Exhibit 10.3

 

KINIKSA PHARMACEUTICALS, LTD.

2018 INCENTIVE AWARD PLAN

 

ARTICLE I.

PURPOSE

 

The Plan’s purpose is to enhance the Company’s ability to attract, retain and
motivate persons who make (or are expected to make) important contributions to
the Company by providing these individuals with equity ownership
opportunities.  Capitalized terms used in the Plan are defined in Article XI.

 

ARTICLE II.

ELIGIBILITY

 

Service Providers are eligible to be granted Awards under the Plan, subject to
the limitations described herein.

 

ARTICLE III.

ADMINISTRATION AND DELEGATION

 

3.1         Administration.  The Plan is administered by the Administrator.  The
Administrator has authority to determine which Service Providers receive Awards,
grant Awards and set Award terms and conditions, subject to the conditions and
limitations in the Plan.  The Administrator also has the authority to take all
actions and make all determinations under the Plan, to interpret the Plan and
Award Agreements and to adopt, amend and repeal Plan administrative rules,
guidelines and practices as it deems advisable.  The Administrator may correct
defects and ambiguities, supply omissions and reconcile inconsistencies in the
Plan or any Award as it deems necessary or appropriate to administer the Plan
and any Awards.  The Administrator’s determinations under the Plan are in its
sole discretion and will be final and binding on all persons having or claiming
any interest in the Plan or any Award.

 

3.2         Appointment of Committees.  To the extent Applicable Laws permit,
the Board may delegate any or all of its powers under the Plan to one or more
Committees or officers of the Company or any of its Subsidiaries.  The Board may
abolish any Committee or re-vest in itself any previously delegated authority at
any time.

 

ARTICLE IV.

 SHARES AVAILABLE FOR AWARDS

 

4.1        Number of Shares.  Subject to adjustment under Article VIII and the
terms of this Article IV, Awards may be made under the Plan covering up to the
Overall Share Limit.  As of the Plan’s effective date under Section 10.3, the
Company will cease granting awards under the Prior Plans; however, Prior Plan
Awards will remain subject to the terms of the applicable Prior Plan. Shares
issued under the Plan may consist of authorized but unissued Shares, Shares
purchased on the open market or Shares held in treasury.

 

4.2          Share Recycling.  If all or any part of an Award or Prior Plan
Award expires, lapses or is terminated, exchanged for cash, surrendered,
repurchased, canceled without having been fully exercised or forfeited, in any
case, in a manner that results in the Company acquiring Shares covered by the
Award or Prior Plan Award at a price not greater than the price (as adjusted to
reflect any Equity Restructuring) paid by the Participant for such Shares or not
issuing any Shares covered by the Award or Prior Plan Award, the unused Shares
covered by the Award or Prior Plan Award will, as applicable, become or again be
available

 

 

for Award grants under the Plan.  Further, Shares delivered (either by actual
delivery or attestation) to the Company by a Participant to satisfy the
applicable exercise or purchase price of an Award or Prior Plan Award and/or to
satisfy any applicable tax withholding obligation, will, as applicable, become
or again be available for Award grants under the Plan.  The payment of Dividend
Equivalents in cash in conjunction with any outstanding Awards shall not count
against the Overall Share Limit.

 

4.3        Incentive Stock Option Limitations.  Notwithstanding anything to the
contrary herein, no more than 27,915,000 Shares may be issued pursuant to the
exercise of Incentive Stock Options.

 

4.4        Substitute Awards.  In connection with an entity’s amalgamation,
merger or consolidation with the Company or the Company’s acquisition of an
entity’s property or shares, the Administrator may grant Awards in substitution
for any options or other shares or share-based awards granted before such
amalgamation, merger or consolidation by such entity or its
affiliate.  Substitute Awards may be granted on such terms as the Administrator
deems appropriate, notwithstanding limitations on Awards in the
Plan.  Substitute Awards will not count against the Overall Share Limit (nor
shall Shares subject to a Substitute Award be added to the Shares available for
Awards under the Plan as provided above), except that Shares acquired by
exercise of substitute Incentive Stock Options will count against the maximum
number of Shares that may be issued pursuant to the exercise of Incentive Stock
Options under the Plan. Additionally, in the event that a company acquired by
the Company or any Subsidiary or with which the Company or any Subsidiary
combines has shares available under a pre-existing plan approved by shareholders
and not adopted in contemplation of such acquisition or combination, the shares
available for grant pursuant to the terms of such pre-existing plan (as
adjusted, to the extent appropriate, using the exchange ratio or other
adjustment or valuation ratio or formula used in such acquisition or combination
to determine the consideration payable to the equity holders of the entities
party to such acquisition or combination) may be used for Awards under the Plan
and shall not reduce the Shares authorized for grant under the Plan (and Shares
subject to such Awards shall not be added to the Shares available for Awards
under the Plan as provided above); provided that Awards using such available
shares shall not be made after the date awards or grants could have been made
under the terms of the pre-existing plan, absent the acquisition or combination,
and shall only be made to individuals who were not Employees or Directors prior
to such acquisition or combination.

 

ARTICLE V.

 SHARE OPTIONS AND SHARE APPRECIATION RIGHTS

 

5.1        General.  The Administrator may grant Options or Share Appreciation
Rights to Service Providers subject to the limitations in the Plan, including
any limitations in the Plan that apply to Incentive Stock Options.  The
Administrator will determine the number of Shares covered by each Option and
Share Appreciation Right, the exercise price of each Option and Share
Appreciation Right, the vesting conditions of each Option and Share Appreciation
Right, and the conditions and limitations applicable to the exercise of each
Option and Share Appreciation Right.  A Share Appreciation Right will entitle
the Participant (or other person entitled to exercise the Share Appreciation
Right) to receive from the Company upon exercise of the exercisable portion of
the Share Appreciation Right an amount determined by multiplying the excess, if
any, of the Fair Market Value of one Share on the date of exercise over the
exercise price per Share of the Share Appreciation Right by the number of Shares
with respect to which the Share Appreciation Right is exercised, subject to any
limitations of the Plan or that the Administrator may impose and payable in
cash, Shares valued at Fair Market Value or a combination of the two as the
Administrator may determine or provide in the Award Agreement.

 

5.2        Exercise Price.  The Administrator will establish each Option’s and
Share Appreciation Right’s exercise price and specify the exercise price in the
Award Agreement.  The exercise price will not

 

2

 

be less than 100% of the Fair Market Value or par value per Share, whichever is
greater, on the grant date of the Option or Share Appreciation Right.

 

5.3         Duration.  Each Option or Share Appreciation Right will be
exercisable at such times and as specified in the Award Agreement, provided that
the term of an Option or Share Appreciation Right will not exceed ten
years.  Notwithstanding the foregoing and unless determined otherwise by the
Company, in the event that on the last business day of the term of an Option or
Share Appreciation Right (other than an Incentive Stock Option) (i) the exercise
of the Option or Share Appreciation Right is prohibited by Applicable Law, as
determined by the Company, or (ii) Shares may not be purchased or sold by the
applicable Participant due to any Company insider trading policy (including
blackout periods) or a “lock-up” agreement undertaken in connection with an
issuance of securities by the Company, the term of the Option or Share
Appreciation Right shall be extended until the date that is thirty (30) days
after the end of the legal prohibition, black-out period or lock-up agreement,
as determined by the Company; provided, however, in no event shall the extension
last beyond the ten year term of the applicable Option or Share Appreciation
Right.  Notwithstanding the foregoing, if the Participant, prior to the end of
the term of an Option or Share Appreciation Right, violates the non-competition,
non-solicitation, confidentiality or other similar restrictive covenant
provisions of any employment contract, confidentiality and nondisclosure
agreement or other agreement between the Participant and the Company or any of
its Subsidiaries, the right of the Participant and the Participant’s transferees
to exercise any Option or Share Appreciation Right issued to the Participant
shall terminate immediately upon such violation, unless the Company otherwise
determines.  In addition, if, prior to the end of the term of an Option or Share
Appreciation Right, the Participant is given notice by the Company or any of its
Subsidiaries of the Participant’s Termination of Service by the Company or any
of its Subsidiaries for Cause, and the effective date of such Termination of
Service is subsequent to the date of the delivery of such notice, the right of
the Participant and the Participant’s transferees to exercise any Option or
Share Appreciation Right issued to the Participant shall be suspended from the
time of the delivery of such notice until the earlier of (i) such time as it is
determined or otherwise agreed that the Participant’s service as a Service
Provider will not be terminated for Cause as provided in such notice or (ii) the
effective date of the Participant’s Termination of Service by the Company or any
of its Subsidiaries for Cause (in which case the right of the Participant and
the Participant’s transferees to exercise any Option or Share Appreciation Right
issued to the Participant will terminate immediately upon the effective date of
such termination of Service).

 

5.4         Exercise.  Options and Share Appreciation Rights may be exercised by
delivering to the Company a written notice of exercise, in a form the
Administrator approves (which may be electronic), signed by the person
authorized to exercise the Option or Share Appreciation Right, together with, as
applicable, payment in full (i) as specified in Section 5.5 for the number of
Shares for which the Award is exercised and (ii) as specified in Section 9.5 for
any applicable taxes.  Unless the Administrator otherwise determines, an Option
or Share Appreciation Right may not be exercised for a fraction of a Share.

 

5.5         Payment Upon Exercise.  Subject to Section 10.8, any Company insider
trading policy (including blackout periods) and Applicable Laws, the exercise
price of an Option must be paid by:

 

(a)           cash, wire transfer of immediately available funds or by check
payable to the order of the Company, provided that the Company may limit the use
of one of the foregoing payment forms if one or more of the payment forms below
is permitted;

 

(b)          if there is a public market for Shares at the time of exercise,
unless the Company otherwise determines, (A) delivery (including telephonically
to the extent permitted by the Company) of an irrevocable and unconditional
undertaking by a broker acceptable to the Company to deliver promptly to the
Company sufficient funds to pay the exercise price, or (B) the Participant’s
delivery to the Company of a copy of irrevocable and unconditional instructions
to a broker acceptable to the Company to deliver

 

3

 

promptly to the Company cash or a check sufficient to pay the exercise price;
provided that such amount is paid to the Company at such time as may be required
by the Administrator;

 

(c)           to the extent permitted by the Administrator, delivery (either by
actual delivery or attestation) of Shares owned by the Participant valued at
their Fair Market Value;

 

(d)          to the extent permitted by the Administrator, surrendering Shares
then issuable upon the Option’s exercise valued at their Fair Market Value on
the exercise date;

 

(e)           to the extent permitted by the Administrator, delivery of a
promissory note or any other property that the Administrator determines is good
and valuable consideration; or

 

(f)           to the extent permitted by the Company, any combination of the
above payment forms approved by the Administrator.

 

ARTICLE VI.

RESTRICTED SHARES; RESTRICTED SHARE UNITS

 

6.1          General.  The Administrator may grant Restricted Shares, or the
right to purchase Restricted Shares, to any Service Provider, subject to the
Company’s right to repurchase all or part of such shares at their issue price or
other stated or formula price from the Participant (or to require forfeiture of
such shares) if conditions the Administrator specifies in the Award Agreement
are not satisfied before the end of the applicable restriction period or periods
that the Administrator establishes for such Award and subject to Applicable
Laws.  In addition, the Administrator may grant to Service Providers Restricted
Share Units, which may be subject to vesting and forfeiture conditions during
the applicable restriction period or periods, as set forth in an Award
Agreement.  The Administrator will determine and set forth in the Award
Agreement the terms and conditions for each Restricted Share and Restricted
Share Unit Award, subject to the conditions and limitations contained in the
Plan.

 

6.2         Restricted Shares.

 

(a)          Dividends.  Participants holding shares of Restricted Shares will
be entitled to all ordinary cash dividends paid with respect to such Shares,
unless the Administrator provides otherwise in the Award Agreement.  In
addition, unless the Administrator provides otherwise, if any dividends or
distributions are paid in Shares, or consist of a dividend or distribution to
holders of Common Shares of property other than an ordinary cash dividend, the
Shares or other property will be subject to the same restrictions on
transferability and forfeitability as the shares of Restricted Shares with
respect to which they were paid.

 

(b)          Share Certificates.  The Company may require that the Participant
deposit in escrow with the Company (or its designee) any share certificates
issued in respect of shares of Restricted Shares, together with a duly executed,
but undated, instrument of transfer.

 

6.3         Restricted Share Units.

 

(a)          Settlement.  The Administrator may provide that settlement of
Restricted Share Units will occur upon or as soon as reasonably practicable
after the Restricted Share Units vest or will instead be deferred, on a
mandatory basis or at the Participant’s election, in a manner intended to comply
with Section 409A.

 

4

 

(b)          Shareholder Rights. A Participant will have no rights of a
shareholder with respect to Shares subject to any Restricted Share Unit unless
and until the Shares are delivered in settlement of the Restricted Share Unit.

 

(c)          Dividend Equivalents.  If the Administrator provides, a grant of
Restricted Share Units may provide a Participant with the right to receive
Dividend Equivalents.  Dividend Equivalents may be paid currently or credited to
an account for the Participant, settled in cash or Shares and subject to the
same restrictions on transferability and forfeitability as the Restricted Share
Units with respect to which the Dividend Equivalents are granted and subject to
other terms and conditions as set forth in the Award Agreement.

 

ARTICLE VII.

 OTHER SHARE OR CASH BASED AWARDS

 

Other Share or Cash Based Awards may be granted to Participants, including
Awards entitling Participants to receive Shares to be delivered in the future
and including annual or other periodic or long-term cash bonus awards (whether
based on specified Performance Criteria or otherwise), in each case subject to
any conditions and limitations in the Plan. Such Other Share or Cash Based
Awards will also be available as a payment form in the settlement of other
Awards, as standalone payments and as payment in lieu of compensation to which a
Participant is otherwise entitled.  Other Share or Cash Based Awards may be paid
in Shares, cash or other property, as the Administrator determines.  Subject to
the provisions of the Plan, the Administrator will determine the terms and
conditions of each Other Share or Cash Based Award, including any purchase
price, performance goal (which may be based on the Performance Criteria),
transfer restrictions, and vesting conditions, which will be set forth in the
applicable Award Agreement.

 

ARTICLE VIII.

 ADJUSTMENTS FOR CHANGES IN COMMON SHARES

AND CERTAIN OTHER EVENTS

 

8.1         Equity Restructuring.  In connection with any Equity Restructuring,
notwithstanding anything to the contrary in this Article VIII, the Administrator
will equitably adjust each outstanding Award as it deems appropriate to reflect
the Equity Restructuring, which may include adjusting the number and type of
securities subject to each outstanding Award and/or the Award’s exercise price
or grant price (if applicable), granting new Awards to Participants, and making
a cash payment to Participants.  The adjustments provided under this Section 8.1
will be nondiscretionary and final and binding on the affected Participant and
the Company; provided that the Administrator will determine whether an
adjustment is equitable.

 

8.2         Corporate Transactions.  In the event of any dividend or other
distribution (whether in the form of cash, Common Shares, other securities, or
other property), reorganization, merger, consolidation, combination,
amalgamation, repurchase, recapitalization, liquidation, dissolution, or sale,
transfer, exchange or other disposition of all or substantially all of the
assets of the Company, or sale or exchange of Common Shares or other securities
of the Company, Change in Control, issuance of warrants or other rights to
purchase Common Shares or other securities of the Company, other similar
corporate transaction or event, other unusual or nonrecurring transaction or
event affecting the Company or its financial statements or any change in any
Applicable Laws or accounting principles, the Administrator, on such terms and
conditions as it deems appropriate, either by the terms of the Award or by
action taken prior to the occurrence of such transaction or event (except that
action to give effect to a change in Applicable Law or accounting principles may
be made within a reasonable period of time after such change) and either
automatically or upon the Participant’s request, is hereby authorized to take
any one or more of the following actions whenever the Administrator determines
that such action is appropriate in order to (x)

 

5

 

prevent dilution or enlargement of the benefits or potential benefits intended
by the Company to be made available under the Plan or with respect to any Award
granted or issued under the Plan, (y) to facilitate such transaction or event or
(z) give effect to such changes in Applicable Laws or accounting principles:

 

(a)           To provide for the cancellation of any such Award in exchange for
either an amount of cash or other property with a value equal to the amount that
could have been obtained upon the exercise or settlement of the vested portion
of such Award or realization of the Participant’s rights under the vested
portion of such Award, as applicable; provided that, if the amount that could
have been obtained upon the exercise or settlement of the vested portion of such
Award or realization of the Participant’s rights, in any case, is equal to or
less than zero, then the Award may be terminated without payment;

 

(b)          To provide that such Award shall vest and, to the extent
applicable, be exercisable as to all shares covered thereby, notwithstanding
anything to the contrary in the Plan or the provisions of such Award;

 

(c)           To provide that such Award be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be substituted for by
awards covering the shares of the successor or survivor corporation, or a parent
or subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and/or applicable exercise or purchase price, in all cases, as determined
by the Administrator;

 

(d)          To make adjustments in the number and type of shares (or other
securities or property) subject to outstanding Awards and/or with respect to
which Awards may be granted under the Plan (including, but not limited to,
adjustments of the limitations in Article IV hereof on the maximum number and
kind of shares which may be issued) and/or in the terms and conditions of
(including the grant or exercise price), and the criteria included in,
outstanding Awards;

 

(e)           To replace such Award with other rights or property selected by
the Administrator; and/or

 

(f)           To provide that the Award will terminate and cannot vest, be
exercised or become payable after the applicable event.

 

8.3         Administrative Stand Still.  In the event of any pending share
dividend, bonus issue, share split, combination or exchange of shares, merger,
amalgamation, consolidation or other distribution (other than normal cash
dividends) of Company assets to shareholders, or any other extraordinary
transaction or change affecting the Shares or the share price of Common Shares,
including any Equity Restructuring or any securities offering or other similar
transaction, for administrative convenience, the Administrator may refuse to
permit the exercise of any Award for up to sixty days before or after such
transaction.

 

8.4         General.  Except as expressly provided in the Plan or the
Administrator’s action under the Plan, no Participant will have any rights due
to any subdivision or consolidation of Shares of any class, dividend payment,
increase or decrease in the number of Shares of any class or dissolution,
liquidation, merger, amalgamation or consolidation of the Company or other
corporation.  Except as expressly provided with respect to an Equity
Restructuring under Section 8.1 above or the Administrator’s action under the
Plan, no issuance by the Company of Shares of any class, or securities
convertible into Shares of any class, will affect, and no adjustment will be
made regarding, the number of Shares subject to an Award or the Award’s grant or
exercise price.  The existence of the Plan, any Award Agreements and the Awards
granted hereunder will not affect or restrict in any way the Company’s right or
power to make or authorize (i) any adjustment, recapitalization, reorganization
or other change in the Company’s capital structure or its business, (ii) any
merger, amalgamation, consolidation dissolution or liquidation of the Company or
sale of

 

6

 

Company assets or (iii) any sale or issuance of securities, including securities
with rights superior to those of the Shares or securities convertible into or
exchangeable for Shares.  The Administrator may treat Participants and Awards
(or portions thereof) differently under this Article VIII.

 

ARTICLE IX.

 GENERAL PROVISIONS APPLICABLE TO AWARDS

 

9.1         Transferability.  Except as the Administrator may determine or
provide in an Award Agreement or otherwise for Awards other than Incentive Stock
Options, Awards may not be sold, assigned, transferred, pledged or otherwise
encumbered, either voluntarily or by operation of law, except by will or the
laws of descent and distribution, or, subject to the Administrator’s consent,
pursuant to a domestic relations order, and, during the life of the Participant,
will be exercisable only by the Participant.  References to a Participant, to
the extent relevant in the context, will include references to a Participant’s
authorized transferee that the Administrator specifically approves.

 

9.2         Documentation.  Each Award will be evidenced in an Award Agreement,
which may be written or electronic, as the Administrator determines. Each Award
may contain terms and conditions in addition to those set forth in the Plan.

 

9.3         Discretion.  Except as the Plan otherwise provides, each Award may
be made alone or in addition or in relation to any other Award.  The terms of
each Award to a Participant need not be identical, and the Administrator need
not treat Participants or Awards (or portions thereof) uniformly.

 

9.4         Termination of Status.  The Administrator will determine how the
disability, death, retirement, authorized leave of absence or any other change
or purported change in a Participant’s Service Provider status affects an Award
and the extent to which, and the period during which, the Participant, the
Participant’s legal representative, conservator, guardian or Designated
Beneficiary may exercise rights under the Award, if applicable.

 

9.5         Withholding.  Each Participant must pay the Company, or make
provision satisfactory to the Administrator for payment of, any taxes required
by law to be withheld in connection with such Participant’s Awards by the date
of the event creating the tax liability.  The Company may deduct a cash amount
sufficient to satisfy such tax obligations based on the applicable statutory
withholding rates (or such other rate as may be determined by the Company after
considering any accounting consequences or costs) from any payment otherwise due
to a Participant.  Subject to Section 10.8 and any Company insider trading
policy (including blackout periods), Participants may satisfy such tax
obligations (i) in cash, by wire transfer of immediately available funds, by
check made payable to the order of the Company, provided that the Company may
limit the use of the foregoing payment forms if one or more of the payment forms
below is permitted, (ii) to the extent permitted by the Administrator, in whole
or in part by delivery of Shares valued at their Fair Market Value or elect to
have the Company repurchase Shares otherwise issuable under an Award limited to
the number of Common Shares which have a Fair Market Value on the date of
repurchase necessary to pay the aggregate amount of tax liability, (iii) if
there is a public market for Shares at the time the tax obligations are
satisfied, unless the Company otherwise determines, (A) delivery (including
telephonically to the extent permitted by the Company) of an irrevocable and
unconditional undertaking by a broker acceptable to the Company to deliver
promptly to the Company sufficient funds to satisfy the tax obligations, or
(B) delivery by the Participant to the Company of a copy of irrevocable and
unconditional instructions to a broker acceptable to the Company to deliver
promptly to the Company cash or a check sufficient to satisfy the tax
withholding; provided that such amount is paid to the Company at such time as
may be required by the Administrator, or (iv) to the extent permitted by the
Company, any combination of the foregoing payment forms approved by the
Administrator.  If any tax withholding obligation will be satisfied under clause
(ii) of the immediately preceding sentence by the Company’s retention of Shares

 

7

 

from the Award creating the tax obligation and there is a public market for
Shares at the time the tax obligation is satisfied, the Company may elect to
instruct any brokerage firm determined acceptable to the Company for such
purpose to sell on the applicable Participant’s behalf some or all of the Shares
retained and to remit the proceeds of the sale to the Company or its designee,
and each Participant’s acceptance of an Award under the Plan will constitute the
Participant’s authorization to the Company and instruction and authorization to
such brokerage firm to complete the transactions described in this sentence.

 

9.6         Amendment of Award; Repricing.  The Administrator may amend, modify
or terminate any outstanding Award, including by substituting another Award of
the same or a different type, changing the exercise or settlement date, and
converting an Incentive Stock Option to a Non-Qualified Share Option.  The
Participant’s consent to such action will be required unless (i) the action,
taking into account any related action, does not materially and adversely affect
the Participant’s rights under the Award, or (ii) the change is permitted under
Article VIII or pursuant to Section 10.6.  Notwithstanding the foregoing or
anything in the Plan to the contrary, the Administrator may not except pursuant
to Article VIII, without the approval of the shareholders of the Company, reduce
the exercise price per share of outstanding Options or Share Appreciation Rights
or cancel outstanding Options or Share Appreciation Rights in exchange for cash,
other Awards or Options or Share Appreciation Rights with an exercise price per
share that is less than the exercise price per share of the original Options or
Share Appreciation Rights.

 

9.7         Conditions on Delivery of Shares.  The Company will not be obligated
to deliver any Shares under the Plan or remove restrictions from Shares
previously delivered under the Plan until (i) all Award conditions have been met
or removed to the Company’s satisfaction, (ii) as determined by the Company, all
other legal matters regarding the issuance and delivery of such Shares have been
satisfied, including any applicable securities laws and stock exchange or stock
market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Administrator
deems necessary or appropriate to satisfy any Applicable Laws.  The Company’s
inability to obtain authority from any regulatory body having jurisdiction,
which the Administrator determines is necessary to the lawful issuance and sale
of any securities, will relieve the Company of any liability for failing to
issue or sell such Shares as to which such requisite authority has not been
obtained.

 

9.8         Acceleration.  The Administrator may at any time provide that any
Award will become immediately vested and fully or partially exercisable, free of
some or all restrictions or conditions, or otherwise fully or partially
realizable.

 

9.9         Additional Terms of Incentive Stock Options.  The Administrator may
grant Incentive Stock Options only to employees of the Company, any of its
present or future parent or subsidiary corporations, as defined in
Sections 424(e) or (f) of the Code, respectively, and any other entities the
employees of which are eligible to receive Incentive Stock Options under the
Code.  If an Incentive Stock Option is granted to a Greater Than 10%
Shareholder, the exercise price will not be less than 110% of the Fair Market
Value on the Option’s grant date, and the term of the Option will not exceed
five years.  All Incentive Stock Options will be subject to and construed
consistently with Section 422 of the Code.  By accepting an Incentive Stock
Option, the Participant agrees to give prompt notice to the Company of
dispositions or other transfers (other than in connection with a Change in
Control) of Shares acquired under the Option made within (i) two years from the
grant date of the Option or (ii) one year after the transfer of such Shares to
the Participant, specifying the date of the disposition or other transfer and
the amount the Participant realized, in cash, other property, assumption of
indebtedness or other consideration, in such disposition or other
transfer.  Neither the Company nor the Administrator will be liable to a
Participant, or any other party, if an Incentive Stock Option fails or ceases to
qualify as an “incentive stock option” under Section 422 of the Code.  Any
Incentive Stock Option or portion thereof that fails to qualify as an “incentive
stock option” under Section 422 of the Code for any reason, including becoming
exercisable with respect

 

8

 

to Shares having a fair market value exceeding the $100,000 limitation under
Treasury Regulation Section 1.422-4, will be a Non-Qualified Stock Option.

 

ARTICLE X.

 MISCELLANEOUS

 

10.1         No Right to Employment or Other Status.  No person will have any
claim or right to be granted an Award, and the grant of an Award will not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company.  The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan or any Award, except as expressly
provided in an Award Agreement.

 

10.2         No Rights as Shareholder; Certificates.  Subject to the Award
Agreement, no Participant or Designated Beneficiary will have any rights as a
shareholder with respect to any Shares to be distributed under an Award until
becoming the record holder of such Shares.  Notwithstanding any other provision
of the Plan, unless the Administrator otherwise determines or Applicable Laws
require, the Company will not be required to deliver to any Participant
certificates evidencing Shares issued in connection with any Award and instead
such Shares may be recorded in the books of the Company (or, as applicable, its
transfer agent or share plan administrator).  The Company may place legends on
share certificates issued under the Plan that the Administrator deems necessary
or appropriate to comply with Applicable Laws.

 

10.3         Effective Date and Term of Plan.  Unless earlier terminated by the
Board, the Plan will become effective on the day prior to the Public Trading
Date and will remain in effect until the tenth anniversary of the earlier of
(i) the date the Board adopted the Plan or (ii) the date the Company’s
shareholders approved the Plan, but Awards previously granted may extend beyond
that date in accordance with the Plan.  If the Plan is not approved by the
Company’s shareholders, the Plan will not become effective, no Awards will be
granted under the Plan and the Prior Plans will continue in full force and
effect in accordance with their terms.

 

10.4         Amendment of Plan.  The Administrator may amend, suspend or
terminate the Plan at any time; provided that no amendment, other than an
increase to the Overall Share Limit, may materially and adversely affect any
Award outstanding at the time of such amendment without the affected
Participant’s consent.  No Awards may be granted under the Plan during any
suspension period or after Plan termination.  Awards outstanding at the time of
any Plan suspension or termination will continue to be governed by the Plan and
the Award Agreement, as in effect before such suspension or termination.  The
Board will obtain shareholder approval of any Plan amendment to the extent
necessary to comply with Applicable Laws.

 

10.5                             Provisions for Non-U.S. Employees.  The
Administrator may modify Awards granted to Participants who are citizens or
residents of a country other than the United States or employed outside the
United States or establish subplans or procedures under the Plan to address
differences in laws, rules, regulations or customs of such foreign jurisdictions
with respect to tax, securities, currency, employee benefit or other matters.

 

10.6         Section 409A.

 

(a)          General.  The Company intends that all Awards be structured to
comply with, or be exempt from, Section 409A, such that no adverse tax
consequences, interest, or penalties under Section 409A apply.  Notwithstanding
anything in the Plan or any Award Agreement to the contrary, the Administrator
may, without a Participant’s consent, amend this Plan or Awards, adopt policies
and procedures, or take any other actions (including amendments, policies,
procedures and retroactive actions) as are necessary or appropriate to preserve
the intended tax treatment of Awards, including any such actions

 

9

 

intended to (A) exempt this Plan or any Award from Section 409A, or (B) comply
with Section 409A, including regulations, guidance, compliance programs and
other interpretative authority that may be issued after an Award’s grant
date.  The Company makes no representations or warranties as to an Award’s tax
treatment under Section 409A or otherwise.  The Company will have no obligation
under this Section 10.6 or otherwise to avoid the taxes, penalties or interest
under Section 409A with respect to any Award and will have no liability to any
Participant or any other person if any Award, compensation or other benefits
under the Plan are determined to constitute noncompliant “nonqualified deferred
compensation” subject to taxes, penalties or interest under Section 409A.

 

(b)          Separation from Service.  If an Award constitutes “nonqualified
deferred compensation” under Section 409A, any payment or settlement of such
Award upon a termination of a Participant’s Service Provider relationship will,
to the extent necessary to avoid taxes under Section 409A, be made only upon the
Participant’s “separation from service” (within the meaning of Section 409A),
whether such “separation from service” occurs upon or after the termination of
the Participant’s Service Provider relationship.  For purposes of this Plan or
any Award Agreement relating to any such payments or benefits, references to a
“termination,” “termination of employment” or like terms means a “separation
from service.”

 

(c)          Payments to Specified Employees.  Notwithstanding any contrary
provision in the Plan or any Award Agreement, any payment(s) of “nonqualified
deferred compensation” required to be made under an Award to a “specified
employee” (as defined under Section 409A and as the Administrator determines)
due to his or her “separation from service” will, to the extent necessary to
avoid taxes under Section 409A(a)(2)(B)(i) of the Code, be delayed for the
six-month period immediately following such “separation from service” (or, if
earlier, until the specified employee’s death) and will instead be paid (as set
forth in the Award Agreement) on the day immediately following such six-month
period or as soon as administratively practicable thereafter (without
interest).  Any payments of “nonqualified deferred compensation” under such
Award payable more than six months following the Participant’s “separation from
service” will be paid at the time or times the payments are otherwise scheduled
to be made.

 

10.7         Limitations on Liability.  Notwithstanding any other provisions of
the Plan, no individual acting as a director, officer, other employee or agent
of the Company or any Subsidiary will be liable to any Participant, former
Participant, spouse, beneficiary, or any other person for any claim, loss,
liability, or expense incurred in connection with the Plan or any Award, and
such individual will not be personally liable with respect to the Plan because
of any contract or other instrument executed in his or her capacity as an
Administrator, director, officer, other employee or agent of the Company or any
Subsidiary.  The Company will indemnify and hold harmless each director,
officer, other employee and agent of the Company or any Subsidiary that has been
or will be granted or delegated any duty or power relating to the Plan’s
administration or interpretation, against any cost or expense (including
attorneys’ fees) or liability (including any sum paid in settlement of a claim
with the Administrator’s approval) arising from any act or omission concerning
this Plan unless arising from such person’s own fraud or bad faith.

 

10.8         Lock-Up Period.  The Company may, at the request of any underwriter
representative or otherwise, in connection with registering the offering of any
Company securities under the Securities Act, prohibit Participants from,
directly or indirectly, selling or otherwise transferring any Shares or other
Company securities during a period of up to one hundred eighty days following
the effective date of a Company registration statement filed under the
Securities Act, or such longer period as determined by the underwriter.

 

10.9         Data Privacy.  As a condition for receiving any Award, each
Participant explicitly and unambiguously consents to the collection, use and
transfer, in electronic or other form, of personal data as described in this
section by and among the Company and its Subsidiaries and affiliates exclusively
for

 

10

 

implementing, administering and managing the Participant’s participation in the
Plan.  The Company and its Subsidiaries and affiliates may hold certain personal
information about a Participant, including the Participant’s name, address and
telephone number; birthdate; social security, insurance number or other
identification number; salary; nationality; job title(s); any Shares held in the
Company or its Subsidiaries and affiliates; and Award details, to implement,
manage and administer the Plan and Awards (the “Data”).  The Company and its
Subsidiaries and affiliates may transfer the Data amongst themselves as
necessary to implement, administer and manage a Participant’s participation in
the Plan, and the Company and its Subsidiaries and affiliates may transfer the
Data to third parties assisting the Company with Plan implementation,
administration and management.  These recipients may be located in the
Participant’s country, or elsewhere, and the Participant’s country may have
different data privacy laws and protections than the recipients’ country.  By
accepting an Award, each Participant authorizes such recipients to receive,
possess, use, retain and transfer the Data, in electronic or other form, to
implement, administer and manage the Participant’s participation in the Plan,
including any required Data transfer to a broker or other third party with whom
the Company or the Participant may elect to deposit any Shares.  The Data
related to a Participant will be held only as long as necessary to implement,
administer, and manage the Participant’s participation in the Plan.  A
Participant may, at any time, view the Data that the Company holds regarding
such Participant, request additional information about the storage and
processing of the Data regarding such Participant, recommend any necessary
corrections to the Data regarding the Participant or refuse or withdraw the
consents in this Section 10.9 in writing, without cost, by contacting the local
human resources representative.  The Company may cancel Participant’s ability to
participate in the Plan and, in the Administrator’s discretion, the Participant
may forfeit any outstanding Awards if the Participant refuses or withdraws the
consents in this Section 10.9.  For more information on the consequences of
refusing or withdrawing consent, Participants may contact their local human
resources representative.

 

10.10         Severability.  If any portion of the Plan or any action taken
under it is held illegal or invalid for any reason, the illegality or invalidity
will not affect the remaining parts of the Plan, and the Plan will be construed
and enforced as if the illegal or invalid provisions had been excluded, and the
illegal or invalid action will be null and void.

 

10.11         Governing Documents.  If any contradiction occurs between the Plan
and any Award Agreement or other written agreement between a Participant and the
Company (or any Subsidiary) that the Administrator has approved, the Plan will
govern, unless it is expressly specified in such Award Agreement or other
written document that a specific provision of the Plan will not apply.

 

10.12         Governing Law.  The Plan and all Awards will be governed by and
interpreted in accordance with the laws of Delaware, disregarding any state’s
choice-of-law principles requiring the application of a jurisdiction’s laws
other than Delaware.

 

10.13         Claw-back Provisions.  All Awards (including any proceeds, gains
or other economic benefit the Participant actually or constructively receives
upon receipt or exercise of any Award or the receipt or resale of any Shares
underlying the Award) will be subject to any Company claw-back policy, including
any claw-back policy adopted to comply with Applicable Laws (including the
Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or
regulations promulgated thereunder) as set forth in such claw-back policy or the
Award Agreement.

 

10.14         Titles and Headings.  The titles and headings in the Plan are for
convenience of reference only and, if any conflict, the Plan’s text, rather than
such titles or headings, will control.

 

10.15         Conformity to Securities Laws.  Participant acknowledges that the
Plan is intended to conform to the extent necessary with Applicable
Laws.  Notwithstanding anything herein to the contrary, the Plan and all Awards
will be administered only in conformance with Applicable Laws.  To the extent

 

11

 

Applicable Laws permit, the Plan and all Award Agreements will be deemed amended
as necessary to conform to Applicable Laws.

 

10.16         Relationship to Other Benefits.  No payment under the Plan will be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or other benefit plan of the
Company or any Subsidiary except as expressly provided in writing in such other
plan or an agreement thereunder.

 

10.17         Broker-Assisted Sales. In the event of a broker-assisted sale of
Shares in connection with the payment of amounts owed by a Participant under or
with respect to the Plan or Awards, including amounts to be paid under the final
sentence of Section 9.5: (a) any Shares to be sold through the broker-assisted
sale will be sold on the day the payment first becomes due, or as soon
thereafter as practicable; (b) such Shares may be sold as part of a block trade
with other Participants in the Plan in which all participants receive an average
price; (c) the applicable Participant will be responsible for all broker’s fees
and other costs of sale, and by accepting an Award, each Participant agrees to
indemnify and hold the Company harmless from any losses, costs, damages, or
expenses relating to any such sale; (d) to the extent the Company or its
designee receives proceeds of such sale that exceed the amount owed, the Company
will pay such excess in cash to the applicable Participant as soon as reasonably
practicable; (e) the Company and its designees are under no obligation to
arrange for such sale at any particular price; and (f) in the event the proceeds
of such sale are insufficient to satisfy the Participant’s applicable
obligation, the Participant may be required to pay immediately upon demand to
the Company or its designee an amount in cash sufficient to satisfy any
remaining portion of the Participant’s obligation.

 

ARTICLE XI.

 DEFINITIONS

 

As used in the Plan, the following words and phrases will have the following
meanings:

 

11.1        “Administrator” means the Board or a Committee to the extent that
the Board’s powers or authority under the Plan have been delegated to such
Committee.

 

11.2        “Applicable Laws” means the requirements relating to the
administration of equity incentive plans under U.S. federal and state
securities, tax and other applicable laws, rules and regulations, the applicable
rules of any stock exchange or quotation system on which the Common Shares are
listed or quoted and the applicable laws and rules of any foreign country or
other jurisdiction where Awards are granted or issued under the Plan, including
without limitation, the laws of Bermuda.

 

11.3        “Award” means, individually or collectively, a grant under the Plan
of Options, Share Appreciation Rights, Restricted Shares, Restricted Share Units
or Other Share or Cash Based Awards.

 

11.4        “Award Agreement” means a written agreement evidencing an Award,
which may be electronic, that contains such terms and conditions as the
Administrator determines, consistent with and subject to the terms and
conditions of the Plan.

 

11.5        “Board” means the Board of Directors of the Company.

 

11.6        “Cause” means, with respect to a Participant, (A) dishonesty with
respect to the Company or any Subsidiary; (B) insubordination, substantial
malfeasance or nonfeasance of duty; (C) unauthorized disclosure of confidential
information; (D) breach by a Participant of any provision of any employment,
consulting, advisory, nondisclosure, non-competition or similar agreement
between the Participant and the Company or any Subsidiary; and (E) conduct
substantially prejudicial to the business of the Company or

 

12

 

any Subsidiary; provided, however, that any provision in an agreement between a
Participant and the Company or an Subsidiary, which contains a conflicting
definition of Cause for termination and which is in effect at the time of such
termination, shall supersede this definition with respect to that Participant.
The determination of the Administrator as to the existence of Cause will be
conclusive on the Participant and the Company.

 

11.7        “Change in Control” means (a) a sale of all or substantially all of
the Company’s assets, or (b) any merger, amalgamation, consolidation or other
business combination transaction of the Company with or into another
corporation, entity or person, other than a transaction in which the holders of
at least a majority of the voting shares of the Company outstanding immediately
prior to such transaction continue to hold (either by such shares remaining
outstanding or by their being converted into voting shares of the surviving
entity) a majority of the total voting power represented by the voting shares of
the Company (or the surviving entity) outstanding immediately after such
transaction, or (c) the direct or indirect acquisition (including by way of a
tender or exchange offer) by any person, or persons acting as a group, of
beneficial ownership or a right to acquire beneficial ownership of shares
representing a majority of the voting power of the then outstanding shares of
the Company. Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur: (A) on account of the acquisition of voting shares by any
institutional investor or any affiliate thereof or any other person, or persons
acting as a group, that acquires the Company’s voting shares in a transaction or
series of related transactions that are primarily a private financing
transaction for the Company or (B) solely because the level of ownership held by
any institutional investor or any affiliate thereof or any other person, or
persons acting as a group (the “Subject Person”), exceeds the designated
percentage threshold of the outstanding voting shares as a result of a
repurchase or other acquisition of voting shares by the Company reducing the
number of shares outstanding, provided that if a Change in Control would occur
(but for the operating of this sentence) as a result of the acquisition of
voting shares by the Company, and after such share acquisition, the Subject
Person becomes the owner of any additional voting shares that, assuming the
repurchase or other acquisition had not occurred, increases the percentage of
the then outstanding voting shares owned by such Subject Person over the
designated percentage threshold, then a Change in Control shall be deemed to
occur.

 

Notwithstanding the foregoing, if a Change in Control constitutes a payment
event with respect to any Award (or portion of any Award) that provides for the
deferral of compensation that is subject to Section 409A, to the extent required
to avoid the imposition of additional taxes under Section 409A, the transaction
or event described in subsection (a), (b) or (c) with respect to such Award (or
portion thereof) shall only constitute a Change in Control for purposes of the
payment timing of such Award if such transaction also constitutes a “change in
control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5).

 

The Administrator shall have full and final authority, which shall be exercised
in its discretion, to determine conclusively whether a Change in Control has
occurred pursuant to the above definition, the date of the occurrence of such
Change in Control and any incidental matters relating thereto; provided that any
exercise of authority in conjunction with a determination of whether a Change in
Control is a “change in control event” as defined in Treasury Regulation
Section 1.409A-3(i)(5) shall be consistent with such regulation.

 

11.8        “Code” means the Internal Revenue Code of 1986, as amended, and the
regulations issued thereunder.

 

11.9        “Committee” means one or more committees or subcommittees of the
Board, which may include one or more Company directors or executive officers, to
the extent Applicable Laws permit.  To the extent required to comply with the
provisions of Rule 16b-3, it is intended that each member of the Committee will
be, at the time the Committee takes any action with respect to an Award that is
subject to

 

13

 

Rule 16b-3, a “non-employee director” within the meaning of Rule 16b-3; however,
a Committee member’s failure to qualify as a “non-employee director” within the
meaning of Rule 16b-3 will not invalidate any Award granted by the Committee
that is otherwise validly granted under the Plan.

 

11.10      “Common Shares” means the Class A Common Shares of the Company of par
value US$0.0001 each.

 

11.11      “Company” means Kiniksa Pharmaceuticals, Ltd., a Bermuda exempted
company, or any successor.

 

11.12      “Consultant” means any person, including any adviser, engaged by the
Company or its parent or Subsidiary to render services to such entity if the
consultant or adviser: (i) renders bona fide services to the Company;
(ii) renders services not in connection with the offer or sale of securities in
a capital-raising transaction and does not directly or indirectly promote or
maintain a market for the Company’s securities; and (iii) is a natural person.

 

11.13      “Designated Beneficiary” means the beneficiary or beneficiaries the
Participant designates, in a manner the Administrator determines, to receive
amounts due or exercise the Participant’s rights if the Participant dies or
becomes incapacitated.  Without a Participant’s effective designation,
“Designated Beneficiary” will mean the Participant’s estate.

 

11.14      “Director” means a Board member.

 

11.15      “Disability” means a permanent and total disability under
Section 22(e)(3) of the Code, as amended.

 

11.16      “Dividend Equivalents” means a right granted to a Participant under
the Plan to receive the equivalent value (in cash or Shares) of dividends paid
on Shares.

 

11.17      “Employee” means any employee of the Company or its Subsidiaries.

 

11.18      “Equity Restructuring” means a nonreciprocal transaction between the
Company and its shareholders, such as a share dividend, bonus issue, share
split, spin-off or recapitalization through a large, nonrecurring cash dividend,
that affects the number or kind of Shares (or other Company securities) or the
share price of Common Shares (or other Company securities) and causes a change
in the per share value of the Common Shares underlying outstanding Awards.

 

11.19      “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

11.20      “Fair Market Value” means, as of any date, the value of Common Shares
determined as follows: (i) if the Common Shares are listed on any established
stock exchange, a share’s Fair Market Value will be the closing sales price for
such Common Shares as quoted on such exchange for such date, or if no sale
occurred on such date, the last day preceding such date during which a sale
occurred, as reported in The Wall Street Journal or another source the
Administrator deems reliable; (ii) if the Common Shares are not traded on a
stock exchange but is quoted on a national market or other quotation system, the
closing sales price on such date, or if no sales occurred on such date, then on
the last date preceding such date during which a sale occurred, as reported in
The Wall Street Journal or another source the Administrator deems reliable; or
(iii) without an established market for the Common Shares, the Administrator
will determine the Fair Market Value in its discretion.  Notwithstanding the
foregoing, with respect to any Award granted on the pricing date of the
Company’s initial public offering, the Fair Market Value shall

 

14

 

mean the initial public offering price of a Share as set forth in the Company’s
final prospectus relating to its initial public offering filed with the
Securities and Exchange Commission.

 

11.21      “Greater Than 10% Shareholder” means an individual then owning
(within the meaning of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of shares of the Company or its parent or
subsidiary corporation, as defined in Section 424(e) and (f) of the Code,
respectively.

 

11.22      “Incentive Stock Option” means an Option intended to qualify as an
“incentive stock option” as defined in Section 422 of the Code.

 

11.23      “Non-Qualified Stock Option” means an Option not intended or not
qualifying as an Incentive Stock Option.

 

11.24      “Option” means an option to purchase Shares.

 

11.25      “Other Share or Cash Based Awards” means cash awards, awards of
Shares, and other awards valued wholly or partially by referring to, or are
otherwise based on, Shares or other property.

 

11.26      “Overall Share Limit” means (i) 4,466,500 Common Shares, (ii) any
Common Shares which are subject to Prior Plan Awards which become available for
issuance under the Plan pursuant to Article IV and (iii) an annual increase on
the first day of each calendar year beginning January 1, 2019 and ending on and
including January 1, 2028, equal to the lesser of (A) 4% of the aggregate number
of Shares outstanding (on an as-converted basis) on the final day of the
immediately preceding calendar year and (B) such smaller number of Shares as is
determined by the Board.

 

11.27      “Participant” means a Service Provider who has been granted an Award.

 

11.28      “Performance Criteria” mean the criteria (and adjustments) that the
Administrator may select for an Award to establish performance goals for a
performance period, which may include the following: net earnings or losses
(either before or after one or more of interest, taxes, depreciation,
amortization, and non-cash equity-based compensation expense); gross or net
sales or revenue or sales or revenue growth; net income (either before or after
taxes) or adjusted net income; profits (including but not limited to gross
profits, net profits, profit growth, net operation profit or economic profit),
profit return ratios or operating margin; budget or operating earnings (either
before or after taxes or before or after allocation of corporate overhead and
bonus); cash flow (including operating cash flow and free cash flow or cash flow
return on capital); return on assets; return on capital or invested capital;
cost of capital; return on shareholders’ equity; total shareholder return;
return on sales; costs, reductions in costs and cost control measures; expenses;
working capital; earnings or loss per share; adjusted earnings or loss per
share; price per share or dividends per share (or appreciation in or maintenance
of such price or dividends); regulatory achievements or compliance;
implementation, completion or attainment of objectives relating to research,
development, regulatory, commercial, or strategic milestones or developments;
market share; economic value or economic value added models; division, group or
corporate financial goals; customer satisfaction/growth; customer service;
employee satisfaction; recruitment and maintenance of personnel; human resources
management; supervision of litigation and other legal matters; mergers,
acquisitions, and other strategic partnerships, licenses, and other
transactions; financial ratios (including those measuring liquidity, activity,
profitability or leverage); debt levels or reductions; sales-related goals;
financing and other capital raising transactions; cash on hand; acquisition
activity; investment sourcing activity; and marketing initiatives, any of which
may be measured in absolute terms or as compared to any incremental increase or
decrease. Such performance goals also may be based solely by reference to the
Company’s performance or the performance of a Subsidiary, division, business
segment or business unit of the

 

15

 

Company or a Subsidiary, or based upon performance relative to performance of
other companies or upon comparisons of any of the indicators of performance
relative to performance of other companies.  The Committee may provide for
exclusion of the impact of an event or occurrence which the Committee determines
should appropriately be excluded, including (a) restructurings, discontinued
operations, extraordinary items, and other unusual, infrequently occurring or
non-recurring charges or events, (b) asset write-downs, (c) litigation or claim
judgments or settlements, (d) acquisitions or divestitures, (e) reorganization
or change in the corporate structure or capital structure of the Company, (f) an
event either not directly related to the operations of the Company, Subsidiary,
division, business segment or business unit or not within the reasonable control
of management, (g) foreign exchange gains and losses, (h) a change in the fiscal
year of the Company, (i) the refinancing or repurchase of bank loans or debt
securities, (j) unbudgeted capital expenditures, (k) the issuance or repurchase
of equity securities and other changes in the number of issued and outstanding
shares, (l) conversion of some or all of convertible securities to Common
Shares, (m) any business interruption event (n) the cumulative effects of tax or
accounting changes in accordance with U.S. generally accepted accounting
principles, or (o) the effect of changes in other laws or regulatory
rules affecting reported results.

 

11.29      “Plan” means this 2018 Incentive Award Plan.

 

11.30      “Prior Plans” means, collectively, the Kiniksa Pharmaceuticals, Ltd.
2015 Equity Incentive Plan and any prior equity incentive plans of the Company
or its predecessor.

 

11.31      “Prior Plan Award” means an award outstanding under the Prior Plans
as of the Plan’s effective date in Section 10.3.

 

11.32      “Public Trading Date” means the first date upon which the Common
Shares are listed (or approved for listing) upon notice of issuance on any
securities exchange or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system, or,
if earlier, the date on which the Company becomes a “publicly held corporation”
for purposes of Treasury Regulation Section 1.162-27(c)(1).

 

11.33      “Restricted Share” means a Share awarded to a Participant under
Article VI subject to certain vesting conditions and other restrictions.

 

11.34      “Restricted Share Unit” means an unfunded, unsecured right to
receive, on the applicable settlement date, one Share or an amount in cash or
other consideration determined by the Administrator to be of equal value as of
such settlement date, subject to certain vesting conditions and other
restrictions.

 

11.35      “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act.

 

11.36      “Section 409A” means Section 409A of the Code and all regulations,
guidance, compliance programs and other interpretative authority thereunder.

 

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

 

11.38      “Service Provider” means an Employee, Consultant or Director.

 

11.39      “Shares” means Common Shares.

 

11.40      “Share Appreciation Right” means a share appreciation right granted
under Article V.

 

11.41      “Subject Person” has the meaning set forth in Section 11.7.

 

16

 

11.42      “Subsidiary” means any entity (other than the Company), whether
domestic or foreign, in an unbroken chain of entities beginning with the Company
if each of the entities other than the last entity in the unbroken chain
beneficially owns, at the time of the determination, securities or interests
representing at least 50% of the total combined voting power of all classes of
securities or interests in one of the other entities in such chain.

 

11.43      “Substitute Awards” shall mean Awards granted or Shares issued by the
Company in assumption of, or in substitution or exchange for, awards previously
granted, or the right or obligation to make future awards, in each case by a
company acquired by the Company or any Subsidiary or with which the Company or
any Subsidiary combines.

 

11.44      “Termination of Service” means the date the Participant ceases to be
a Service Provider.

 

* * * * *

 

 

17

KINIKSA PHARMACEUTICALS, LTD.

 2018 INCENTIVE AWARD PLAN

 

SHARE OPTION GRANT NOTICE

 

Capitalized terms not specifically defined in this Share Option Grant Notice
(the “Grant Notice”) have the meanings given to them in the 2018 Incentive Award
Plan (as amended from time to time, the “Plan”) of Kiniksa Pharmaceuticals, Ltd.
(the “Company”).

 

The Company has granted to the participant listed below (“Participant”) the
share option described in this Grant Notice (the “Option”), subject to the terms
and conditions of the Plan and the Share Option Agreement attached as Exhibit A
(the “Agreement”), both of which are incorporated into this Grant Notice by
reference.

 

 

   

 

 

Participant:

   

 

 

 

 

Grant Date:

 

 

 

 

 

Exercise Price per Share:

 

 

 

 

 

Shares Subject to the Option:

 

 

 

 

 

Final Expiration Date:

 

 

 

 

 

Vesting Commencement Date:

 

 

 

 

 

Vesting Schedule:

 

[To be specified in individual award agreements]

 

 

 

Type of Option

 

[Incentive Stock Option/Non-Qualified Stock Option]

 

 

By Participant’s signature below, Participant agrees to be bound by the terms of
this Grant Notice, the Plan and the Agreement.  Participant has reviewed the
Plan, this Grant Notice and the Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Grant Notice
and fully understands all provisions of the Plan, this Grant Notice and the
Agreement.  Participant hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Administrator upon any questions arising
under the Plan, this Grant Notice or the Agreement.

 

 

  

 

 

 

KINIKSA PHARMACEUTICALS, LTD.

    

PARTICIPANT

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

[Participant Name]

 

 

 

 

Title:

 

 

 

 

 

 

 

Exhibit A

 

SHARE OPTION AGREEMENT

 

Capitalized terms not specifically defined in this Agreement have the meanings
specified in the Grant Notice or, if not defined in the Grant Notice, in the
Plan.

 

ARTICLE I.

 GENERAL

 

1.1         Grant of Option.  The Company has granted to Participant the Option
effective as of the grant date set forth in the Grant Notice (the “Grant Date”).

 

1.2         Incorporation of Terms of Plan.  The Option is subject to the terms
and conditions set forth in this Agreement and the Plan, which is incorporated
herein by reference.  In the event of any inconsistency between the Plan and
this Agreement, the terms of the Plan will control.

 

ARTICLE II.

 PERIOD OF EXERCISABILITY

 

2.1         Commencement of Exercisability.  The Option will vest and become
exercisable according to the vesting schedule in the Grant Notice (the “Vesting
Schedule”), except that any fraction of a Share as to which the Option would be
vested or exercisable will be accumulated and will vest and become exercisable
only when a whole Share has accumulated.  In addition, if a Change in Control
occurs (i) any outstanding portion of the Option that is not assumed, continued
converted, replaced or substituted with a substantially similar award by the
Company or a successor entity or its parent or subsidiary in the Change in
Control (an “Assumption”) will be accelerated and will become vested and
exercisable in full as of immediately prior to the occurrence of the Change in
Control, and (ii) following an Assumption, if Participant’s employment with the
Surviving Entity is terminated by the Surviving Entity without Cause within 12
months following the Change in Control, any outstanding portion of the Option
will be accelerated and will become vested and exercisable in full as of
immediately prior to Participant’s employment termination.  Notwithstanding
anything in the Grant Notice, the Plan or this Agreement to the contrary, unless
the Administrator otherwise determines, the Option will immediately expire and
be forfeited as to any portion that is not vested and exercisable as of
Participant’s Termination of Service for any reason.

 

2.2         Duration of Exercisability.  The Vesting Schedule is
cumulative.  Any portion of the Option which vests and becomes exercisable will
remain vested and exercisable until the Option expires.  The Option will be
forfeited immediately upon its expiration.

 

2.3         Expiration of Option.  The Option may not be exercised to any extent
by anyone after, and will expire on, the first of the following to occur:

 

(a)           The final expiration date in the Grant Notice;

 

(b)          Except as the Administrator may otherwise approve, the expiration
of three (3) months from the date of Participant’s Termination of Service,
unless Participant’s Termination of Service is for Cause or by reason of
Participant’s death or Disability;

 

(c)           Except as the Administrator may otherwise approve, the expiration
of one (1) year from the date of Participant’s Termination of Service by reason
of Participant’s death or Disability; and

 

 

(d)          Except as the Administrator may otherwise approve, Participant’s
Termination of Service for Cause.

 

ARTICLE III.

EXERCISE OF OPTION

 

3.1         Person Eligible to Exercise.  During Participant’s lifetime, only
Participant may exercise the Option.  After Participant’s death, any exercisable
portion of the Option may, prior to the time the Option expires, be exercised by
Participant’s Designated Beneficiary according to the procedures in the Plan.

 

3.2         Partial Exercise.  Any exercisable portion of the Option or the
entire Option, if then wholly exercisable, may be exercised, in whole or in
part, according to the procedures in the Plan at any time prior to the time the
Option or portion thereof expires, except that the Option may only be exercised
for whole Shares.

 

3.3         Tax Withholding.

 

(a)           The Company has the right and option, but not the obligation, to
treat Participant’s failure to provide timely payment in accordance with the
Plan of any withholding tax arising in connection with the Option as
Participant’s election to satisfy all or any portion of the withholding tax by
requesting the Company repurchase Shares otherwise issuable under the Option
limited to the number of Shares which have a Fair Market Value on the date of
repurchase necessary to pay the aggregate amount of tax liability.

 

(b)          Participant acknowledges that Participant is ultimately liable and
responsible for all taxes owed in connection with the Option, regardless of any
action the Company or any Subsidiary takes with respect to any tax withholding
obligations that arise in connection with the Option.  Neither the Company nor
any Subsidiary makes any representation or undertaking regarding the treatment
of any tax withholding in connection with the awarding, vesting or exercise of
the Option or the subsequent sale of Shares.  The Company and the Subsidiaries
do not commit and are under no obligation to structure the Option to reduce or
eliminate Participant’s tax liability.

 

ARTICLE IV.

OTHER PROVISIONS

 

4.1         Adjustments.  Participant acknowledges that the Option is subject to
adjustment, modification and termination in certain events as provided in this
Agreement and the Plan.

 

4.2         Notices.  Any notice to be given under the terms of this Agreement
to the Company must be in writing and addressed to the Company in care of the
Company’s Secretary at the Company’s principal office or the Secretary’s
then-current email address or facsimile number.  Any notice to be given under
the terms of this Agreement to Participant must be in writing and addressed to
Participant (or, if Participant is then deceased, to the person entitled to
exercise the Option) at Participant’s last known mailing address, email address
or facsimile number in the Company’s personnel files.  By a notice given
pursuant to this Section, either party may designate a different address for
notices to be given to that party.  Any notice will be deemed duly given when
actually received, when sent by email, when sent by certified mail (return
receipt requested) and deposited with postage prepaid in a post office or branch
post office regularly maintained by the United States Postal Service, when
delivered by a nationally recognized express shipping company or upon receipt of
a facsimile transmission confirmation.

 

A-2

 

4.3         Titles.  Titles are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of this Agreement.

 

4.4         Conformity to Securities Laws.  Participant acknowledges that the
Plan, the Grant Notice and this Agreement are intended to conform to the extent
necessary with all Applicable Laws and, to the extent Applicable Laws permit,
will be deemed amended as necessary to conform to Applicable Laws.

 

4.5         Successors and Assigns.  The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement will
inure to the benefit of the successors and assigns of the Company.  Subject to
the restrictions on transfer set forth in the Plan, this Agreement will be
binding upon and inure to the benefit of the heirs, legatees, legal
representatives, successors and assigns of the parties hereto.

 

4.6         Limitations Applicable to Section 16 Persons.  Notwithstanding any
other provision of the Plan or this Agreement, if Participant is subject to
Section 16 of the Exchange Act, the Plan, the Grant Notice, this Agreement and
the Option will be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3) that are requirements for the application of such
exemptive rule.  To the extent Applicable Laws permit, this Agreement will be
deemed amended as necessary to conform to such applicable exemptive rule.

 

4.7         Entire Agreement.  The Plan, the Grant Notice and this Agreement
(including any exhibit hereto) constitute the entire agreement of the parties
and supersede in their entirety all prior undertakings and agreements of the
Company and Participant with respect to the subject matter hereof.

 

4.8         Agreement Severable.  In the event that any provision of the Grant
Notice or this Agreement is held illegal or invalid, the provision will be
severable from, and the illegality or invalidity of the provision will not be
construed to have any effect on, the remaining provisions of the Grant Notice or
this Agreement.

 

4.9         Limitation on Participant’s Rights.  Participation in the Plan
confers no rights or interests other than as herein provided.  This Agreement
creates only a contractual obligation on the part of the Company as to amounts
payable and may not be construed as creating a trust.  Neither the Plan nor any
underlying program, in and of itself, has any assets.  Participant will have
only the rights of a general unsecured creditor of the Company with respect to
amounts credited and benefits payable, if any, with respect to the Option, and
rights no greater than the right to receive the Shares as a general unsecured
creditor with respect to the Option, as and when exercised pursuant to the terms
hereof.

 

4.10         Not a Contract of Employment.  Nothing in the Plan, the Grant
Notice or this Agreement confers upon Participant any right to continue in the
employ or service of the Company or any Subsidiary or interferes with or
restricts in any way the rights of the Company and its Subsidiaries, which
rights are hereby expressly reserved, to discharge or terminate the services of
Participant at any time for any reason whatsoever, with or without Cause, except
to the extent expressly provided otherwise in a written agreement between the
Company or a Subsidiary and Participant.

 

4.11         Counterparts.  The Grant Notice may be executed in one or more
counterparts, including by way of any electronic signature, subject to
Applicable Law, each of which will be deemed an original and all of which
together will constitute one instrument.

 

4.12         Incentive Stock Options.  If the Option is designated as an
Incentive Stock Option:

 

A-3

 

(a)          Participant acknowledges that to the extent the aggregate fair
market value of shares (determined as of the time the option with respect to the
shares is granted) with respect to which share options intended to qualify as
“incentive stock options” under Section 422 of the Code, including the Option,
are exercisable for the first time by Participant during any calendar year
exceeds $100,000 or if for any other reason such share options do not qualify or
cease to qualify for treatment as “incentive stock options” under Section 422 of
the Code, such share options (including the Option) will be treated as
non-qualified share options.  Participant further acknowledges that the rule set
forth in the preceding sentence will be applied by taking the Option and other
share options into account in the order in which they were granted, as
determined under Section 422(d) of the Code.  Participant acknowledges that
amendments or modifications made to the Option pursuant to the Plan that would
cause the Option to become a Non-Qualified Stock Option will not materially or
adversely affect Participant’s rights under the Option, and that any such
amendment or modification shall not require Participant’s consent.  Participant
also acknowledges that if the Option is exercised more than three (3) months
after Participant’s Termination of Service as an Employee, other than by reason
of death or disability, the Option will be taxed as a Non-Qualified Stock
Option.

 

(b)          Participant will give prompt written notice to the Company of any
disposition or other transfer of any Shares acquired under this Agreement if
such disposition or other transfer is made (a) within two (2) years from the
Grant Date or (b) within one (1) year after the transfer of such Shares to
Participant.  Such notice will specify the date of such disposition or other
transfer and the amount realized, in cash, other property, assumption of
indebtedness or other consideration, by Participant in such disposition or other
transfer.

 

* * * * *

 

 

A-4

KINIKSA PHARMACEUTICALS, LTD.

 2018 INCENTIVE AWARD PLAN

 

RESTRICTED SHARE GRANT NOTICE

 

Capitalized terms not specifically defined in this Restricted Share Grant Notice
(the “Grant Notice”) have the meanings given to them in the 2018 Incentive Award
Plan (as amended from time to time, the “Plan”) of Kiniksa Pharmaceuticals, Ltd.
(the “Company”).

 

The Company has granted to the participant listed below (“Participant”) the
Restricted Shares described in this Grant Notice (the “Restricted Shares”),
subject to the terms and conditions of the Plan and the Restricted Share
Agreement attached as Exhibit A (the “Agreement”), both of which are
incorporated into this Grant Notice by reference.

 

 

 

 

 

Participant:

   

 

 

 

 

Grant Date:

 

 

 

 

 

Number of Restricted Shares:

 

 

 

 

 

Vesting Commencement Date:

 

 

 

 

 

Vesting Schedule:

 

[To be specified in individual award agreements]

 

 

By Participant’s signature below, Participant agrees to be bound by the terms of
this Grant Notice, the Plan and the Agreement.  Participant has reviewed the
Plan, this Grant Notice and the Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Grant Notice
and fully understands all provisions of the Plan, this Grant Notice and the
Agreement.  Participant hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Administrator upon any questions arising
under the Plan, this Grant Notice or the Agreement.

 

 

  

 

 

 

KINIKSA PHARMACEUTICALS, LTD.

    

PARTICIPANT

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

[Participant Name]

 

 

 

 

Title:

 

 

 

 

 

 

 

 

Exhibit A

 

RESTRICTED SHARE AGREEMENT

 

Capitalized terms not specifically defined in this Agreement have the meanings
specified in the Grant Notice or, if not defined in the Grant Notice, in the
Plan.

 

ARTICLE I.

 GENERAL

 

1.1         Issuance of Restricted Shares.  The Company will issue the
Restricted Shares to the Participant effective as of the grant date set forth in
the Grant Notice and will cause (a) a share certificate or certificates
representing the Restricted Shares to be registered in Participant’s name or
(b) the Restricted Shares to be held in book-entry form.  If a share certificate
is issued, the certificate will be delivered to, and held in accordance with
this Agreement by, the Company or its authorized representatives and will bear
the restrictive legends required by this Agreement.  If the Restricted Shares
are held in book-entry form, then the book-entry will indicate that the
Restricted Shares are subject to the restrictions of this Agreement.

 

1.2         Incorporation of Terms of Plan.  The Restricted Shares are subject
to the terms and conditions set forth in this Agreement and the Plan, which is
incorporated herein by reference.  In the event of any inconsistency between the
Plan and this Agreement, the terms of the Plan will control.

 

ARTICLE II.

 VESTING, FORFEITURE AND ESCROW

 

2.1         Vesting.  The Restricted Shares will become vested Shares (the
“Vested Shares”) according to the vesting schedule in the Grant Notice except
that any fraction of a Share that would otherwise become a Vested Share will be
accumulated and will become a Vested Share only when a whole Vested Share has
accumulated.

 

2.2         Forfeiture.  In the event of Participant’s Termination of Service
for any reason, Participant will immediately and automatically forfeit to the
Company any Shares that are not Vested Shares (the “Unvested Shares”) at the
time of Participant’s Termination of Service, except as otherwise determined by
the Administrator or provided in a binding written agreement between Participant
and the Company.  Upon forfeiture of Unvested Shares, the forfeited shares will
be cancelled and Participant will have no further rights with respect to the
Unvested Shares.

 

2.3         Escrow.

 

(a)          Unvested Shares in certificated form will be held by the Company or
its authorized representatives until (i) they are forfeited, (ii) they become
Vested Shares or (iii) this Agreement is no longer in effect.  By accepting this
Award, Participant appoints the Company and its authorized representatives as
Participant’s attorney(s)-in-fact to take all actions necessary to effect
cancellation of forfeited Unvested Shares (and Retained Distributions (as
defined below), if any, paid on such forfeited Unvested Shares) to the Company
as may be required pursuant to the Plan or this Agreement and to execute such
representations or other documents or assurances as the Company or such
representatives deem necessary or advisable in connection with any such
transfer.  The Company, or its authorized representative, will not be liable for
any good faith act or omission with respect to the holding in escrow or transfer
of the Restricted Shares.

 

(b)          All cash dividends and other distributions made or declared with
respect to Unvested Shares (“Retained Distributions”) will be held by the
Company until the time (if ever) when

 

 

the Unvested Shares to which such Retained Distributions relate become Vested
Shares.  The Company will establish a separate Retained Distribution bookkeeping
account (“Retained Distribution Account”) for each Unvested Share with respect
to which Retained Distributions have been made or declared in cash and credit
the Retained Distribution Account (without interest) on the date of payment with
the amount of such cash made or declared with respect to the Unvested
Share.  Retained Distributions (including any Retained Distribution Account
balance) will immediately and automatically be forfeited to the Company upon
forfeiture of the Unvested Share with respect to which the Retained
Distributions were paid or declared.

 

(c)          As soon as reasonably practicable following the date on which an
Unvested Share becomes a Vested Share, the Company will (i) cause the
certificate (or a new certificate without the legend required by this Agreement,
if Participant so requests) representing the Share to be delivered to
Participant or, if the Share is held in book-entry form, cause the notations
indicating the Share is subject to the restrictions of this Agreement to be
removed and (ii) pay to Participant the Retained Distributions relating to the
Share.

 

2.4         Rights as Shareholder.  Except as otherwise provided in this
Agreement or the Plan, upon issuance of the Restricted Shares by the Company,
Participant will have all the rights of a shareholder with respect to the
Restricted Shares, including the right to vote the Restricted Shares and to
receive dividends or other distributions paid or made with respect to the
Restricted Shares.

 

ARTICLE III.

 TAXATION AND TAX WITHHOLDING

 

3.1         Representation.  Participant represents to the Company that
Participant has reviewed with Participant’s own tax advisors the tax
consequences of the Restricted Shares and the transactions contemplated by the
Grant Notice and this Agreement.  Participant is relying solely on such advisors
and not on any statements or representations of the Company or any of its
agents.

 

3.2         Section 83(b) Election.  If Participant makes an election under
Section 83(b) of the Code with respect to the Restricted Shares, Participant
will deliver a copy of the election to the Company promptly after filing the
election with the Internal Revenue Service.

 

3.3         Tax Withholding.

 

(a)           The Company has the right and option, but not the obligation, to
treat Participant’s failure to provide timely payment in accordance with the
Plan of any withholding tax arising in connection with the Restricted Shares as
Participant’s election to satisfy all or any portion of the withholding tax by
requesting the Company repurchase Shares otherwise deliverable under the Award
limited to the number of Shares which have a Fair Market Value on the date of
repurchase necessary to pay the aggregate amount of tax liability.

 

(b)          Participant acknowledges that Participant is ultimately liable and
responsible for all taxes owed in connection with the Restricted Shares,
regardless of any action the Company or any Subsidiary takes with respect to any
tax withholding obligations that arise in connection with the Restricted
Shares.  Neither the Company nor any Subsidiary makes any representation or
undertaking regarding the treatment of any tax withholding in connection with
the awarding, vesting or payment of the Restricted Shares or the subsequent sale
of the Restricted Shares.  The Company and the Subsidiaries do not commit and
are under no obligation to structure this Award to reduce or eliminate
Participant’s tax liability.

 

A-2

 

ARTICLE IV.

 RESTRICTIVE LEGENDS AND TRANSFERABILITY

 

4.1         Legends.  Any certificate representing a Restricted Share will bear
the following legend until the Restricted Share becomes a Vested Share:

 

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO FORFEITURE IN FAVOR OF
THE COMPANY AND MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A
RESTRICTED SHARE AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

 

4.2         Transferability.  The Restricted Shares and any Retained
Distributions are subject to the restrictions on transfer in the Plan and may
not be sold, assigned or transferred in any manner unless and until they become
Vested Shares.  Any attempted transfer or disposition of Unvested Shares or
related Retained Distributions prior to the time the Unvested Shares become
Vested Shares will be null and void.  The Company will not be required to
(a) transfer on its books any Restricted Share that has been sold or otherwise
transferred in violation of this Agreement or (b)  treat as owner of such
Restricted Share or accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Restricted Share has been so transferred.  The
Company may issue appropriate “stop transfer” instructions to its transfer
agent, if any, or make appropriate notations to the same effect in its records.

 

ARTICLE V.

 OTHER PROVISIONS

 

5.1         Adjustments.  Participant acknowledges that the Restricted Shares
are subject to adjustment, modification and termination in certain events as
provided in this Agreement and the Plan.

 

5.2         Notices.  Any notice to be given under the terms of this Agreement
to the Company must be in writing and addressed to the Company in care of the
Company’s Secretary at the Company’s principal office or the Secretary’s
then-current email address or facsimile number.  Any notice to be given under
the terms of this Agreement to Participant must be in writing and addressed to
Participant at Participant’s last known mailing address, email address or
facsimile number in the Company’s personnel files.  By a notice given pursuant
to this Section, either party may designate a different address for notices to
be given to that party.  Any notice will be deemed duly given when actually
received, when sent by email, when sent by certified mail (return receipt
requested) and deposited with postage prepaid in a post office or branch post
office regularly maintained by the United States Postal Service, when delivered
by a nationally recognized express shipping company or upon receipt of a
facsimile transmission confirmation.

 

5.3         Titles.  Titles are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of this Agreement.

 

5.4         Conformity to Securities Laws.  Participant acknowledges that the
Plan, the Grant Notice and this Agreement are intended to conform to the extent
necessary with all Applicable Laws and, to the extent Applicable Laws permit,
will be deemed amended as necessary to conform to Applicable Laws.

 

5.5         Successors and Assigns.  The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement will
inure to the benefit of the successors and assigns of the Company.  Subject to
the restrictions on transfer set forth in this Agreement or the

 

A-3

 

Plan, this Agreement will be binding upon and inure to the benefit of the heirs,
legatees, legal representatives, successors and assigns of the parties hereto.

 

5.6         Limitations Applicable to Section 16 Persons.  Notwithstanding any
other provision of the Plan or this Agreement, if Participant is subject to
Section 16 of the Exchange Act, the Plan, the Grant Notice, this Agreement and
the Restricted Shares will be subject to any additional limitations set forth in
any applicable exemptive rule under Section 16 of the Exchange Act (including
any amendment to Rule 16b-3) that are requirements for the application of such
exemptive rule.  To the extent Applicable Laws permit, this Agreement will be
deemed amended as necessary to conform to such applicable exemptive rule.

 

5.7         Entire Agreement.  The Plan, the Grant Notice and this Agreement
(including any exhibit hereto) constitute the entire agreement of the parties
and supersede in their entirety all prior undertakings and agreements of the
Company and Participant with respect to the subject matter hereof.

 

5.8         Agreement Severable.  In the event that any provision of the Grant
Notice or this Agreement is held illegal or invalid, the provision will be
severable from, and the illegality or invalidity of the provision will not be
construed to have any effect on, the remaining provisions of the Grant Notice or
this Agreement.

 

5.9         Limitation on Participant’s Rights.  Participation in the Plan
confers no rights or interests other than as herein provided.  This Agreement
creates only a contractual obligation on the part of the Company as to amounts
payable and may not be construed as creating a trust.  Neither the Plan nor any
underlying program, in and of itself, has any assets.  Participant will have
only the rights of a general unsecured creditor of the Company with respect to
amounts credited and benefits payable, if any, with respect to the Award.

 

5.10         Not a Contract of Employment.  Nothing in the Plan, the Grant
Notice or this Agreement confers upon Participant any right to continue in the
employ or service of the Company or any Subsidiary or interferes with or
restricts in any way the rights of the Company and its Subsidiaries, which
rights are hereby expressly reserved, to discharge or terminate the services of
Participant at any time for any reason whatsoever, with or without cause, except
to the extent expressly provided otherwise in a written agreement between the
Company or a Subsidiary and Participant.

 

5.11         Counterparts.  The Grant Notice may be executed in one or more
counterparts, including by way of any electronic signature, subject to
Applicable Law, each of which will be deemed an original and all of which
together will constitute one instrument.

 

* * * * *

 

 

A-4

KINIKSA PHARMACEUTICALS, LTD.

 2018 INCENTIVE AWARD PLAN

 

RESTRICTED SHARE UNIT GRANT NOTICE

 

Capitalized terms not specifically defined in this Restricted Share Unit Grant
Notice (the “Grant Notice”) have the meanings given to them in the 2018
Incentive Award Plan (as amended from time to time, the “Plan”) of Kiniksa
Pharmaceuticals, Ltd. (the “Company”).

 

The Company has granted to the participant listed below (“Participant”) the
Restricted Share Units described in this Grant Notice (the “RSUs”), subject to
the terms and conditions of the Plan and the Restricted Share Unit Agreement
attached as Exhibit A (the “Agreement”), both of which are incorporated into
this Grant Notice by reference.

 

 

 

 

 

Participant:

   

 

 

 

 

Grant Date:

 

 

 

 

 

Number of RSUs:

 

 

 

 

 

Vesting Commencement Date:

 

 

 

 

 

Vesting Schedule:

 

[To be specified in individual award agreements]

 

 

By Participant’s signature below, Participant agrees to be bound by the terms of
this Grant Notice, the Plan and the Agreement.  Participant has reviewed the
Plan, this Grant Notice and the Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Grant Notice
and fully understands all provisions of the Plan, this Grant Notice and the
Agreement.  Participant hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Administrator upon any questions arising
under the Plan, this Grant Notice or the Agreement.

 

 

 

 

 

 

KINIKSA PHARMACEUTICALS, LTD.

    

PARTICIPANT

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

[Participant Name]

 

 

 

 

Title:

 

 

 

 

 

 

 

Exhibit A

 

RESTRICTED SHARE UNIT AGREEMENT

 

Capitalized terms not specifically defined in this Agreement have the meanings
specified in the Grant Notice or, if not defined in the Grant Notice, in the
Plan.

 

ARTICLE I.

 GENERAL

 

1.1         Award of RSUs and Dividend Equivalents.

 

(a)           The Company has granted the RSUs to Participant effective as of
the grant date set forth in the Grant Notice (the “Grant Date”).  Each RSU
represents the right to receive one Share or, at the option of the Company, an
amount of cash, in either case, as set forth in this Agreement.  Participant
will have no right to the distribution of any Shares or payment of any cash
until the time (if ever) the RSUs have vested.

 

(b)          The Company hereby grants to Participant, with respect to each RSU,
a Dividend Equivalent for ordinary cash dividends paid to substantially all
holders of outstanding Shares with a record date after the Grant Date and prior
to the date the applicable RSU is settled, forfeited or otherwise expires.  Each
Dividend Equivalent entitles Participant to receive the equivalent value of any
such ordinary cash dividends paid on a single Share.  The Company will establish
a separate Dividend Equivalent bookkeeping account (a “Dividend Equivalent
Account”) for each Dividend Equivalent and credit the Dividend Equivalent
Account (without interest) on the applicable dividend payment date with the
amount of any such cash paid.

 

1.2         Incorporation of Terms of Plan.  The RSUs are subject to the terms
and conditions set forth in this Agreement and the Plan, which is incorporated
herein by reference.  In the event of any inconsistency between the Plan and
this Agreement, the terms of the Plan will control.

 

1.3         Unsecured Promise.  The RSUs and Dividend Equivalents will at all
times prior to settlement represent an unsecured Company obligation payable only
from the Company’s general assets.

 

ARTICLE II.

 VESTING; FORFEITURE AND SETTLEMENT

 

2.1         Vesting; Forfeiture.  The RSUs will vest according to the vesting
schedule in the Grant Notice except that any fraction of an RSU that would
otherwise be vested will be accumulated and will vest only when a whole RSU has
accumulated.  In the event of Participant’s Termination of Service for any
reason, all unvested RSUs will immediately and automatically be cancelled and
forfeited, except as otherwise determined by the Administrator or provided in a
binding written agreement between Participant and the Company.  Dividend
Equivalents (including any Dividend Equivalent Account balance) will vest or be
forfeited, as applicable, upon the vesting or forfeiture of the RSU with respect
to which the Dividend Equivalent (including the Dividend Equivalent Account)
relates.

 

2.2         Settlement.

 

(a)           RSUs and Dividend Equivalents (including any Dividend Equivalent
Account balance) will be paid in Shares or cash at the Company’s option as soon
as administratively practicable after the vesting of the applicable RSU, but in
no event more than sixty (60) days after the RSU’s vesting
date.  Notwithstanding the foregoing, the Company may delay any payment under
this Agreement that the Company reasonably determines would violate Applicable
Law until the earliest date the Company

 

A-1

 

 

reasonably determines the making of the payment will not cause such a violation
(in accordance with Treasury Regulation Section 1.409A-2(b)(7)(ii)), provided
the Company reasonably believes the delay will not result in the imposition of
excise taxes under Section 409A.

 

(b)          If an RSU is paid in cash, the amount of cash paid with respect to
the RSU will equal the Fair Market Value of a Share on the day immediately
preceding the payment date.  If a Dividend Equivalent is paid in Shares, the
number of Shares paid with respect to the Dividend Equivalent will equal the
quotient, rounded down to the nearest whole Share, of the Dividend Equivalent
Account balance divided by the Fair Market Value of a Share on the day
immediately preceding the payment date.

 

ARTICLE III.

 TAXATION AND TAX WITHHOLDING

 

3.1         Representation.  Participant represents to the Company that
Participant has reviewed with Participant’s own tax advisors the tax
consequences of this Award and the transactions contemplated by the Grant Notice
and this Agreement.  Participant is relying solely on such advisors and not on
any statements or representations of the Company or any of its agents.

 

3.2         Tax Withholding.

 

(a)           The Company has the right and option, but not the obligation, to
treat Participant’s failure to provide timely payment in accordance with the
Plan of any withholding tax arising in connection with the RSUs or Dividend
Equivalents as Participant’s election to satisfy all or any portion of the
withholding tax by requesting the Company repurchase Shares otherwise issuable
under the Award limited to the number of Shares which have a Fair Market Value
on the date of repurchase necessary to pay the aggregate amount of tax
liability.

 

(b)          Participant acknowledges that Participant is ultimately liable and
responsible for all taxes owed in connection with the RSUs and the Dividend
Equivalents, regardless of any action the Company or any Subsidiary takes with
respect to any tax withholding obligations that arise in connection with the
RSUs or Dividend Equivalents.  Neither the Company nor any Subsidiary makes any
representation or undertaking regarding the treatment of any tax withholding in
connection with the awarding, vesting or payment of the RSUs or the Dividend
Equivalents or the subsequent sale of Shares.  The Company and the Subsidiaries
do not commit and are under no obligation to structure the RSUs or Dividend
Equivalents to reduce or eliminate Participant’s tax liability.

 

ARTICLE IV.

 OTHER PROVISIONS

 

4.1         Adjustments.  Participant acknowledges that the RSUs, the Shares
subject to the RSUs and the Dividend Equivalents are subject to adjustment,
modification and termination in certain events as provided in this Agreement and
the Plan.

 

4.2         Notices.  Any notice to be given under the terms of this Agreement
to the Company must be in writing and addressed to the Company in care of the
Company’s Secretary at the Company’s principal office or the Secretary’s
then-current email address or facsimile number.  Any notice to be given under
the terms of this Agreement to Participant must be in writing and addressed to
Participant at Participant’s last known mailing address, email address or
facsimile number in the Company’s personnel files.  By a notice given pursuant
to this Section, either party may designate a different address for notices to
be given to that party.  Any notice will be deemed duly given when actually
received, when sent by email, when sent by certified mail (return receipt
requested) and deposited with postage prepaid in a post

 

A-2

 

 

office or branch post office regularly maintained by the United States Postal
Service, when delivered by a nationally recognized express shipping company or
upon receipt of a facsimile transmission confirmation.

 

4.3         Titles.  Titles are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of this Agreement.

 

4.4         Conformity to Securities Laws.  Participant acknowledges that the
Plan, the Grant Notice and this Agreement are intended to conform to the extent
necessary with all Applicable Laws and, to the extent Applicable Laws permit,
will be deemed amended as necessary to conform to Applicable Laws.

 

4.5         Successors and Assigns.  The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement will
inure to the benefit of the successors and assigns of the Company.  Subject to
the restrictions on transfer set forth in the Plan, this Agreement will be
binding upon and inure to the benefit of the heirs, legatees, legal
representatives, successors and assigns of the parties hereto.

 

4.6         Limitations Applicable to Section 16 Persons.  Notwithstanding any
other provision of the Plan or this Agreement, if Participant is subject to
Section 16 of the Exchange Act, the Plan, the Grant Notice, this Agreement, the
RSUs and the Dividend Equivalents will be subject to any additional limitations
set forth in any applicable exemptive rule under Section 16 of the Exchange Act
(including any amendment to Rule 16b-3) that are requirements for the
application of such exemptive rule.  To the extent Applicable Laws permit, this
Agreement will be deemed amended as necessary to conform to such applicable
exemptive rule.

 

4.7         Entire Agreement.  The Plan, the Grant Notice and this Agreement
(including any exhibit hereto) constitute the entire agreement of the parties
and supersede in their entirety all prior undertakings and agreements of the
Company and Participant with respect to the subject matter hereof.

 

4.8         Agreement Severable.  In the event that any provision of the Grant
Notice or this Agreement is held illegal or invalid, the provision will be
severable from, and the illegality or invalidity of the provision will not be
construed to have any effect on, the remaining provisions of the Grant Notice or
this Agreement.

 

4.9         Limitation on Participant’s Rights.  Participation in the Plan
confers no rights or interests other than as herein provided.  This Agreement
creates only a contractual obligation on the part of the Company as to amounts
payable and may not be construed as creating a trust.  Neither the Plan nor any
underlying program, in and of itself, has any assets.  Participant will have
only the rights of a general unsecured creditor of the Company with respect to
amounts credited and benefits payable, if any, with respect to the RSUs and
Dividend Equivalents, and rights no greater than the right to receive cash or
the Shares as a general unsecured creditor with respect to the RSUs and Dividend
Equivalents, as and when settled pursuant to the terms of this Agreement.

 

4.10         Not a Contract of Employment.  Nothing in the Plan, the Grant
Notice or this Agreement confers upon Participant any right to continue in the
employ or service of the Company or any Subsidiary or interferes with or
restricts in any way the rights of the Company and its Subsidiaries, which
rights are hereby expressly reserved, to discharge or terminate the services of
Participant at any time for any reason whatsoever, with or without Cause, except
to the extent expressly provided otherwise in a written agreement between the
Company or a Subsidiary and Participant.

 

A-3

 

 

4.11         Counterparts.  The Grant Notice may be executed in one or more
counterparts, including by way of any electronic signature, subject to
Applicable Law, each of which will be deemed an original and all of which
together will constitute one instrument.

 

* * * * *

 

 

A-4