UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

SCHEDULE TO

(Rule 13e-4)

 

Tender Offer Statement Under Section 14(d)(1) or 13(e)(1)

of the Securities Exchange Act of 1934

 

 

 

INTERCEPT PHARMACEUTICALS, INC.

(Name of Subject Company (Issuer) and Filing Person (Offeror))

 

Options to Purchase Common Stock, Par Value $0.001 Per Share

(Title of Class of Securities)

 

45845P108

(CUSIP Number of Class of Securities)

 

Mary J. Grendell

Deputy General Counsel and Corporate Secretary

Intercept Pharmaceuticals, Inc.

10 Hudson Yards, 37th Floor

New York, NY 10001

(646) 747-1000

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Filing Person)

 

 

 

CALCULATION OF FILING FEE

 

Transaction Valuation(1) Amount of Filing Fee(2)
$2,014,589.76 $219.79

 

(1) Estimated solely for purposes of calculating the amount of the filing fee. The calculation of the transaction valuation assumes that all stock options to purchase shares of the issuer’s common stock that may be eligible for repricing in the offer will be tendered pursuant to this offer. This calculation assumes stock options to purchase an aggregate of 733,613  shares of the issuer’s common stock, having an aggregate value of $2,014,589.76 as of August 12, 2021, calculated based on the Black-Scholes option pricing model, will be exchanged or cancelled pursuant to this offer.
(2) The amount of the filing fee, calculated in accordance with Rule 0-11(b) of the Securities Exchange Act of 1934, as amended, equals $109.10 per $1,000,000 of the aggregate amount of the Transaction Valuation (or 0.01091% of the aggregate Transaction Valuation). The Transaction Valuation set forth above was calculated for the sole purpose of determining the filing fee and should not be used for any other purpose.

 

¨  Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

Amount Previously Paid:   Not applicable   Filing Party:   Not applicable
Form or Registration No.:   Not applicable   Date Filed:   Not applicable

 

¨  Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

 

Check the appropriate boxes below to designate any transactions to which the statement relates:

 

  ¨  third party tender offer subject to Rule 14d-1.

  x  Issuer tender offer subject to Rule 13e-4.

  ¨  going-private transaction subject to Rule 13e-3.

  ¨  amendment to Schedule 13D under Rule 13d-2.

 

Check the following box if the filing is a final amendment reporting the results of the tender offer:  ☐

 

If applicable, check the appropriate box(es) below to designate the appropriate rule provision(s) relied upon:

 

  ¨  Rule 13e-4(i) (Cross-Border Issuer Tender Offer)

  ¨  Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)

 

 

 

 

 

 

Item 1. Summary Term Sheet.

 

The information set forth under “Summary Term Sheet—Overview” and “Summary Term Sheet—Questions and Answers” in the Offer to Exchange Eligible Options for New Options, dated August 16, 2021 (the “Exchange Offer”), attached hereto as Exhibit (a)(1)(A), is incorporated herein by reference.

 

Item 2. Subject Company Information.

 

(a) Name and Address.

 

Intercept Pharmaceuticals, Inc., a Delaware corporation (the “Company”), is the issuer of the securities subject to the Exchange Offer. The Company’s principal executive offices are located at 10 Hudson Yards, 37th Floor, New York, NY 10001 and the telephone number of its principal executive offices is (646) 747-1000.

 

(b) Securities.

 

This Tender Offer Statement on Schedule TO relates to an offer by the Company to certain employee optionholders (“Eligible Participants”), subject to specified conditions, to exchange some or all of their eligible outstanding options to purchase shares of common stock, par value $0.001 per share (the “Common Stock”), for new options to purchase shares of the Company’s Common Stock. Members of the Company’s board of directors and the Company’s executive officers are not eligible to participate in this offer.

 

An option is eligible for exchange (an “Eligible Option”) if it is held by an Eligible Participant, was granted under the Company’s 2012 Equity Incentive Plan (the “2012 Equity Plan”), is outstanding as of the Expiration Time (as defined in the Exchange Offer), has an exercise price per share greater than $50.75 and was granted before February 15, 2020. As of August 16, 2021, there were approximately 733,613 Eligible Options outstanding.

 

 

 

 

Pursuant to the Exchange Offer, in exchange for the tender and cancellation of Eligible Options, the Company will grant new options (each, a “New Option”) following the Expiration Time. The total number of shares of Common Stock underlying a New Option with respect to an exchanged Eligible Option will be determined by dividing the number of shares of Common Stock underlying the exchanged Eligible Option by the applicable exchange ratio and rounding to the nearest share, subject to the terms and conditions described in the Exchange Offer and in the related accompanying Election Form, the form of which is attached hereto as Exhibit (a)(1)(C).

 

The information set forth in the Exchange Offer under “Summary Term Sheet—Overview” and “Summary Term Sheet—Questions and Answers” and the information set forth under Section 1 (“Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer”), Section 5 (“Acceptance of Eligible Options for Exchange; Grant of New Options”) and Section 7 (“Price Range of Our Common Stock”) of the Offering Memorandum for the Exchange Offer contained in the Exchange Offer (the “Offering Memorandum”) are incorporated herein by reference.

 

(c) Trading Market and Price.

 

The information set forth under Section 7 (“Price Range of Our Common Stock”) of the Offering Memorandum is incorporated herein by reference.

 

Item 3. Identity and Background of Filing Person.

 

(a) Name and Address.

 

The Company is both the filing person and the subject company. The information set forth under Item 2(a) above and under Section 9 (“Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Our Securities”) of the Offering Memorandum is incorporated herein by reference.

 

The address of each executive officer and director of the Company is:

 

Intercept Pharmaceuticals, Inc.

10 Hudson Yards, 37th Floor

New York, NY 10001

 

The directors and executive officers of the Company are set forth below:

 

Executive Officers   Title
Jerome Durso   President and Chief Executive Officer
Bryan Ball   Chief Quality Officer
M. Michelle Berrey   President, R&D; Chief Medical Officer
Gail Cawkwell   Senior Vice President, Medical Affairs, Safety & Pharmacovigilance
Lisa DeFrancesco   Senior Vice President, Corporate Affairs & Investor Relations
David Ford   Chief Human Resources Officer
Jared Freedberg   General Counsel  
Linda Richardson   EVP, Chief Commercial Officer
Andrew Saik   EVP, Chief Financial Officer
Rocco Venezia   Chief Accounting Officer and Treasurer

 

 

 

 

Directors    
Paolo Fundaro   Director
Jerome Durso   Director
Srinivas Akkaraju   Director
Luca Benatti   Director
Daniel Bradbury   Director
Keith Gottesdiener   Director
Nancy Miller-Rich   Director
Mark Pruzanski   Director
Dagmar Rosa-Bjorkeson   Director
Gino Santini   Director
Glenn Sblendorio   Director

 

Item 4. Terms of the Transaction.

 

(a) Material Terms.

 

The information set forth in the Exchange Offer under “Summary Term Sheet—Overview” and “Summary Term Sheet—Questions and Answers” and the information set forth in the Offering Memorandum under Section 1 (“Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer”), Section 3 (“Procedures for Tendering Eligible Options”), Section 4 (“Withdrawal Rights”), Section 5 (“Acceptance of Eligible Options for Exchange; Grant of New Options”), Section 6 (“Conditions of the Exchange Offer”), Section 8 (“Information Concerning Intercept; Financial Information”), Section 10 (“Accounting Consequences of the Exchange Offer”), Section 11 (“Legal Matters; Regulatory Approvals”), Section 12 (“Material United States Tax Consequences”) and Section 13 (“Extension of the Exchange Offer; Termination; Amendment”) are incorporated herein by reference.

 

(b) Purchases.

 

The information set forth under Section 9 (“Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Our Securities”) of the Offering Memorandum is incorporated herein by reference.

 

Item 5. Past Contacts, Transactions, Negotiations and Agreements.

 

(e) Agreements Involving the Subject Company’s Securities.

 

The information set forth under Section 9 (“Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Our Securities”) of the Offering Memorandum is incorporated herein by reference. The documents incorporated herein by reference as Exhibit (d)(1) through Exhibit (d)(9) also contain information regarding agreements relating to securities of the Company.

 

Item 6. Purposes of the Transaction and Plans or Proposals.

 

(a) Purposes.

 

The information set forth under Section 2 (“Purpose of the Exchange Offer; Additional Considerations”) of the Offering Memorandum is incorporated herein by reference.

 

 

 

 

(b) Use of Securities Acquired.

 

The information set forth under Section 5 (“Acceptance of Eligible Options for Exchange; Grant of New Options”) of the Offering Memorandum is incorporated herein by reference.

 

(c) Plans.

 

The information set forth under Section 2 (“Purpose of the Exchange Offer; Additional Considerations”) of the Offering Memorandum is incorporated herein by reference.

 

Item 7. Source and Amount of Funds or Other Consideration.

 

(a) Source of Funds.

 

The information set forth under Section 14 (“Consideration; Fees and Expenses”) of the Offering Memorandum is incorporated herein by reference.

 

(b) Conditions.

 

The information set forth under Section 6 (“Conditions of the Exchange Offer”) of the Offering Memorandum is incorporated herein by reference.

 

(d) Borrowed Funds.

 

Not applicable.

 

Item 8. Interest in Securities of the Subject Company.

 

(a) Securities Ownership.

 

The information set forth under Section 9 (“Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Our Securities”) of the Offering Memorandum is incorporated herein by reference.

 

(b) Securities Transactions.

 

The information set forth under Section 9 (“Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Our Securities”) of the Offering Memorandum is incorporated herein by reference.

 

Item 9. Persons/Assets, Retained, Employed, Compensated or Used.

 

(a) Solicitations or recommendations.

 

Not applicable.

 

Item 10. Financial Statements.

 

(a) Financial Information.

 

The information set forth under Section 8 (“Information Concerning Intercept; Financial Information”), including Schedule A, and Section 15 (“Additional Information”) of the Offering Memorandum is incorporated herein by reference.

 

(b) Pro Forma Information.

 

Not applicable.

 

 

 

 

Item 11. Additional Information.

 

(a) Agreements, Regulatory Requirements and Legal Proceedings.

 

  (1) The information set forth under Section 9 (“Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Our Securities”) of the Offering Memorandum is incorporated herein by reference.

 

  (2) The information set forth under Section 11 (“Legal Matters; Regulatory Approvals”) of the Offering Memorandum is incorporated herein by reference.

 

  (3) Not applicable.

 

  (4) Not applicable.

 

  (5) Not applicable.

 

(c) Other Material Information.

 

Not applicable.

 

Item 12. Exhibits.

 

Exhibit
Number
  Description
(a)(1)(A)   Offer to Exchange Eligible Options for New Options, dated August 16, 2021.
   
(a)(1)(B)   Form of Announcement Email to Eligible Participants.
   
(a)(1)(C)   Election Form on the Exchange Website.
   
(a)(1)(D)   Notice of Withdrawal of Election Form on the Exchange Website.
   
(a)(1)(E)   Form of Email Confirming Receipt of Election Form.
   
(a)(1)(F)   Form of Email Confirming Receipt of Notice of Withdrawal of Election Form.
   
(a)(1)(G)   Form of Reminder Email to Eligible Participants Regarding the Expiration of the Exchange Offer.
   
(a)(1)(H)   Form of Email to Eligible Participants Confirming Acceptance of Eligible Options.
   
(a)(1)(I)   Form of Email Notice Regarding Rejection of Options for Exchange.
   
(a)(1)(J)   Form of Expiration Notice Email.
   
(a)(1)(K)   Form of Registration Email.
     
(a)(1)(L)   Form of New Option Agreement.
     
(a)(1)(M)   Eligible Participant Communication, sent on August 16, 2021.
     
(a)(5)(A)   Option Exchange Program Overview Video Presentation Transcript.

 

 

 

 

(a)(5)(B)   Tender Offering Video Presentation Transcript.
     
(a)(5)(C)   Option Exchange Example Video Presentation Transcript.
   
(a)(5)(D)   Option Exchange Webinar Presentation Slides.
     
(a)(5)(E)   Option Exchange Webinar Presentation Script.
     
(b)   Not applicable
     
(d)(1)   Intercept Pharmaceuticals, Inc. 2012 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.2.1 to the Company’s Registration Statement on Form S-1/A filed with the SEC on September 27, 2012).
     
(d)(2)   Form of Stock Option Grant Notice and Agreement for Directors (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 10, 2020).
     
(d)(3)   Form of Stock Option Grant Notice and Agreement for Employees and Consultants (incorporated herein by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K filed with the SEC on February 25, 2020).
     
(d)(4)   Form of Restricted Stock Unit Award Grant Notice and Agreement for Directors (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 10, 2020).
     
(d)(5)   Form of Restricted Stock Unit Award Grant Notice and Agreement for Employees and Consultants (incorporated herein by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K filed with the SEC on February 25, 2020).
     
(d)(6)   Form of Restricted Stock Award Grant Notice and Agreement for Directors (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 9, 2014).
     
(d)(7)   Form of Restricted Stock Award Grant Notice and Agreement for Employees and Consultants  (incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 9, 2014).
     
(d)(8)   Form of Performance Stock Unit Grant Notice and Agreement (incorporated herein by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K filed with the SEC on February 25, 2020).
     
(d)(9)   Form of Performance Share Grant Notice and Agreement (incorporated herein by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 10, 2018).
     
(g)   Not applicable
     
(h)   Not applicable

 

Item 13. Information Required by Schedule 13E-3.

 

Not applicable.

 

 

 

 

SIGNATURES

 

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

Date: August 16, 2021 INTERCEPT PHARMACEUTICALS, INC.
     
  By: /s/Rocco Venezia
    Rocco Venezia
    Chief Accounting Officer and Treasurer

 

 

 

 

Exhibit (a)(1)(A)

 

INTERCEPT PHARMACEUTICALS, INC.

 

10 HUDSON YARDS, 37th FLOOR 

NEW YORK, NEW YORK 10001

 

OFFER TO EXCHANGE ELIGIBLE OPTIONS FOR NEW OPTIONS

 

August 16, 2021

 

 

INTERCEPT PHARMACEUTICALS, INC.

 

SUMMARY TERM SHEET — OVERVIEW

 

OFFER TO EXCHANGE ELIGIBLE OPTIONS FOR NEW OPTIONS

 

This offer and withdrawal rights will expire at 11:59 p.m., Eastern Daylight Time, 

on Friday, September 17, 2021, unless extended 

(or at any time after 11:59 p.m., Eastern Daylight Time, on Tuesday, October 12, 2021 

if tendered securities have not yet been accepted)

 

By this Offer to Exchange Eligible Options for New Options (as the context requires, this document and the actions taken hereby, the “Exchange Offer”), Intercept Pharmaceuticals, Inc., which we refer to in this document as “we,” “us,” “our,” “Intercept” or the “Company,” is giving each Eligible Participant the opportunity to exchange one or more Eligible Options (as defined below) for New Options, as discussed below and in the Offering Memorandum for the Exchange Offer beginning on page 16 (the “Offering Memorandum”). Where the context requires, references herein to Intercept shall be deemed to include wholly-owned subsidiaries of Intercept.

 

The “Expiration Time” of the Exchange Offer is 11:59 p.m., Eastern Daylight Time, on September 17, 2021. If we extend the period of time during which this Exchange Offer remains open, the term “Expiration Time” will refer to the last time and date on which this Exchange Offer expires.

 

You are an “Eligible Participant” if:

 

  on the date the Exchange Offer commences, you are a current employee (not a consultant) of Intercept or one of our wholly-owned subsidiaries and have not submitted a notice of resignation or termination, or been notified by Intercept or such subsidiary that your employment relationship is being terminated;

 

  as of the Expiration Time, you continue to be employed by Intercept or one of our wholly-owned subsidiaries, and have not submitted a notice of resignation or termination, or been notified by Intercept or such subsidiary that your employment relationship is being terminated;

 

  you are not an executive officer of Intercept; and

 

  you are not a member of Intercept’s board of directors (the “Board”).

 

An “Eligible Option” is an outstanding option to purchase our common stock that:

 

  is held by an Eligible Participant;

 

  is outstanding as of the Expiration Time and was granted before February 15, 2020;

 

  has an exercise price per share greater than $50.75; and

 

  was granted under the Intercept Pharmaceuticals, Inc. 2012 Equity Incentive Plan (the “2012 Equity Plan”).

 

 

 

 

If you choose to participate in the Exchange Offer and tender Eligible Options for exchange, and if we accept your tendered Eligible Options, then we will cancel your tendered Eligible Options and grant you a new award of stock options (each, a “New Option”) with the following terms (collectively, the “New Option Terms”):

 

  Each New Option will have an exercise price per share equal to the closing price of our common stock reported on the Nasdaq Global Select Market (“Nasdaq”) on the date the New Option is granted.

 

  Each New Option will represent your right to purchase a number of shares of our common stock that is calculated using an exchange ratio based on the exercise price of your tendered Eligible Option. The chart below sets forth the applicable exchange ratios for outstanding Eligible Options based on the dollar range of the exercise prices of such Eligible Options.

 

Eligible Option Exercise Price Range   Exchange Ratio
(Surrendered Eligible
Options: New Options)*
$50.75** to $75.00   1.50 to 1
$75.01 to $115.00   1.75 to 1
$115.01 to $125.00   2.50 to 1
$125.01 and up   4.50 to 1

 

* Rounded to the nearest whole share
** Greater than $50.75

 

  Your New Options will be granted under the 2012 Equity Plan; excess shares resulting from the cancellation of Eligible Options will not be returned to the plan pool.

 

  Each New Option will be granted as a non-qualified stock option, regardless of whether the corresponding Eligible Option was an incentive stock option or a non-qualified stock option.

 

  Each New Option will have a maximum term of six and one-half (6.5) years from the date the New Option is granted.

 

  Each New Option will not be exercisable on the date it is granted, even if the corresponding Eligible Options had previously vested, and instead will vest on the first anniversary of the date the New Option is granted (with respect to vested Eligible Options that are exchanged) and on the second anniversary of the date the New Option is granted (with respect to unvested Eligible Options that are exchanged), subject in each case to continued employment through the applicable vesting date.

 

The commencement date of the Exchange Offer is August 16, 2021. We are making the Exchange Offer upon the terms and subject to the conditions described in the Offering Memorandum and in the related Election Form distributed with the Offering Memorandum. The Exchange Offer is voluntary with respect to each Eligible Option you hold. You are not required to participate in the Exchange Offer. If you hold more than one option grant that qualifies as an Eligible Option and elect to participate in the Exchange Offer, you will be allowed to tender for exchange as few or as many of your Eligible Option grants as you wish; however, you must tender all of the shares underlying any selected Eligible Option grant (i.e., all options granted to you on the same date must receive the same treatment). Eligible Options properly tendered in this Exchange Offer and accepted by us for exchange will be cancelled, and your New Options will be granted with the New Option Terms effective promptly following the Expiration Time (such date, the “New Option Grant Date”).

 

See the “Risk Factors” section of this Exchange Offer beginning on page 14 for a discussion of risks and uncertainties that you should consider before agreeing to exchange your Eligible Options for New Options. You should consider, among other things, these risks and uncertainties before deciding whether to participate in the Exchange Offer.

 

Shares of our common stock are quoted on Nasdaq under the symbol “ICPT.” On August 13, 2021, the closing price of our common stock as reported on Nasdaq was $14.92 per share. We recommend that you obtain current market quotations for our common stock before deciding whether to elect to participate in the Exchange Offer.

 

2

 

 

You should direct any questions about the Exchange Offer or requests for assistance (including requests for additional copies of the Offering Memorandum, the Election Form, the Notice of Withdrawal or any other documents relating to the Exchange Offer) by email to totalrewards@interceptpharma.com.

 

IMPORTANT

 

If you choose to participate in the Exchange Offer, you must properly complete and submit the accompanying Election Form on the option exchange website before 11:59 p.m. Eastern Daylight Time, on Friday, September 17, 2021 (or such later date as may apply if the Exchange Offer is extended).

 

You are responsible for making sure that the Election Form is delivered as indicated above. You must allow for sufficient time to complete, sign and deliver your Election Form to ensure that we receive your Election Form before the Expiration Time.

 

You do not need to return your stock option agreements for your Eligible Options to be cancelled and exchanged in the Exchange Offer. We will provide you with a written confirmation of the cancellation of any such options along with a stock option agreement for your New Options shortly following the grant of your New Options. A form of Stock Option Agreement for the New Options is filed as an exhibit to the Tender Offer Statement on Schedule TO (the “Schedule TO”), as it may be amended, which was filed with the Securities and Exchange Commission (the “SEC”).

 

Although the Compensation Committee of the Board and the stockholders of Intercept have approved the Exchange Offer, consummation of the Exchange Offer is subject to the satisfaction or waiver of the conditions described in Section 6 of the Offering Memorandum (“Conditions of the Exchange Offer”). Neither we nor the Board (or the Compensation Committee) makes any recommendation as to whether you should participate, or refrain from participating, in the Exchange Offer. You must make your own decision whether to participate. You should consult your personal financial and tax advisors if you have questions about your financial or tax situation as it relates to the Exchange Offer.

 

Neither the SEC nor any state securities commission has approved or disapproved of this transaction or passed upon the fairness or merits of this transaction or the accuracy or adequacy of the information contained in the Exchange Offer. Any representation to the contrary is a criminal offense.

 

WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF AS TO WHETHER OR NOT YOU SHOULD PARTICIPATE IN THE EXCHANGE OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT, THE RELATED ELECTION FORMS AND THE OTHER DOCUMENTS REFERENCED HEREIN.

 

WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DOCUMENT, THE RELATED ELECTION FORMS AND THE OTHER DOCUMENTS REFERENCED HEREIN. IF ANYONE MAKES ANY RECOMMENDATION OR REPRESENTATION TO YOU OR GIVES YOU ANY INFORMATION, YOU SHOULD NOT RELY UPON THAT RECOMMENDATION, REPRESENTATION OR INFORMATION AS HAVING BEEN AUTHORIZED BY INTERCEPT.

 

3

 

 

SUMMARY TERM SHEET — QUESTIONS AND ANSWERS

  

OFFER TO EXCHANGE ELIGIBLE OPTIONS FOR NEW OPTIONS

 

Set forth below are answers to some of the questions that you may have about the Exchange Offer. This Summary Term Sheet does not contain all of the information that you should consider in deciding whether to participate in the Exchange Offer. We encourage you to carefully read the remainder of this Offer to Exchange Eligible Options for New Options and the accompanying Election Form. Where appropriate, we have included references to the relevant sections of the Offering Memorandum where you can find a more complete description of the topics in this summary.

 

No. Question Page
Q1. Why is Intercept making the Exchange Offer? 5
     
Q2. Who is eligible to participate in the Exchange Offer? 6
     
Q3. Which options are eligible for the Exchange Offer? 6
     
Q4. Will the terms and conditions of my New Options be the same as my exchanged options? 6
     
Q5. How many New Options will I receive for the Eligible Options I exchange? 7
     
Q6. Will my New Options have an exercise or purchase price? 7
     
Q7. When will my New Options vest? 7
     
Q8. Do I need to exercise my New Option in order to receive shares? 7
     
Q9. If I participate in the Exchange Offer, when will my New Options be granted? 8
     
Q10. What happens to my New Options if I terminate my employment with Intercept? 8
     
Q11. Must I participate in the Exchange Offer? 8
     
Q12. How should I decide whether or not to participate in the Exchange Offer? 9
     
Q13. How do I find out how many Eligible Options I have and what their exercise prices are? 9
     
Q14. Can I tender for exchange stock options that I have already fully exercised? 9
     
Q15. Can I tender for exchange the remaining unexercised portion of an Eligible Option that I have already partially exercised? 9
     
Q16. Can I tender for exchange a portion of an Eligible Option? 10
     
Q17. What if I am on an authorized leave of absence during the Exchange Offer? 10
     
Q18. What happens if my employment with Intercept terminates before the Expiration Time? 10
     
Q19. Will I owe taxes if I participate in the Exchange Offer? 10

 

4

 

 

Q20. Will I owe taxes if I do not participate in the Exchange Offer? 11
     
Q21. What will happen to my Eligible Options if I participate in the Exchange Offer? 11
     
Q22. Is it possible for my New Options to be or become "underwater"? 11
     
Q23. What happens to Eligible Options that I choose not to tender or that are not accepted for exchange in the Exchange Offer? 11
     
Q24. How long do I have to decide whether to participate in the Exchange Offer? 11
     
Q25. How do I tender my Eligible Options for exchange? 12
     
Q26. Can I withdraw previously tendered Eligible Options? 12
     
Q27. How will I know whether you have received my Election Form or my Notice of Withdrawal? 13
     
Q28. What will happen if I do not return my Election Form by the deadline? 13
     
Q29. What if I have any questions regarding the Exchange Offer? 13

 

***

 

Q1.Why is Intercept making the Exchange Offer?

 

We believe that the Exchange Offer is in the best interests of our stockholders and an important component of our strategy to maintain an equity compensation program that effectively motivates and retains our employees.

 

Since 2015, when our stock closed as high as $313.98 (on May 18, 2015), declines in our stock price have steadily eroded the retentive and incentive value of stock options granted. For example, on December 31, 2019, our stock closed at $123.92. The decline dramatically accelerated following the issuance of the complete response letter (“CRL”) from the U.S. Food and Drug Administration (“FDA”) in June 2020, after which our stock price declined to levels last seen in 2012.

 

During the course of 2020, our Compensation Committee began considering, with input from the Compensation Committee’s independent compensation consultant, whether conducting an option exchange program would assist with our retention efforts. These discussions were undertaken in the context of this sustained decline in the trading price of our shares, which has resulted in a situation where, as of April 6, 2021, Intercept had a total of approximately 2.7 million outstanding options, 98.0% of which were "underwater" (i.e., had an exercise price greater than the trading price of our shares) at a stock price of $23.53.

 

We have heard from employees that they view their existing underwater stock options as having little or no value due to the difference between the exercise prices of those options and the current trading price of our stock. With the uncertainty around Intercept created by a number of factors, of which the stock price is one, we have seen a meaningful uplift in staff turnover since receipt of the CRL, and we believe that the exchange of underwater stock options would help reduce the level of turnover in both the short and medium terms. The Board and the Compensation Committee believe that the underwater options no longer function as the retentive and incentive tool that they believe is necessary to retain employees and to motivate them to increase long-term stockholder value.

 

In addition to the benefits for employees, we expect that the option exchange will meaningfully reduce our equity overhang (the potential dilution represented by outstanding equity awards) by eliminating a sizable number of outstanding options that, under their current terms and conditions, are likely to remain unexercised for the foreseeable future. Under the ratios included in the terms of the Exchange Offer, these current options would be replaced by a smaller number of new options, thus meaningfully reducing the total number of outstanding options included in our overhang.

 

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We further believe that the Exchange Offer will permit us to enhance long-term stockholder value by restoring competitive incentives among the Eligible Participants who choose to participate in the Exchange Offer so they are further motivated to complete and deliver the important strategic and operational initiatives of our company.

 

See Section 2 of the Offering Memorandum (“Purpose of The Exchange Offer; Additional Considerations”) for more information.

 

Q2.Who is eligible to participate in the Exchange Offer?

 

Only Eligible Participants are eligible to participate in the Exchange Offer. You are an “Eligible Participant” if:

 

  on the date the Exchange Offer commences, you are a current employee (not a consultant) of Intercept or a wholly owned subsidiary and have not submitted a notice of resignation or termination, or been notified by Intercept or such subsidiary that your employment relationship is being terminated;

 

  as of the Expiration Time, you continue to be employed by Intercept or a wholly owned subsidiary, and have not submitted a notice of resignation or termination, or been notified by Intercept or such subsidiary that your employment relationship is being terminated;

 

  you are not an executive officer of Intercept; and

 

  you are not a member of Intercept’s board of directors (the “Board”).

 

See Section 1 of the Offering Memorandum (“Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer”) for more information.

 

Q3.Which options are subject to the Exchange Offer?

 

Under the Exchange Offer, Eligible Participants will be able to elect to tender outstanding Eligible Options for exchange.

 

An “Eligible Option” is an outstanding option that:

 

  is held by an Eligible Participant;

 

  is outstanding as of the Expiration Time and was granted before February 15, 2020;

 

  has an exercise price per share greater than $50.75; and

 

  was granted under the Intercept Pharmaceuticals, Inc. 2012 Equity Incentive Plan (the “2012 Equity Plan”).

 

See Section 1 of the Offering Memorandum (“Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer”) for more information.

 

Q4.Will the terms and conditions of my New Options be the same as my exchanged options?

 

No. The terms and conditions of your New Options, including the exercise price, vesting schedule, term and the potential tax treatment of your New Options, will or may be different than your tendered Eligible Options. The material differences between your Eligible Options and your New Options are described in this Summary Term Sheet and in the Offering Memorandum. A form of Stock Option Agreement for the New Options is filed as an exhibit to the Schedule TO.

 

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Q5.How many New Options will I receive for the Eligible Options I exchange?

 

The Option Exchange Program is not a one-for-one exchange. Each New Option will represent your right to purchase a number of shares of our common stock that is calculated using an exchange ratio based on the exercise price of your tendered Eligible Options. The chart below sets forth the applicable exchange ratio for outstanding Eligible Options based on the dollar range of the exercise prices of such Eligible Options.

 

Eligible Option Exercise Price Range   Exchange Ratio
(Surrendered Eligible
Options: New Options)*
$50.75** to $75.00   1.50 to 1
$75.01 to $115.00   1.75 to 1
$115.01 to $125.00   2.50 to 1
$125.01 and up   4.50 to 1

 

* Rounded to the nearest whole share
** Greater than $50.75

 

Q6.Will my New Options have an exercise or purchase price?

 

Your New Options will have an exercise price per share equal to the closing price of our common stock as reported on Nasdaq on the date that we grant your New Options.

 

See Section 1 of the Offering Memorandum (“Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer”) for more information and Section 7 of the Offering Memorandum (“Price Range of Our Common Stock”) for information concerning the historical prices of our common stock.

 

Q7.When will my New Options vest?

 

Each New Option will not be exercisable on the date it is granted, even if the corresponding tendered Eligible Option had previously vested, and instead will vest on the first anniversary of the date the New Option is granted (with respect to vested options that are exchanged) and on the second anniversary of the date the New Option is granted (with respect to unvested options that are exchanged), subject in each case to continued employment through the applicable vesting date.

 

As with our unvested equity awards generally, you must remain in continuous employment with Intercept through the applicable vesting date. In the event that your employment with Intercept terminates for any reason prior to the vesting date of any unvested portion of your New Option, such unvested portion shall be forfeited on your termination date.

 

Q8.Do I need to exercise my New Option in order to receive shares?

 

Yes. You will need to exercise the vested portion of your New Option and pay the purchase price to receive shares of common stock.

 

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Q9.If I participate in the Exchange Offer, when will my New Options be granted?

 

Unless we amend or terminate the Exchange Offer in accordance with its terms, we will grant you New Options in exchange for Eligible Options with respect to which you properly made a valid election (and did not validly revoke that election), effective as of the New Option Grant Date, which is currently expected to be on or around Monday, September 20, 2021. The New Options will reflect the New Option Terms.

 

See Section 1 of the Offering Memorandum (“Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer”) for more information.

 

Q10.What happens to my New Options if I terminate my employment with Intercept?

 

Vesting of your New Options will cease upon termination of your employment with Intercept. Your unvested New Options will be forfeited to us.

 

In general, pursuant to the 2012 Equity Plan, the vested portion of your New Options may be exercised for three months following termination of your service with Intercept unless (i) termination is due to your death or disability, in which case the New Option may be exercised (to the extent exercisable at the time of the termination of service) at any time within 12 months following your termination by your legal representative or legatee; or (ii) you are terminated for cause, in which case the New Option will cease to be exercisable immediately upon your termination. New Options will in no event be exercisable following the expiration of the maximum term of the New Option, which will be six and one-half (6.5) years from the date of grant of the New Option.

 

Nothing in the Exchange Offer should be construed to confer upon you the right to remain employed with Intercept. The terms of your employment with Intercept remain unchanged. We cannot guarantee or provide you with any assurance that you will not be subject to involuntary termination or that you will otherwise remain employed or engaged by Intercept until the expiration of the Exchange Offer, the grant date for the New Options or thereafter during the vesting period of the New Options. In addition, we cannot provide any assurance that your employment with Intercept will continue until or past the vesting date of any New Option issued in exchange for an Eligible Option that would have been vested and exercisable as of your termination date had the Eligible Option not been exchanged for a New Option.

 

See Section 1 of the Offering Memorandum (“Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer”) and Section 5 of the Offering Memorandum (“Acceptance of Eligible Options for Exchange; Grant of New Options”) for more information.

 

Q11.Must I participate in the Exchange Offer?

 

No. Participation in the Exchange Offer is completely voluntary. If you hold more than one option grant that qualifies as an Eligible Option and would like to participate in the Exchange Offer, you will be allowed to elect to tender for exchange as few or as many of your Eligible Option grants as you wish; however, you must tender all of the shares underlying any selected Eligible Option grant (i.e., all options granted to you on the same date must be subject to the same election). If you choose not to participate in the Exchange Offer, then your Eligible Options will remain outstanding and subject to their current terms.

 

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Q12.How should I decide whether or not to participate in the Exchange Offer?

 

We are providing substantial information to assist you in making your own informed decision. Please read all the information contained in the various sections of the Offering Memorandum below, including the information in Section 2 (“Purpose of The Exchange Offer; Additional Considerations”), Section 7 (“Price Range of Our Common Stock”), Section 8 (“Information Concerning Intercept; Financial Information”), Section 9 (“Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Our Securities”), Section 12 (“Material United States Tax Consequences”) and Section 15 (“Additional Information”) of the Offering Memorandum. You should seek further advice from your legal counsel, accountant and financial advisor. Participation in the Exchange Offer is entirely your decision and should be made based on your personal circumstances. No one from Intercept is, or will be, authorized to provide you with legal, tax, financial or other advice or recommendations regarding whether you should participate in the Exchange Offer.

 

In addition to reviewing the materials provided, please note the following:

 

  The Exchange Offer is not a one-for-one exchange. Any New Options you receive will be exercisable for  fewer shares than your Eligible Options, based on the applicable exchange ratio.

 

  Options provide value upon exercise only if the price of our common stock increases after the grant date. Also, because the exchange ratios for the option exchange are not one-for-one, it is possible that, at some point in the future, Eligible Options you choose to exchange could have been economically more valuable than the New Options you receive pursuant to the Exchange Offer.

 

  New Options granted in the Exchange Offer will have a maximum term of six and one-half (6.5) years, even if the Eligible Options you exchange had a longer term.

 

  You should carefully consider the potential tax consequences of your exchange of Eligible Options for New Options.

 

Please also review the “Risk Factors” that appear on page 14.

 

Q13.How do I find out how many Eligible Options I have and what their exercise prices are?

 

The Election Form distributed along with the Exchange Offer includes a list of your Eligible Options as of August 16, 2021. At any time during the Exchange Offer, you may access the option exchange website at https://equitysolutions.aon.com/UWSO/Participant/Account/Register (the “Option Exchange Portal”) or contact us via email at totalrewards@interceptpharma.com to confirm the number of option grants that you have and the grant dates, remaining term, exercise prices, vesting schedule and other information regarding such option grants.

 

Q14.Can I tender for exchange stock options that I have already fully exercised?

 

No. The Exchange Offer applies only to outstanding Eligible Options. An option that has been fully exercised is no longer outstanding and is therefore not an Eligible Option.

 

Q15.Can I tender for exchange the remaining unexercised portion of an Eligible Option that I have already partially exercised?

 

Yes. If you exercised an Eligible Option in part before August 16, 2021, the entire remaining unexercised portion of the Eligible Option can be tendered for exchange in the Exchange Offer.

 

See Section 3 of the Offering Memorandum (“Procedures for Tendering Eligible Options”) for more information.

 

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Q16.Can I tender for exchange a portion of an Eligible Option?

 

No partial exchange of an Eligible Option grant will be permitted. If you elect to tender an Eligible Option for exchange, you must tender the entire unexercised portion of that Eligible Option (i.e., all options granted to you on the same date must be subject to the same election). You may elect to tender as few or as many of your Eligible Option grants as you wish. If you attempt to tender a portion but not all of an outstanding Eligible Option grant, we will reject your tender of that particular grant. Such rejection will not affect any other Eligible Option grants that you have properly tendered for exchange.

 

See Section 3 of the Offering Memorandum (“Procedures for Tendering Eligible Options”) for more information.

 

Q17.What if I am on an authorized leave of absence during the Exchange Offer?

 

Any Eligible Participant who is on an authorized leave of absence will be eligible to participate in the Exchange Offer.

 

See Section 1 of the Offering Memorandum (“Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer”) for more information.

 

Q18.What happens if my employment relationship with Intercept terminates before the Expiration Time?

 

If you have tendered Eligible Options under the Exchange Offer and your employment relationship with Intercept terminates for any reason prior to the Expiration Time or if you have given or received notice of termination prior to the Expiration Time, you will no longer be eligible to participate in the Exchange Offer. Accordingly, we will not accept your Eligible Options for exchange, and you will not be eligible to receive New Options. In such a case, you may be able to exercise the vested portion of your existing Eligible Options for a limited time after your termination date, subject to and in accordance with their original terms.

 

Nothing in the Exchange Offer should be construed to confer upon you the right to remain an employee or other service provider of Intercept. The terms of your employment with Intercept remain unchanged. We cannot guarantee or provide you with any assurance that you will not be subject to involuntary termination or that you will otherwise remain in our service until the Expiration Time, the New Option Grant Date or thereafter. In addition, we cannot provide any assurance that your employment with Intercept will continue until or past the vesting date of any New Option granted in exchange for an Eligible Option that would have been vested and exercisable as of your termination date had the Eligible Option not been exchanged for a New Option.

 

See Section 1 (“Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer”) and Section 5 (“Acceptance of Eligible Options for Exchange; Grant of New Options”) of the Offering Memorandum for more information.

 

Q19.Will I owe taxes if I participate in the Exchange Offer?

 

Neither the acceptance of your Eligible Options for exchange nor the grant of any New Options will be a taxable event for U.S. federal income tax purposes.

 

You should consult with your tax advisor to determine the personal tax consequences of participating in the Exchange Offer. If you are an Eligible Participant who is subject to the tax laws of a country other than the United States or of more than one country, you should be aware that there may be additional or different tax consequences that may apply to you. We advise all Eligible Participants who may consider tendering their Eligible Options for exchange to consult with their own tax advisors with respect to the federal, state, local and foreign tax consequences of participating in the Exchange Offer.

 

See Section 12 of the Offering Memorandum (“Material United States Tax Consequences”) for more information regarding the United States tax aspects of the Exchange Offer.

 

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Q20.Will I owe taxes if I do not participate in the Exchange Offer?

 

Your decision not to participate in the Exchange Offer will not be a taxable event for U.S. federal income tax purposes.

 

See Section 12 of the Offering Memorandum (“Material United States Tax Consequences”) for more information.

 

Q21.What will happen to my Eligible Options if I participate in the Exchange Offer?

 

We will cancel all Eligible Options tendered by you and accepted by us for exchange in the Exchange Offer.

 

Q22.Is it possible for my New Options to be or become underwater?

 

Yes. The New Options will have an exercise price equal to the closing price of our common stock reported on Nasdaq on the New Option Grant Date. If the price of our common stock reported on Nasdaq falls below this exercise price at any time after the New Option Grant Date, then your New Options will be underwater.

 

Q23.What happens to Eligible Options that I choose not to tender or that are not accepted for exchange in the Exchange Offer?

 

Generally, there will be no impact to Eligible Options that you choose not to tender for exchange prior to the original Expiration Time. However, if any of your Eligible Options are currently treated as incentive stock options (“ISOs”), because the Exchange Offer is scheduled to remain open for thirty or more calendar days, the United States Internal Revenue Service may take the position that the Two-Year Holding Period (described below) with respect to such ISOs that are not tendered will re-set so as to commence on August 16, 2021.

 

We will not accept for exchange any options that are tendered that do not qualify as Eligible Options. If you tender an option that is not accepted for exchange, we will send you a separate email following the Expiration Time notifying you that your tendered option was not accepted for exchange.

 

Q24.How long do I have to decide whether to participate in the Exchange Offer?

 

The Exchange Offer expires at 11:59 p.m., Eastern Daylight Time, on September 17, 2021 (or such later date as may apply if the Exchange Offer is extended). We will not make any exceptions to this deadline. However, although we do not currently intend to do so, we may, in our sole discretion, extend the Expiration Time of the Exchange Offer at any time. If we extend the Exchange Offer, we will publicly announce the extension and the new Expiration Time no later than 9:00 a.m., Eastern Daylight Time, on the next business day after the last previously scheduled or announced Expiration Time.

 

See Section 13 of the Offering Memorandum (“Extension of Exchange Offer; Termination; Amendment”) for more information.

 

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Q25.    How do I tender my Eligible Options for exchange?

 

If you are an Eligible Participant, you may tender your Eligible Options for exchange at any time before the Exchange Offer expires at 11:59 p.m., Eastern Daylight Time, on September 17, 2021 (or such later date as may apply if the Exchange Offer is extended).

 

To validly tender your Eligible Options, you must complete and submit your Election Form through the Option Exchange Portal.

 

You do not need to return your stock option agreements relating to any tendered Eligible Options because they will be automatically cancelled effective as of the New Option Grant Date if we accept your Eligible Options for exchange. We will separately provide to you the grant documents relating to your New Options for your acceptance through Benefits OnLine following the New Option Grant Date.

 

Your Eligible Options will not be considered tendered until we receive your properly completed and signed Election Form. We must receive your properly completed and signed Election Form before 11:59 p.m., Eastern Daylight Time, on September 17, 2021 (or such later date as may apply if the Exchange Offer is extended). If you miss this deadline, you will not be permitted to participate in the Exchange Offer.

 

You are responsible for making sure that the Election Form is completed and submitted as indicated above. You must allow for sufficient time to complete and deliver your Election Form to ensure that we receive your Election Form before the Expiration Time.

 

We reserve the right to reject any or all tenders of Eligible Options that we determine are not in appropriate form or that we determine would be unlawful to accept. Subject to our rights to extend, terminate and amend the Exchange Offer, we expect to accept all properly tendered Eligible Options on September 17, 2021 following the Expiration Time.

 

See Section 3 of the Offering Memorandum (“Procedures for Tendering Eligible Options”) for more information.

 

Q26.    Can I withdraw previously tendered Eligible Options?

 

Yes. You may withdraw your tendered Eligible Options at any time during the period the Exchange Offer remains open, and unless we have accepted the Eligible Options pursuant to the Exchange Offer, you may also withdraw any tendered Eligible Options that have not been accepted at any time after 11:59 p.m., Eastern Daylight Time, on Tuesday, October 12, 2021.

 

To withdraw tendered Eligible Options, you must revoke your Election Form through the Option Exchange Portal prior to the Expiration Time.

 

If you miss the deadline to withdraw but remain an Eligible Participant, any previously tendered Eligible Options will be exchanged pursuant to the Exchange Offer. You may change your mind as many times as you wish, but you will be bound by the last properly submitted Election Form or Notice of Withdrawal that we receive before the Expiration Time.

 

You are responsible for making sure that you properly submit a Notice of Withdrawal for any tendered Eligible Option that you wish to subsequently withdraw. You must allow sufficient time to complete and deliver your Notice of Withdrawal to ensure that we receive it before the Expiration Time.

 

Once you have withdrawn Eligible Options, you may re-tender such Eligible Options prior to the Expiration Time by submitting a new Election Form and following the procedures for validly tendering Eligible Options in the Exchange Offer described in Question 25 above and Section 3 of the Offering Memorandum (“Procedures for Tendering Eligible Options”).

 

See Section 4 of the Offering Memorandum (“Withdrawal Rights”) for more information.

 

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Q27.    How will I know whether you have received my Election Form or my Notice of Withdrawal?

 

We will send you an email or other form of communication, as appropriate, to confirm receipt of your Election Form or Notice of Withdrawal, as applicable, shortly after we receive it. However, it is your responsibility to ensure that we receive your Election Form or Notice of Withdrawal, as applicable, prior to the Expiration Time.

 

See Section 3 of the Offering Memorandum (“Procedures for Tendering Eligible Options”) for more information.

 

Q28.    What will happen if I do not return my Election Form by the deadline?

 

If we do not receive an Election Form from you by the Expiration Time (or such later date as may apply if the Exchange Offer is extended), then all of your Eligible Options will remain outstanding at their original exercise price and subject to their original terms. If you prefer not to tender any of your Eligible Options for exchange in the Exchange Offer, you do not need to do anything.

 

See Section 3 of the Offering Memorandum (“Procedures for Tendering Eligible Options”) for more information.

 

Q29.    What if I have any questions regarding the Exchange Offer?

 

You should direct questions about the Exchange Offer (including requests for additional copies of the Exchange Offer and other Exchange Offer documents which we will promptly furnish to you at our expense) by email to totalrewards@interceptpharma.com.

 

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RISK FACTORS

 

Participation in the Exchange Offer involves a number of potential risks and uncertainties, including those described below. You should consider, among other things, these risks and uncertainties before deciding whether or not to request that we exchange your Eligible Options in the manner described in the Exchange Offer. You should carefully review the risk factors set forth below and those contained in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2021 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, filed with the SEC on July 29, 2021, as well as the other information provided in the Exchange Offer and the other materials that we have filed with the SEC, before making a decision as to whether or not to tender your Eligible Options. See Section 15 of the Offering Memorandum (“Additional Information”) for more information regarding reports we file with the SEC and how to obtain copies of or otherwise review these reports.

 

Portions of this Offer to Exchange (including information incorporated by reference) include "forward-looking statements." These forward-looking statements are often identified by terms and phrases such as "anticipate," "believe," "intend," "estimate," "expect," "continue," "should," "could," "may," "plan," "project," "predict," "will" and similar expressions, and speak only as of the date on which they are made. The matters discussed in these forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those projected, anticipated or implied in the forward-looking statements. The most significant of these risks, uncertainties and other factors are described in this Offer to Exchange and in our SEC filings referenced in the immediately preceding paragraph. We caution you not to place undue reliance on the forward-looking statements contained in this Offer to Exchange or in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. In addition, the safe harbor protections for forward-looking statements contained in the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, do not apply to any forward-looking statements we make in connection with the Offer to Exchange, including any forward-looking statements incorporated herein by reference from our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

 

The following discussion should be read in conjunction with the financial information in Section 8 of the Offering Memorandum (“Information Concerning Intercept; Financial Information"), as well as our financial statements and notes to the financial statements included on our most recent Forms 10-K and 10-Q.

 

Risks Related to the Exchange Offer

 

Your cancelled Eligible Options may be worth more than the New Options that you receive in exchange.

 

Because the number of shares issuable to you upon exercise of your New Options will be fewer than the number of shares issuable to you upon exercise of your Eligible Options, it is possible that, at some point in the future, due to potential increases in our stock price, those Eligible Options would have been more economically valuable than the New Options granted pursuant to the Exchange Offer.

 

Your cancelled Eligible Options may have a term that expires later than the term of the New Options that you receive in exchange for them.

 

Because your New Options could expire on a date earlier than your cancelled Eligible Options are currently set to expire, you may not have the same amount of time to benefit from any appreciation in our stock price.

 

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If your employment with Intercept terminates before your New Options vest, you will not be able to receive value for your unvested New Options, but you may have been able to receive value for the Eligible Options you exchanged for the New Options.

 

The New Options will be subject to a new vesting schedule that differs from the vesting schedules of the Eligible Options that you exchange. Accordingly, if your employment with Intercept terminates after you exchange your Eligible Options for New Options, you may not be able to realize as much value from your New Options as you could have realized from the Eligible Options you exchanged. For example, if you do not exchange your vested Eligible Options for New Options, and your employment with Intercept terminates, if our stock price increases above the exercise price per share of your vested Eligible Options, you would still be able to exercise and sell the underlying shares of common stock for these vested Eligible Options at a gain. However, if you exchange your vested Eligible Options for New Options, and your employment with Intercept terminates after you receive New Options but before such New Options have vested and can be exercised, you will receive no value from the unvested portion of the New Options if our stock price increases.

 

You may incur additional taxes in connection with the exercise of the New Options for U.S. tax purposes.

 

For more detailed information regarding the tax treatment of stock options, see Section 12 of the Offering Memorandum (“Material United States Tax Consequences”).

 

If you are subject to foreign tax laws, even if you are a resident of the United States, there may be tax, social insurance, or other consequences of participating in the Offer.

 

If you are subject to the tax laws of another country, even if you are a resident of the United States, you should be aware that there may be tax, social insurance, or other consequences that may apply to you. You are encouraged to consult your own legal counsel, accountant, financial and/or tax advisor(s) to discuss these consequences.

 

15

 

OFFERING MEMORANDUM

 

OFFER TO EXCHANGE ELIGIBLE OPTIONS FOR NEW OPTIONS

 

Table of Contents

 

   Page
Section 1. Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer  17
    
Section 2. Purpose of the Exchange Offer; Additional Considerations  19
    
Section 3. Procedures for Tendering Eligible Options  21
    
Section 4. Withdrawal Rights  23
    
Section 5. Acceptance of Eligible Options for Exchange; Grant of New Options  23
    
Section 6. Conditions of the Exchange Offer  24
    
Section 7. Price Range of Our Common Stock  25
    
Section 8. Information Concerning Intercept; Financial Information  26
    
Section 9. Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Our Securities  27
    
Section 10. Accounting Consequences of the Exchange Offer  27
    
Section 11. Legal Matters; Regulatory Approvals  28
    
Section 12. Material United States Tax Consequences  28
    
Section 13. Extension of the Exchange Offer; Termination; Amendment  29
    
Section 14. Consideration; Fees and Expenses  30
    
Section 15. Additional Information  31
    
Section 16. Miscellaneous  31

 

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OFFERING MEMORANDUM

 

OFFER TO EXCHANGE ELIGIBLE OPTIONS FOR NEW OPTIONS

 

Section 1. Eligible Participants; Eligible Options; the Proposed Exchange; Expiration and Extension of the Exchange Offer.

 

Intercept Pharmaceuticals, Inc. (“Intercept,” the “Company,” “we,” “us” or “our”) is offering eligible non-executive, non-director employees (not consultants) the opportunity to exchange certain outstanding stock options for replacement stock options with modified terms. As described in this Section 1 of this Offering Memorandum—Offer to Exchange Eligible Options for New Options (this “Offering Memorandum”), Eligible Options that are validly tendered prior to the Expiration Time will be exchanged for New Options in exchange for cancellation of the tendered Eligible Options and the Eligible Participant’s agreement to accept the New Option Terms (as defined below). Each capitalized term that is used in this paragraph without being defined has the meaning set forth below. Where the context requires, references herein to Intercept shall be deemed to include wholly-owned subsidiaries of Intercept.

 

We are making the offer on the terms and subject to the conditions described in this Offering Memorandum, as they may be amended from time to time, and these terms and conditions constitute the “Exchange Offer.” The Exchange Offer is not conditioned on the acceptance of the Exchange Offer by a minimum number of option holders or the tender of elections to exchange Eligible Options covering a minimum number of shares.

 

Eligible Participants

 

All individuals who hold Eligible Options and who, as of the date the Exchange Offer commences and as of the Expiration Time, are current employees (not consultants) of Intercept and are not executive officers or Board members of Intercept may participate in the Exchange Offer (the “Eligible Participants”). To be an Eligible Participant, you must continue to be employed by Intercept, and not have submitted a notice of resignation or termination or received a notice of termination prior to the Expiration Time.

 

You will not be eligible to tender Eligible Options for exchange in the Exchange Offer if you cease to be an Eligible Participant for any reason prior to or as of the Expiration Time, including due to your voluntary resignation, retirement, involuntary termination, layoff, death or disability. An individual who is on an authorized leave of absence and is otherwise an Eligible Participant at the Expiration Time will be eligible to tender Eligible Options in the Exchange Offer. A leave of absence is considered “authorized” if it was approved in accordance with Intercept’s policies.

 

Your employment with Intercept will remain at will, regardless of your participation in the Exchange Offer, and can be terminated by you or Intercept at any time, subject to applicable law. Nothing in the Exchange Offer should be construed to confer upon you the right to remain employed by or otherwise in a service relationship with Intercept. The terms of your employment relationship with Intercept remain unchanged. We cannot guarantee or provide you with any assurance that you will not be subject to involuntary termination or that you will otherwise remain employed by Intercept until the grant date for the New Options or any vesting date of your New Options in the future.

 

Intercept’s executive officers are not eligible to participate in the Exchange Offer. In addition, members of our board of directors (our “Board”) are not eligible to participate in the Exchange Offer.

 

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Eligible Options

 

An “Eligible Option” is an outstanding option that:

 

    is held by an Eligible Participant;

 

    is outstanding as of the Expiration Time and was granted before February 15, 2020;

 

    has an exercise price per share greater than $50.75; and

 

    was granted under the Intercept Pharmaceuticals, Inc. 2012 Equity Incentive Plan (the “2012 Equity Plan”).

 

The Proposed Exchange

 

If you choose to participate in the Exchange Offer and tender Eligible Options for exchange, and if we accept your tendered Eligible Options, then we will cancel your tendered Eligible Options and grant you new options (each, a “New Option”) with the following terms (collectively, the “New Option Terms”):

 

    Each New Option will have an exercise price per share equal to the closing price of our common stock reported on Nasdaq on the date the New Option is granted.

 

    Each New Option will represent your right to purchase a number of shares of our common stock that is calculated using an exchange ratio based on the exercise price of your tendered Eligible Option. The chart below sets forth the applicable exchange ratios for outstanding Eligible Options based on the dollar range of the exercise prices of such Eligible Options.

 

Eligible Option Exercise Price Range   Exchange Ratio
(Surrendered Eligible
Options: New Options)*
$50.75** to $75.00   1.50 to 1
$75.01 to $115.00   1.75 to 1
$115.01 to $125.00   2.50 to 1
$125.01 and up   4.50 to 1

 

* Rounded to the nearest whole share
** Greater than $50.75

 

    Your New Options will be granted under the 2012 Equity Plan; excess shares resulting from the exchange will not be returned to the plan pool.

 

    Each New Option will be granted as a non-qualified stock option, regardless of whether the corresponding Eligible Option was an incentive stock option or a non-qualified stock option.

 

    Each New Option will have a maximum term of six and one-half (6.5) years from its date of grant.

 

    Each New Option will not be exercisable on the date it is granted, even if the corresponding tendered Eligible Option had previously vested, and instead will vest on the first anniversary of the date the New Option is granted (with respect to vested options that are exchanged) and on the second anniversary of the date the New Option is granted (with respect to unvested options that are exchanged), subject in each case to continued employment through the applicable vesting date.

 

You are not required to participate in the Exchange Offer. If you hold more than one option grant that qualifies as an Eligible Option and elect to participate in the Exchange Offer, you will be allowed to tender for exchange as few or as many of your Eligible Option grants as you wish; however, you must tender all of the shares underlying any selected Eligible Option grant (i.e., all options granted to you on the same date must be subject to the same election). Eligible Options properly tendered in this Exchange Offer and accepted by Intercept for exchange will be cancelled and your New Options will be granted with the New Option Terms effective on a date promptly following the Expiration Time (such date, the “New Option Grant Date”).

 

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Expiration and Extension of the Exchange Offer

 

The Exchange Offer is scheduled to expire at 11:59 p.m., Eastern Daylight Time, on September 17, 2021, unless we, in our sole discretion, extend the Expiration Time of the Exchange Offer (such time and date referred to herein as the “Expiration Time”). See Section 13 (“Extension of Exchange Offer; Termination; Amendment”) for a description of our rights to extend, terminate and amend the Exchange Offer.

 

If you do not elect to tender your Eligible Options before the Expiration Time, such Eligible Options will remain subject to their current terms, including the current exercise prices and vesting schedules.

 

Section 2. Purpose of the Exchange Offer; Additional Considerations.

 

We believe that the Exchange Offer is in the best interests of our stockholders and an important component of our strategy to maintain an equity compensation program that effectively motivates and retains our employees.

 

Since 2015, when our stock closed as high as $313.98 (on May 18, 2015), declines in our stock price have steadily eroded the retentive and incentive value of stock options granted. For example, on December 31, 2019, our stock closed at $123.92. The decline dramatically accelerated following the issuance of the complete response letter (“CRL”) from the U.S. Food and Drug Administration (“FDA”) in June 2020, after which our stock price declined to levels last seen in 2012.

 

During the course of 2020, our Compensation Committee began considering, with input from Radford, which is part of the Rewards Solution practice at Aon plc (“Radford”) and serves as the Compensation Committee’s independent compensation consultant, whether conducting an option exchange program would assist with our retention efforts. These discussions were undertaken in the context of this sustained decline in the trading price of our shares, which has resulted in a situation where, as of April 6, 2021, Intercept had a total of approximately 2.7 million outstanding options, 98.0% of which were underwater at a stock price of $23.53.

 

We have heard from employees that they view their existing underwater stock options as having little or no value due to the difference between the exercise prices of those options and the current trading price of our stock. With the uncertainty around Intercept created by a number of factors, of which the stock price is one, we have seen a meaningful uplift in staff turnover since receipt of the CRL, and we believe that the exchange of underwater stock options would help reduce the level of turnover in both the short and medium terms. The Board and the Compensation Committee believe that the underwater options no longer function as the retentive and incentive tool that they believe is necessary to retain employees and to motivate them to increase long-term stockholder value.

 

In addition, we expect that the Exchange Offer will meaningfully reduce our equity overhang by eliminating a sizable number of outstanding options that, under their current terms and conditions, are likely to remain unexercised for the foreseeable future. Under the ratios included in the terms of the Exchange Offer, these current options would be replaced by a smaller number of new options, thus meaningfully reducing the total number of outstanding options included in our overhang.

 

When considering how best to continue to incentivize and reward our employees who have out-of-the-money stock options, the Compensation Committee engaged Radford to review and evaluate strategies to address this issue. These strategies included the stock option exchange program, as well as other alternatives, including the following:

 

·Increase cash compensation. To replace equity incentives, we considered whether we could substantially increase bonus cash compensation. However, significant increases in cash compensation would substantially increase our compensation expenses and reduce the cash available for other initiatives, which could adversely affect our business and operating results.

 

·Grant additional equity awards. We also considered special grants of additional stock options at current market prices or another form of equity award such as restricted stock units. However, these additional grants could substantially increase our overhang and the dilution to our stockholders.

 

·Exchange options for cash. We also considered implementing a program to exchange underwater options for cash payments. However, an exchange program for cash would also increase our compensation expenses and reduce our cash flow from operations, which could adversely affect our business and operating results. In addition, we do not believe that such a program would have significant long-term retention value.

 

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·Exchange options for restricted stock units. We also considered implementing a program to exchange underwater options for restricted stock units. However, in order to keep the aggregate value of the old versus replacement awards approximately consistent, the exchange ratios for an options-for-restricted stock units exchange program would need to be substantially higher than for an options-for-options exchange program (i.e., fewer replacement awards would be granted in the exchange). Thus, we believe that employee participation in an options-for-restricted stock units exchange program would be lower than with an options-for-options exchange program, reducing the retention and incentive value of the program.

 

Taking into account the advice of Radford and other relevant considerations, the Compensation Committee determined that, compared to other alternatives, the Exchange Offer provides better performance and retention incentives at a lower exercise price with potentially less dilution to stockholders. The following considerations recommended proposing this approach:

 

·Reasonable, balanced incentives. We believe that the opportunity to exchange Eligible Options for New Options with respect to fewer shares, together with a new vesting requirement and term, represents a reasonable and balanced exchange program with the potential for a significant positive impact on employee retention, motivation and performance. We believe that the New Options issued in the exchange program will provide a meaningful retention period for employees during the next two years, at a time when the Company expects to continue to experience retention challenges.

 

·

Reduction of the number of shares subject to outstanding options. In addition to the out-of-the-money options having little or no retention value, they also contribute to our stock option overhang until they are exercised or expire unexercised. As of August 16, 2021, there were approximately 733,613 outstanding stock options with an exercise price greater than $50.75 per share, with a weighted average exercise price of $98.52, that would have been eligible to participate in the Exchange Offer if it had commenced on that day. The Exchange Offer is expected to reduce our overhang of outstanding stock options by eliminating the ineffective options that are currently outstanding and issued to our non-executive employees. Under the Exchange Offer, Eligible Participants will receive New Options covering fewer shares than the exchanged options. Based on the number of outstanding stock options as of August 16, 2021, and assuming that all Eligible Options were exchanged in the program, options to purchase approximately 733,613 shares would have been exchanged and cancelled, while new options covering approximately 409,452 shares would have been issued. This would have resulted in a net reduction in the overhang of our equity awards by approximately 324,161 shares, or approximately 12% of our total overhang on account of stock options (from approximately 2.7 million to approximately 2.4 million shares), and approximately 1% of our total fully diluted share count as of June 30, 2021. The actual reduction in our overhang that may result from the Exchange Offer could vary significantly and is dependent upon a number of factors, such as the actual level of participation in the Exchange Offer.

 

·Reduced pressure for additional grants. If we were unable to implement the Exchange Offer, we may have found it necessary to issue additional options to our employees at current market prices, increasing our overhang. These grants would have depleted the current pool of options available for future grants under our 2012 Equity Plan and would also have resulted in increased stock compensation expense, which could negatively impact our stock price.

 

·Impact on accounting expense. Under applicable accounting rules, we are required to continue to recognize compensation expense related to these underwater stock options as they vest, even if they are never exercised because they remain underwater. We believe the Exchange Offer will allow us to recapture retentive and incentive value from the compensation expense that we have recorded and will continue to record in our financial statements with respect to our Eligible Options. The New Options are not expected to result in significant additional compensation expense and therefore will not have a material adverse impact on our reported earnings.

 

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In deciding whether to tender one or more Eligible Options pursuant to the Exchange Offer, you should know that we continually evaluate and explore strategic opportunities as they arise. At any given time, we may be engaged in discussions or negotiations with respect to one or more corporate transactions. We also grant equity awards in the ordinary course of business to our directors and our current and new employees, including our executive officers. Our directors and employees, including our executive officers, from time to time may acquire or dispose of our securities. We may from time to time repurchase our own outstanding securities in accordance with applicable securities laws. In addition, we may pursue opportunities to raise additional capital through the issuance of equity or debt securities, including convertible debt securities, or through strategic opportunities, including asset dispositions. If any of these events occur, our cash position, assets, or capital structure could change, or the percentage ownership of our stockholders could be significantly diluted, and where such a transaction or event results in our issuance of additional securities, these newly issued securities may have rights, preferences or privileges senior to those of existing stockholders.

 

Subject to the foregoing and except as otherwise disclosed in the Exchange Offer or in our filings with the Securities and Exchange Commission (the “SEC”), as of the date hereof, we have no plans, proposals or negotiations (although we often consider such matters in the ordinary course of our business and intend to continue to do so in the future) that relate to or would result in:

 

    any extraordinary corporate transaction, such as a material merger, reorganization or liquidation, involving Intercept;

 

    any purchase, sale or transfer of a material amount of our assets;

 

    any material change in our present dividend policy or our indebtedness or capitalization;

 

    any material change in our Board or executive management team, including any plans to change the number or term of our directors or to change the material terms of any executive officer’s employment;

 

    any other material change in our corporate structure or business;

 

    our common stock not being traded on a national securities exchange;

 

    our common stock becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”);

 

    the suspension of our obligation to file reports pursuant to Section 15(d) of the Exchange Act;

 

    the acquisition by any person of any of our securities or the disposition of any of our securities, other than in the ordinary course of business or pursuant to existing options or other rights; or

 

    any change in our certificate of incorporation or bylaws, or any actions that may impede the acquisition of control of us by any person.

 

WE DO NOT MAKE ANY RECOMMENDATION AS TO WHETHER YOU SHOULD TENDER YOUR ELIGIBLE OPTIONS, NOR HAVE WE AUTHORIZED ANY PERSON TO MAKE ANY SUCH RECOMMENDATION. YOU SHOULD EVALUATE CAREFULLY ALL OF THE INFORMATION IN THE EXCHANGE OFFER AND CONSULT YOUR OWN FINANCIAL AND TAX ADVISORS. YOU MUST MAKE YOUR OWN DECISION WHETHER TO TENDER YOUR ELIGIBLE OPTIONS FOR EXCHANGE.

 

Section 3. Procedures for Tendering Eligible Options.

 

If you wish to tender your Eligible Options for exchange, you must complete and submit your Election Form through the option exchange website (the “Option Exchange Portal”), which can be accessed at https://equitysolutions.aon.com/UWSO/Participant/Account/Register, before the Expiration Time.

 

Except as described in the following sentence, the Election Form must be signed by the Eligible Participant who holds the Eligible Options to be tendered using the same name for such Eligible Participant as appears on the applicable stock option agreement. If the signature is by an attorney-in-fact or another person acting in a fiduciary or representative capacity, the signer’s full title and proper evidence of the authority of such person to act in such capacity must be identified on the Election Form.

 

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Your Eligible Options will not be considered tendered until we receive the properly completed and signed Election Form. We must receive your properly completed and signed Election Form before the Expiration Time. If you fail to meet this deadline or submit an Election Form that is not properly completed as of the deadline, you will not be permitted to participate in the Exchange Offer.

 

You do not need to return your stock option agreements relating to any tendered Eligible Options, as they will be automatically cancelled in exchange for New Options if we accept your Eligible Options for exchange.

 

Determination of Validity; Rejection of Eligible Options; Waiver of Defects; No Obligation to Give Notice of Defects.

 

To validly tender your Eligible Options pursuant to the Exchange Offer, you must remain an Eligible Participant and must not have given a notice of resignation or termination, must not have received a notice of termination and your employment relationship with us must not have terminated for any other reason, including due to your voluntary resignation, retirement, involuntary termination, layoff, death or disability, prior to or as of the Expiration Time.

 

If you hold multiple option grants that each qualify as an Eligible Option and elect to participate in the Exchange Offer, you will be able to elect to tender as few or as many of your Eligible Option grants as you wish. However, if you elect to tender an Eligible Option for exchange, you must tender the entire outstanding (i.e., unexercised) portion of that Eligible Option (i.e., all options granted to you on the same date must receive the same treatment). If you attempt to tender a portion but not all of an outstanding Eligible Option grant, we will reject your tender of that particular grant. Such rejection will not affect any other Eligible Options that you have properly tendered for exchange.

 

We will determine all questions as to form of documents and the validity, eligibility, time of receipt and acceptance of any tender of Eligible Options. Neither Intercept nor any other person is obligated to give notice of any defects or irregularities in tenders. No tender of Eligible Options will be deemed to have been properly made until all defects or irregularities have been cured by the tendering Eligible Participant or waived by Intercept. Subject to any order or decision by a court or arbitrator of competent jurisdiction, our determination of these matters will be final and binding on all parties.

 

The Exchange Offer is a one-time offer, and we will strictly enforce the offer period, subject to any extension of the Expiration Time that we may grant in our sole discretion. Subject to Rule 13e-4 under the Exchange Act, we also reserve the right to waive any of the conditions of the Exchange Offer or any defect or irregularity in any tender with respect to any particular Eligible Option or any particular Eligible Participant (with any such waiver to be applied consistently among all Eligible Participants).

 

Our Acceptance Constitutes an Agreement.

 

Your tender of Eligible Options pursuant to the procedures described above constitutes your acceptance of the terms and conditions of the Exchange Offer and will be controlling, absolute and final, subject to your withdrawal rights under Section 4 (“Withdrawal Rights”) and our acceptance of your tendered Eligible Options in accordance with Section 5 (“Acceptance of Eligible Options for Exchange; Grant of New Options”). Our acceptance for exchange of Eligible Options that you tender pursuant to the Exchange Offer will constitute a binding agreement between Intercept and you upon the terms and subject to the conditions of the Exchange Offer.

 

Upon the terms and subject to the conditions of the Exchange Offer, we expect to accept for exchange all properly tendered Eligible Options that were not validly withdrawn prior to the Expiration Time. Eligible Options accepted by Intercept for exchange will be cancelled and New Options will be granted with the New Option Terms effective on the New Option Grant Date. We expect the New Option Grant Date to occur promptly following the Expiration Time. If the Expiration Time is extended, then the New Option Grant Date will be similarly extended.

 

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Section 4. Withdrawal Rights.

 

If you elect to accept the Exchange Offer with respect to some or all of your Eligible Options and later change your mind, you may withdraw any tendered Eligible Options prior to the Expiration Time by following the procedures described in this Section 4. Just as you may not tender only part of an Eligible Option grant, you also may not withdraw your election with respect to only a portion of an Eligible Option grant. If you elect to withdraw a previously tendered Eligible Option grant, you must withdraw the entire Eligible Option, but you are not required to withdraw any other tendered Eligible Options.

 

We will permit any Eligible Options tendered in the Exchange Offer to be withdrawn at any time during the period the Exchange Offer remains open, and unless we have accepted the Eligible Options pursuant to the Exchange Offer, you may also withdraw any tendered Eligible Options that have not been accepted at any time after 11:59 p.m., Eastern Daylight Time, on Tuesday, October 12, 2021. Please note that, upon the terms and subject to the conditions of the Exchange Offer, we expect to accept for exchange all Eligible Options properly tendered and not validly withdrawn by the Expiration Time.

 

To validly withdraw tendered Eligible Options, you must deliver to us (using the same delivery method described in Section 3) a properly completed and signed Notice of Withdrawal of Election Form (“Notice of Withdrawal”) during a period in which you have the right to withdraw the tendered Eligible Options. Your tendered Eligible Options will not be considered withdrawn until we receive your properly completed and signed Notice of Withdrawal. If you miss the deadline for withdrawal but remain an Eligible Participant, we will exchange any previously tendered Eligible Options pursuant to the Exchange Offer and your previously submitted Election Form.

 

You are responsible for making sure that, if you wish to withdraw tendered Eligible Options, the Notice of Withdrawal is delivered as indicated in Section 3 above. The Notice of Withdrawal must specify the Eligible Options to be withdrawn. Except as described in the following sentence, the Notice of Withdrawal must be signed by the Eligible Participant who holds the Eligible Options to be tendered using the same name for such Eligible Participant as appears on the applicable stock option agreement and the previously submitted Election Form. If the signature is by an attorney-in-fact or another person acting in a fiduciary or representative capacity, the signer’s full title and proper evidence of the authority of such person to act in such capacity must be identified on the Notice of Withdrawal. We have filed a form of the Notice of Withdrawal as an exhibit to the Tender Offer Statement on Schedule TO filed by Intercept with the SEC on August 16, 2021 (the “Schedule TO”). We will deliver a copy of the Notice of Withdrawal form to all Eligible Participants.

 

You may not rescind any withdrawal, and any Eligible Options you withdraw will thereafter be deemed not properly tendered for purposes of the Exchange Offer unless you properly re-tender those Eligible Options before the Expiration Time by following the procedures described in Section 3 of this Offering Memorandum.

 

Neither we nor any other person is obligated to give notice of any defects or irregularities in any Notice of Withdrawal, nor will anyone incur any liability for failing to give notice of any defects or irregularities. We will determine all questions as to the form and validity, including time of receipt, of Notices of Withdrawal. Subject to any order or decision by a court or arbitrator of competent jurisdiction, our determinations of these matters will be final and binding.

 

Section 5. Acceptance of Eligible Options for Exchange; Grant of New Options.

 

Upon the terms and subject to the conditions of the Exchange Offer, we expect to accept for exchange all Eligible Options properly tendered and not validly withdrawn (i) by the Expiration Time, unless extended, or (ii) after 11:59 p.m., Eastern Daylight Time, on October 12, 2021, if we have not accepted such Eligible Options by such time. On the New Option Grant Date, we expect to cancel the Eligible Options we have accepted in exchange for the grant of the New Options with the New Option Terms. We expect the New Option Grant Date to occur promptly following the Expiration Time. If the Expiration Time is extended, then the New Option Grant Date will be similarly extended.

 

If any Eligible Option that you tender for exchange is vested (or partially vested) as of the Expiration Time, you will receive a New Option that will vest on the first anniversary of the replacement grant (with respect to vested portions of options that are exchanged); your New Option will vest on the second anniversary of the replacement grant with respect to unvested portions of options that are exchanged—subject in each case to continued employment.

 

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Promptly after we grant the New Options, we will send each tendering Eligible Participant a confirmation email with respect to the Eligible Options that we have accepted for exchange. We have filed a form of such confirmation email as an exhibit to the Schedule TO. In addition, we will separately provide to each tendering Eligible Participant for acceptance via Benefits OnLine the stock option documentation relating to the Eligible Participant’s New Options. You must accept in accordance with the terms therein your new stock option agreement that replaces your existing stock option agreement for the grant of your New Options to be completed. A form of Stock Option Agreement for the New Options is filed as an exhibit to the Schedule TO.

 

If you have tendered Eligible Options under the Exchange Offer and your employment relationship terminates for any reason, or if you submit a notice of resignation or termination or receive a notice of termination, before the Expiration Time, you will no longer be eligible to participate in the Exchange Offer and we will not accept your Eligible Options for exchange. In that case, you may be able to exercise your existing vested Eligible Options for a limited time after your termination date in accordance with and subject to their terms.

 

Section 6. Conditions of the Exchange Offer.

 

Notwithstanding any other provision of the Exchange Offer, we will not be required to accept any Eligible Options tendered for exchange, and we may terminate or amend the Exchange Offer, in each case subject to Rule 13e-4(f)(5) under the Exchange Act, if at any time on or after the date hereof and prior to the Expiration Time, any of the following events has occurred, or if we have determined, in our reasonable judgment, that any of the following events has occurred:

 

    there shall have been threatened or instituted any action or proceeding by any government or governmental, regulatory or administrative agency, authority or tribunal or other person, domestic or foreign, before any court, authority, agency or tribunal that (i) directly or indirectly challenges the making of the Exchange Offer or the exchange of some or all of the Eligible Options tendered for exchange, (ii) otherwise relates in any manner to the Exchange Offer, or (iii) in our reasonable judgment, could materially affect our business, condition (financial or other), assets, income, operations, prospects or stock ownership;

 

    there shall have been threatened, instituted or taken any action, or any approval, exemption or consent shall have been withheld, or any statute, rule, regulation, judgment, order or injunction shall have been proposed, sought, promulgated, enacted, entered, amended, interpreted, enforced or deemed to be applicable to the Exchange Offer or Intercept, by or from any court or any regulatory or administrative authority, agency or tribunal that, in our reasonable judgment, would directly or indirectly make it illegal for us to accept some or all of the tendered Eligible Options for exchange, otherwise restrict or prohibit consummation of the Exchange Offer or otherwise relate in any manner to the Exchange Offer; delay or restrict our ability, or render us unable, to accept the tendered Eligible Options for exchange; or impair the contemplated benefits of the Exchange Offer to Intercept;

 

    there will have occurred: any general suspension of trading in securities on any national securities exchange or automated quotation system or in the over-the-counter market; the declaration of a banking moratorium or any suspension of payments with respect to banks in the United States; during the Exchange Offer, a decline of at least 10% in either the Dow Jones Industrial Average or the Standard & Poor’s 500 Index from the date of commencement of the Exchange Offer; the commencement or escalation of a war or other national or international calamity directly or indirectly involving the United States, which could reasonably be expected to affect materially or adversely, or to delay materially, the completion of the Exchange Offer; or any of the situations described above which existed at the time of commencement of the Exchange Offer, where such situation, in our reasonable judgment, deteriorates materially after commencement of the Exchange Offer;

 

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    a tender or exchange offer (other than the Exchange Offer) with respect to some or all of our capital stock, or a merger or acquisition proposal for Intercept, shall have been proposed, announced or publicly disclosed or we shall have learned that any person, entity or group (where “group” has the meaning given within Section 13(d)(3) of the Exchange Act) has acquired more than 5% of our outstanding common stock, other than a person, entity or group that had publicly disclosed such ownership with the SEC prior to the date of commencement of the Exchange Offer; any such person, entity or group that had publicly disclosed such ownership prior to such date has acquired additional common stock constituting more than 1% of our outstanding shares; or any new group has been formed that beneficially owns more than 5% of our outstanding common stock that, in our judgment in any such case, and regardless of the circumstances, makes it inadvisable to proceed with the Exchange Offer or with such acceptance of Eligible Options for exchange;

 

    any change, development, clarification or position taken in generally accepted accounting principles that could or would require us to record for financial reporting purposes compensation expense against our earnings in connection with the Exchange Offer, other than as contemplated as of the commencement date of this Exchange Offer (as described in Section 10 of this Offering Memorandum (“Accounting Consequences of this Exchange Offer”));

 

    any change occurs in our business, financial condition, assets, income, operations, prospects or stock ownership that, in our reasonable judgment, is or may be material to Intercept;

 

    any event or events occur that have resulted or may result, in our reasonable judgment, in a material impairment of the contemplated benefits of the Exchange Offer to Intercept (see Section 2 of this Offering Memorandum (“Purpose of the Exchange Offer; Additional Consideration”) for a description of the contemplated benefits of the Exchange Offer to Intercept); and

 

    any rules or regulations by any governmental authority, Nasdaq, or other regulatory or administrative authority or any national securities exchange have been enacted, enforced, or deemed applicable to us that have resulted or may result, in our reasonable judgment, in a material impairment of the contemplated benefits of the Exchange Offer to Intercept (see Section 2 of this Offering Memorandum (“Purpose of the Exchange Offer; Additional Consideration”) for a description of the contemplated benefits of the Exchange Offer to Intercept).

 

The conditions to the Exchange Offer are for Intercept’s benefit. We may assert them prior to the Expiration Time regardless of the circumstances giving rise to them (other than circumstances caused by our action or inaction). We may waive the conditions, in whole or in part, at any time and from time to time prior to the Expiration Time (with any such waiver to be applied consistently among all Eligible Participants), whether or not we waive any other condition to the Exchange Offer. Subject to any order or decision by a court or arbitrator of competent jurisdiction, any determination we make concerning the events described in this Section 6 will be final and binding upon all persons.

 

Section 7. Price Range of Our Common Stock.

 

The Eligible Options give Eligible Participants the right to acquire shares of our common stock. None of the Eligible Options are traded on any trading market. Our common stock trades on Nasdaq under the symbol “ICPT.

 

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The following table sets forth the high and low per share sales prices of our common stock on Nasdaq during the periods indicated.

 

   High   Low 
Fiscal Year Ending December 31, 2021          
Second quarter  $25.00   $13.88 
First quarter   38.94    18.15 

 

   High   Low 
Fiscal Year Ending December 31, 2020          
Fourth quarter  $43.16   $24.25 
Third quarter   55.59    37.50 
Second quarter   95.98    44.50 
First quarter   121.53    47.57 

 

   High   Low 
Fiscal Year Ending December 31, 2019          
Fourth quarter  $125.00   $56.76 
Third quarter   81.96    58.21 
Second quarter   122.74    73.01 
First quarter   131.87    88.27 

 

As of June 30, 2021, we had 109 stockholders of record, and 33,201,181 shares of our common stock were issued and outstanding. Because brokers and other institutions hold many of our shares on behalf of stockholders, we are unable to estimate the total number of beneficial stockholders represented by these record holders. On August 13, 2021, the closing price for our common stock as reported on Nasdaq was $14.92 per share. We recommend that you obtain current market quotations for our common stock before deciding whether or not to tender your Eligible Options for exchange. The price of our common stock has been, and in the future may be, volatile and could decline. The trading price of our common stock has fluctuated in the past and is expected to continue to do so in the future as a result of a number of factors, many of which are outside our control. In addition, the stock market has experienced extreme price and volume fluctuations that have affected the market prices of many companies and that have often been unrelated or disproportionate to the operating performance of those companies.

 

Section 8. Information Concerning Intercept; Financial Information.

 

Information Concerning Intercept.

 

We are a biopharmaceutical company focused on the development and commercialization of novel therapeutics to treat progressive non-viral liver diseases, including primary biliary cholangitis (“PBC”) and nonalcoholic steatohepatitis (“NASH”). We currently have one marketed product, Ocaliva (obeticholic acid or “OCA”).

 

We were incorporated in Delaware in September 2002. Our principal executive offices are located at 10 Hudson Yards, 37th Floor, New York, NY 10001 and our telephone number is (646) 747-1000. We have several additional offices, including those in San Diego, California and London, United Kingdom. Our corporate website address is www.interceptpharma.com. Information found on, or accessible through, our website is not a part of, and is not incorporated into, this Exchange Offer.

 

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Financial Information.

 

A summary of certain financial information is attached as Schedule A to this Offering Memorandum and should be read in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 25, 2021 (the “Annual Report”) and the condensed consolidated financial statements and the notes thereto included in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, filed with the SEC on July 29, 2021 (the “Quarterly Report”), which are incorporated herein by reference.

 

Additional Information.

 

For more information about Intercept, please refer to our Annual Report, our Quarterly Report and our other filings made with the SEC. We recommend that you review the materials that we have filed with the SEC before making a decision on whether or not to tender your Eligible Options. We will also provide without charge to you, upon your written or oral request, a copy of any or all of the documents to which we have referred you. See Section 15 (“Additional Information”) for more information regarding reports we file with the SEC and how to obtain copies of or otherwise review such reports.

 

Section 9. Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Our Securities.

 

Our executive officers and members of our Board are not eligible to participate in the Exchange Offer. Accordingly, none of these individuals are Eligible Participants, and they do not hold any Eligible Options.

 

Except as otherwise disclosed in the Exchange Offer or in our filings with the SEC, including our Annual Report, and other than outstanding stock option and other equity awards granted to our directors, executive officers and other employees and consultants pursuant to our 2012 Equity Plan, which are described in the notes to our financial statements as set forth in our Annual Report and Quarterly Report, neither Intercept nor, to our knowledge, any of our executive officers or directors, any person controlling Intercept or any executive officer or director of such control person is a party to any agreement, arrangement or understanding with respect to any of our securities, including any agreement, arrangement or understanding concerning the transfer or the voting of any of our securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies, consents or authorizations.

 

During the 60-day period prior to the date of this Offering Memorandum, we have not granted any options that are Eligible Options. During such 60-day period, neither we, nor, to the best of our knowledge, any member of our Board or any of our executive officers, nor any of our affiliates, has engaged in any transaction involving the Eligible Options.

 

Section 10. Accounting Consequences of the Exchange Offer.

 

We follow the provisions of the Financial Accounting Standard Board’s Accounting Standards Update 2014-12, Compensation—Stock Compensation (Topic 718) (“ASC Topic 718”) regarding accounting for share-based payments. Under ASC Topic 718, we will recognize compensation cost equal to the grant date fair value of the tendered Eligible Options plus the incremental compensation cost of the New Options. The incremental compensation expense associated with the Option Exchange will be measured as the excess of the fair value of each award of New Options granted to participants in the Option Exchange, measured as of the date the New Options are granted, over the fair value of the Eligible Options cancelled in exchange for the New Options, measured immediately prior to the cancellation. As the fair value will be determined at a later date, the impact of the incremental compensation expense is undeterminable. We will recognize any such incremental compensation expense ratably over the vesting period of the New Options.

 

The amount of incremental compensation cost will depend on a number of factors, including the level of participation in the Exchange Offer and the exercise price per share of Eligible Options, as applicable, exchanged in the Exchange Offer. Since these factors cannot be predicted with any certainty as of the date of this Offering Memorandum and will not be known until the Expiration Time, we cannot predict the exact amount of the charge (if any) that will result from the Exchange Offer.

 

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Section 11. Legal Matters; Regulatory Approvals.

 

We are not aware of any material pending or threatened legal actions or proceedings relating to the Exchange Offer. We are not aware of any margin requirements or anti-trust laws applicable to the Exchange Offer. We are not aware of any license or regulatory permit that appears to be material to our business that might be adversely affected by our acceptance of Eligible Options for exchange and grant of New Options as contemplated by the Exchange Offer, or of any regulatory requirements that we must comply with or approval or other action by any government or governmental, administrative or regulatory authority or agency, domestic or foreign, that would be required for the completion of the Exchange Offer as contemplated herein. Should any such compliance or approval or other action be required, we currently contemplate that we will use commercially reasonable efforts to comply with such requirements or seek such approval or take such other action. We cannot assure you that any such compliance or approval or other action, if needed, would be achieved or obtained or would be achieved or obtained without substantial conditions or that the failure to achieve such compliance or obtain any such approval or other action would not adversely affect our business. Our obligation under the Exchange Offer to accept tendered Eligible Options for exchange and to grant New Options with the New Option Terms would be subject to achieving such compliance or obtaining any such governmental approval or other action.

 

Section 12. Material United States Tax Consequences.

 

The following is a summary of the anticipated material United States federal income tax consequences of the Exchange Offer. This tax summary does not discuss all of the tax consequences that may be relevant to you in light of your particular circumstances, nor is it intended to apply in all respects to all categories of Eligible Participants. The tax consequences for individuals who are subject to the tax laws of a country other than the United States or of more than one country may differ from the United States federal income tax consequences summarized herein. The rules governing the tax treatment of stock options are complex. You should consult with your tax advisor to determine the personal tax consequences to you of participating or not participating in the Exchange Offer.

 

Tax Effects of Rejecting the Offer

 

In general, your rejection of the Exchange Offer will not be a taxable event for United States federal income tax purposes. However, because the Exchange Offer is scheduled to remain outstanding for thirty or more calendar days, the United States Internal Revenue Service may take the position that the Two-Year Holding Period (described below) with respect to incentive stock options (“ISOs”) that are not tendered will re-set so as to commence on August 16, 2021.

 

Tax Effects of Accepting the Offer

 

Neither your acceptance of the Exchange Offer nor the exchange of your Eligible Options will be a taxable event for United States federal income tax purposes. You will not recognize any income, gain or loss as a result of the exchange and cancellation of your Eligible Options for New Options for United States federal income tax purposes. However, if any of your Eligible Options are currently treated as ISOs and you elect to exchange those ISOs in the Exchange Offer, your New Options will not constitute ISOs and will be treated for tax purposes as non-qualified stock options (as described below) rather than remaining eligible to receive the tax treatment available for ISOs (also described below).

 

Taxation of Nonstatutory Stock Options (also known as Non-qualified Stock Options) (“NSOs”)

 

Generally, an optionholder will not recognize any income, gain or loss on the granting of an NSO. Upon the exercise of an NSO, an optionholder will recognize ordinary income on each purchased share equal to the difference between the fair market value of the stock on the date of exercise and the exercise price of the NSO.

 

If and when an optionholder sells the stock purchased upon the exercise of an NSO, any additional increase or decrease in the fair market value on the date of sale, as compared to the fair market value on the date of exercise, will be treated as a capital gain or loss. If the optionholder has held those shares for more than one year from the date of exercise, such gain or loss will be a long-term capital gain or loss. If the optionholder has held those shares for not more than one year from the date of exercise, such gain or loss will be a short-term capital gain or loss.

 

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Taxation of Incentive Stock Options

 

The following summarizes the general tax treatment relating to the grant and exercise of ISOs and the subsequent sale of shares acquired upon exercise of an ISO. This treatment will not be available for New Options. Generally, an optionholder will not recognize any income, gain or loss on the granting of an ISO. Upon the exercise of an ISO, an optionholder is typically not subject to United States federal income tax except for the possible imposition of alternative minimum tax. Rather, the optionholder is taxed for United States federal income tax purposes at the time he or she disposes of the stock subject to the option.

 

Following the exercise of an ISO, if the date upon which the optionholder disposes of the stock subject to an ISO is more than two years from the date on which the ISO was granted (the “Two-Year Holding Period”) and more than one year from the date on which the optionholder exercised the option (the “One-Year Holding Period”), then the optionholder’s entire gain or loss is characterized as long-term capital gain or loss, rather than as ordinary income. However, if the optionholder fails to satisfy both the Two-Year Holding Period and the One-Year Holding Period, then a portion of the optionholder’s profit from the sale of the stock subject to the ISO will be characterized as ordinary income and a portion may be short-term capital gain if the One-Year Holding Period has not been satisfied. The portion of the profit that is characterized as ordinary income will be equal to the lesser of (a) the excess of the fair market value of the stock on the date of exercise over the exercise price of the option and (b) the excess of the sales price over the exercise price of the option. This deferral of the recognition of tax until the time of sale of the stock, as well as the possible treatment of the “spread” as long-term capital gain, are the principal advantages of your options being treated as ISOs.

 

If you tender your Eligible Options for exchange in the Exchange Offer, all New Options that you are granted, to the extent you are an employee, will be nonqualified stock options and will not be eligible for the tax treatment described above with respect to ISOs. In addition, if you hold Eligible Options that are ISOs and choose not to tender such Eligible Options for exchange in the Exchange Offer, because the Exchange Offer is scheduled to remain open for thirty or more calendar days, the United States Internal Revenue Service may take the position that the Two-Year Holding Period with respect to such ISOs that are not tendered will re-set so as to commence on August 16, 2021.

 

Withholding

 

We will withhold all required local, state, federal, foreign and other taxes and any other amount required to be withheld by any governmental authority or law with respect to ordinary compensation income recognized with respect to the exercise of a stock option by an Eligible Participant. We will require any such Eligible Participants to make arrangements to satisfy this withholding obligation prior to the delivery or transfer of any shares of our common stock.

 

Section 13. Extension of the Exchange Offer; Termination; Amendment.

 

We may, from time to time, extend the period of time during which the Exchange Offer is open and delay accepting any Eligible Options tendered to us by disseminating notice of the extension to Eligible Participants by public announcement, written notice, including electronically posted or delivered notices, or otherwise as permitted by Rule 13e-4(e)(3) under the Exchange Act. If the Exchange Offer is extended, we will provide appropriate notice of the extension and the new Expiration Time no later than 9:00 a.m. Eastern Daylight Time on the next business day following the previously scheduled Expiration Time. For purposes of the Exchange Offer, a “business day” means any day other than a Saturday, Sunday or United States federal holiday and consists of the time period from 12:00 a.m. through 11:59 p.m., Eastern Daylight Time.

 

We also expressly reserve the right, in our reasonable judgment, prior to the Expiration Time, to terminate or amend the Exchange Offer upon the occurrence of any of the conditions specified in Section 6 (“Conditions of the Exchange Offer”), by disseminating notice of such termination or amendment to Eligible Participants by public announcement, written notice, including electronically posted or delivered notices, or otherwise as permitted by applicable law.

 

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Subject to compliance with applicable law, we further reserve the right, in our discretion, and regardless of whether any event set forth in Section 6 has occurred or we deem any such event to have occurred, to amend the Exchange Offer in any respect prior to the Expiration Time. We will promptly disseminate any notice of such amendment required pursuant to the Exchange Offer or applicable law to Eligible Participants in a manner reasonably designed to inform Eligible Participants of such change and will file such notice with the SEC as an amendment to the Schedule TO.

 

If we materially change the terms of the Exchange Offer or the information concerning the Exchange Offer, or if we waive a material condition of the Exchange Offer, we will extend the Exchange Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(3) under the Exchange Act. Under these rules, the minimum period during which a tender or Exchange Offer must remain open following material changes in the terms of or information concerning a tender or Exchange Offer, other than a change in price or a change in percentage of securities sought, will depend on the facts and circumstances, including the relative materiality of such terms or information.

 

In addition, we will publicly notify or otherwise inform Eligible Participants in writing if we decide to take any of the following actions and will keep the Exchange Offer open for at least 10 business days after the date of such notification:

 

    we increase or decrease the amount of consideration offered for the Eligible Options; or

 

    we increase or decrease the number of Eligible Options that may be tendered in the Exchange Offer.

 

Section 14. Consideration; Fees and Expenses.

 

Each Eligible Participant who properly tenders an Eligible Option to be exchanged and which is accepted by Intercept pursuant to this Exchange Offer will receive a New Option. Options are equity awards under which the holder can purchase shares of common stock for a predetermined exercise price, provided that the vesting criteria are satisfied, and otherwise subject to compliance with the applicable option terms.

 

Subject to the terms and conditions of this Exchange Offer, upon our acceptance of your properly tendered Eligible Options, you will be entitled to receive New Options for a number of shares of common stock calculated using an exchange ratio based on the exercise price of your tendered Eligible Options, as described in Section 1 of this Offering Memorandum. New Options will be fully unvested as of the New Option Grant Date and will be subject to a new vesting schedule, as described in Section 1 of this Offering Memorandum. If you receive New Options, you do not have to make any cash payment to Intercept to receive your New Options, but upon exercise of your vested New Options, you will be required to pay the per share exercise price to receive any shares of common stock subject to your New Options.

 

If we receive and accept tenders from Eligible Participants of all Eligible Options (comprising a total of approximately 1,914 vested or unvested options to purchase approximately 733,613 shares outstanding as of August 16, 2021) subject to the terms and conditions of this Exchange Offer, we will grant New Options covering a total of approximately 409,452 shares of common stock.

 

We will not pay any fees or commissions to any broker, dealer or other person for soliciting tenders of Eligible Options pursuant to the Exchange Offer. You will be responsible for any expenses that you incur in connection with your election to participate in the Exchange Offer, including mailing, telephone, and other telecommunications expenses, as well as any expenses associated with any tax, legal or other advisor that you consult or retain in connection with the Exchange Offer.

 

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Section 15. Additional Information.

 

With respect to the Exchange Offer, we have filed the Schedule TO, as may be amended, of which the Exchange Offer is a part. The Exchange Offer document (of which this Offering Memorandum is a part) does not contain all of the information contained in the Schedule TO and the exhibits to the Schedule TO. We intend to supplement and amend the Schedule TO to the extent required to reflect information we subsequently file with the SEC. Before making a decision on whether or not to tender your Eligible Options, we highly recommend that you review the Schedule TO, as may be amended, including its exhibits, and the following documents that we have filed with the SEC (excluding any portions of the respective filings that have been furnished rather than filed):

 

    our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 25, 2021;

 

    our Definitive Proxy Statement on Schedule 14A filed with the SEC on April 27, 2021;

 

    our Quarterly Reports on Form 10-Q for the quarters ended June 30, 2021, filed with the SEC on July 29, 2021, and March 31, 2021, filed with the SEC on May 6, 2021;

 

    our Current Reports on Form 8-K (excluding any information furnished therein) filed with the SEC on January 20, 2021, February 22, 2021, February 23, 2021, March 10, 2021, May 26, 2021, May 27, 2021, June 7, 2021 and August 11, 2021; and

 

    the description of our common stock contained in our Description of Securities of the Registrant filed with the SEC on February 25, 2021 as Exhibit 4.11 to our Annual Report on Form 10-K for the year ended December 31, 2020, including any amendments or reports filed for the purpose of updating such description.

 

Our SEC filings are available to the public on the SEC’s website at http://www.sec.gov. We also make available on or through our corporate website, free of charge, copies of these reports as soon as reasonably practicable after we electronically file or furnish them to the SEC.

 

We will also promptly provide without charge to each Eligible Participant to whom we deliver a copy of the Exchange Offer, upon written or oral request, a copy of any or all of the documents to which we have referred you, other than exhibits to such documents (unless specifically incorporated by reference into such documents and deemed filed therewith). Written requests should be directed to totalrewards@interceptpharma.com.

 

The information about us contained in the Exchange Offer should be read together with the information contained in the documents to which we have referred you.

 

Section 16. Miscellaneous.

 

The Exchange Offer and our SEC reports referred to above include forward-looking statements. Words such as “believes,” “will,” “should,” “could,” “expect,” “anticipate,” “estimate,” “plan,” “objectives,” and other similar statements of expectation identify forward-looking statements. These forward-looking statements involve risks and uncertainties, including those described in this Offering Memorandum, our Annual Report and our Quarterly Reports, that could cause actual results to differ materially from those expressed in the forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. While we believe our plans, intentions and expectations reflected in these forward-looking statements are reasonable, these plans, intentions or expectations may not be achieved.

 

WE ENCOURAGE YOU TO REVIEW THE RISK FACTORS CONTAINED IN OUR QUARTERLY REPORT FOR THE QUARTER ENDED JUNE 30, 2021 BEFORE YOU DECIDE WHETHER TO PARTICIPATE IN THE EXCHANGE OFFER.

 

WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF AS TO WHETHER OR NOT YOU SHOULD TENDER YOUR ELIGIBLE OPTIONS PURSUANT TO THE EXCHANGE OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR IN DOCUMENTS REFERENCED HEREIN. WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DOCUMENT OR IN THE RELATED DOCUMENTS. IF ANYONE MAKES ANY RECOMMENDATION OR REPRESENTATION TO YOU OR GIVES YOU ANY INFORMATION, YOU SHOULD NOT RELY UPON THAT RECOMMENDATION, REPRESENTATION OR INFORMATION AS HAVING BEEN AUTHORIZED BY US.

 

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Schedule A

 

Summary of Certain Financial Information

 

The following financial information should be read in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 25, 2021 and the condensed consolidated financial statements and the notes thereto included in our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2021, filed with the SEC on July 29, 2021, both of which are incorporated herein by reference. The selected consolidated statements of operations data for the fiscal years ended December 31, 2020 and December 31, 2019 and the selected consolidated balance sheets data as of December 31, 2020 and December 31, 2019 are derived from our audited consolidated financial statements that are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. The selected condensed consolidated statements of operations data for the three months ended June 30, 2021 and June 30, 2020 and the selected condensed consolidated balance sheets data as of June 30, 2021 and June 30, 2020 are derived from our unaudited condensed consolidated financial statements included in our Quarterly Reports on Form 10-Q for the fiscal quarters ended June 30, 2021 and June 30, 2020, respectively. Our interim results are not necessarily indicative of results for the full fiscal year, and our historical results are not necessarily indicative of the results to be expected in any future period. You should refer to Section 15 of the Offering Memorandum, “Additional Information,” for information on how you can obtain copies of our SEC filings.

 

   Three Months Ended
June 30,
   Years Ended
December 31,
 
(in thousands, except share and per share data)  2021   2020   2020   2019 
   (unaudited)   (unaudited)         
Statements of Operations Data                    
Revenue:                    
Product revenue, net  $96,576   $77,249   $312,690   $249,570 
Total revenue   96,576    77,249    312,690    252,002 
Total operating expenses   95,816    129,279    543,930    564,429 
Operating income (loss)   760    (52,030)   (231,240)   (312,427)
Basic and diluted income (loss) per share from continuing operations   0.02    (1.58)   (7.01)   (9.87)
Total other (expense)   (11,854)   (11,251)   (43,640)   (32,254)
Net income (loss)   (11,094)   (63,281)   (274,880)   (344,681)
Basic and diluted net income (loss) per share   (0.33)   (1.92)   (8.34)   (10.89)

 

   As of June 30,   As of December 31, 
(in thousands)  2021   2020   2020   2019 
   (unaudited)   (unaudited)         
Balance Sheets Data                    
Current assets  $493,105   $606,552   $545,741   $721,315 
Non-current assets   30,119    30,842    34,748    33,571 
Total assets   523,224    637,494    580,489    754,886 
Current liabilities   145,281    163,536    179,076    162,005 
Non-current liabilities   581,138    552,754    576,303    549,362 
Total liabilities   726,419    716,290    747,342    703,330 
                     
Other Historical Financial Data                    
Book value per share as of June 30, 2021  $(6.12)               

 

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Exhibit (a)(1)(B)

 

FORM OF ANNOUNCEMENT EMAIL TO ELIGIBLE PARTICIPANTS

 

From: Aon
Subject: Intercept Pharmaceuticals, Inc. Offer to Exchange Eligible Options for New Options

 

We are pleased to announce that Intercept Pharmaceuticals, Inc. (“Intercept,” “we,” “us” or “our”) is commencing an Offer to Exchange Eligible Options for New Options (the “Exchange Offer”) today, August 16, 2021. You are receiving this email because you are eligible to participate and exchange certain outstanding stock options for replacement stock options with modified terms.

 

Intercept has chosen Aon to help with administration of this exchange offer. To access your exchange election site, visit this registration site to access your information:

 

Direct URL for registration will be https://equitysolutions.aon.com/UWSO/Participant/Account/Register.
You will need to provide the following registration code: [•]

 

The Exchange Offer will expire at 11:59 p.m., Eastern Time, on September 17, 2021 (the “Expiration Time”). We may extend this expiration date and time in our discretion, in which case references to the “Expiration Time” shall refer to any such extended date and time.

 

Please understand that we cannot advise you on whether or not to participate in the Exchange Offer.

 

Participation in the Exchange Offer is entirely your decision and at your discretion, and you should make the decision about whether to participate based on your personal circumstances.

 

To aid in the decision-making process, however, the company will be offering live webinars to all eligible employees – and has already provided videos regarding the Exchange Offer and its process.  These videos can also be found via the “Document Library” within the exchange election site.

 

This notice does not constitute an offer. The full terms of the Exchange Offer, including a Frequently Asked Questions document, are described in the Schedule TO-I and accompanying documents, which you may access via the “Document Library” within the exchange election site, our Intercept website at https://ir.interceptpharma.com/financial-information/sec-filings, or through the SEC website at www.sec.gov. Capitalized terms used but not otherwise defined in this email shall have the meanings set forth in the Exchange Offer documents.  Intercept recommends that you consult your tax and financial advisors to address questions regarding your decision. Our inclusion of website links in this notice does not incorporate them by reference into the Exchange Offer.

 

 

 

Exhibit (a)(1)(C)

 

 

Website Text:

Home Document Library My Options Log Out

The election period closes on 9/17/2021. You have 33 days left to make an election.

Welcome! You have one or more outstanding option grants that are eligible to be exchanged under the Intercept Pharmaceuticals Option Exchange Program. Under the Option Exchange Program, you have the opportunity to exchange your underwater options for a smaller number of new at-the-money options through the end of the current tender offer period (9/17/2021). A summary of your current options is shown below. Options you have selected to exchange already during this tender offer period have been highlighted. Click one of the links to get started.

Document Library My Options

Grant Number Options Outstanding Exchange Available?

*Note that these values are rounded for display purposes. The actual underlying value may differ.

 

 

 

 

 

Website Text:

Home Document Library My Options Log Out

The election period closes on 9/17/2021. You have 33 days left to make an election.

My Eligible Options

The options below are available for exchange. Using the dropdowns on the right, please elect to exchange your options for new options or leave as-is. Options you have selected to exchange already during this tender offer period have been highlighted.

Existing Awards Exchange Awards Exchange Decision

Grant Number Grant Type Grant Date Expiration Date Options Outstanding* Options Vested Exchange Ratio Grant Type Expiration Date New Options Outstanding* New Vesting Schedule Exchange?

*Note that these values are rounded for display purposes. The actual underlying value may differ.

Confirm and Submit.

 

 

 

 

 

Website Text:

Please confirm your elections. You may change your elections until the offer period closes on 9/17/2021.

Exchanges

You have elected to exchange the following options:

Existing Awards Exchange Awards Exchange Decision

Grant Number Grant Type Grant Date Expiration Date Options Outstanding* Options Vested Exchange Ratio Grant Type Expiration Date New Options Outstanding* New Vesting Schedule Exchange?

*Note that these values are rounded for display purposes. The actual underlying value may differ.

Confirm & Submit.

 

 

 

 

 

Website Text:

Home Document Library My Options Log Out

Changes Saved Successfully!

Thank you for updating your options. A confirmation email has been sent to your email on file. If you have any questions of need to make further changes, please contact your account manager.

You’ll be redirected to your home page in 3 seconds…

 

 

 

 

Exhibit (a)(1)(D)

 

 

Website Text:

Home Document Library My Options Log Out

The election period closes on 9/17/2021. You have 33 days left to make an election.

Welcome! You have one or more outstanding option grants that are eligible to be exchanged under the Intercept Pharmaceuticals Option Exchange Program. Under the Option Exchange Program, you have the opportunity to exchange your underwater options for a smaller number of new at-the-money options through the end of the current tender offer period (9/17/2021). A summary of your current options is shown below. Options you have selected to exchange already during this tender offer period have been highlighted. Click one of the links to get started.

Document Library My Options

Grant Number Options Outstanding* Exchange Available?

*Note that these values are rounded for display purposes. The actual underlying value may differ.

 

 

 

 

 

Website Text:

Home Document Library My Options Log Out

The election period closes on 9/17/2021. You have 33 days left to make an election.

My Eligible Options

The options below are available for exchange. Using the dropdowns on the right, please elect to exchange your options for new options or leave as-is. Options you have selected to exchange already during this tender offer period have been highlighted.

Existing Awards Exchange Awards Exchange Decision

Grant Number Grant Type Grant Date Expiration Date Options Outstanding* Options Vested Exchange Ratio Grant Type Expiration Date New Options Outstanding* New Vesting Schedule Exchange?

*Note that these values are rounded for display purposes. The actual underlying value may differ.

Confirm and Submit.

 

 

 

 

 

Website Text:

Please confirm your elections. You may change your elections until the offer period closes on 9/17/2021.

Exchanges

You have elected to exchange the following options:

Existing Awards Exchange Awards Exchange Decision

Grant Number Grant Type Grant Date Expiration Date Options Outstanding* Options Vested Exchange Ratio Grant Type Expiration Date New Options Outstanding* New Vesting Schedule Exchange?

*Note that these values are rounded for display purposes. The actual underlying value may differ.

Confirm & Submit.

 

 

 

 

 

Website Text:

Home Document Library My Options Log Out

Changes Saved Successfully!

Thank you for updating your options. A confirmation email has been sent to your email on file. If you have any questions of need to make further changes, please contact your account manager.

You’ll be redirected to your home page in 3 seconds…

 

 

 

 

Exhibit (a)(1)(E)

 

FORM OF EMAIL

CONFIRMING RECEIPT OF OPTION EXCHANGE ELECTION

 

From: Aon

Subject: Confirmation of Receipt of Option Exchange Election

 

This email is to confirm receipt of the changes to your options through Aon's UWSO Exchange Site. If you did not make these changes and believe you are receiving this email in error, please contact totalrewards@interceptpharma.com for further instructions.

 

The elections that have been made to your account on < > are as follows:

 

Grants you have chosen to exchange:

 

·Transaction #< >: Grant Number < > with < > outstanding options and an expiration date of < > was exchanged at a ratio of < > to 1. Following completion of the tender offer, you will have < > of these new options outstanding.

·Transaction #< >: Grant Number< > with < > outstanding options and an expiration date of < > was exchanged at a ratio of < > to 1. Following completion of the tender offer, you will have < > of these new options outstanding.

 

If you have any questions regarding these changes, please contact totalrewards@interceptpharma.com referencing the transaction numbers listed above.

 

Your Election may be changed or withdrawn at any time before 11:59 p.m., Eastern Time, on Friday, September 17, 2021, unless the Exchange Offer is extended. You should direct questions about the Exchange Offer or requests for assistance (including requests for additional or paper copies of the Exchange Offer, Election Form, Notice of Withdrawal or any other documents relating to the Exchange Offer) by email to totalrewards@interceptpharma.com. Capitalized terms used but not otherwise defined in this email shall have the meanings set forth in the Offer to Exchange Eligible Options for New Options, dated August 16, 2021.

 

This is an automatically generated email. Please do not respond to this email as this mailbox is not monitored.

 

 

 

 

Exhibit (a)(1)(F)

 

FORM OF EMAIL

CONFIRMING RECEIPT OF NOTICE OF WITHDRAWAL OF ELECTION

 

From: Aon

Subject: Confirmation of Receipt of Option Exchange Election

 

This email is to confirm receipt of the changes to your options through Aon's UWSO Exchange Site. If you did not make these changes and believe you are receiving this email in error, please contact totalrewards@interceptpharma.com for further instructions.

 

The elections that have been made to your account on < > are as follows:

 

Grants you previously chose to exchange and have now elected to not exchange:

 

·Transaction #< >: Grant Number < > with < > outstanding options was previously elected to be exchanged at a ratio of < > to 1. This option will no longer be exchanged.

·Transaction #< >: Grant Number < > with < > outstanding options was previously elected to be exchanged at a ratio of < > to 1. This option will no longer be exchanged.

 

If you have any questions regarding these changes, please contact totalrewards@interceptpharma.com referencing the transaction numbers listed above.

 

Your Election may be changed or withdrawn at any time before 11:59 p.m., Eastern Daylight Time, on Friday, September 17, 2021, unless the Exchange Offer is extended. You should direct questions about the Exchange Offer or requests for assistance (including requests for additional or paper copies of the Exchange Offer or any other documents relating to the Exchange Offer) by email to totalrewards@interceptpharma.com. Capitalized terms used but not otherwise defined in this email shall have the meanings set forth in the Offer to Exchange Eligible Options for New Options, dated August 16, 2021.

 

This is an automatically generated email. Please do not respond to this email as this mailbox is not monitored.

 

 

 

Exhibit (a)(1)(G)

 

FORM OF REMINDER EMAIL TO ELIGIBLE HOLDERS 

REGARDING THE EXPIRATION OF THE EXCHANGE OFFER

 

From: Intercept Pharmaceuticals, Inc.
Subject: Intercept Pharmaceuticals, Inc. Offer to Exchange Eligible Options for New Options Remains Open

 

As an eligible participant in the Intercept Pharmaceuticals, Inc. (“Intercept,” “we,” “us” or “our”) Offer to Exchange Eligible Options for New Options (the “Exchange Offer”), we are pleased to inform you that the exchange is still open and you have time to make an election until the Exchange Offer expires at 11:59 p.m., Eastern Daylight Time, on Friday, September 17, 2021 (the “Expiration Time”). We may extend this expiration date and time in our discretion, in which case references to the Expiration Time shall refer to any such extended date and time.

 

Please understand that we cannot advise you on whether or not to participate in the Exchange Offer. Participation in the Exchange Offer is entirely your decision and at your discretion, and you should make the decision about whether to participate based on your personal circumstances. Intercept recommends that you consult your tax and financial advisors to address questions regarding your decision.

 

This notice does not constitute an offer. The full terms of the Exchange Offer are described in the Schedule TO and accompanying documents, which are available via the “Document Library” within the exchange election site, on our website at https://ir.interceptpharma.com/financial-information/sec-filings, or through the SEC website at www.sec.gov. Capitalized terms used but not otherwise defined in this email shall have the meanings set forth in the Exchange Offer documents. Our inclusion of website links in this notice does not incorporate them by reference into the Exchange Offer.

 

 

 

Exhibit (a)(1)(H)

 

FORM OF EMAIL TO ELIGIBLE PARTICIPANTS

CONFIRMING ACCEPTANCE OF ELIGIBLE OPTIONS

 

From: Intercept Pharmaceuticals, Inc.
Subject:

Confirmation of Acceptance of Eligible Options 

 

Thank you for your submission of the Election Form pursuant to the Offer to Exchange Eligible Options for New Options, dated August 16, 2021 (the “Offer Documents”). With this letter, we confirm that Intercept Pharmaceuticals, Inc. (“Intercept”) has accepted the Eligible Options listed on your Election Form for exchange in the Exchange Offer. Subject to the terms and conditions of the Exchange Offer, as described in the Offer Documents, your Eligible Options will be cancelled and New Options will be granted to you. Your New Options will appear shortly in Benefits OnLine, and your stock option agreement(s) will be available for electronic acceptance. If you have included in your Election Form an election to tender any options for exchange that do not qualify as Eligible Options, such options will not be accepted by Intercept and will remain outstanding subject to their original terms following the expiration of the Exchange Offer. If you have any questions, please email totalrewards@interceptpharma.com.

 

Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Offer Documents.

 

 

 

 

Exhibit (a)(1)(I)

 

FORM OF EMAIL NOTICE

REGARDING REJECTION OF OPTIONS FOR EXCHANGE

 

From: Intercept Pharmaceuticals, Inc.
Subject: Notice of Rejection of Options for Exchange
   

Thank you for your submission of the Election Form pursuant to the Offer to Exchange Eligible Options for New Options, dated August 16, 2021 (the “Exchange Offer”). With this letter, we are notifying you that Intercept Pharmaceuticals, Inc. (“Intercept”) has rejected for exchange the options listed on your Election Form. Accordingly, your options will remain outstanding and subject to their original terms. For additional information regarding the rejection of your options for exchange, please email totalrewards@interceptpharma.com.

 

Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Exchange Offer.

 

 

 

Exhibit (a)(1)(J)

 

FORM OF EXPIRATION NOTICE EMAIL

 

From: Intercept Pharmaceuticals, Inc.
Subject: Expiration of the Exchange Offer

 

The Exchange Offer described in the Offer to Exchange Eligible Options for New Options, dated August 16, 2021 (the “Offer Documents”), has expired, and no additional Election Forms or Notices of Withdrawal may be submitted. If you are an Eligible Participant and delivered a properly completed and signed Election Form to tender your Eligible Options before the Expiration Time, and did not subsequently deliver a Notice of Withdrawal, you will receive a separate email confirming our acceptance of your tendered Eligible Options. Any Eligible Options you did not tender for exchange will remain outstanding and subject to their original terms. If you have any questions regarding the stock options you hold, please email totalrewards@interceptpharma.com.

 

Capitalized terms used but not otherwise defined in this email shall have the meanings set forth in the Offer Documents.

 

 

 

Exhibit (a)(1)(K)

 

FORM OF REGISTRATION EMAIL

 

From: Aon

Subject: Confirm your E-mail

 

Please confirm your email by clicking here.

 

 

 

Exhibit (a)(1)(L)

 

INTERCEPT PHARMACEUTICALS, INC.
2012 EQUITY INCENTIVE PLAN
STOCK OPTION GRANT

 

Stock Option Grant Notice (Employees only)

 

Intercept Pharmaceuticals, Inc. (the "Company") hereby grants to the participant named below (the "Participant") an option of the type specified below (this "Option") to purchase up to the number of shares of the Company's common stock, par value $0.001 per share (the "Shares"), set forth below at the exercise price set forth below. This Option is subject to all of the terms and conditions set forth in this Stock Option Grant Notice (this "Grant Notice"), the Intercept Pharmaceuticals, Inc. 2012 Equity Incentive Plan (as amended, the "Plan") and the Stock Option Agreement attached hereto (the "Agreement"). Capitalized terms not defined in this Grant Notice but defined in the Agreement or the Plan will have the meanings assigned to such terms in the Agreement or the Plan, as applicable.

 

1.  Name and Address of Participant:  
   
   
   
   
   
2.  Date of Grant:
   
3.  Type of Option: Non-Qualified
   
4.  Number of Shares Underlying Option:
   
5.  Exercise Price Per Share:
   
6.  Option Expiration Date: The date which is 6 years and 6 months following the Date of Grant
   
7.  Vesting Commencement Date: Date of Grant

 

8.  Vesting Schedule: This Option shall become exercisable (and the Shares issued upon exercise shall be vested) as follows provided the Participant is an Employee, director or Consultant of the Company or an Affiliate on the first anniversary of the Date of Grant with respect to [number] Shares and the second anniversary of the Date of Grant with respect to [number] Shares.

 

See Section 1(b) of the Agreement for vesting in the event of a Change of Control (as defined in the Agreement). The foregoing vesting provisions are subject to the other terms and conditions of the Agreement and the Plan.

 

 

 

By accepting this Option, whether electronically or otherwise, the Participant acknowledges receipt of, and understands and agrees to, this Grant Notice, the Agreement, and the Plan, and reaffirms the Participant's understanding of, and agreement to, the terms and conditions of the Offer to Exchange Eligible Options for New Options (the "Exchange Offer"), dated August 16, 2021, in which the Participant has elected to participate and pursuant to which this Option is issued. This Grant Notice, the Agreement and the Plan set forth the entire understanding between the Participant and the Company regarding this Option and supersede all prior oral and written agreements on the terms of this Option, including the Exchange Offer. In the event of a conflict among any of the documents described in the preceding sentence, the provisions of the Grant Notice and the Agreement shall govern.

 

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INTERCEPT PHARMACEUTICALS, INC.
2012 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT

 

Pursuant to the Stock Option Grant Notice to which this agreement is attached (the "Grant Notice") and this Stock Option Agreement (this "Agreement"), Intercept Pharmaceuticals, Inc. (the "Company") has granted to the participant named in the Grant Notice (the "Participant") a Non-Qualified option (this "Option"), under and for the purposes set forth in the Intercept Pharmaceuticals, Inc. 2012 Equity Incentive Plan (as amended, the "Plan"), to purchase up to the number of shares of the Company's common stock, par value $0.001 per share (the "Shares"), indicated in the Grant Notice at the exercise price indicated in the Grant Notice (as each may be adjusted from time to time in accordance with this Agreement and the Plan, the "Exercise Price"). Capitalized terms not defined in this Agreement or in the Grant Notice but defined in the Plan will have the meanings assigned to such terms in the Plan.

 

The terms and conditions of this Option, in addition to those set forth in the Grant Notice and the Plan, are as follows:

 

1.             EXERCISABILITY OF OPTION.

 

(a)           Subject to the terms and conditions set forth in this Agreement and the Plan, this Option shall become vested and exercisable as set forth in the Grant Notice. This Option shall continue to vest and become exercisable in accordance with its terms for so long as the Participant is an Employee, director or Consultant of the Company or an Affiliate.

 

(b)           Notwithstanding the foregoing, except to the extent specifically provided to the contrary in any employment agreement between the Participant and the Company or an Affiliate, in the event of (i) a Change of Control (as defined below) and the Participant's service with the Company, the acquiring or succeeding corporation or any Affiliate of any of the foregoing is terminated by such entity for any reason other than for Cause within 12 months of the Change of Control, then, immediately prior to such termination, this Option, to the extent then-outstanding, shall become fully vested and exercisable, or (ii) a Corporate Transaction (as defined in Section 24(b) of the Plan) that is a Change of Control in which the acquiring entity does not assume this Option, then, immediately prior to the Change of Control, this Option, to the extent then-outstanding, shall become fully vested and exercisable.

 

For purposes of this Agreement, "Change of Control" means the occurrence of any of the following events:

 

(i)            Ownership. Any "Person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the "Beneficial Owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company's then-outstanding voting securities (excluding for this purpose any such voting securities held by the Company or its Affiliates or any employee benefit plan of the Company); or

 

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(ii)           Merger/Sale of Assets. (A) A merger or consolidation of the Company whether or not approved by the Board of Directors, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such corporation) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation, as the case may be, outstanding immediately after such merger or consolidation; or (B) the sale or disposition by the Company of all or substantially all of the Company's assets in a transaction requiring stockholder approval; or

 

(iii)         Change in Board Composition. A change in the composition of the Board of Directors, as a result of which fewer than a majority of the directors are Incumbent Directors. "Incumbent Directors" shall mean directors who either (A) are directors of the Company as of the date of grant, or (B) are elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company).

 

2.             TERM OF OPTION.

 

This Option shall terminate on the Option Expiration Date specified in the Grant Notice, but shall be subject to earlier termination as provided herein or in the Plan.

 

If the Participant ceases to be an Employee, director or Consultant of the Company or an Affiliate for any reason other than the termination of the Participant for Cause (the date of such cessation of service, the "Termination Date"), this Option, to the extent then vested and exercisable, and not previously terminated in accordance with this Agreement, may be exercised by the Participant or, as applicable, the Participant's Survivors on or prior to the earliest of the following:

 

(i)             in the event that the Participant ceases to be an Employee, director or Consultant of the Company or an Affiliate other than for Cause or due to the Disability or death of the Participant, the date that is three (3) months after the Termination Date; provided, that the commencement of such three-month period shall be tolled (subject to clause (iii) below) for so long as the sale of any Shares received upon exercise of this Option on or after the Termination Date (including in connection with a broker-assisted cashless exercise) would result in (a) short swing profit liability for the Participant under Section 16(b) of the Exchange Act or (b) a violation of the Company's insider trading policy; provided, further, that, in the event of the Participant's Disability or death within such period, the Participant or, as applicable, the Participant's Survivors may exercise this Option on or prior to the date that is one (1) year after the Termination Date;

 

(ii)            in the event that the Participant ceases to be an Employee, director or Consultant of the Company or an Affiliate due to the Disability or death of the Participant, the date that is one (1) year after the Termination Date; or

 

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(iii)           the Option Expiration Date specified in the Grant Notice.

 

The unvested portion of this Option shall not be exercisable and shall expire and be cancelled on the Termination Date; provided, that, in the event that the Participant ceases to be an Employee, director or Consultant of the Company or an Affiliate due to the Disability or death of the Participant, and rights to exercise this Option accrue periodically, a pro rata portion of any additional vesting rights that would have accrued on the next vesting date had the Participant not become Disabled or died shall vest and become exercisable as of the Termination Date. Such proration shall be based upon the number of days accrued in the current vesting period prior to the date of the Participant's termination of service due to Disability or death.

 

If the Participant ceases to be an Employee of the Company or an Affiliate but continues after termination of employment to provide services to the Company or an Affiliate as a director or Consultant, this Option shall continue to vest and become exercisable until the Participant is no longer providing services to the Company or an Affiliate as set forth above.

 

In the event the Participant's service is terminated by the Company or an Affiliate for Cause, the Participant's right to exercise any unexercised portion of this Option (even if vested) shall cease immediately as of the time the Participant is notified his or her service is terminated for Cause, and this Option shall thereupon terminate. Notwithstanding anything herein to the contrary, if subsequent to the Participant's termination, but prior to the exercise of this Option, the Administrator determines that, either prior or subsequent to the Participant's termination, the Participant engaged in conduct which would constitute Cause, then the Participant shall immediately cease to have any right to exercise this Option and this Option shall thereupon terminate.

 

3.             METHOD OF EXERCISING OPTION.

 

Subject to the terms and conditions of this Agreement, this Option may be exercised by written notice to the Company or its designee (in a form designated by the Company, which may include electronic notice) stating the number of Shares with respect to which this Option is being exercised. Payment of the Exercise Price for such Shares shall be made in accordance with Paragraph 9 of the Plan. The Company shall deliver such Shares as soon as practicable after the notice shall be received, provided, however, that the Company may delay issuance of such Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including, without limitation, state securities or "blue sky" laws). The Shares as to which this Option shall have been so exercised shall be registered in the Company's share register in the name of the person so exercising this Option (or, if this Option shall be exercised by the Participant and if the Participant shall so request in the notice exercising this Option, shall be registered in the Company's share register in the name of the Participant and another person jointly, with right of survivorship) and shall be delivered as provided above to or upon the written order of the person exercising this Option. In the event this Option shall be exercised, pursuant to Section 2 hereof, by any person other than the Participant, such notice shall be accompanied by appropriate proof of the right of such person to exercise this Option. All Shares that shall be purchased upon the exercise of this Option as provided herein shall be fully paid and nonassessable.

 

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4.             PARTIAL EXERCISE.

 

Exercise of this Option to the extent above stated may be made in part at any time and from time to time within the above limits, except that no fractional share shall be issued pursuant to this Option.

 

5.             PROHIBITIONS ON TRANSFER.

 

This Option shall not be transferable by the Participant otherwise than by will or by the laws of descent and distribution. The Option may also be transferred pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act or the rules thereunder. Except as provided above in this Section 5, this Option shall be exercisable during the Participant's lifetime only by the Participant (or, in the event of legal incapacity or incompetency, by the Participant's guardian or representative) and shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of this Option or of any rights granted hereunder contrary to the provisions of this Section 5, or the levy of any attachment or similar process upon this Option shall be null and void.

 

6.             NO RIGHTS AS STOCKHOLDER.

 

The Participant shall have no rights as a stockholder with respect to Shares subject to this Option until registration of the Shares in the Company's share register in the name of the Participant. Except as is expressly provided in the Plan with respect to certain changes in the capitalization of the Company, no adjustment shall be made for dividends or similar rights for which the record date is prior to the date of such registration.

 

7.             ADJUSTMENTS.

 

This Option, including the number of Shares subject to this Option and the Exercise Price, shall be subject to adjustment from time to time as provided for in the Plan upon the occurrence of certain events described therein.

 

8.             TAXES.

 

The Participant acknowledges that any income or other taxes due from him or her with respect to this Option or the Shares issuable pursuant to this Option shall be the Participant's responsibility. The Participant acknowledges and agrees that (i) the Participant was free to use professional advisors of his or her choice in connection with his or her acceptance of this Option, has received advice from his or her professional advisors in connection with his or her acceptance of this Option, understands its meaning and import, and has accepted this Option freely and without coercion or duress; (ii) the Participant has not received and is not relying upon any advice, representations or assurances made by or on behalf of the Company or any Affiliate or any employee of or counsel to the Company or any Affiliate regarding any tax or other effects or implications of this Option, the Shares subject to this Option or other matters contemplated hereby; and (iii) neither the Administrator, the Company, its Affiliates, nor any of its or their officers or directors, shall be held liable for any applicable costs, taxes, or penalties associated with this Option if, in fact, the Internal Revenue Service were to determine that this Option constitutes deferred compensation under Section 409A of the Code.

 

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The Participant agrees that the Company may withhold from the Participant's remuneration, if any, the amount of federal, state and local withholding taxes attributable to such amount that is considered compensation includable in such person's gross income in connection with the exercise of this Option and, as a condition to the exercise of this Option, the Participant shall make arrangements satisfactory to the Company to enable it to satisfy all such withholding requirements. Without limiting the generality of the foregoing, at the Company's discretion, the amount required to be withheld may be withheld in cash from such remuneration, or in kind from the Shares otherwise deliverable to the Participant on exercise of this Option. The Participant further agrees that, to the extent the Company does not withhold an amount from the Participant's remuneration sufficient to satisfy the Company's income tax withholding obligation, the Participant will reimburse the Company on demand, in cash, for the amount under-withheld.

 

9.             SECURITIES LAWS COMPLIANCE.

 

The Participant specifically acknowledges and agrees that this Option and any delivery of Shares hereunder shall be subject to compliance with the requirements of the Securities Act and other applicable securities laws, rules or regulations. In addition, applicable securities laws, rules or regulations may restrict the ability of the Participant to resell Shares delivered hereunder, including due to the Participant's affiliation with the Company. The Company shall not be obligated to issue the Shares if such issuance would violate any applicable securities law, rule or regulation.

 

10.           NO OBLIGATION TO MAINTAIN RELATIONSHIP.

 

The Participant acknowledges that: (i) the Company is not by the Plan or this Option obligated to continue the Participant as an Employee, director or Consultant of the Company or an Affiliate; (ii) the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (iii) the grant of this Option is a one-time benefit which does not create any contractual or other right to receive future grants of options, or benefits in lieu of options; (iv) all determinations with respect to future grants, if any, will be at the sole discretion of the Company; (v) the Participant's participation in the Plan is voluntary; (vi) the value of this Option is an extraordinary item of compensation which is outside the scope of the Participant's employment or consulting contract, if any; and (vii) this Option is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.

 

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11.           NOTICES.

 

Any notices required or permitted by the terms of this Agreement or the Plan shall be given by recognized courier service, registered or certified mail, return receipt requested, addressed as follows:

 

If to the Company:

 

Intercept Pharmaceuticals, Inc.
10 Hudson Yards, 37th Floor
New York, NY 10001

 

Attention: General Counsel

 

If to the Participant at the address set forth on the Grant Notice or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given upon the earlier of receipt, one business day following delivery to a recognized courier service or three business days following mailing by registered or certified mail.

 

The Company may, in its sole discretion, decide to deliver any documents related to participation in the Plan and this Option by electronic means. By accepting this Option, whether electronically or otherwise, the Participant consents to receive such documents by electronic delivery and to participate in the Plan through an online or electronic system established and maintained by the Company or another third party designated by the Company.

 

12.           GOVERNING LAW.

 

The Grant Notice and this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflict of law principles thereof. For the purpose of litigating any dispute that arises under the Grant Notice, this Agreement or the Plan, each of the Company and, by accepting this Option, whether electronically or otherwise, the Participant hereby consents to exclusive jurisdiction in New York and agrees that such litigation shall be conducted in the state courts of New York County, New York or the federal courts of the United States for the District of the Southern District of New York.

 

13.           BENEFIT OF AGREEMENT.

 

Subject to the provisions of the Plan and the other provisions hereof, the Grant Notice and this Agreement shall be for the benefit of and shall be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto.

 

14.           ENTIRE AGREEMENT.

 

The Grant Notice and this Agreement, together with the Plan, embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement not expressly set forth in the Grant Notice or this Agreement shall affect or be used to interpret, change or restrict the express terms and provisions of the Grant Notice or this Agreement; provided, however, in any event, the Grant Notice and this Agreement shall be subject to and governed by the Plan. This Option is subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. In addition, this Option (and any compensation paid or shares issued pursuant to this Option) is subject to recoupment in accordance with The Dodd-Frank Wall Street Reform and Consumer Protection Act and any implementing regulations thereunder, any clawback policy adopted by the Company and any compensation recovery policy otherwise required by applicable law.

 

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15.           MODIFICATIONS AND AMENDMENTS.

 

The terms and provisions of the Grant Notice and this Agreement may be modified or amended as provided in the Plan.

 

16.           WAIVERS AND CONSENTS.

 

Except as provided in the Plan, the terms and provisions of the Grant Notice and this Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of the Grant Notice or this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.

 

17.           DATA PRIVACY.

 

By accepting this Option, whether electronically or otherwise, the Participant: (i) authorizes the Company and each Affiliate, and any agent of the Company or any Affiliate administering the Plan or providing Plan recordkeeping services, to disclose to the Company or any of its Affiliates such information and data as the Company or any such Affiliate shall request in order to facilitate the grant of options and the administration of the Plan; (ii) waives any data privacy rights he or she may have with respect to such information or the sharing of such information; and (iii) authorizes the Company and each Affiliate to store and transmit such information in electronic form for the purposes set forth in the Grant Notice and this Agreement.

 

18.           SEVERABILITY.

 

If all or any part of the Grant Notice, this Award Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any portion of the Grant Notice, this Award Agreement or the Plan not declared to be unlawful or invalid. Any section of the Grant Notice, this Award Agreement or the Plan (or part of such a section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such section or part of a section to the fullest extent possible while remaining lawful and valid.

 

19.            NON-U.S. PARTICIPANTS.

 

If the Participant works and/or resides outside of the United States, the applicable terms and conditions set forth in appendix A shall apply to this Option. In addition, the Company reserves the right to impose other requirements on the Participant to the extent the Company determines that such requirements are necessary or advisable in order to comply with local law or facilitate the administration of the Plan and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

 

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APPENDIX A

 

INTERCEPT PHARMACEUTICALS, INC.
2012 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT

 

TERMS AND CONDITIONS FOR NON-U.S. PARTICIPANTS

 

This Appendix includes additional or different terms and conditions that govern this Option if the Participant works and/or resides outside of the United States. This Appendix forms part of the Stock Option Agreement to which it is attached (the "Agreement"). Capitalized terms not defined in this Appendix but defined in the Agreement or the Plan will have the meanings assigned to such terms in the Agreement or the Plan, as applicable. References within this Appendix to "you" refer to the Participant.

 

These terms are general in nature, may not apply to your particular situation and are based on securities, tax and other laws that are often complex and subject to frequent change. As such, the Company strongly recommends that you do not rely on this summary as your only source of information relating to the consequences of your Option and participation in the Plan and further that you consult your personal tax or legal advisors for advice as to how the laws in your country apply to your situation. Note that if you are a citizen or resident of a country other than the one in which you are working, additional requirements, other than those described herein, may be applicable to you.

 

ALL NON-U.S. PARTICIPANTS

 

1.TAXES (REPLACING SECTION 8 OF THE AGREEMENT)

 

The Participant acknowledges that any income or other taxes due from him or her with respect to this Option or the Shares issuable pursuant to this Option shall be the Participant's responsibility. The Participant acknowledges and agrees that (i) the Participant was free to use professional advisors of his or her choice in connection with his or her acceptance of this Option, has received advice from his or her professional advisors in connection with his or her acceptance of this Option, understands its meaning and import, and has accepted this Option freely and without coercion or duress; and (ii) the Participant has not received and is not relying upon any advice, representations or assurances made by or on behalf of the Company or any Affiliate or any employee of or counsel to the Company or any Affiliate regarding any tax or other effects or implications of this Option, the Shares subject to this Option or other matters contemplated hereby.

 

The Participant agrees that the Company may withhold from the Participant's remuneration, if any, the statutory or contractual amount of any federal, provincial, state, local and personal income taxes, wage tax and social security contributions (including, as applicable, UK National Insurance Contributions of any kind and Canada Pension Plan contributions) required by law or contract to be withheld or that the Participant has elected to bear (including, as applicable, employer National Insurance Contributions) in relation to the grant or exercise of this Option ("Participant Tax Liability") and, as a condition to the grant or exercise of this Option (as applicable), the Participant shall make arrangements satisfactory to the Company to enable it to satisfy all such withholding requirements. Without limiting the generality of the foregoing, at the Company's discretion, the amount required to be withheld may be withheld in cash from such remuneration. The Participant further agrees that, to the extent the Company does not withhold an amount from the Participant's remuneration sufficient to satisfy the Company's income or wage tax and social security withholding obligation, the Participant will reimburse the Company on demand, in cash, for the amount under-withheld.

 

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2.WAIVER OF RIGHTS ON TERMINATION (EXCEPT FRANCE, PORTUGAL, SPAIN AND DENMARK)

 

The Participant hereby waives all and any rights to compensation or damages in consequence of the termination of his or her office or employment with the Company or his or her employing entity for any reasons whatsoever (whether lawful or unlawful and including, without prejudice to the generality of the foregoing, in circumstances giving rise to a claim for wrongful dismissal) insofar as those rights arise or may arise from his or her ceasing to have rights under or being entitled to exercise this Option as a result of such termination, or from the loss or diminution in value of any rights or entitlements in connection with the Plan.

 

The Plan and this Option do not form part of the Participant's contract of employment. If the Participant ceases to be employed or engaged by the Company or any Affiliate for any reason (including as a result of a repudiatory breach of contract by the Company or its Affiliate), the Participant shall not be entitled, and by participating in the Plan the Participant shall be deemed irrevocably to have waived any entitlement, by way of compensation for loss of employment, breach of contract or otherwise, to any sum or other benefit to compensate the Participant for any rights or prospective rights under the Plan. This exclusion applies equally (and without limitation) to any loss arising from the way in which the discretion is (or is not) exercised under any provision of the Plan even if the exercise (or non-exercise) of such discretion is, or appears to be, irrational or perverse and/or breaches, or is claimed to breach any implied term of the Plan or any other contract between the Participant and the Participant's employer. Participation in the Plan and any benefits provided under it shall not be pensionable nor will they count as pay or remuneration when calculating salary related benefits (including, but not limited to, pension).

 

3.DATA PRIVACY (IN ADDITION TO SECTION 19 OF THE AGREEMENT) (EXCEPT ITALY, PORTUGAL AND SPAIN)

 

(a)The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of his or her personal data as described in the Agreement by and among, as applicable, his or her employing entity or contracting party and the Company for the exclusive purpose of implementing, administering and managing his or her participation in the Plan.

 

(b)The Participant acknowledges the following:

 

(i)the Company holds certain personal information about the Participant, including, but not limited to, his or her name, home address and telephone number, work location and phone number, date of birth, hire date, bank and payroll details, social security numbers, details of all awards or any other entitlement to shares awarded, cancelled, exercised, vested, unvested or outstanding in the Participant's favor, for the purpose of implementing, administering and managing the Plan ("Personal Data");

 

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(ii)providing or transferring Personal Data to the Company is necessary and essential to the Participant's participation in the Plan and that the Participant's refusal to provide Personal Data or withdrawal of consent to the collection, storage or transfer of Personal Data may affect the Participant's ability to participate in the Plan since it would be impossible for the Company to comply with its contractual obligations under the Plan;

 

(iii)the Participant's Personal Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Participant's country or elsewhere, and that the recipient's country may have different data privacy laws and protections than the Participant's country;

 

(iv)the Participant has been informed that the Company shall not transfer Personal Data from the Participant's country without requiring the recipient to comply with the requirements of the General Data Protection Regulation (as applicable) and applicable data protection laws, and that the Participant may request a list with the names and addresses of any potential recipients of the Personal Data by contacting his or her local human resources representative;

 

(v)Personal Data will be held only as long as is necessary to implement, administer and manage the Participant's participation in the Plan and any potential claim made by the Participant in relation to any award; and

 

(vi)the Participant may, at any time, exercise the right of access, rectification and cancelation of the Participant's personal data, oppose, request additional information about the storage and processing of Personal Data or refuse to the further processing of the Personal Data by contacting in writing the Participant's local human resources representative (who can be identified on the Company's intranet).

 

ADDITIONAL COUNTRY-SPECIFIC PROVISIONS

 

AUSTRALIA

 

Financial product advice: The Participant acknowledges and agrees that advice provided by the Company (if any) in relation to this Option is of a general nature only and does not take into account the objectives, financial situation or needs of the Participant. The Participant should consider obtaining advice from a person who is licensed by the Australian Securities and Investments Commission to give such advice. The Company is not licensed to provide financial product advice in Australia in relation to options and there is no cooling-off regime in Australia that applies in respect of the grant of options.

 

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Risk of acquiring and holding Common Stock: The Participant acknowledges that there are risks of acquiring and holding Common Stock. Before accepting or exercising this Option, or acquiring the underlying Shares, the Participant should satisfy himself or herself that he or she has a sufficient understanding of these matters and should consider whether Common Stock is a suitable investment for the Participant, having regard to the investment objectives, financial circumstances and taxation position of the Participant.

 

(a)The price at which Common Stock is quoted on the Nasdaq Global Select Market may decrease, even to the extent that the price is less than the price or prices paid for the Shares by the Participant.

 

(b)There is no guarantee that an active market in Common Stock will continue. The number of potential buyers or sellers of Common Stock on the Nasdaq Global Select Market may vary at any time. This may increase the volatility of the market price of Common Stock.

 

(c)The Company may not pay dividends on Common Stock at any particular level or at all. If the Company has paid dividends on Common Stock, it may cease to pay such dividends.

 

(d)Holding Common Stock may have tax implications for the Participant and the tax regime applying to the Participant may change.

 

Market price of Common Stock: The Participant could, from time to time, ascertain the market price of Common Stock in Australian Dollars by obtaining the market price from the Nasdaq Global Select Market website, the Company's website or applicable U.S. publication, and multiplying that market price by a published exchange rate to convert U.S. Dollars into Australian Dollars.

 

BELGIUM

 

Timing and calculation basis of taxation. You are required to accept the offer of this Option in writing. If this Option is accepted by you on or prior to the 60th day following the offer, you will recognize taxable income on the 60th day following the date of the offer (date of grant), and you will be required to include the taxable income within your yearly income tax return covering the financial year during which occurred the date of grant. You will not be subject to income tax upon exercise of this Option. The amount of the taxable income is calculated as a certain percentage of the fair market value of the underlying shares at the date of the offer. The income will be taxed as compensation income and subject to income tax and social security contributions.

 

If this Option is only accepted by you after the 60th day following the date of the offer, you will not recognize taxable income on the date of grant but upon exercise, and you will be required to include the taxable income within your yearly income tax return covering the financial year during which occurred the exercise of this Option. The amount of taxable income will then be calculated on the basis of the fair market value of the stock acquired. The income will be taxed as compensation income and subject to income tax and social security contributions. Capital gains on sale. The capital gains on the sale of the stock are not taxable to the extent you qualify as a Belgian tax resident.

 

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CANADA

 

Term of Option. For purposes of Section 2 of the Agreement, "Termination Date" means the later of: (i) the date that is the last day of any statutory notice period applicable to the Participant pursuant to applicable employment standards legislation; and (ii) the date that is designated by the Company or Affiliate to which the Participant provides services as the last day of the Participant's employment, term of office or engagement with the Company or Affiliate (as applicable); provided, that in the case of termination of employment by voluntary resignation by the Participant, such date shall not be earlier than the date notice of resignation was given. For certainty, except only as expressly required by applicable employment standards legislation, as amended or replaced, or agreed by the Company, no portion of this Option shall vest following the Participant's Termination Date and no period of notice or payment in lieu of notice in respect of a termination of an office or employment without Cause shall extend such Termination Date.

 

Method of Exercising Option. Payment of the Exercise Price for the Shares with respect to which this Option is exercised may not be made in either of the forms described in clause (b) or clause (c) of Paragraph 9 of the Plan.

 

DENMARK

 

Danish Stock Option Act. In accepting this Option, you acknowledge that you have received an Employer Statement translated into Danish, which is being provided to comply with the Danish Stock Option Act and which sets out the main terms of the Plan applying to you. To the extent more favorable to you and required to comply with the Stock Option Act, the terms set forth in the Employer Statement, including terms regarding vesting and forfeiture in connection with termination of your employment will apply to your participation in the Plan.

 

Exchange Control Notification. If you establish an account holding Shares or cash outside Denmark, you must report the account to the Danish Tax Administration. The form which should be used in this respect can be obtained from a local bank. (Please note that these obligations are separate from and in addition to the obligations described below.)

 

Securities and Tax Reporting Notification. You may hold Shares acquired under the Plan in a safety-deposit account (e.g., a brokerage account) with either a Danish bank or with an approved foreign broker or bank. If the Shares are held with a foreign broker or bank, you are required to inform the Danish Tax Administration about the safety-deposit account. For this purpose, you must file a Form V (Erklaering V) with the Danish Tax Administration. Both you and the broker or bank must sign the Form V. By signing the Form V, the broker or bank undertakes an obligation, without further request each year, to forward information to the Danish Tax Administration concerning the Shares in the safety-deposit account. In the event that the applicable broker or bank with which the account is held does not wish to, or pursuant to the laws of the country in question, is not allowed to assume such obligation to report, you will be solely responsible for providing certain details regarding the foreign brokerage or bank account and any Shares acquired in connection with the Plan and held in such account to the Danish Tax Administration as part of your annual income tax return. By signing the Form V, you authorize the Danish Tax Administration to examine the account. A sample of the Form V can be found at the following website: www.skat.dk.

 

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In addition, if you open a brokerage account or a bank account with a U.S. bank, the account will be treated as a deposit account because cash can be held in the account. Therefore, you must also file a Form K (Erklaering K) with the Danish Tax Administration. Both you and the broker must sign the Form K. By signing the Form K, the broker or bank, as applicable, undertakes an obligation, without further request each year, to forward information to the Danish Tax Administration concerning the content of the deposit account. In the event that the applicable financial institution (broker or bank) with which the account is held does not wish to, or pursuant to the laws of the country in question, is not allowed to assume such obligation to report, you will be solely responsible for providing certain details regarding the foreign brokerage or bank account to the Danish Tax Administration as part of your annual income tax return. By signing the Form K, you authorize the Danish Tax Administration to examine the account. A sample of Declaration K can be found at the following website: www.skat.dk.

 

FRANCE

 

Language Consent. By accepting the grant, you confirm that you have read and understood the documents relating to the grant (the Plan, the Grant Notice and the Agreement, including this Appendix) which were provided in the English language. You confirm that you are fluent in English, written and spoken. You accept the terms of these documents accordingly.

 

Consentement Relatif a la Langue Utilisee.      En acceptant l'attribution, vous confirmez avoir lu et compris les documents relatfft a l'attribution (le Plan, l'Avis et le Contrat, y compris cette Annexe) qui ont ete communiqués en langue anglaise. Vous acceptez les termes de ces documents en connaissance de cause.

 

Tax Notification. This Option is not intended to qualify for favorable tax or social security treatment in France.

 

Exchange Control Notification. If you hold Shares outside of France or maintain a foreign bank account, you are required to report such to the French tax authorities when filing your annual tax return.

 

GERMANY

 

Taxes. The following provision supplements Section 1 of this Appendix A:

 

For the avoidance of doubt, under Section 1 of this Appendix A (which replaces Section 8 of the Agreement), the Company, inter alia, has the authority to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy applicable taxes (including wage taxes (Lohnsteuern), solidarity surcharges (Solidaritlitszuschllige), church taxes (Kirchensteuem) and social security contributions (Sozialversicherungsbeitriige)) arising from or relating to the (i) the grant, vesting or exercise of this Option or (ii) the delivery of the Shares. For the avoidance of doubt, Section 1 of this Appendix A shall remain unaffected.

 

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ITALY

 

Data Privacy. The following provision replaces Section 3 of this Appendix A:

 

You understand that the Company and/or any Affiliate may hold certain personal information about you, including, without limitation, your name, home address and telephone number, date of birth, social insurance or other identification number, salary, nationality, job title, any Shares or directorships held in the Company or an Affiliate, details of all options, or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in your favor, for the exclusive purpose of implementing, managing, and administering the Plan ("Data") and in compliance with applicable laws and regulations.

 

You also understand that providing the Company with Data is necessary for the performance of the Plan and that your refusal to provide such Data would make it impossible for the Company to perform its contractual obligations and may affect your ability to participate in the Plan. The Controller of personal data processing is Intercept Pharmaceuticals, Inc., 10 Hudson Yards, 37th Floor, New York, NY 10001 and pursuant to Art. 6 let. b) and c) of the General Data Protection Regulation ("GDPR") and Legislative Decree no. 196/2003, its representative in Italy.

 

You understand that Data will not be publicized, but it may be transferred to the Company's designated broker/third party administrator for the Plan or such other stock plan service provider as may be selected by the Company in the future (any such entity, "Broker"), or other third parties involved in the management and administration of the Plan. You understand that Data may also be transferred to the independent registered public accounting firm engaged by the Company. You further understand that the Company and its Affiliates will transfer Data amongst themselves as necessary for the purposes of implementing, administering and managing your participation in the Plan, and that the Company and/or any Affiliate may each further transfer Data to third parties assisting the Company in the implementation, administration and management of the Plan, including any requisite transfer of Data to the Broker or other third party with whom you may elect to deposit any Shares acquired under the Plan. Such recipients may receive, possess, use, retain, and transfer Data in electronic or other form, for the purposes of implementing, administering, and managing your participation in the Plan. You understand that these recipients may be located in or outside the European Economic Area, such as in the United States or elsewhere, and in locations that might not provide the same level of protection as intended under Italian data privacy laws. In such case, the Company undertakes to comply with the applicable privacy law in order to ensure that the recipient meets the same standards provided by the European Union legislation, implementing appropriate and suitable safeguards, such as using standard clauses or equivalent safeguard measures as provided for by Art. 46 of the GDPR and paragraph 7 of Legislative Decree no. 196/2003. Should the Company exercise its discretion in suspending all necessary legal obligations connected with the management and administration of the Plan, it will delete Data as soon as it has completed all the necessary legal obligations connected with the management and administration of the Plan.

 

You understand that Data processing related to the purposes specified above shall take place under automated or non-automated conditions, anonymously when possible, that comply with the purposes for which Data is collected and with confidentiality and security provisions, as set forth by applicable laws and regulations, with specific reference to Art. 6 let. b) and c) of the GDPR and Legislative Decree no. 196/2003.

 

The processing activity, including communication, the transfer of Data abroad, including outside of the European Economic Area, as herein specified and pursuant to applicable laws and regulations, does not require your consent thereto, as the processing is necessary to performance of contractual obligations related to implementation, administration, and management of the Plan. You understand that, pursuant to Art. 15 of the GDPR and paragraph 7 of Legislative Decree no. 196/2003, you have the right to, without limitation, access, delete, update, correct, or terminate, for legitimate reason, the Data processing. Additionally, you understand that you may exercise the right to portability, within the limits set forth by Art. 20 of the GDPR.

 

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Furthermore, you are aware that Data will not be used for direct-marketing purposes. In addition, Data provided can be reviewed and questions or complaints can be addressed by contacting your local human resources representative.

 

Grant Document Acknowledgment. In accepting the grant of this Option, you acknowledge that you have received a copy of the Plan, the Grant Notice and the Agreement, including this Appendix, and have reviewed the Plan, the Grant Notice and the Agreement, including this Appendix, in their entirety and fully understand and accepts all provisions thereof.

 

Foreign Asset Reporting Notification. If you are an Italian resident and, during any fiscal year, hold investments or financial assets outside of Italy (e.g., cash, Shares) which may generate income taxable in Italy (or if you are the beneficial owner of such an investment or asset even if you do not directly hold the investment or asset), you are required to report such investments or assets on your annual tax return for such fiscal year (on UNICO Form, RW Schedule, or on a special form if you are not required to file a tax return).

 

NORWAY

 

Securities and Tax Reporting Notification. You may hold Shares acquired under the Plan in a safety-deposit account (e.g., a brokerage account) with either a Norwegian bank or with an approved foreign broker or bank. If the Shares are held with a foreign broker or bank, you are required to inform the Norwegian Tax Administration about the safety-deposit account. You do this on forms RF-1088 and RF-1059 in connection with filing your annual tax return ("selvangivelse"). Shares held with a Norwegian bank will be reported automatically.

 

PORTUGAL

 

Language Consent. By accepting the grant of this Option, you confirm that you have read and understood the documents relating to the grant (the Plan, the Grant Notice and the Agreement, including this Appendix) which were provided to you in English language. You confirm that you are fluent in English, written and spoken. You accept the terms of these documents accordingly.

 

Grant Document Acknowledgment. In accepting the grant of this Option, you acknowledge that you have received a copy of the Plan, the Grant Notice and the Agreement, including this Appendix, and have reviewed the Plan, the Grant Notice and the Agreement, including this Appendix, in their entirety and fully understand and accept all provisions thereof.

 

Tax Reporting Obligation. If the Shares acquired under the Plan are held with a foreign broker or bank, you are required to inform the Portuguese Tax Authorities about the existence of such account. For this purpose, within the annual submission of your personal income tax return you must file Annex J with the Portuguese Tax Administration, identifying the account by reference to the applicable IBAN — International Bank Account Number and BIC - Bank Identifier Code.

 

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Income arising out of the Plan and/or derived from the Shares is subject to reporting to the Portuguese Tax Authorities.

 

Data Privacy. The following provision replaces Section 3 of this Appendix A:

 

You understand that the Company holds certain personal information about you, including, but not limited to, your name, home address and telephone number, work location and phone number, date of birth, hire date, details of all awards or any other entitlement to shares awarded, cancelled, exercised, vested, unvested or outstanding in the Participant's favor, for the purpose of implementing, administering and managing the Plan ("Personal Data").

 

You understand that the providing or transferring of Personal Data to the Company is necessary and essential to your participation in the Plan and that your refusal to provide Personal Data or withdrawal of consent to the collection, storage or transfer of Personal Data may affect your ability to participate in the Plan since it would be impossible for the Company to comply with its contractual obligations under the Plan.

 

You understand that your Personal Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Participant's country or elsewhere, and that the recipient's country may have different data privacy laws and protections than the Participant's country.

 

You were informed that the personal data communicated outside of Portugal will be protected identically as provided for in Law No. 67/98, of 26 October, and that you may request a list with the names and addresses of any potential recipients of the Personal Data by contacting your local human resources representative.

 

You authorize the recipients to receive, possess, use, retain and transfer the Personal Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan.

 

You understand that Personal Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan and any potential claim of the Participant.

 

You understand that you may, at any time, exercise of the right of access, rectification and cancelation of your personal data, oppose, request additional information about the storage and processing of Personal Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative (who can be identified on the Company's intranet).

 

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SPAIN

 

Taxes. The following provision supplements Section 1 of this Appendix A:

 

Pursuant to Royal Decree-Law 13/2011 of 16 September (as amended), wealth tax (Impuesto sobre el Patrimonio) has been temporarily restored in Spain. If the Participant's only foreign assets are the Shares and the value of the Shares on 31 December exceeds the specified threshold the Participant will be required to make a declaration to the Spanish tax authorities between 1 January and 31 March of the immediately following year. The Participant much declare foreign rights and assets including (i) ISIN code of Shares; (ii) the name and corporate domicile of the issuing company; and (iii) the number, class, and value of the Shares held as of 31 December.

 

Exchange Controls. The Participant is responsible for complying with exchange control regulations in Spain. Declaration of the acquisition of Shares for statistical purposes to the Direccion General de Comercio e Inversiones (DGCI) of Ministerio de Economia is compulsory (i) if the purchase price exceeds the specified threshold; (ii) if the investor holds a stake of at least 10 percent in the Company; or (iii) if the investor belongs to the Company' s board of directors. If Participants purchase any Shares through the use of a Spanish financial institution, the institution will automatically make the declaration to the DGCI; otherwise the Participant must make the declaration by filing the appropriate form with the DGCI. The Participant must also declare ownership of Shares with the DGCI in January of each year.

 

Data Privacy. The following provisions replace Section 3 of this Appendix A:

 

The Participant's personal data will be processed by Intercept Pharmaceuticals, Inc. (the "Data Controller") with a corporate domicile at 10 Hudson Yards, 37th Floor, New York, NY 10001.

 

The purpose of the processing is to implement the Grant Notice and the Agreement under the Plan, verify eligibility conditions and develop and perform the contractual and legal obligations arising thereof. The processing of the Participant's personal data is necessary for such purposes and its legal basis are the execution and development of the contractual relationship and, if applicable, the compliance with legal duties applicable to the Data Controller. Personal data will be processed whilst the Participant holds the relevant awards and, after this, for six years, or, exceptionally, for the period during which any kind of liability may arise from a legal or contractual obligation applicable to the Data Controller.

 

The Participant's personal data will be transferred outside the European Economic Area, to the United States, where Intercept Pharmaceuticals, Inc. is located. A copy of the relevant appropriate safeguards subscribed in order to carry out such international data transfer can be requested from human resources. Additionally, the Participant's personal data may be disclosed only to those group companies which may have a legal basis for processing this personal data.

 

The Participant may exercise his/her right of access, rights to rectification, erasure, objection, data portability, restriction of processing and any other right recognized by the applicable regulations from time to time, by sending a request to human resources. The Participant may also file any claim or request related to his or her data protection rights with the relevant supervisory authority. The personal data processed for the purposes described above derives from the execution of the Participant's employment agreement or, in case that the Participant is an independent professional, the relevant services agreement.

 

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UNITED KINGDOM

 

MC Joint Election. Unless the Company permits otherwise, this Option may not be exercised unless and until the Company (or the employing entity) has received from the Participant a duly completed joint election with the Company and his or her employing entity (in the form prescribed by the Company from time to time) to the effect that the Participant will become liable, so far as permissible by law, for the whole of employer national insurance contributions which may arise in connection with this Option and the Shares which may be or are acquired on the exercise of this Option.

 

Taxes. The following provision supplements Section 1 of this Appendix A:

 

The amount of the Participant Tax Liability may be withheld in cash from such remuneration. The Participant further agrees that, if the Company does not withhold an amount from the Participant's remuneration sufficient to satisfy the Participant Tax Liability, the Participant will reimburse the Company on demand, in cash, for the amount under-withheld. Without limiting the foregoing, the Participant agrees (i) that the Participant shall, promptly upon being requested to do so by the Company, the Participant's employer or former employer (as appropriate), elect (using a form approved by HM Revenue & Customs) that the whole or any part of the liability for employer National Insurance Contributions shall be transferred to the Participant; and (ii) to enter into a joint election, under section 431(1) or 431(2) of the Income Tax (Earnings & Pensions) Act 2003, in respect of the Shares delivered pursuant to the award, if required to do so by the Company, the Participant's employer or former employer, before, on or within 14 days after any date of delivery of such Shares.

 

A-11

Exhibit (a)(1)(M)

 

Date: 8/16/2021

To: All ICPT Employees

 

From: David Ford, Chief Human Resources Officer

 

Subject: THE STOCK OPTION EXCHANGE PROGRAM KICKS OFF TODAY

 

Dear Colleagues:

 

We are excited to announce that we are formally kicking off the stock option exchange program today. The plan is to make the program available from today until 11:59 p.m., Eastern Daylight Time, on September 17, 2021 (24 business days).

 

Please note, all eligible employees will be receiving an e-mail today from our exchange service provider, Aon. This email will provide you with account access to the exchange election website. The email should arrive shortly from awardchoice@aon.com - and will walk you through accessing your account and starting the process. You must use your Intercept e-mail for account access.

 

Want to understand more about the exchange? We created a video that walks you through some of the basics. You can find it here: https://equitv.aon.com/viewer/Intercept21/UWSO/0717af6d50f7450c.

 

There is also additional content on the Aon Exchange Website, including the legal details that govern this transaction that has been filed with the SEC as part of this process. In addition, we will be hosting webinars to discuss in greater detail how exchanges work and provide an overview of the exchange election site. Eligible employees will receive invitations to the webinars over the next few days.

 

Lastly, you are of course always welcome to email the Total Rewards team with questions on the program at totalrewards@interceptpharma.com.

 

Best regards.

 

David Ford

Chief Human Resources Officer

 

Important Legal Information

 

This notice does not constitute an offer. The full terms of the Exchange Offer are described in the Schedule TO and accompanying documents, which you may access via the Document Library within the exchange election site, on our website at https://ir.interceptpharma.com/financial-information/sec-filings or through the SEC website at www.sec.gov. Capitalized terms used but not otherwise defined in this email shall have the meanings set forth in the Offer to Exchange Eligible Options for New Options, dated August 16, 2021.

 

 

 

Exhibit (a)(5)(A)

GRAPHIC

Storyboard: Intercept Pharma | UWSO | Intercept's Option Exchange Program Overview (2021) Scene 1 (00m00s - 00m06s) Words on-screen: Intercept’s Option Exchange Program Overview Description: https://equitv.aon.com/viewer/Intercept21/UWSO/0717af6d50f7450c

GRAPHIC

Storyboard: Intercept Pharma | UWSO | Intercept's Option Exchange Program Overview (2021) Scene 2 (00m06s - 00m14s) Words on-screen: • Welcome to Intercept’s Video on the option exchange program • UWSO: Intercepts Option Exchange Program Overview Script: Welcome to Intercept’s Video on the option exchange program. We’re excited to bring you this opportunity, as this may be welcome to you…

GRAPHIC

Storyboard: Intercept Pharma | UWSO | Intercept's Option Exchange Program Overview (2021) Scene 3-6 (00m14s - 00m23s) Words on-screen: • Welcome to Intercept’s Video on the option exchange program • UWSO: Intercepts Option Exchange Program Overview Script: …but you should be aware option exchanges have certain requirements that are important to understand when deciding if this is right for you.

GRAPHIC

Storyboard: Intercept Pharma | UWSO | Intercept's Option Exchange Program Overview (2021) Scene 7 (00m23s - 00m33s) Words on-screen: • Underwater Option: An option whose exercise price, as stated in your grant agreement, is above the current trading price of the stock • Exercise Price • Stock Price • UWSO: Intercepts Option Exchange Program Overview Script: First – let’s define an underwater option. An underwater option is an option whose exercise price, as stated in your grant agreement, is above the current trading price of the stock.

GRAPHIC

Storyboard: Intercept Pharma | UWSO | Intercept's Option Exchange Program Overview (2021) Scene 8 - 9 (00m33s - 00m38s) Words on-screen: • Underwater Option: An option whose exercise price, as stated in your grant agreement, is above the current trading price of the stock • Exercise Price • Stock Price • A regular occurrence • UWSO: Intercepts Option Exchange Program Overview Script: Though this is a regular occurrence with options…

GRAPHIC

Storyboard: Intercept Pharma | UWSO | Intercept's Option Exchange Program Overview (2021) Scene 10 (00m38s - 00m42s) Words on-screen: • Underwater Option: An option whose exercise price, as stated in your grant agreement, is above the current trading price of the stock • Exercise Price • Stock Price • UWSO: Intercepts Option Exchange Program Overview Script: …when an option becomes significantly underwater, employees often lose sight of the value in that, if the stock rebounds…

GRAPHIC

Storyboard: Intercept Pharma | UWSO | Intercept's Option Exchange Program Overview (2021) Scene 11 - 12 (00m42s - 00m45s) Words on-screen: • Underwater Option: An option whose exercise price, as stated in your grant agreement, is above the current trading price of the stock • Exercise Price • Stock Price • UWSO: Intercepts Option Exchange Program Overview Script: …it will be of real value again.

GRAPHIC

Storyboard: Intercept Pharma | UWSO | Intercept's Option Exchange Program Overview (2021) Scene 13 (00m45s - 00m51s) Words on-screen: • Underwater Option: An option whose exercise price, as stated in your grant agreement, is above the current trading price of the stock • 5+ Years • UWSO: Intercepts Option Exchange Program Overview Script: Especially with options that have five or more years left, it’s a lot of opportunity to make up for a drop in stock price…

GRAPHIC

Storyboard: Intercept Pharma | UWSO | Intercept's Option Exchange Program Overview (2021) Scene 14 - 15 (00m51s - 00m57s) Words on-screen: • Underwater Option: An option whose exercise price, as stated in your grant agreement, is above the current trading price of the stock • All options have some degree of value as long as Intercept is still around • UWSO: Intercepts Option Exchange Program Overview Script: …and with that, all options have some degree of value as long as Intercept is still around.

GRAPHIC

Storyboard: Intercept Pharma | UWSO | Intercept's Option Exchange Program Overview (2021) Scene 16 (00m57s - 01m02s) Words on-screen: • Underwater Option: An option whose exercise price, as stated in your grant agreement, is above the current trading price of the stock • All options have some degree of value as long as Intercept is still around • Opportunity • UWSO: Intercepts Option Exchange Program Overview Script: But we also know it is important to many of you to see opportunity over shorter horizons.

GRAPHIC

Storyboard: Intercept Pharma | UWSO | Intercept's Option Exchange Program Overview (2021) Scene 17 - 19 (01m02s - 01m18s) Words on-screen: • Option Exchange • Underwater Option • New Option • Exchange • UWSO: Intercepts Option Exchange Program Overview Script: An option exchange is an opportunity for eligible employees with eligible underwater option grants to exchange their options for new ones.

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Storyboard: Intercept Pharma | UWSO | Intercept's Option Exchange Program Overview (2021) Scene 20 - 21 (01m18s - 01m31s) Words on-screen: • Option Exchange • Employer • Employees • Shareholders • Exchange • UWSO: Intercepts Option Exchange Program Overview Script: There are rules around these types of exchanges to assure that we are protecting both our interests as an employer, doing what’s best for employees, while also needing to assure our shareholders that we are acting in their best interests.

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Storyboard: Intercept Pharma | UWSO | Intercept's Option Exchange Program Overview (2021) Scene 22 - 24 (01m31s - 01m41s) Words on-screen: • Option Exchange • Underwater Options: and option exchanges are not taken lightly • Windfall • UWSO: Intercepts Option Exchange Program Overview Script: #1 in shareholders’ views is assuring that this is not taken lightly and that it doesn’t become a windfall for employees or executives.

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Storyboard: Intercept Pharma | UWSO | Intercept's Option Exchange Program Overview (2021) Scene 25 (01m41s - 01m46s) Words on-screen: • Option Exchange • Underwater Options: and option exchanges are not taken lightly • Windfall • Tender Offering • 1 • UWSO: Intercepts Option Exchange Program Overview Script: It is also important for you to understand, Intercept will only make this offering for these options once.

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Storyboard: Intercept Pharma | UWSO | Intercept's Option Exchange Program Overview (2021) Scene 26 - 27 (01m46s - 02m00s) Words on-screen: • Option Exchange • Underwater Options: and option exchanges are not taken lightly • Windfall • Tender Offering • 1 • Executives who are Officers of the company and board members will not be eligible for Intercept’s exchange offering • UWSO: Intercepts Option Exchange Program Overview Script: There will not be another tender offering during the life of these options, so it’s important you make this evaluation now. Executives who are Officers of the company and board members will not be eligible for Intercept’s exchange offering.

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Storyboard: Intercept Pharma | UWSO | Intercept's Option Exchange Program Overview (2021) Scene 28 (02m00s - 02m17s) Words on-screen: • Option Exchange Example • The Tender Offering • Click on any of the videos linked above to learn more. • UWSO: Intercepts Option Exchange Program Overview Script: For an example on how exchanges work, click here. For more on the tender offering, click here.

Exhibit (a)(5)(B)

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Storyboard: Intercept Pharma | UWSO | The Tender Offering (2021) Scene 1 (00m00s - 00m06s) Words on-screen: • The Tender Offering Description: https://equitv.aon.com/viewer/Intercept21/UWSO/0717af6d50f7450c

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Storyboard: Intercept Pharma | UWSO | The Tender Offering (2021) Scene 2 - 3 (00m06s - 00m13s) Words on-screen: • Making the Election • Tender Offering: Allows you to make the decision on the option exchange • If you do not make an election, you will retain your original awards • UWSO: The Tender Offering Script: For making the election, Intercept will have a tender offering allowing you to make the decision on the option exchange.

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Storyboard: Intercept Pharma | UWSO | The Tender Offering (2021) Scene 4 - 5 (00m13s - 00m18s) Words on-screen: • Making the Election • Tender Offering: Allows you to make the decision on the option exchange • If you do not make an election, you will retain your original awards • UWSO: The Tender Offering Script: If you do not make an election, you will retain your original awards.

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Storyboard: Intercept Pharma | UWSO | The Tender Offering (2021) Scene 6 (00m18s - 00m23s) Words on-screen: • Making the Election • Tender Offering: Allows you to make the decision on the option exchange • If you do not make an election, you will retain your original awards • August 16, 2021 – September 17, 2021 • UWSO: The Tender Offering Script: The tender offer period will last close to one month. You will be provided online access to make your election. At any point in time during the tender offering…

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Storyboard: Intercept Pharma | UWSO | The Tender Offering (2021) Scene 7 - 8 (00m23s - 00m31s) Words on-screen: • Making the Election • Tender Offering: Allows you to make the decision on the option exchange • If you do not make an election, you will retain your original awards • August 16, 2021 – September 17, 2021 • Enter or modify your elections • UWSO: The Tender Offering Script: …you can enter or even modify your elections.

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Storyboard: Intercept Pharma | UWSO | The Tender Offering (2021) Scene 9 - 11 (00m31s - 00m40s) Words on-screen: • Making the Election • Tender Offering: Allows you to make the decision on the option exchange • If you do not make an election, you will retain your original awards • August 16, 2021 – September 17, 2021 • Once the election period closes, you are locked into your final election • You will be notified of your new award details • UWSO: The Tender Offering Script: Once the election period closes, you are locked into your final election and, if exchanged, you will be notified of your new award details following the exchange.

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Storyboard: Intercept Pharma | UWSO | The Tender Offering (2021) Scene 12 - 14 (00m40s - 00m54s) Words on-screen: • Intercept cannot advise you on what makes sense for you • UWSO: The Tender Offering Script: Much more information will be made available as you go through the process. Intercept cannot advise you on what makes sense for you, but definitely ask as many questions as needed, so you have the information you need to make the right decision for you.

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Storyboard: Intercept Pharma | UWSO | The Tender Offering (2021) Scene 15 (00m54s - 01m08s) Words on-screen: • Option Exchange Example • Intercept’s Option Exchange Program Overview • Click on any of the videos linked above to learn more. • UWSO: The Tender Offering Script: For an example on how exchanges work, click here. To view the overview again, click here.

Exhibit (a)(5)(C)

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Storyboard: Intercept Pharma | UWSO | Option Exchange Example (2021) Scene 1 (00m00s - 00m06s) Words on-screen: • Option Exchange Example Description: https://equitv.aon.com/viewer/Intercept21/UWSO/0717af6d50f7450c

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Storyboard: Intercept Pharma | UWSO | Option Exchange Example (2021) Scene 2 - 3 (00m06s - 00m30s) Words on-screen: • Example • Note: This example uses hypothetical prices and exchange rates • Intercept’s Stock Price: $20 per share • Exercise Price: $60 ; Option Grants: 1,000 ; Exchange Ratio: 2:1 • Exercise Price: $80 ; Option Grants: 1,000 ; Exchange Ratio: 3:1 • Exercise Price: $100 ; Option Grants: 1,000 ; Exchange Ratio: 3:1 • UWSO: Option Exchange Example Script: As an example, using completely, hypothetical prices and exchange ratios, if Intercept stock is trading at $20, you may have options at $60, $80 and $100. If you had 1,000 option grants for each of the three prices, and if you were offered an exchange at 2-1 for the $60 option and 3-1 for the $80 and $100 options, would it be worth it?

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Storyboard: Intercept Pharma | UWSO | Option Exchange Example (2021) Scene 4 (00m30s - 00m37s) Words on-screen: • Example • Note: This example uses hypothetical prices and exchange rates • Intercept’s Stock Price: $20 per share • Exercise Price: $60 ; Option Grants: 1,000 ; Exchange Ratio: 2:1 • Exercise Price: $80 ; Option Grants: 1,000 ; Exchange Ratio: 3:1 • Exercise Price: $100 ; Option Grants: 1,000 ; Exchange Ratio: 3:1 • 1,000 - $100 Options ; 333 - $20 Options • UWSO: Option Exchange Example Script: Would you trade 1,000, $100 options for 333, $20 options?

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Storyboard: Intercept Pharma | UWSO | Option Exchange Example (2021) Scene 5 - 6 (00m37s - 00m46s) Words on-screen: • Example • Note: This example uses hypothetical prices and exchange rates • Intercept’s Stock Price: $20 per share • Exercise Price: $60 ; Option Grants: 1,000 ; Exchange Ratio: 2:1 • Exercise Price: $80 ; Option Grants: 1,000 ; Exchange Ratio: 3:1 • Exercise Price: $100 ; Option Grants: 1,000 ; Exchange Ratio: 3:1 • 1,000 - $60 Options ; 500 - $20 Options • UWSO: Option Exchange Example Script: What about 1,000, $60 options for 500, $20 options?

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Storyboard: Intercept Pharma | UWSO | Option Exchange Example (2021) Scene 7 - 8 (00m46s - 00m54s) Words on-screen: • Example • Note: This example uses hypothetical prices and exchange rates • Intercept’s Stock Price: $20 per share • Exercise Price: $60 ; Option Grants: 1,000 ; Exchange Ratio: 2:1 • Exercise Price: $80 ; Option Grants: 1,000 ; Exchange Ratio: 3:1 • Exercise Price: $100 ; Option Grants: 1,000 ; Exchange Ratio: 3:1 • 1,000 - $60 Options ; 500 - $20 Options • UWSO: Option Exchange Example Script: Though it is certainly the better deal if the stock stays below $60, there is a break-even for each option that you need to be aware of, where your current option could be worth more than your exchanged option down the road.

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Storyboard: Intercept Pharma | UWSO | Option Exchange Example (2021) Scene 9 - 10 (00m54s - 01m04s) Words on-screen: • Example • Note: This example uses hypothetical prices and exchange rates • Intercept’s Stock Price: $20 per share • Exercise Price: $60 ; Option Grants: 1,000 ; Exchange Ratio: 2:1 • Exercise Price: $80 ; Option Grants: 1,000 ; Exchange Ratio: 3:1 • Exercise Price: $100 ; Option Grants: 1,000 ; Exchange Ratio: 3:1 • You will have a new vesting schedule • Expiration: The new expiration may be shorter than your current grant • UWSO: Option Exchange Example Script: Also, the options will have a new vesting schedule and the new expiration may be shorter than your current grant, and those features might also affect your decision.

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Storyboard: Intercept Pharma | UWSO | Option Exchange Example (2021) Scene 11 - 12 (01m04s - 01m10s) Words on-screen: • Example • This example provides a basic understanding of how exchanges work • Exercise Price: $60 ; Option Grants: 1,000 ; Exchange Ratio: 2:1 • Exercise Price: $80 ; Option Grants: 1,000 ; Exchange Ratio: 3:1 • Exercise Price: $100 ; Option Grants: 1,000 ; Exchange Ratio: 3:1 • You will have a new vesting schedule • Expiration: The new expiration may be shorter than your current grant • UWSO: Option Exchange Example Script: Though your exchange will look different than this example, this provides a basic understanding of how they work.

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Storyboard: Intercept Pharma | UWSO | Option Exchange Example (2021) Scene 13 (01m10s - 01m25s) Words on-screen: • The Tender Offering • Intercept’s Option Exchange Program Overview • Click on any of the videos linked above to learn more. • UWSO: Option Exchange Example Script: For more on the tender offering, click here. To view the overview again, click here.

Exhibit (a)(5)(D)

 

https://cdn.kscope.io/5e562fd6c24fd9e3211bc31cb00d47dc-111_apage005d_page002.jpg  Intercept’s Option ExchangeOffering An Offer to Exchange Eligible Options for New Options Employee Meetings August 2021 – September 2021 FOR INTERNAL USE ONLY. DO NOT DUPLICATE OR DISTRIBUTE

 

 

https://cdn.kscope.io/5e562fd6c24fd9e3211bc31cb00d47dc-111_apage005d_page003.jpg  Introductions Rick Johnson Vice President, Head of Total Rewards David Ford CHRO Michael Stapleton Senior Manager, Global Equity Plans John Hammond Aon FOR INTERNAL USE ONLY. DO NOT DUPLICATE OR DISTRIBUTE2

 

 

https://cdn.kscope.io/5e562fd6c24fd9e3211bc31cb00d47dc-111_apage005d_page004.jpg Agenda How it works Eligibility to participate Eligible options New option terms Ratios and example Timeline for exchange Process Demo Important disclaimers Q & A – send all questions to: totalrewards@interceptpharma.com FOR INTERNAL USE ONLY. DO NOT DUPLICATE OR DISTRIBUTE3

 

 

https://cdn.kscope.io/5e562fd6c24fd9e3211bc31cb00d47dc-111_apage005d_page005.jpg How an Option Exchange Works

 

 

https://cdn.kscope.io/5e562fd6c24fd9e3211bc31cb00d47dc-111_apage005d_page006.jpg How An Option Exchange Works Opportunity to exchange existing underwater options for new ones. Eligible employees and eligible grants Not required – you can retain your existing option grants An underwater option is an option whose exercise price is above the current trading price of the stock. The replacement options granted must be the equivalent value of your current options Will result in change of terms and fewer options for the lower exercise price FOR INTERNAL USE ONLY. DO NOT DUPLICATE OR DISTRIBUTE5

 

 

https://cdn.kscope.io/5e562fd6c24fd9e3211bc31cb00d47dc-111_apage005d_page007.jpg How An Option Exchange Works Continued An option exchange rate/ratio is set up front Different levels of exercise prices can have different exchange rates If the stock is trading at $20, an option with a $60 grant price is worth more than an option with a $100 grant price Ratios were finalized as of the start of the tender offer based on the stock price at that time When the tender offer is completed, if you chose to exchange your existing options for new options, your original award or awards are cancelled, and you receive the new award Important: You can change your election as often as you want prior to the tender period closing. When it closes, your decision is ‘locked.’ FOR INTERNAL USE ONLY. DO NOT DUPLICATE OR DISTRIBUTE6

 

 

https://cdn.kscope.io/5e562fd6c24fd9e3211bc31cb00d47dc-111_apage005d_page008.jpg Eligibility

 

 

https://cdn.kscope.io/5e562fd6c24fd9e3211bc31cb00d47dc-111_apage005d_page009.jpg Eligibility Executive Officers and Board Members are excluded Active employees – at the beginning and end of the tender period Have options that are eligible for the exchange FOR INTERNAL USE ONLY. DO NOT DUPLICATE OR DISTRIBUTE8

 

 

https://cdn.kscope.io/5e562fd6c24fd9e3211bc31cb00d47dc-111_apage005d_page010.jpg Eligible Options | An Outstanding Option Grant price, Exercise price, Strike price, and Option price – 4 terms that mean the same thing – the price you pay for the option Held by an Eligible Participant Outstanding as of the end of the tender offering Granted before February 15, 2020 Has a grant date strike price greater than $50.75 Granted under the 2012 Equity Plan FOR INTERNAL USE ONLY. DO NOT DUPLICATE OR DISTRIBUTE9

 

 

https://cdn.kscope.io/5e562fd6c24fd9e3211bc31cb00d47dc-111_apage005d_page011.jpg New Option Terms

 

 

https://cdn.kscope.io/5e562fd6c24fd9e3211bc31cb00d47dc-111_apage005d_page012.jpg New Option Terms Expected Grant Date September 20, 2021 Exercise Price (Grant / Strike) will be as of close on that date New Options will be Non-Qualified grants which is consistent with our current practice and policy Expiration date will be up to 6.5 years New Vesting – even if grant already vested Vested options – vests 1 year from grant date Unvested options – vests 2 years from grant date FOR INTERNAL USE ONLY. DO NOT DUPLICATE OR DISTRIBUTE11

 

 

https://cdn.kscope.io/5e562fd6c24fd9e3211bc31cb00d47dc-111_apage005d_page013.jpg RatiosandExample *Ratios in your tender offer document FOR INTERNAL USE ONLY. DO NOT DUPLICATE OR DISTRIBUTE12

 

 

https://cdn.kscope.io/5e562fd6c24fd9e3211bc31cb00d47dc-111_apage005d_page014.jpg Current: 1,000 eligible options at original $120.00 grant price Closing Stock Price: on September 20th, is $20.00 Offer to Exchange: Would be receiving 400 new options at $20.00 grant price FOR INTERNAL USE ONLY. DO NOT DUPLICATE OR DISTRIBUTE13

 

 

https://cdn.kscope.io/5e562fd6c24fd9e3211bc31cb00d47dc-111_apage005d_page015.jpg A more detailed example to aid in your decision (#1) Example: 777 eligible options at $100.00 grant price Closing stock price on September 20th is $20 (hypothetical) Offer to exchange would be receiving 444 options at $20 grant price (1.75 – 1) At a hypothetical future Intercept stock price of $80, the Original options still are underwater (no value) Breakeven – $206.67. If the stock exceeds $206.67, retaining your original award would have been more profitable (different ratios and grant prices have different breakeven points) Eligible Option Grant Price Range Original Options Exchanged Options Grant Price $100.00 $20.00 Your Options 777 444 Future ICPT Stock Price $80.00 $80.00 Value --$26,640 Eligible Option Grant Price Range Original Options Exchanged Options Grant Price $100.00 $20.00 Your Options 777 444 Future ICPT Stock Price $206.67 $206.67 Value $82,880 $82,880 At a future ICPT stock price of $80.00, the original options are still underwater and do not have any value, however the exchanged options are now worth $26,640.00 Intercept’s stock price would need to exceed $206.67 for your original options to break even with your new exchanged offer FOR INTERNAL USE ONLY. DO NOT DUPLICATE OR DISTRIBUTE14

 

 

https://cdn.kscope.io/5e562fd6c24fd9e3211bc31cb00d47dc-111_apage005d_page016.jpg A more detailed example to aid in your decision (#2) Example: 750 eligible options at $75.00 grant price Closing stock price on September 20th is $20 (hypothetical) Offer to exchange would be receiving 500 options at $20 grant price (1.5 – 1). At a hypothetical future Intercept stock price of $70, the Original options still are underwater (no value) Breakeven – $185.00. If the stock exceeds $185.00, retaining your original award would have been more profitable (different ratios and grant prices have different breakeven points) Eligible Option Grant Price Range Original Options Exchanged Options Grant Price $75.00 $20.00 Your Options 750 500 Future ICPT Stock Price $70.00 $70.00 Value --$25,000.00 Eligible Option Grant Price Range Original Options Exchanged Options Grant Price $75.00 $20.00 Your Options 750 500 Future ICPT Stock Price $185.00 $185.00 Value $82,500.00 $82,500.00 At a future ICPT stock price of $70.00, the original options are still underwater and do not have any value, however the exchanged options are now worth $25,000.00 Intercept’s stock price would need to exceed $185.00 for your original options to break even with your new exchanged offer FOR INTERNAL USE ONLY. DO NOT DUPLICATE OR DISTRIBUTE15

 

 

https://cdn.kscope.io/5e562fd6c24fd9e3211bc31cb00d47dc-111_apage005d_page017.jpg TimelineForExchange Grant Date September 20th Early October BAML System Updates with New Grant Paperwork Opened August 16th Closes Friday, September 17th at 11:59PM (EDT)* Exchange Statements Week of September 20th The Company retains the ability to extend the closing date from Friday, September 17th. If we do so, we will let you know. That would mean that the grant date (and subsequent events) would occur later as well. FOR INTERNAL USE ONLY. DO NOT DUPLICATE OR DISTRIBUTE16

 

 

https://cdn.kscope.io/5e562fd6c24fd9e3211bc31cb00d47dc-111_apage005d_page018.jpg Process You received an email with election account opening details We’ll demo this shortly You can go in the Aon site as often as you want and change your ‘current’ election until it closes It is locked at close REMINDER Grant price determined with the September 20th stock price * Final exchange statements will be sent out week of September 20th YOU MUST ACCEPT your new grant when delivered via BAML system in October (same process as all standard grants) The Company retains the ability to extend the closing date from Friday, September 17th. If we do so, we will let you know. That would mean that the grant date (and subsequent events) would occur later as well. FOR INTERNAL USE ONLY. DO NOT DUPLICATE OR DISTRIBUTE17

 

 

https://cdn.kscope.io/5e562fd6c24fd9e3211bc31cb00d47dc-111_apage005d_page019.jpg ImportantDisclaimers Intercept cannot advise you on what to do – this is a financial decision that is entirely yours Send us an email asking for advice, and we will be required to say ‘read through your materials’ / check out the Website / talk to your advisor’ You must complete your tender offer on time You will receive an immediate e-mail confirmation with your elections – every time you submit Keep it for documentation It’s only 25 business days long. This is a one-time event. FOR INTERNAL USE ONLY. DO NOT DUPLICATE OR DISTRIBUTE18

 

 

https://cdn.kscope.io/5e562fd6c24fd9e3211bc31cb00d47dc-111_apage005d_page020.jpg Demo You have an e-mail from Aon (awardchoice@aon.com) You’ll click the link – use the provided code and register with your Intercept e-mail only Aon cannot validate your account with a Gmail, or other personal email You will get an authentication e-mail FOR INTERNAL USE ONLY. DO NOT DUPLICATE OR DISTRIBUTE

 

 

https://cdn.kscope.io/5e562fd6c24fd9e3211bc31cb00d47dc-111_apage005d_page021.jpg  Q&A – email questions to: totalrewards@interceptpharma.com FOR INTERNAL USE ONLY. DO NOT DUPLICATE OR DISTRIBUTE20

 

 

Exhibit (a)(5)(E)

  

Cover – Transition to Slide 2

 

Slide 2: Hello and welcome to our presentation on Intercept’s Option Exchange Offering – which is now open as of August 16th. I'm Rick Johnson, and I am the head of Total Rewards for Intercept. I am joined by David Ford, our chief human resources officer, and Michael Stapleton, Sr. Manager of equity plans. We also have John Hammond from Aon, who will help us walk through a demo of the exchange site today.

 

Before we dive into the presentation, David would you like to say a few words on behalf of Management? Turn over to David.

 

David:

 

Thanks Rick and hello everyone. We’re excited to be able to talk to you today about the Option Exchange Offering.

 

This has been a project that has been a long time in the making and that a lot of people in the company have worked hard on since late last year when the idea was first being developed. I’m grateful to the team, made up of members of our HR, Legal and Finance who worked on the initiative and got us to the point where we could open the Exchange on the 16th of August.

 

I’m also grateful to the Board of Directors – and particularly the Compensation Committee – for their support in accepting and understanding the need for this initiative and being actively involved in our dialogue with shareholders on the project.

 

Finally, I would like to acknowledge the very strong support we received from shareholders for the Exchange, with the proposal receiving more than 98% votes in favor at the recent Annual General Meeting.

 

I’d like to think that we got this support because our proposal is clear and fair; fair to shareholders from a value standpoint – but also fair to our people who make up Intercept. My hope with the Option Exchange Offering is that it provides an opportunity for Intercept employees who want to take advantage of the Offering, to reset their long-term incentives and look forward to being part of the exciting journey ahead of us.

 

While much good work has been done to get us to this point, the Exchange is not a simple tool – so I’m going to stop here and hand back to Rick so that we can make the best use of the time we have together to tell you as much as we can about the Option Exchange Offering.

 

Rick: Thanks David – so with that said, let’s get started with the presentation.

 

Slide 3: Starting with the Agenda – we’ll discuss how the exchange program works, eligibility to participate, a review of the details in terms of the eligible options, new option grant terms, the ratio of how your existing options can be exchanged for new ones – including examples, discuss the important timelines and process, go through a demonstration of the tool - and wrap up with time for your questions.

 

 

 

 

From a housekeeping perspective, we’ll have all lines muted – and if you have questions as we go, certainly please feel free to send them to totalrewards@interceptpharma.com and we'll get to your questions at the end. This will make it easier to manage and respond in this remote environment. I’m also going to be speaking a little slower and more deliberate that I typically would to ensure I don’t gloss over any of these fairly technical details that will be discussed today.

  

Slide 4: Ok moving on to how to how an options exchange works.

 

Slide 5: This program provides you with an opportunity to exchange eligible existing underwater options for new ones during the open window of what is known as the Tender Offer period that runs from August 16th 2021 to September 17th 2021. There was a brief video sent out in the initial e-mail from David on Monday August 16th. If you’ve had a chance to watch that, it goes through a nice explanation of option exchanges and how they work. We're going to discuss some the same type of information today, but in more detail.

 

There are certain employees that are not considered eligible – we’ll discuss that shortly – but note that no executive officers or members of the Board of Directors are eligible.

 

As I referenced the term “eligible underwater options” a moment ago – understand that not every grant can be exchanged – and we’ll also talk about this in the coming slides.

 

Your participation is optional, and you are not required to make an election under the exchange. You can keep your current options and you do not have to do take part in exchange if you do not want to.

 

Definitionally speaking, an underwater option is an option whose grant price (also known as Option price, Exercise price and strike price – all synonyms) is above or higher than the current trading price of the stock.

 

As a rule, the replacement option that you receive in exchange must be generally equivalent in value to your current option. So, for that to happen, you're going to end up with fewer options at the new lower strike price – and that is how the math will end up working from a value perspective. The exchange will result in a change of terms with respect to vesting as well and we’ll talk more about that shortly.

 

Slide 6 (continued from slide 5): The exchange ratio is set up front. Different option grant prices can have different exchange ratios and that is the case with ours. And it makes sense if you think about it – the more an option is underwater, the lower the value, so options are grouped together in ranges for the exchange ratios. Ratios were finalized right before the start of the tender offer period. When the offer period is completed, if you choose to exchange your eligible options, your original options award is canceled, and you receive the new award. You can change your election as often as you want prior to the close of the period. When it closes, then your decision is locked.

 

Slide 7: Eligibility - Eligibility

 

Slide 8: As mentioned, executive officers and board members are excluded from the offer. You also have to be an active employee, not just at the beginning of the tender offer period, but also at the end of the tender offering period. And you must have options that are eligible for the exchange. Let’s talk about that next.

 

 

 

 

Slide 9: Eligible options. First thing – your option must be outstanding, as in, it needs to still exist – and is held by an eligible participant as defined previously. It must be outstanding as of the end of the tender offering – anything that expires in the next few weeks during the offer period would not be included as eligible. The award must be granted before February 15th, 2020 – and have a grant price greater than $50 dollars and 75 cents - And of course the options must have been granted under the 2012 equity plan – which is our current Equity Plan.

  

It’s important to understand, I said grant a moment ago, but we’ll use the term "exercise price" in the official tender offer documents. We may also need to say, "option price". Again, all synonymous terms – and I think you are most familiar with "grant price" as that is what the Merrill Lynch system uses. Again, all four of those terms mean exactly the same thing. It's the price you pay for the option.

 

Slide 10: - New option terms.

 

Slide 11: The expected grant date will be September 20th – which is the Monday after the exchange closes. The grant price will be the stock’s closing price on that day. New options will be non-qualified grants, which is consistent with what we're currently doing. The Expiration date will be up to six and a half years. Also - even if the grant is currently vested, there will be a new vesting schedule for the entire grant. The exchanged equivalent of any vested options will have a new 1-year vest from the grant date, and for any unvested options that are exchanged, they will have a 2-year vest – which means they will vest 2 years from the grant date.

 

Slide 12: Okay. Slide 12. This is where a lot of this will start to get clarified. Here are the grant price ranges for the existing options and what the exchange rates or ratios will be for those options.

 

So, as you can see for any options with a grant price of $50.75 to $75, the ratio is 1.50 to 1. So, to be clear, for every 1 and a half options you exchange within this tier of grant price, you will receive 1 option back in return. Whereas for $75.01 to $115, it’s 1 ¾ to 1. For $115.01 to $125 the ratio is 2 ½ to 1. And above $125 – it will be 4 ½ to 1. As I mentioned earlier, the more an option is underwater, the lower the value, so therefore, for the exchange to be of relative equal value at the new grant price, you need to exchange more options.

 

Slide 13: Let’s look at an example – and here we are just focusing on the exchange math. Let's say you have one thousand eligible options at a $120 grant price or strike price – and then let’s assume the closing stock price on September 20th is $20. Here you would receive 400 new options, as in you exchanged two and a half options for every 1 you get back. So, take the 1,000 original options, divided by 2 point 5. If you exchange, you're going to get 400 new options at a new grant or strike price of $20.

 

 

 

 

Slide 14: Now we put together another slightly more detailed example that is designed to allow you to see a side-by-side comparison on how the math works for the exchange relative to a break-even point. Here you will see we have assumed there are 777 eligible options, at a $100 original grant price – and let's say you chose to exchange them at the 1.75: 1 ratio - - this would result in 444 new options at a $20 grant price (so essentially, we just took 777 original options / the 1.75 ratio = which results in 444 new options).

 

Using that information and a hypothetical future intercept stock price of $80, the original options still would not have any profit to them at that point. They would still be underwater. But if you had elected to exchange, your new exchanged grant would be worth $26 thousand, Six hundred and forty dollars.

 

Now let’s have a look at the break-even. In this example, it’s $206.67. Intercepts future stock price would need to exceed $206.67 for the original options to be more financially beneficial. In this case, at a $206.67 stock price, the options would net $82,880 for both versions.

 

Slide 15: Here is a similar side-by-side example, just with a different ratio to show you that, even with the ratio changing or other inputs changing, conceptually speaking, the calculation is the same. Here you will see we have assumed there are 750 eligible options, at a $75 original grant price – and let's say you chose to exchange them at the 1.50: 1 ratio - - this would result in 500 new options at a $20 grant price (750 / 1.5 = 500).

 

Using that information and a hypothetical future intercept stock price of $70, the original options still would not have any profit to them at that point. They would still be underwater. But if you had elected to exchange, your new exchanged grant would be worth $25 thousand dollars.

 

Now let’s have a look at the break-even. In this example, it’s $185.00 Intercepts future stock price would need to exceed $185.00 for the original options to be more financially beneficial. In this case, at a $185 stock price, the options would net $82,500 for both versions.

 

Slide 16: Let’s now review the timeline. As mentioned, the tender period opened August 16th and closes Friday, September 17th. The grant date for the new options however will be September 20th – the Monday after the exchange period closes. Exchange statements will be created the week of the September 20th and then you'll be looking for the Bank of America Merrill Lynch system to be updated with the new awards and the new grant paperwork in the early October timeframe.

 

Slide 17: The process. So, by now, you’ve received an email from Aon with your election account opening details and links. We'll go ahead and demo the site here shortly – but know that that you can go into the site as often as you want during the offer period and change your election until the period closes. And just as a reminder again, your final election is locked in at the close – and the grant price for your award is determined with the September 20th closing stock price. Final exchange statements will be sent out week of September 20th. Lastly and Importantly, we need you to accept your new grant when delivered via the Merrill Lynch system – which is same process you are used to for standard equity grants.

 

 

 

 

Slide 18: Before I turn it over to John to provide a demo of the exchange site, just a friendly heads up that we are not able to provide any financial advice and cannot advise you on what to do. This is a financial decision that is entirely yours. We are happy to answer any questions we can about what has been covered in today’s program, but we cannot tell you if you should or should not participate in the program. Be sure to keep your election documents safe and be mindful of the deadline of September 17th – as you must complete your tender offer on time – so please don’t wait until the last day to make your elections! And with that, I’ll hand over to John to talk about accessing the site and giving a demo. John, I’ll pass you the ball and you can take it from here.

 

Demo script:

 

Slide 19: You received an email on Monday the 16th that looked like this one on the top left. If you have clicked through, you will receive an email that looked like the bottom one saying confirm your email address. The email was from awardchoice@aon.com. Click the link, use the provider code, register with an intercept email only. Aon cannot validate your personal emails and since this is connected to Intercept, we will use your Intercept email to authenticate and provide you access to your election information.

 

Now let’s link over to the site. Most people can navigate a website and this one is quite simple. Across the top, we have 5 links for pages – Home, FAQ, Document Library, My Options and Logout. The home page shows you a snapshot of the awards. What’s outstanding and what can be exchanged.

 

The FAQ page shows frequently asked questions – you’ll have access to those. The document library shows the official exchange documents and has a copy of this PowerPoint deck. My Options is where all the work gets done. On the left side you have your existing options that are eligible for the exchange. On the right side, you have the ratios applied and what you would be exchanging for. You do not know the final grant price, but this gives you how many new options you would receive. The last column shows ‘do not exchange’ as the default, and this is where you select your grants to exchange. I will select a couple. Here you will get a pop up – another view, but you have not confirmed yet. I will confirm and submit. The dot lets you know it’s working. And you exit to the home page. Here you will see the highlighted rows – those are the ones I selected. This helps you see visually that those are different than the others. If I go back to my options – same thing, except now the default for those 2 is exchange. If I exit and come back in a week, this will still be there. We want it to be easy to know if you exchanged everything or nothing or split your decision.

 

You will also get an email with the confirmation from awardchoice within a minute or 2. You will receive an email every time you submit changes.

 

Slide 20: Let’s go to the questions that came into the e-mail