Document:

Exhibit 10.23

 

KINIKSA PHARMACEUTICALS, LTD.
 2018 INCENTIVE AWARD PLAN

 

SUB-PLAN FOR UK EMPLOYEES

 

1.                                      Purpose

 

Pursuant to the powers granted by the Administrator in Section 10.5 of the Kiniksa Pharmaceuticals, Ltd. 2018 Incentive Award Plan (as it may be amended or restated from time to time, the “Plan”), the Administrator has adopted this Sub-Plan (the “Sub-Plan”). The purpose of the Sub-Plan is to promote the success and enhance the value of Kiniksa Pharmaceuticals, Ltd. (the “Company”), by linking the individual interests of Employees, to those of Company shareholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to Company shareholders. The Sub-Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of Employees upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is largely dependent.  Only Employees may receive Awards under the Sub-Plan.

 

2.                                      Definitions, Construction and Eligibility

 

(a)                                 Capitalized terms used in the Sub-Plan which are not defined herein shall have the meaning given in the Plan, and where the context requires any references to the “Plan” in those definitions shall be a reference to the Sub-Plan.  The singular pronoun shall include the plural where the context so indicates.

 

(b)                                 In the event of a conflict between the terms of the Sub-Plan and the Plan with respect to Awards granted to Employees based in the United Kingdom under the Sub-Plan, the terms of the Sub-Plan will control.

 

2.1                               Definitions

 

Wherever the following terms are: (i) used in the Sub-Plan; or (ii) used in the Plan but apply to Awards made under the Sub-Plan, they shall have the meanings specified below, unless the context clearly indicates otherwise:

 

(c)                                  “Award” means, individually, or collectively, a grant under the Sub-Plan of an option, a Share Appreciation Right, a Restricted Share award, a Restricted Share award or an Other Share or Cash Based Award;

 

(d)                                 “Service Provider” shall mean any person who is an Employee.

 

2.2                               Eligibility

 

The Sub-Plan forms the rules of the employee share scheme applicable to Awards made under the Sub-Plan to Employees of the Company and any Subsidiaries based in the United Kingdom or in any other jurisdiction at the discretion of the Administrator.  Other Service Providers who are not Employees (such as Consultants and non-employee Directors) are not eligible to receive Awards and become Participants under this Sub-Plan.  References to the phrase

 

 

“Service Provider” shall be interpreted as referring only to Employees when that phrase in the Plan is used in the context of the Sub-Plan and Awards granted to Employees under this Sub-Plan.

 

3.                                      Administration and Delegation

 

The provisions of Article 3 of the Plan shall apply to this Sub-Plan as if references to the Plan are references to the Sub-Plan.

 

4.                                      Shares Available for Awards

 

(a)                                 The provisions of Article 4 of the Plan shall apply to this Sub-Plan as if references to the Plan are references to the Sub-Plan.

 

(b)                                 The aggregate number of Shares which may be issued or transferred pursuant to Awards under the Sub-Plan, when taken together with the number of Shares which may be issued or transferred pursuant to Awards under the Plan or any other sub-plan, shall not exceed the limits specified by Article 4 of the Plan, as amended from time to time.

 

5.                                      Share Options and Share Appreciation Rights

 

(a)                                 Except as set out below, the provisions of Article 5 of the Plan shall apply to this Sub-Plan as if references to the Plan are references to the Sub-Plan.

 

(b)                                 Unless otherwise determined appropriate by the Administrator, any Option granted under this Sub-Plan shall be a Non-Qualified Stock Option.

 

6.                                      Restricted Shares; Restricted Share Units

 

The provisions of Article 6 of the Plan shall apply to this Sub-Plan as if references to the Plan are references to the Sub-Plan.  On request by the Company, Participants tax resident in the United Kingdom will be required to make an election under Section 431 of Chapter 2 Income Tax (Earnings and Pensions) Act 2003 (“ITEPA”) pursuant to which, for the relevant tax purposes, the market value of the Shares acquired will be calculated as if the Shares were not restricted.  Participants tax resident in other jurisdictions may be required to make equivalent elections appropriate to their jurisdictions.

 

7.                                      Other Share or Cash Based Awards

 

The provisions of Article 7 of the Plan shall apply to this Sub-Plan as if references to the Plan are references to the Sub-Plan.

 

8.                                      Adjustments For Changes In Common Shares And Certain Other Events

 

The provisions of Article 8 of the Plan shall apply to this Sub-Plan as if references to the Plan are references to the Sub-Plan.

 

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9.                                      General Provisions Applicable To Awards

 

(a)                                 Except as set out below, the provisions of Article 9 of the Plan shall apply to this Sub-Plan as if references to the Plan are references to the Sub-Plan.

 

(b)                                 Section 9.5 of the Plan shall be amended so that the terms “taxes required by law to be withheld” and any similar phrases relating to tax obligations or tax liability when used in Section 9.5 shall include income tax, employee’s National Insurance contributions and (at the discretion of the Company) employer’s National Insurance contributions or other similar taxes arising in any jurisdiction (any a “Tax Liability”). The Participant will indemnify and keep indemnified the Company and his/her employing company, if different, from and against any liability for or obligation to pay any Tax Liability arising in consequence of any Award.

 

10.                               Miscellaneous

 

(a)                                 Except as set out below, the provisions of Article 10 of the Plan shall apply to this Sub-Plan as if references to the Plan are references to the Sub-Plan.

 

(b)                                 The following language set out below is in addition to the terms of Article 10:

 

“Neither the Sub-Plan nor any Award made under the Sub-Plan shall give the Participant any rights to compensation or damages including for any loss or potential loss that the Participant may suffer by reason of being unable to exercise any Option or forfeiting any Award or Shares as a result of the termination of the Sub-Plan, the lapsing or termination of an Award or the Participant’s Termination of Service including where any Termination of Service is subsequently held to be wrongful or unfair.”

 

(c)                                  The following language set out below shall replace Section 10.9:

 

“The Company and all its Subsidiaries may transfer, collect, use, process or disclose, in electronic or other form, such information to third parties, including where they are situated outside the European Economic Area in countries where the level of data protection may not be as high as in the Participant’s country of residence, in the event that such disclosure is in their view required for the performance of their obligations under the Plan. The Company and all Group Companies shall ensure that such collection, use, processing and transfers are made in accordance with the EU General Data Protection Regulation and other applicable data protection laws in any other jurisdiction.”

 

11.                               Definitions

 

(a)                                 Except as set out below, the provisions of Article 11 of the Plan shall apply to this Sub-Plan as if references to the Plan are references to the Sub-Plan.

 

(b)                                 Section 11.12 (“Consultant”) shall not apply to this Sub-Plan.

 

(c)                                  Section 11.38, (“Service Provider”) shall mean an Employee.

 

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KINIKSA PHARMACEUTICALS, LTD.
 2018 INCENTIVE AWARD PLAN UK SUB-PLAN

 

SHARE OPTION GRANT NOTICE FOR UK PARTICIPANTS

 

Capitalized terms not specifically defined in this Share Option Grant Notice for UK participants (the “Grant Notice”) have the meanings given to them in the 2018 Incentive Award Plan UK Sub-Plan (the “UK Sub-Plan”) of Kiniksa Pharmaceuticals, Ltd. (the “Company”), which incorporates terms from the Company’s 2018 Incentive Award Plan (the “Plan”).

 

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 UK Sub-Plan and the Share Option Agreement attached as Exhibit A (the “UK Option 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 UK Sub-Plan and the UK Option Agreement.  Participant has reviewed the UK Sub-Plan, this Grant Notice and the UK Option 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 UK Sub-Plan, this Grant Notice and the UK Option Agreement.  Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the UK Sub-Plan, this Grant Notice or the UK Option Agreement.

 

	
KINIKSA PHARMACEUTICALS, LTD.
    	
PARTICIPANT
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
[Participant Name]
    
	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    

 

 

Exhibit A

 

SHARE OPTION AGREEMENT FOR UK PARTICIPANTS

 

Capitalized terms not specifically defined in this UK Option Agreement have the meanings specified in the Grant Notice or, if not defined in the Grant Notice, in the UK Sub-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 UK Sub-Plan.  The Option is subject to the terms and conditions set forth in this UK Option Agreement and the UK Sub-Plan, which is incorporated herein by reference.  In the event of any inconsistency between the UK Sub-Plan and this UK Option Agreement, the terms of the UK Option Agreement 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 UK Sub-Plan or this UK Option 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 the 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 UK Sub-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 UK Sub-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                               3.3                               UK Tax Obligations.

 

(a)                                 Tax Indemnity.  Participant agrees to indemnify and keep indemnified the Company and his/her employing company (“Employer”), if different, from and against any liability for or obligation to pay any Tax Liability (a “Tax Liability” being any liability for income tax, employee’s National Insurance contributions and (at the discretion of the Company) employer’s National Insurance Contributions (or other similar obligations to pay tax and social security wherever in the world arising)) that is attributable to: (1) the grant or exercise of, or any benefit derived by Participant from, the Option or the Shares which are the subject of the Option; (2) the transfer or issue of Shares to Participant on satisfaction of the Option or any other benefit on exercise of the Option; (3) any restrictions applicable to the Shares held by the Participant ceasing to apply to those shares; or (4) the disposal of any Shares.

 

(b)                                 Tax Liability.  The Option cannot be exercised until Participant has made such arrangements as the Company may require for the satisfaction of any Tax Liability that may arise in connection with the exercise of the Option and/or the acquisition of the Shares by the Participant.  The Company shall not be required to issue, allot or transfer Shares until Participant has satisfied this obligation.

 

(c)                                  Election.  Participant undertakes that, upon request by the Company, he/she will (on or within 14 days of acquiring the Shares) join with his/her Employer in electing, pursuant to Section  431(1) of the Income Tax (Earnings and Pensions) Act 2003 (“ITEPA”)  that, for relevant tax purposes, the market value of the Shares acquired on exercise of the Option on any occasion will be calculated as if the Shares were not restricted and Sections 425 to 430 (inclusive) of ITEPA are not to apply to such Shares.

 

(d)                                 The Company has the right and option, but not the obligation, to treat Participant’s failure to provide timely payment in accordance with the UK Sub-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 an aggregate Fair Market Value on the date of repurchase necessary to pay the aggregate amount of Tax Liability.

 

(e)                                  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

 

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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 UK Option Agreement and the UK Sub-Plan.

 

4.2                               Notices.  Any notice to be given under the terms of this UK Option 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 UK Option 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.

 

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

 

4.4                               Conformity to Securities Laws.  Participant acknowledges that the UK Sub-Plan, the Grant Notice and this UK Option 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 UK Option Agreement to single or multiple assignees, and this UK Option Agreement will inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer set forth in the UK Sub-Plan, this UK Option 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 UK Sub-Plan or this UK Option Agreement, if Participant is subject to Section 16 of the Exchange Act, the UK Sub-Plan, the Grant Notice, this UK Option 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 UK Option Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.

 

4.7                               Entire Agreement.  The UK Sub-Plan, the Grant Notice and this UK Option 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.

 

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4.8                               Agreement Severable.  In the event that any provision of the Grant Notice or this UK Option 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 UK Option Agreement.

 

4.9                               Limitation on Participant’s Rights.  Participation in the UK Sub-Plan confers no rights or interests other than as herein provided.  This UK Option 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 UK Sub-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 UK Sub-Plan, the Grant Notice or this UK Option Agreement confers upon Participant any right to continue in the employ 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)                                 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 UK Sub-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 UK Option 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.

 

4.13                        Data Protection.  The Company and all its Subsidiaries may transfer, collect, use, process or disclose, in electronic or other form, such information to third parties, including where they are situated

 

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outside the European Economic Area in countries where the level of data protection may not be as high as in the Participant’s country of residence, in the event that such disclosure is in their view required for the performance of their obligations under the Plan. The Company and all Group Companies shall ensure that such collection, use, processing and transfers are made in accordance with the EU General Data Protection Regulation and other applicable data protection laws in any other jurisdiction.

 

4.14                        Acknowledgement.  Participant acknowledges that neither this UK Option Agreement nor the UK Sub-Plan has been issued, nor has it been approved by, an authorised person within the meaning of the Financial Services and Markets Act 2000 of the United Kingdom and is being directed at the Participant because the offer to which this UK Option Agreement and the UK Sub-Plan relate has been determined as having regard to the Participant’s circumstances as an employee of the Company. This UK Option Agreement is strictly confidential and is not for distribution to, and may not be acted upon by, any other person other than the person to whom it has been specifically addressed.

 

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5Exhibit 10.25

 

KINIKSA PHARMACEUTICALS, LTD.

 

Restricted Stock Agreement

 

AGREEMENT made this 16 day of September, 2015, between Kiniksa Pharmaceuticals, Ltd., a Bermuda exempted company (the “Company”), and Sanj K. Patel (the “Founder”).

 

For valuable consideration, receipt of which is acknowledged, the parties hereto agree as follows:

 

1.                                      Purchase of Shares.

 

The Company shall allot and issue to the Founder, and the Founder shall subscribe for and shall purchase from the Company, subject to the terms and conditions set forth in this Agreement, 600,000 common shares (the “Shares”) US$0.0001 par value, of the Company (“Common Stock”), at a purchase price of US$0.0001 per share. The aggregate purchase price for the Shares shall be paid by the Founder by check payable to the order of the Company or such other method as may be acceptable to the Company. Upon receipt by the Company of payment for the Shares, the Company shall issue to the Founder one or more certificates in the name of the Founder for that number of Shares purchased by the Founder. The Founder agrees that the Shares shall be subject to the purchase options set forth in Sections 2 and 5 of this Agreement and the restrictions on transfer set forth in Section 4 of this Agreement.

 

2.                                      Purchase Option.

 

(a)                                 In the event that the Founder ceases to be employed by the Company for any reason or no reason, with or without cause, within 48 months from the Vesting Commencement Date (as defined below), the Company shall have the right and option (the “Purchase Option”) to purchase from the Founder, for a sum of $ US$0.0001 per share (the “Option Price”), some or all of the Unvested Shares (as defined below).

 

“Unvested Shares” means the total number of Shares multiplied by the Applicable Percentage at the time the Purchase Option becomes exercisable by the Company. The “Applicable Percentage” shall be (i) 100% during the period ending on the first anniversary of the Vesting Commencement Date (as defined below), (ii) 75% on the first anniversary of the Vesting Commencement Date, (iii) 75% less 2.0833% for each month of employment completed by the Founder with the Company from and after the first anniversary of the Vesting Commencement Date, and (iv) zero on or after the fourth anniversary of the Vesting Commencement Date. For purposes of this Agreement, “Vesting Commencement Date” shall mean August 1, 2015.

 

(b)                                 For purposes of this Agreement, employment with the Company shall include employment with a parent or subsidiary of the Company and service to the Company as an advisor, consultant or member of the Board of Directors of the Company.

 

(c)                                  If, after a Sale (as defined below) of the Company, the Founder’s employment with the Company is terminated (i) by the Company without cause (as defined

 

 

below) or (ii) by the Founder for Good Reason (as defined below), then the vesting schedule of the Shares shall be accelerated so that all then Unvested Shares shall immediately become free from the Purchase Option on the date of such termination.

 

(d)                                 For purposes of Section 2(c), the Founder’s employment shall be considered terminated without cause when such termination does not exist upon (i) a good faith finding by the Board of Directors of the Company that the Founder’s gross negligence or repeated and willful misconduct in performance of his duties to the Company, where such gross negligence or repeated and willful misconduct has resulted in material damage to the Company or any of its Affiliates or successors; (ii) the Founder’s commission of any act of fraud, embezzlement or material professional dishonesty with respect to the business of the Company or any of its Affiliates; (iii) the Founder’s commission of a felony or crime involving moral turpitude; or (iv) the Founder’s material breach of any provision of this Agreement or any other written agreement between the Founder and the Company which breach is not cured within twenty days after written notice thereof.

 

(e)                                  For purposes of Section 2(c), “Good Reason” shall exist upon any of the following occurring without the prior consent of the Founder (i) the assignment to the Founder of duties materially inconsistent with the Founder’s title, position, status, reporting relationships, authority, duties or responsibilities; (ii) a requirement that the Founder relocate his primary reporting location to a location more than fifty (50) miles from the location of the Company subsidiary’s offices in Wellesley, Massachusetts; (iii) a material diminution by the Company of the Founder’s annual compensation; (iv) a material diminution in the budget over which Founder has responsibility; or (v) a breach by the Company (or its subsidiaries) of any written agreement between the Company (or its subsidiaries) and Founder.

 

3.                                      Exercise of Purchase Option and Closing.

 

(a)                                 The Company may exercise the Purchase Option by delivering or mailing to the Founder (or his estate), within 90 days after the termination of the employment of the Founder with the Company, a written notice of exercise of the Purchase Option. Such notice shall specify the number of Shares to be purchased. If and to the extent the Purchase Option is not so exercised by the giving of such a notice within such 90-day period, the Purchase Option shall automatically expire and terminate effective upon the expiration of such 90-day period.

 

(b)                                 Within 10 days after delivery to the Founder of the Company’s notice of the exercise of the Purchase Option pursuant to subsection (a) above, the Founder (or his estate) shall, pursuant to the provisions of the Joint Escrow Instructions referred to in Section 7 below, tender to the Company at its principal offices the certificate or certificates representing the Shares which the Company has elected to purchase in accordance with the terms of this Agreement, duly endorsed in blank or with duly endorsed instrument of transfer attached thereto, all in form suitable for the transfer of such Shares to the Company. Promptly following its receipt of such certificate or certificates, the Company shall pay to the Founder the aggregate Option Price for such Shares (provided that any delay in making such payment shall not invalidate the Company’s exercise of the Purchase Option with respect to such Shares).

 

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

 

(d)                                 The Option Price may be payable, at the option of the Company, in cancellation of all or a portion of any outstanding indebtedness of the Founder to the Company or in cash (by check) or both.

 

(e)                                  The Company shall not purchase any fraction of a Share upon exercise of the Purchase Option, and any fraction of a Share resulting from a computation made pursuant to Section 2 of this Agreement shall be rounded to the nearest whole Share (with any one-half Share being rounded upward).

 

(f)                                   The Company may assign its Purchase Option to one or more persons or entities.

 

4.                                      Restrictions on Transfer.

 

(a)                                 The Founder shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively “transfer”) any Shares, or any interest therein, that are subject to the Purchase Option, except that the Founder may transfer such Shares (i) to or for the benefit of any spouse, children, parents, uncles, aunts, siblings, grandchildren and any other relatives approved by the Board of Directors (collectively, “Approved Relatives”) or to a trust established solely for the benefit of the Founder and/or Approved Relatives, provided that such Shares shall remain subject to this Agreement (including without limitation the restrictions on transfer set forth in this Section 4, the Purchase Option and the right of first refusal set forth in Section 5) and such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument confirming that such transferee shall be bound by all of the terms and conditions of this Agreement or (ii) as part of the sale of all or substantially all of the shares of capital stock of the Company (including pursuant to a merger or consolidation), provided that, in accordance with Section 9(b) below, the securities or other property received by the Founder in connection with such transaction shall remain subject to this Agreement.

 

(b)                                 The Founder shall not transfer any Shares, or any interest therein, that are no longer subject to the Purchase Option, except in accordance with Section 5 below.

 

5.                                      Right of First Refusal.

 

(a)                                 If the Founder proposes to transfer any Shares that are no longer subject to the Purchase Option (either because they are no longer Unvested Shares or because the Purchase Option expired unexercised), then the Founder shall first give written notice of the proposed transfer (the “Transfer Notice”) to the Company. The Transfer Notice shall name the proposed

 

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transferee and state the number of such Shares the Founder proposes to transfer (the “Offered Shares”), the price per share and all other material terms and conditions of the transfer.

 

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

 

(c)                                  If the Company does not elect to acquire any of the Offered Shares, the Founder may, within the 30-day period following the expiration of the option granted to the Company under subsection (b) above, transfer the Offered Shares which the Company has not elected to acquire to the proposed transferee, provided  that such transfer shall not be on terms and conditions more favorable to the transferee than those contained in the Transfer Notice. Notwithstanding any of the above, all Offered Shares transferred pursuant to this Section 5 shall remain subject to this Agreement (including without limitation the restrictions on transfer set forth in Section 4 and the right of first refusal set forth in this Section 5) and such transferee shall, as a condition to such transfer, deliver to the Company a written instrument confirming that such transferee shall be bound by all of the terms and conditions of this Agreement.

 

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

 

(e)                                  The following transactions shall be exempt from the provisions of this Section 5:

 

(1)                                 a transfer of Shares to or for the benefit of any Approved Relatives, or to a trust established solely for the benefit of the Founder and/or Approved Relatives;

 

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

 

4

 

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

 

provided, however, that in the case of a transfer pursuant to clause (1) above, such Shares shall remain subject to this Agreement (including without limitation the restrictions on transfer set forth in Section 4 and the right of first refusal set forth in this Section 5) and such transferee shall, as a condition to such transfer, deliver to the Company a written instrument confirming that such transferee shall be bound by all of the terms and conditions of this Agreement.

 

(f)                                   The Company may assign its rights to purchase Offered Shares in any particular transaction under this Section 5 to one or more persons or entities.

 

(g)                                  The provisions of this Section 5 shall terminate upon the earlier of the following events:

 

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

 

(2)                                 the sale of all or substantially all of the outstanding shares of capital stock, assets or business of the Company, by merger, amalgamation, consolidation, sale of assets or otherwise (other than a merger or consolidation in which all or substantially all of the individuals and entities who were beneficial owners of the Company’s voting securities immediately prior to such transaction beneficially own, directly or indirectly, more than 75% (determined on an as-converted basis) of the outstanding securities entitled to vote generally in the election of directors of the resulting, surviving or acquiring corporation in such transaction) (such occurrence, a “Sale”).

 

(h)                                 The Company shall not be required (1) to transfer on its books any of the Shares which shall have been sold or transferred in violation of any of the provisions set forth in this Agreement, or (2) to treat as owner of such Shares or to pay dividends to any transferee to whom any such Shares shall have been so sold or transferred.

 

6.                                      Agreement in Connection with Initial Public Offering.

 

The Founder agrees, in connection with the initial underwritten public offering of the Common Stock pursuant to a registration statement under the Securities Act, (i) not to (a) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock or (b) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of shares of Common Stock, whether any transaction described in clause (a) or (b) is to be settled by delivery of shares of Common Stock or other securities, in cash or otherwise, during the period beginning on the date of the filing of such registration statement with the Securities and Exchange Commission and ending 180 days from the date of

 

5

 

the final prospectus relating to the offering (plus up to an additional 34 days to the extent requested by the managing underwriters for such offering in order to address FINRA rules), and (ii) to execute any agreement reflecting clause (i) above as may be requested by the Company or the managing underwriters at the time of such offering. The Company may impose stop-transfer instructions with respect to the shares of Common Stock or other securities subject to the foregoing restriction until the end of the “lock-up” period.

 

7.                                      Escrow.

 

The Founder shall, upon the execution of this Agreement, execute Joint Escrow Instructions in the form attached to this Agreement as Exhibit A. The Joint Escrow Instructions shall be delivered to the Treasurer of the Company, as escrow agent thereunder. The Founder shall deliver to such escrow agent a stock assignment duly endorsed in blank, in the form attached to this Agreement as Exhibit B, and hereby instructs the Company to deliver to such escrow agent, on behalf of the Founder, the certificate(s) evidencing the Shares issued hereunder. Such materials shall be held by such escrow agent pursuant to the terms of such Joint Escrow Instructions.

 

8.                                      Restrictive Legends.

 

All certificates representing Shares shall have affixed thereto legends in substantially the following form, in addition to any other legends that may be required under federal or state securities laws:

 

“The shares represented by this certificate are subject to restrictions on transfer and an option to purchase set forth in a  certain Restricted Stock Agreement between the company and the registered owner of these shares (or his predecessor in interest), and such Agreement is available for inspection without charge at the office of the Treasurer of the company.”

 

“The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, and may not be sold, transferred or otherwise disposed of in the absence of an effective registration statement under such Act or an opinion of counsel satisfactory to the company to the effect that such registration is not required.”

 

9.                                      Adjustments for Stock Splits, Stock Dividends, etc.

 

(a)                                 If from time to time there is any stock split, stock dividend, stock distribution or other reclassification of the Common Stock of the Company, any and all new, substituted or additional securities to which the Founder is entitled by reason of his ownership of the Shares shall be immediately subject to the purchase options, the restrictions on transfer and the other provisions of this Agreement in the same manner and to the same extent as the Shares, and the Option Price shall be appropriately adjusted.

 

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(b)                                 Upon the occurrence of any merger, amalgamation or consolidation of the Company with or into another entity as a result of which all of the Common Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property or any exchange of all of the Common Stock of the Company for cash, securities or other property pursuant to a share exchange transaction, the repurchase and other rights of the Company hereunder shall inure to the benefit of the Company’s successor and shall apply to the cash, securities or other property which the Shares were converted into or exchanged for pursuant to such transaction in the same manner and to the same extent as they applied to the Shares under this Agreement. If, in connection with such a transaction, a portion of the cash, securities and/or other property received upon the conversion or exchange of the Shares is to be placed into escrow to secure indemnification or similar obligations, the mix between the vested and unvested portion of such cash, securities and/or other property that is placed into escrow shall be the same as the mix between the vested and unvested portion of such cash, securities and/or other property that is not subject to escrow.

 

10.                               Investment Representations.

 

The Founder represents, warrants and covenants as follows:

 

(a)                                 The Founder is purchasing the Shares for his own account for investment only, and not with a view to, or for sale in connection with, any distribution of the Shares in violation of the Securities Act, or any rule or regulation under the Securities Act.

 

(b)                                 The Founder has had such opportunity as he has deemed adequate to obtain from representatives of the Company such information as is necessary to permit him to evaluate the merits and risks of his investment in the Company.

 

(c)                                  The Founder has sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in the purchase of the Shares and to make an informed investment decision with respect to such purchase.

 

(d)                                 The Founder can afford a complete loss of the value of the Shares and is able to bear the economic risk of holding such Shares for an indefinite period.

 

(e)                                  THE FOUNDER UNDERSTANDS THAT (I) THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND ARE “RESTRICTED SECURITIES” WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT; (II) THE SHARES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THEY ARE SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION IS THEN AVAILABLE; (III) IN ANY EVENT, THE EXEMPTION FROM REGISTRATION UNDER RULE 144 WILL NOT BE AVAILABLE FOR AT LEAST ONE YEAR AND EVEN THEN WILL NOT BE AVAILABLE UNLESS A PUBLIC MARKET THEN EXISTS FOR THE COMMON STOCK, ADEQUATE INFORMATION CONCERNING THE COMPANY IS THEN AVAILABLE TO THE PUBLIC, AND OTHER TERMS AND CONDITIONS OF RULE 144 ARE COMPLIED WITH; AND (IV) THERE IS NOW NO REGISTRATION STATEMENT ON FILE WITH

 

7

 

THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO ANY STOCK OF THE COMPANY AND THE COMPANY HAS NO OBLIGATION OR CURRENT INTENTION TO REGISTER THE SHARES UNDER THE SECURITIES ACT.

 

11.                               Withholding Taxes; Section 83(b) Election.

 

(a)                                 The Founder acknowledges and agrees that the Company has the right to deduct from payments of any kind otherwise due to the Founder any federal, state or local taxes of any kind required by law to be withheld with respect to the purchase of the Shares by the Founder or the lapse of the Purchase Option.

 

(b)                                 The Founder has reviewed with the Founder’s own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement. The Founder is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. The Founder understands that the Founder (and not the Company) shall be responsible for the Founder’s own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement. The Founder understands that it may be beneficial in many circumstances to elect to be taxed at the time the Shares are purchased rather than when and as the Company’s Purchase Option expires by filing an election under Section 83(b) of the Internal Revenue Code of 1986 with the I.R.S. within 30 days from the date of purchase.

 

THE FOUNDER ACKNOWLEDGES THAT IT IS SOLELY THE FOUNDER’S RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF THE FOUNDER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON THE FOUNDER’S BEHALF.

 

12.                               Miscellaneous.

 

(a)                                 No Rights to Employment. The Founder acknowledges and agrees that the vesting of the Shares pursuant to Section 2 hereof is earned only by continuing service as an employee at the will of the Company (not through the act of being hired or purchasing shares hereunder). The Founder further acknowledges and agrees that the transactions contemplated hereunder and the vesting schedule set forth herein do not constitute an express or implied promise of continued engagement as an employee or consultant for the vesting period, for any period, or at all.

 

(b)                                 Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.

 

(c)                                  Waiver. Any provision for the benefit of the Company contained in this Agreement may be waived, either generally or in any particular instance, by the Board of Directors of the Company.

 

8

 

(d)                                 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Company and the Founder and their respective heirs, executors, administrators, legal representatives, successors and assigns, subject to the restrictions on transfer set forth in Sections 4 and 5 of this Agreement.

 

(e)                                  Notice. All notices required or permitted hereunder shall be in writing and deemed effectively given upon personal delivery or five days after deposit in the United States Post Office, by registered or certified mail, postage prepaid, addressed to the other party hereto at the address shown beneath his or its respective signature to this Agreement, or at such other address or addresses as either party shall designate to the other in accordance with this Section 12(e).

 

(f)                                   Pronouns. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural, and vice versa.

 

(g)                                  Entire Agreement. This Agreement constitutes the entire agreement between the parties, and supersedes all prior agreements and understandings, relating to the subject matter of this Agreement.

 

(h)                                 Amendment. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Founder.

 

(i)                                     Governing Law/Submission to Jurisdiction. This Agreement shall be construed, interpreted and enforced in accordance with the laws of Bermuda without regard to any applicable conflicts of laws. The parties hereto submit to the non-exclusive jurisdiction of the courts of Massachusetts, USA to resolve any disputes arising between them pertaining to the matters set out herein.

 

(j)                                    Founder’s Acknowledgments. The Founder acknowledges that he: (i) has read this Agreement; (ii) has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of the Founder’s own choice or has voluntarily declined to seek such counsel; (iii) understands the terms and consequences of this Agreement; (iv) is fully aware of the legal and binding effect of this Agreement; and (v) understands that the law firm of Latham & Watkins LLP, is acting as counsel to the Company in connection with the transactions contemplated by the Agreement, and is not acting as counsel for the Founder.

 

- Remainder of this page intentionally left blank -

 

9

 

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

 

	
 
    	
KINIKSA PHARMACEUTICALS, LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Thomas Beetham 
    
	
 
    	
Name: Thomas Beetham 
    
	
 
    	
Title: Sr. Vice President 
    
	
 
    	
Address: 
    	
Clarendon House
    
	
 
    	
 
    	
2 Church Street
    
	
 
    	
 
    	
Hamilton HM 11
    
	
 
    	
 
    	
Bermuda
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Sanj K. Patel
    
	
 
    	
Sanj K. Patel
    
	
 
    	
 
    
	
 
    	
Address:
    	
26 Longmeadow Rd.
    
	
 
    	
 
    	
Lincoln, MA 01773
    
	
 
    	
 
    	
USA
    
				

 

 

Exhibit A

 

Joint Escrow Instructions

 

September 16, 2015

 

Kiniksa Pharmaceuticals, Ltd. 

Clarendon House

2 Church Street

Hamilton HM 11

Bermuda

Attn: Treasurer

 

Dear Sir/Madam:

 

As Escrow Agent for Kiniksa Pharmaceuticals, Ltd., a Bermuda exempted company, and its successors in interest under the Restricted Stock Agreement (the “Agreement”) of even date herewith, to which a copy of these Joint Escrow Instructions is attached (the “Company”), and the undersigned person (“Holder”), you are hereby authorized and directed to hold the documents delivered to you pursuant to the terms of the Agreement in accordance with the following instructions:

 

1.                                      Appointment. Holder irrevocably authorizes the Company to deposit with you any certificates evidencing Shares (as defined in the Agreement) to be held by you hereunder and any additions and substitutions to said Shares. For purposes of these Joint Escrow Instructions, “Shares” shall be deemed to include any additional or substitute property. Holder does hereby irrevocably constitute and appoint you as his attorney-in-fact and agent for the term of this escrow to execute with respect to such Shares all documents necessary or appropriate to make such Shares negotiable and to complete any transaction herein contemplated. Subject to the provisions of this Section 1 and the terms of the Agreement, Holder shall exercise all rights and privileges of a member of the Company while the Shares are held by you.

 

2.                                      Closing of Purchase.

 

(a)                                 Upon any purchase by the Company of the Shares pursuant to the Agreement, the Company shall give to Holder and you a written notice specifying the number of Shares to be purchased, the purchase price for the Shares, as determined pursuant to the Agreement, and the time for a closing hereunder (the “Closing”) at the principal office of the Company. Holder and the Company hereby irrevocably authorize and direct you to close the transaction contemplated by such notice in accordance with the terms of said notice.

 

(b)                                 At the Closing, you are directed (i) to date the stock assignment form or forms necessary for the transfer of the Shares, (ii) to fill in on such form or forms the number of Shares being transferred, and (iii) to deliver the same, together with the certificate or certificates

 

11

 

evidencing the Shares to be transferred, to the Company against the simultaneous delivery to you of the purchase price for the Shares being purchased pursuant to the Agreement.

 

3.                                 Withdrawal. The Holder shall have the right to withdraw from this escrow any Shares as to which the Purchase Option (as defined in the Agreement) has terminated or expired.

 

4.                                      Duties of Escrow Agent.

 

(a)                                 Your duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto.

 

(b)                                 You shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties. You shall not be personally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact of Holder while acting in good faith and in the exercise of your own good judgment, and any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive evidence of such good faith.

 

(c)                                  You are hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or entity, excepting only orders or process of courts of law, and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any court. If you are uncertain of any actions to be taken or instructions to be followed, you may refuse to act in the absence of an order, judgment or decrees of a court. In case you obey or comply with any such order, judgment or decree of any court, you shall not be liable to any of the parties hereto or to any other person or entity, by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction.

 

(d)                                 You shall not be liable in any respect on account of the identity, authority or rights of the parties executing or delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder.

 

(e)                                  You shall be entitled to employ such legal counsel and other experts as you may deem necessary properly to advise you in connection with your obligations hereunder and may rely upon the advice of such counsel.

 

(f)                                   Your rights and responsibilities as Escrow Agent hereunder shall terminate if (i) you cease to be Treasurer of the Company or (ii) you resign by written notice to each party. In the event of a termination under clause (i), your successor as Treasurer shall become Escrow Agent hereunder; in the event of a termination under clause (ii), the Company shall appoint a successor Escrow Agent hereunder.

 

(g)                                  If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments.

 

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(h)                                 It is understood and agreed that if you believe a dispute has arisen with respect to the delivery and/or ownership or right of possession of the securities held by you hereunder, you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such dispute shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings.

 

(i)                                     These Joint Escrow Instructions set forth your sole duties with respect to any and all matters pertinent hereto and no implied duties or obligations shall be read into these Joint Escrow Instructions against you.

 

(j)                                    The Company shall indemnify you and hold you harmless against any and all damages, losses, liabilities, costs, and expenses, including attorneys’ fees and disbursements, (including without limitation the fees of counsel retained pursuant to Section 4(e) above, for anything done or omitted to be done by you as Escrow Agent in connection with this Agreement or the performance of your duties hereunder, except such as shall result from your gross negligence or willful misconduct.

 

5.                                      Notice. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail with postage and fees prepaid, addressed to each of the other parties thereunto entitled at the following addresses, or at such other addresses as a party may designate by ten days’ advance written notice to each of the other parties hereto.

 

	
COMPANY:

 
    	
Notices to the Company shall be sent to the address set forth in the   salutation hereto, Attn: President
    
	
 
    	
 
    
	
Copy to:
    	
Kiniksa Pharmaceuticals Corp. 

15 Walnut Street, Suite 200

Wellesley Hills, MA 02481-1909 

USA
    
	
 
    	
 
    
	
HOLDER:
    	
Notices to Holder shall be sent to the address set forth below   Holder’s signature below.
    
	
 
    	
 
    
	
ESCROW AGENT: 
    	
Notices to the Escrow Agent shall be sent to the address set forth in   the salutation hereto.
    

 

13

 

6.                                      Miscellaneous.

 

(a)                                 By signing these Joint Escrow Instructions, you become a party hereto only for the purpose of said Joint Escrow Instructions, and you do not become a party to the Agreement.

 

(b)                                 This instrument shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
Kiniksa Pharmaceuticals, Ltd.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Thomas Beetham 
    
	
 
    	
Name:   
    	
Thomas   Beetham 
    
	
 
    	
Title: 
    	
Senior Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
HOLDER:
    
	
 
    	
 
    
	
 
    	
/s/ Sanj K. Patel
    
	
 
    	
(Signature)
    
	
 
    	
 
    
	
 
    	
Name: 
    	
Sanj K. Patel
    
	
 
    	
Address: 
    	
26 Longmeadow Rd. 
    
	
 
    	
 
    	
Lincoln, MA 01773 USA
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Date Signed: September 16, 2015
    
	
 
    	
 
    
	
 
    	
 
    
	
ESCROW AGENT:
    	
 
    
	
 
    	
 
    
	

    	
 
    
				

 

14

 

Exhibit B

 

(INSTRUMENT OF TRANSFER SEPARATE FROM CERTIFICATE)

 

FOR VALUE RECEIVED, I hereby sell, assign and transfer unto                                                  shares of Common Stock, $0.0001 par value per share, of Kiniksa Pharmaceuticals, Ltd. (the “Company”) standing in my name on the books of the Company represented by Certificate(s) Number                        herewith, and do hereby irrevocably constitute and appoint                        attorney to transfer the said shares on the books of the Company with full power of substitution in the premises.

 

	
 
    	
Dated:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Sanjiv K. Patel
    
	
 
    	
[Holder   Signature]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Sanjiv K. Patel
    
	
 
    	
[Holder Print   Name]
    

 

15

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