that may
be cast for the election of the directors of the Company.

 

5.4Effect of Termination
on Stock Options and Other Equity Compensation.

 

(a)In the event
of Executive’s termination by Executive by reason of non-renewal of the Agreement Term pursuant to Sections 1 and 4.1, by
the Company for Cause pursuant to Section 4.2, or by Executive without Good Reason pursuant to Section 4.5, all unvested stock
options and other equity-based awards granted to Executive before and after the date of this Agreement shall be immediately forfeited
upon the effective date of such termination of employment or as otherwise provided in the award agreement; provided, that,
Executive shall have until the earlier of expiration date of the option or ninety (90) days from the date of termination of Executive
to exercise all vested options unless the stock plan pursuant to which the option is granted requires earlier termination in connection
with a liquidation or sale of the Company.

 

(b)In the event
of Executive’s termination by the Company by reason of non-renewal of the Agreement Term pursuant to Sections 1 and 4.1,
by Executive for Good Reason pursuant to Section 4.3, or by the Company without Cause pursuant to Section 4.5, and provided that
Executive (or her legal representative, if applicable) executes a Release and the Release becomes effective and irrevocable prior
to the end of the Review Period, that number of Executive’s unvested stock options and other equity-based awards that would
otherwise have vested from the effective date of Executive’s termination to the first anniversary of such date shall vest
as of the date the Release is effective and irrevocable and Executive (or her estate or legal representative, if applicable) shall
have until the earlier of the expiration date of the option or one (1) year from the date of termination of Executive’s employment
to exercise all vested options unless the stock plan pursuant to which the option is granted requires earlier termination in connection
with a liquidation or sale of the Company.

 

(c)In the event
Executive’s employment with the Company is terminated by the Company by reason of non-renewal of the Agreement Term pursuant
to Sections 1 and 4.1, by Executive for Good Reason pursuant to Section 4.3, or by the Company without Cause pursuant to Section
4.5, in any such case, in anticipation of and/or within twelve (12) months following a Change in Control, in lieu of the acceleration
provided for pursuant to Section 5.4(b) above, provided that Executive (or her legal representative, if applicable) executes a
Release and the Release becomes effective and irrevocable prior to the end of the Review Period, all of Executive’s unvested
stock options and other equity-based awards then in effect shall vest as of the date the Release is effective and irrevocable and
Executive (or her estate or legal representative, if applicable) shall have until the earlier of the expiration date of the option
or one (1) year from the date of termination of Executive’s employment to exercise all vested options unless the stock plan
pursuant to which the option is granted requires earlier termination in connection with a liquidation or sale of the Company.

 

    	7

    	 

    

(d)In the event
Executive’s employment with the Company is terminated by reason of disability pursuant to Section 4.4, all unvested stock
and stock options granted to Executive before and after the date of this Agreement shall be immediately forfeited upon the effective
date of such termination of employment or as otherwise provided in the option agreement; provided, that, Executive
shall have until the earlier of the expiration date of the option or one (1) year from the date of termination of Executive’s
employment to exercise all vested options unless the stock plan pursuant to which the option is granted requires earlier termination
in connection with a liquidation or sale of the Company.

 

5.5Review Period.
In the event that the Review Period begins in one taxable year of the Executive and ends in a later taxable year, any payments
contingent upon Executive’s execution without revocation of the Release prior to the end of the Review Period will be made
or commence to be paid on the first payroll date in the later taxable year. In no event will any payments be made or commence to
be paid later than the ninetieth (90th) day following the Executive’s date of termination.

 

5.6Limitation
on Benefits. The Company will make the payments under this Agreement without regard to whether the deductibility of such payments
(or any other payments or benefits) would be limited or precluded by Section 280G of the Internal Revenue Code of 1986, as amended
(the “Code”) and without regard to whether such payments would subject Executive to the federal excise tax levied on
certain “excess parachute payments” under Code Section 4999 of the Code; provided, however, that if the Total After-Tax
Payments (as defined below) would be increased by the reduction or elimination of any payment and/or other benefit (including the
vesting of the options) under this Agreement, then the amounts payable under this Agreement will be reduced or eliminated as follows,
if possible: (i) first, by reducing or eliminating any cash payments or other benefits (other than the vesting of the options)
and (ii) second, by reducing or eliminating the vesting of that options that occurs as a result of such Change in Control (as provided
above), to the extent necessary to maximize the Total After-Tax Payments. The Company’s independent, certified public accounting
firm will determine whether and to what extent payments or vesting under this agreement are required to be reduced in accordance
with the preceding sentence. For purposes of this Agreement, “Total After-Tax Payments” means the total of all “parachute
payments” (as that term is defined in Section 280G(b)(2) of the Code) made to or for the benefit of Executive (whether made
under the Agreement or otherwise), after reduction for all applicable federal taxes (including, without limitation, the tax described
in Section 4999 of the Code). The Company agrees to pay for all costs associated with the determination of the payments or vesting
required to be reduced and for the avoidance of doubt, shall not be required to pay any taxes, penalties, interest or other expenses
to which Executive may be subject.

 

5.7Withholdings.
Payments made under this Section 5 shall be subject to applicable federal, state and local taxes and withholdings.  If the
payment of any COBRA or health insurance premiums would otherwise violate the nondiscrimination rules or cause the reimbursement
of claims to be taxable under the Patient Protection and Affordable Care Act of 2010, together with the Health Care and Education
Reconciliation Act of 2010 (collectively, the “Act”) or Section 105(h) of the Code, the Company paid premiums shall
be treated as taxable payments and be subject to imputed income tax treatment to the extent necessary to eliminate any discriminatory
treatment or taxation under the Act or Section 105(h) of the Code.

 

    	8

    	 

    

6.Notices.
All notices, requests, consents and other communications hereunder will be in writing, will be addressed, if to the Company, at
its principal corporate offices to the attention of the Legal Department, and if to Executive, at her address set forth on the
signature page hereto, or in either case, such other address as a party may designate by notice hereunder, and will be either (i) delivered
by hand, (ii) sent by overnight courier, or (iii) sent by registered or certified mail, return receipt requested, postage
prepaid. All notices, requests, consents and other communications hereunder will be deemed to have been given either (i) if
by hand, at the time of the delivery thereof to the receiving party at the address of such party set forth above, (ii) if
sent by overnight courier, on the next business day following the day such notice is delivered to the courier service, or (iii)
if sent by registered or certified mail, on the fifth business day following the day such mailing is made.

 

7.Absence of
Restrictions. Executive represents and warrants that she is not bound by any employment contracts, restrictive covenants
or other restrictions that prevent her from entering into employment with, or carrying out her responsibilities for, the Company,
or which are in any way inconsistent with any of the terms of this Agreement.

 

8.Entire Agreement.
This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether
written or oral relating to the subject matter of this Agreement, with the exception of the Invention, Non-Disclosure, and Non-Solicitation
Agreement, dated as of May 16, 2009, by and between the Company and Executive. Notwithstanding the foregoing, the parties to this
Agreement acknowledge that stock options and other equity awards may be granted by the Company to Executive under and pursuant
to the Intercept Pharmaceuticals, Inc. 2012 Equity Incentive Plan and any amendments thereto, as well as any additional plans,
and the award agreements related to such plans.

 

9.Amendment.
This Agreement may be amended or modified only by a written instrument executed by both the Company and Executive.

 

10.Governing
Law; Consent to Jurisdiction. This Agreement shall be construed, interpreted and enforced in accordance with the laws of the
State of New York without regard to conflict of law principles. Any action, suit or other legal proceeding arising under or relating
to any provision of this Agreement shall be commenced only in a court of the State of New York (or, if appropriate, a federal court
located within the State of New York), and the Company and Executive each consents to the jurisdiction of such a court. The Company
and Executive each hereby irrevocably waive any right to a trial by jury in any action, suit or other legal proceeding arising
under or relating to any provision of this Agreement.

 

11.Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors
and assigns, including any corporation with which, or into which, the Company may be merged or which may succeed to the Company’s
assets or business, provided, however, that the obligations of Executive are personal and shall not be assigned by
her. Notwithstanding the foregoing, if Executive dies the compensation and benefits stated in this Agreement will be paid to her
beneficiary or her estate if no beneficiary.

 

    	9

    	 

    

12.Miscellaneous.

 

12.1No Waiver.
No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other
right. A waiver or consent given on any one occasion shall be effective only in that instance and shall not be construed as a bar
or waiver of any right on any other occasion.

 

12.2Captions.
The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the
scope or substance of any section of this Agreement.

 

12.3Severability.
In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability
of the remaining provisions shall in no way be affected or impaired thereby.

 

12.4Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument. This Agreement may be delivered by facsimile, and facsimile signatures shall be treated
as original signatures for all applicable purposes.

 

12.5Blue Penciling.
To the extent that any provision herein or in any plan of nonqualified deferred compensation that this document is a part of contravenes
the requirements of Code Section 409A or the regulations thereunder), such provision shall be appropriately modified in accordance
with available IRS guidance (including without limitation IRS Notice 2010-6 and related guidance) so that Executive is not subject
to the adverse effects of Code Section 409A but will nevertheless retain, to the extent possible, the economic benefit of the provision.

 

12.6Section 409A.

 

(a)The payments
under this Agreement are intended either to be exempt from Section 409A of the Code under the short-term deferral, separation pay,
or other applicable exception, or to otherwise comply with Section 409A. The parties agree that this Agreement shall be administered
in a manner consistent with such intent. For purposes of Section 409A, all payments under this Agreement shall be considered separate
payments. If any amount or benefit payable to the Executive under this Agreement upon a “termination of employment”
is determined by the Company to constitute a “deferral of compensation” for purposes of Section 409A (after taking
into account any applicable exceptions), such amount or benefit shall not be paid or provided until the Executive has also experienced
a “separation from service” from the Company within the meaning of Section 409A. Notwithstanding any provision
to the contrary, to the extent Executive is considered a specified employee under Section 409A and would be entitled during the
six-month period beginning on Executive’s separation from service to a payment that is not otherwise excluded under Section
409A, such payment will not be made until the earlier of the six-month anniversary of Employee’s separation from service
or death; provided that the first payment made after the delay
shall include all amounts that would have been paid earlier but for such six (6) month delay. At the
request of the Executive, the Company shall set aside those payments that would otherwise be made in such six-month period in a
trust that is in compliance with Rev. Proc. 92-64. 

 

    	10

    	 

    

(b)If
an expense reimbursement or provision of in-kind benefit provided to the Executive under this Agreement is not exempt from Section
409A of the Code, the following rules apply: (i) in no event shall any reimbursement be paid after the last day of the taxable
year following the taxable year in which the expense was incurred; (ii) the amount of reimbursable expenses incurred or provision
of in-kind benefits in one tax year shall not affect the expenses eligible for reimbursement or the provision of in-kind benefits
in any other tax year; and (iii) the right to reimbursement for expenses or provision of in-kind benefits is not subject to liquidation
or exchange for any other benefit.

 

(c)The parties
agree to negotiate in good-faith the amendment of this Agreement, as necessary, to avoid any violations of Section 409A in
a manner that preserves the original intent of the parties to the extent reasonably possible. Notwithstanding the foregoing, the
Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no
event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred
by Executive on account of non-compliance with Section 409A.

 

[signature page follows]

 

    	11

    	 

    

IN WITNESS WHEREOF,
the parties hereto have executed this Agreement as of the day and year set forth above.

 

 

	 	THE COMPANY:
	 	 
	 	INTERCEPT PHARMACEUTICALS, INC.
	 	 
	 	 
	 	 
	 	By: 	/s/ Mark Pruzanski
	 	 	Name: Mark Pruzanski, MD

Title: President and Chief Executive Officer

 

 

	 	EXECUTIVE:
	 	 
	 	 
	 	 
	 	By: 	/s/ Barbara Duncan
	 	 	Name: Barbara Duncan
	 	 	 
	 	 	 
	 	 	 
	 	 	Address
for Notice Purposes:
	 	 	__________________________________
	 	 	__________________________________
	 	 	__________________________________
	 	 	 
	 	 	 

 

    	12

    	 

    

Exhibit A

 

RELEASE
OF CLAIMS

 

FOR AND IN CONSIDERATION
OF the payments and benefits (the “Separation Benefits”) to be provided to me in connection with the separation
of my employment, in accordance with the Employment Agreement between Intercept Pharmaceuticals, Inc. (the “Company”)
and me dated as May 14, 2013 (the “Agreement”), which Separation Benefits are conditioned on my signing this
Release of Claims (“Release”) and which I will forfeit unless I execute and do not revoke this Release of Claims, I,
on my own behalf and on behalf of my heirs and estate, voluntarily, knowingly and willingly release and forever discharge the Company,
its subsidiaries, affiliates, parents, and stockholders, together with each of those entities’ respective officers, directors,
stockholders, employees, agents, fiduciaries and administrators (collectively, the “Releasees”) from any and
all claims and rights of any nature whatsoever which I now have or in the future may have against them up to the date I execute
this Release, whether known or unknown, suspected or unsuspected. This Release includes, but is not limited to, any rights or claims
relating in any way to my employment relationship with the Company or any of the other Releasees or the termination thereof, any
contract claims (express or implied, written or oral), including, but not limited to, the Agreement, or any rights or claims under
any statute, including, without limitation, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the
Older Workers’ Benefit Protection Act, the Rehabilitation Act of 1973 (including Section 504 thereof), Title VII of the 1964
Civil Rights Act, the Civil Rights Act of 1866 (42 U.S.C. § 1981), the Civil Rights Act of 1991, the Equal Pay Act, the National
Labor Relations Act, the Worker Adjustment and Retraining Notification Act, the Family Medical Leave Act, the Lilly Ledbetter Fair
Pay Act, the Genetic Information Non-Discrimination Act, the New York State Human Rights Law, the New York City Human Rights Law,
and the Employee Retirement Income Security Act of 1974, all as amended, and any other federal, state or local law. This Release
specifically includes, but is not limited to, any claims based upon the right to the payment of wages, incentive
and performance compensation, bonuses, equity grants, vacation, pension benefits, 401(k) Plan benefits, stock benefits or
any other employee benefits, or any other rights arising under federal, state or local laws prohibiting discrimination and/or harassment
on the basis of race, color, age, religion, sexual orientation, religious creed, sex, national origin, ancestry, alienage, citizenship,
nationality, mental or physical disability, denial of family and medical care leave, medical condition (including cancer and genetic
characteristics), marital status, military status, gender identity, harassment or any other basis prohibited by law.

 

As
a condition of the Company entering into this Release, I further represent that I have not filed against the Company or
any of the other Releasees, any complaints, claims or lawsuits with any arbitral tribunal, administrative agency, or court
prior to the date hereof, and that I have not transferred to any other person any such complaints, claims or lawsuits. I
understand that by signing this Release , I waive my right to any monetary recovery in connection with a local, state or
federal governmental agency proceeding and I waive my right to file a claim seeking monetary damages in any arbitral
tribunal, administrative agency, or court. This Release does not: (i) prohibit or restrict me from communicating, providing
relevant information to or otherwise cooperating with the U.S. Equal Employment Opportunity Commission or any other
governmental authority with responsibility for the administration of fair employment practices laws regarding a possible
violation of such laws or responding to any inquiry from such authority, including an inquiry about the existence of this
Release or its underlying facts, or (ii) require me to notify the Company of such communications or inquiry.
Furthermore, notwithstanding the foregoing, this Release does not include and will not preclude: (a) rights or claims to
vested benefits under any applicable retirement and/or pension plans; (b) rights under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”); (c) claims for unemployment compensation; (d) rights to defense and
indemnification, if any, from the Company for actions or inactions taken by me in the course and scope of my employment with
the Company and its parents, subsidiaries and/or affiliates; (e) any rights I may have to obtain contribution as permitted by
law in the event of entry of judgment against the Company as a result of any act or failure to act for which I and the
Company are held jointly liable; (f) any rights to vested equity that vested prior to or because of the termination of my
employment; and/or (g) any actions to enforce the Agreement.

    	13

    	 

    

 

I acknowledge that,
in signing this Release, I have not relied on any promises or representations, express or implied, other than those that are set
forth expressly herein or in the Agreement and that are intended to survive separation from employment, in accordance with the
terms of the Agreement.

 

I further acknowledge
that:

 

		(1)	I first received this Release on the date of the Agreement to which it is attached as Exhibit A;

 

		(2)	I understand that, in order for this Release to be effective, I may not sign it prior to the date
of my separation of employment with the Company but that if I wish to receive the Separation Benefits, I must sign and return this
Release prior to the sixtieth (60th) day following my separation of employment;

 

		(3)	I have carefully read and understand this Release;

 

		(4)	The Company advised me to consult with an attorney and/or any other advisors of my choice before
signing this Release;

 

		(5)	I understand that this Release is legally binding and
by signing it I give up certain rights;

 

		(6)	I have voluntarily chosen to enter into this Release and have not been forced or pressured in any
way to sign it;

 

		(7)	I acknowledge and agree that the Separation Benefits are contingent on execution of this Release,
which releases all of my claims against the Company and the Releasees, and I knowingly
and voluntarily agree to release the Company and the Releasees from any and all claims I may have, known or unknown,
in exchange for the benefits I have obtained by signing, and that these benefits are in addition to any benefit I would have otherwise
received if I did not sign this Release;

 

    	14

    	 

    

		(8)	I have seven (7) days after I sign this Release to revoke it by notifying the Company in writing.
The Release will not become effective or enforceable until the seven (7) day revocation period has expired;

 

		(9)	This Release includes a waiver of all rights and claims
I may have under the Age Discrimination in Employment Act of 1967 (29 U.S.C. §621 et seq.); and

 

		(10)	This Release does not waive any rights or claims that may arise after this Release becomes effective,
which is seven (7) days after I sign it, provided that I do not exercise my right to revoke this Agreement.

 

Intending to be legally
bound, I have signed this Release as of the date written below.

 

 

 

	Signature:_____________________	______________________________
	Barbara Duncan	   Date signed

 

 

 

    	15

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