PREM14A 1 d629545dprem14a.htm PREM14A PREM14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  ☒                            Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material under Rule 14a-12

NIGHTSTAR THERAPEUTICS PLC

(Name of Registrant as Specified in its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

Ordinary Shares, nominal value GBP 0.01 per share, of Nightstar Therapeutics plc

  (2)  

Aggregate number of securities to which transaction applies:

 

The maximum number of Ordinary Shares to which this transaction applies is estimated to be 35,746,942 shares, which consists of, as at 28 February 2019, (A) 33,483,821 Ordinary Shares issued and outstanding; (B) 2,253,121 Ordinary Shares issuable upon the exercise of options to purchase Ordinary Shares with exercise prices below the per share consideration of USD 25.50; and (C) 10,000 Ordinary Shares issuable upon or which will vest upon the exercise of certain outstanding share awards to purchase Ordinary Shares underlying restricted stock units.

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

The maximum aggregate value was determined based upon the sum of (A) 33,483,821 Ordinary Shares issued and outstanding multiplied by USD 25.50 per share; (B) options to purchase 2,253,121 Ordinary Shares with exercise prices below USD 25.50 per share multiplied by USD 10.34 (the difference between USD 25.50 and the weighted average exercise price of USD 15.16 per share); and (C) 10,000 Ordinary Shares underlying restricted stock units multiplied by USD 25.50 per share. In accordance with Section 14(g) of the Securities Exchange Act of 1934, as amended, the filing fee was determined by multiplying the sum calculated in the preceding sentence by .0001212.

  (4)  

Proposed maximum aggregate value of transaction:

 

USD 877,385,478.46

  (5)  

Total fee paid:

 

USD 106,339.12

  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)  

Amount Previously Paid:

 

     

  (2)  

Form, Schedule or Registration Statement No.:

 

     

  (3)  

Filing Party:

 

     

  (4)  

Date Filed:

 

     

 

 

 


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PRELIMINARY PROXY STATEMENT — SUBJECT TO COMPLETION, DATED 18 MARCH 2019

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. THIS DOCUMENT CONTAINS A PROPOSAL WHICH, IF IMPLEMENTED, WILL RESULT IN THE CANCELLATION OF THE LISTING OF NIGHTSTAR THERAPEUTICS PLC’S ADSs ON THE NASDAQ GLOBAL SELECT MARKET. PART II (EXPLANATORY STATEMENT) OF THIS DOCUMENT COMPRISES AN EXPLANATORY STATEMENT IN COMPLIANCE WITH SECTION 897 OF THE COMPANIES ACT 2006.

If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, attorney, solicitor, accountant or other independent professional adviser who, if you are taking advice in the United Kingdom, is authorised pursuant to the Financial Services and Markets Act 2000 or, if you are in a territory outside the United Kingdom, is an appropriately authorised independent financial adviser.

If you sell, or have sold or otherwise transferred all of your Nightstar Shares or Nightstar ADSs, please send this document (but not any accompanying personalised documents) at once to the purchaser or transferee, or to the bank, stockbroker or other agent through whom the sale or transfer was effected for delivery to the purchaser or transferee. If you have sold or otherwise transferred part of your holding of Nightstar Shares or Nightstar ADSs, please consult the bank, stockbroker or other agent through whom the sale or transfer was effected.

The distribution of this document in jurisdictions other than the United Kingdom and United States may be restricted by the laws of those jurisdictions, and therefore persons into whose possession this document and any accompanying documents come should inform themselves about, and observe, any such restrictions. Any failure to comply with those restrictions may constitute a violation of the securities laws of any such jurisdiction.

The accompanying Forms of Proxy and ADS Voting Instruction Card are personalised. If you have recently purchased or been transferred Nightstar Shares or Nightstar ADSs, you should contact Nightstar’s registrars, Computershare, on the telephone number set out on page xvii of this document to obtain replacements for these documents.

 

 

Recommended acquisition of

NIGHTSTAR THERAPEUTICS PLC

by

TUNGSTEN BIDCO LIMITED

A WHOLLY-OWNED SUBSIDIARY OF

BIOGEN SWITZERLAND HOLDINGS GMBH

to be effected by means of a

scheme of arrangement under Part 26 of

the Companies Act 2006

 

 

Nightstar Shareholders and Nightstar ADS Holders should read carefully the whole of this document and the accompanying Forms of Proxy (or, if applicable, the ADS Voting Instruction Card). Your attention is drawn to the letter from the Chairman of Nightstar in Part I (Letter from the Chairman of Nightstar Therapeutics plc) of this document, which contains the unanimous recommendation of the Nightstar Directors that you vote in favour of the Scheme at the Court Meeting and in favour of the Special Resolution to be proposed at the General Meeting. An explanatory statement explaining the Scheme in greater detail is set out in Part II (Explanatory Statement) of this document.

Notices of the Court Meeting and the General Meeting, both of which are to be held at the offices of Nightstar’s solicitors, Skadden, at 40 Bank Street, London E14 5DS on                  2019, are set out at the beginning of this document. The Court Meeting will start at          a.m. and the General Meeting will start at          a.m. (or as soon thereafter as the Court Meeting has been concluded or adjourned).

The action to be taken by Nightstar Shareholders in respect of the Court Meeting and General Meeting is set out on pages xviii and xix. Whether or not you intend to be present at the Court Meeting and/or the General Meeting, please complete and sign both Forms of Proxy accompanying this document, BLUE for the Court Meeting and WHITE for the General Meeting, in accordance with the instructions set out on pages vi to viii of this document (Notice of Court Meeting) and pages ix to xiii of this document (Notice of General Meeting) of this document and return them using the prepaid envelope provided to Nightstar’s registrars, Computershare, as soon as possible, and in any event so as to be received by Computershare at The Pavilions, Bridgwater Road, Bristol, BS13 8AE, United Kingdom not later than          a.m. on                  2019 in the case of the Court Meeting and not later than          a.m. on                  2019 in the case of the General Meeting or, in the case of any adjournment, not later than 48 hours before the time fixed for the holding of the adjourned meeting. Alternatively, the Form of Proxy for the Court Meeting (but not the General Meeting) may be handed to the Chairman of the Court Meeting at the commencement of that meeting. Forms of Proxy returned by fax will not be accepted. You can also lodge your proxy vote online at www.eproxyappointment.com, so as to be received not later than 48 hours before the relevant meeting. The return of a completed Form of Proxy, the electronic appointment of a proxy or the submission of a proxy via CREST will not prevent you from attending the Court Meeting and/or the General Meeting, or any adjournment thereof, and voting in person if you so wish and if you are entitled to do so.

Registered Nightstar ADS Holders are asked to complete and return their ADS Voting Instruction Cards in accordance with the instructions on the ADS Voting Instruction Card as soon as possible. If you hold such Nightstar ADSs indirectly, you must rely on the procedures of the broker, bank or other nominee through which you hold your Nightstar ADSs.

This document is dated                  2019 and is first being mailed to Nightstar Shareholders on or about                  2019.

 

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If you hold your Nightstar Shares in uncertificated form through CREST, you may vote using the CREST Proxy Voting Service in accordance with the procedures set out in the CREST Manual (please also refer to the accompanying notes to the notice of the General Meeting set out at the end of this document). Proxies submitted via CREST (under CREST participant ID 3RA50) must be received by Computershare not later than          a.m. on                  2019 in the case of the Court Meeting and not later than          a.m. on                  2019 in the case of the General Meeting or, in the case of any adjournment, not later than 48 hours before the time fixed for the holding of the adjourned meeting.

Capitalised words and phrases used in this document shall have the meanings given to them in Part VII (Definitions).

Centerview UK, which is authorised and regulated by the FCA, and Centerview are acting exclusively for Nightstar and no one else in connection with the matters referred to in this document. Centerview UK and Centerview are not and will not be responsible to anyone other than Nightstar for providing the protections afforded to its clients or for providing advice in connection with the contents of this document or any matter referred to in this document.

Goldman Sachs International, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively for Bidder and no one else in connection with the matters referred to in this document and will not be responsible to anyone other than Bidder for providing the protections afforded to clients of Goldman Sachs International or for providing advice in connection with the matters referred to in this document.

IMPORTANT NOTICE

This document has been prepared for the purposes of complying with English law and U.S. securities law and the information disclosed herein may not be the same as that which would have been disclosed if this document had been prepared in accordance with the laws of any other jurisdiction.

The distribution of this document in jurisdictions other than the United Kingdom and the United States may be restricted by law, and therefore, persons into whose possession this document comes should inform themselves about, and should observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities laws of any such jurisdiction. This document does not constitute an offer or an invitation to purchase or subscribe for any securities, or a solicitation of an offer to buy any securities, pursuant to the document or otherwise, in any jurisdiction in which such offer or solicitation is unlawful.

The statements contained herein are made as at the date of this document, unless some other time is specified in relation to them, and service of this document shall not give rise to any implication that there has been no change in the facts set forth herein since such date. Nothing contained in this document shall be deemed to be a forecast and service of this document shall not give rise to any implication that there has been no change in the facts set out in this document since such date. Nothing contained in this document shall be deemed to be a forecast, projection or estimate of the future financial performance of Nightstar or Bidder except where otherwise expressly stated. Neither Nightstar nor Bidco nor Bidder intends, or undertakes any obligation, to update information contained in this document, except as required by applicable law.

No person has been authorised to make any representations on behalf of Nightstar, the Nightstar Group, Bidco, Bidder or the Bidder Group concerning the Acquisition or the Scheme which are inconsistent with the statements contained in this document and any such representations, if made, may not be relied upon as having been authorised.

 

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WARNING REGARDING FORWARD-LOOKING STATEMENTS

All statements included in this document, other than statements or characterisations of historical fact, are forward-looking statements within the meaning of the federal securities laws, including Section 21E of the U.S. Exchange Act, and other securities laws. Whenever Nightstar uses words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “will,” “may,” “predict,” “could,” “seek,” “forecast” and negatives or derivatives of these or similar expressions, they are making forward-looking statements. Examples of such forward-looking statements include, but are not limited to, references to the anticipated benefits of the Acquisition and the expected time of effectiveness of the Acquisition. These forward-looking statements are based upon Nightstar’s present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur.

Nightstar Shareholders are cautioned that any forward-looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements. Important risk factors that may cause Nightstar’s actual results to differ materially from their forward-looking statements include, but are not limited to: (1) the Acquisition is subject to the satisfaction or waiver of certain conditions, including the receipt of requisite approvals by Nightstar Shareholders, the sanction of the Scheme by the Court, and the expiration or termination of any applicable waiting periods under the U.S. HSR Act, which conditions may not be satisfied or waived; (2) uncertainties as to the timing of the consummation of the Acquisition and the ability of each party to consummate the Acquisition; (3) the risk that the Acquisition disrupts the parties’ current operations or affects their ability to retain or recruit key employees; (4) the possible diversion of management time on Acquisition-related issues; (5) litigation relating to the Acquisition; (6) unexpected costs, charges or expenses resulting from the Acquisition; and (7) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the Acquisition.

The information contained in Nightstar’s filings with the SEC, including in Nightstar’s Form 10-K for the year ended 31 December 2018, identifies other important factors that could cause actual results to differ materially from those stated in or implied by the forward-looking statements in this document. Nightstar’s filings with the SEC are available on the SEC’s website at www.sec.gov. You should not place undue reliance upon forward-looking statements. Except as required by law, Nightstar does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.

INFORMATION FOR OVERSEAS SHAREHOLDERS

The release, publication or distribution of this document in jurisdictions other than the United Kingdom and the United States may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom or the United States (including Restricted Jurisdictions) should inform themselves about, and observe, any applicable legal or regulatory requirements. In particular, the ability of persons who are not resident in the United Kingdom or the United States or who are subject to the laws of another jurisdiction to vote their Nightstar Scheme Shares in respect of the Scheme at the Court Meeting, or to execute and deliver Forms of Proxy appointing another to vote at the Court Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located or to which they are subject. Any failure to comply with applicable legal or regulatory requirements of any jurisdiction may constitute a violation of securities laws in that jurisdiction. This document has been prepared for the purpose of complying with English law and U.S. proxy rules and the information disclosed may not be the same as that which would have been disclosed if this document had been prepared in accordance with the laws of jurisdictions outside the United Kingdom and the United States.

Copies of this document and any formal documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted

 

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Jurisdiction or any jurisdiction where to do so would constitute a violation of the laws of such jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction. Doing so may render invalid any related purported vote in respect of the Acquisition.

If the Acquisition is implemented by way of an Offer, the Offer may not (unless otherwise permitted by applicable law and regulation) be made, directly or indirectly, in or into or by use of the mails or any other means or instrumentality (including, without limitation, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Acquisition will not be capable of acceptance by any such use, means, instrumentality or facilities or from within any Restricted Jurisdiction.

NOTICE TO UNITED STATES NIGHTSTAR SHAREHOLDERS

The Acquisition relates to the shares of a U.K. company and is being made by means of a scheme of arrangement provided for under Part 26 of the Companies Act 2006. The Acquisition is to be implemented by way of a scheme of arrangement. If, in the future, Bidder or Bidco exercises its right to implement the Acquisition by way of an Offer, subject to the terms of the Implementation Agreement, and determines to extend the Offer into the U.S., the Acquisition will be made in compliance with applicable U.S. laws and regulations.

It may be difficult for U.S. Nightstar Shareholders and Nightstar ADS Holders to enforce their rights and any claim arising out of the U.S. federal securities laws, because Nightstar is located outside of the U.S., and some or all of its officers and directors are residents of countries outside of the U.S. U.S. Nightstar Shareholders and Nightstar ADS Holders may not be able to sue a non-U.S. company or its officers or directors in a non-U.S. court for violations of the U.S. securities laws. Further, it may be difficult to compel a non-U.S. company and its affiliates to subject themselves to a U.S. court’s judgment.

U.S. Nightstar Shareholders and Nightstar ADS Holders also should be aware that the transaction contemplated herein may have tax consequences in the U.S. A summary of certain United Kingdom and United States taxation consequences of the implementation of the Scheme for certain Nightstar Shareholders and Nightstar ADS Holders is set out in paragraph 6 of Part V (Additional Information) of this document. U.S. Nightstar Shareholders and Nightstar ADS Holders are urged to consult with legal, tax and financial advisers in connection with making a decision regarding this transaction.

PUBLICATION ON WEBSITE

A copy of this document, together with all information incorporated into this document by reference to another source, will be made available, subject to certain restrictions relating to persons resident in, or subject to the laws and/or regulations, of any Restricted Jurisdiction or resident in any jurisdiction where the extension or availability of the Acquisition would breach any applicable law, on Nightstar’s website, at www.nightstartx.com, on the date following publication of this document. For the avoidance of doubt, neither the contents of such website nor the contents of any website accessible from hyperlinks on such website (or any other websites referred to in this document) are incorporated into, or form part of, this document.

ROUNDING

Certain figures included in this document have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetical aggregation of the figures that precede them.

 

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It is important that, for the Court Meeting, as many votes as possible are cast so that the Court may be satisfied that there is a fair representation of the opinion of Nightstar Scheme Shareholders. Therefore, whether or not you plan to attend the Nightstar Shareholder Meetings, please complete and sign both the enclosed BLUE and WHITE Forms of Proxy, or deliver your voting instructions by one of the other methods mentioned below, as soon as possible.

Date

This document is published on                  2019.

 

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NOTICE OF COURT MEETING

 

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS

OF ENGLAND AND WALES

COMPANIES COURT (ChD)

ICC JUDGE                 

                   

IN THE MATTER OF NIGHTSTAR THERAPEUTICS PLC

and

IN THE MATTER OF THE COMPANIES ACT 2006

NOTICE IS HEREBY GIVEN that by an Order dated                  2019 made in the above matters, the Court has given permission for a meeting (the “Court Meeting”) to be convened of the holders of Nightstar Scheme Shares (as defined in the Scheme of Arrangement hereinafter mentioned) for the purpose of considering and, if thought fit, approving (with or subject to any modification, addition or condition which the Company and Biogen Switzerland Holdings GmbH may agree and which the Court approves) a scheme of arrangement (the “Scheme of Arrangement”) proposed to be made between (i) Nightstar Therapeutics plc, a public limited company incorporated in England and Wales with its registered office at 10 Midford Place, London, W1T 5BJ (the “Company” or “Nightstar”); and (ii) the holders of Nightstar Scheme Shares, and that the Court Meeting will be held at the offices of Nightstar’s solicitors, Skadden, Arps, Slate, Meagher & Flom (UK) LLP, at 40 Bank Street, London E14 5DS, at                 , on                  2019 at          a.m. at which place and time all Nightstar Scheme Shareholders (as defined in the Scheme of Arrangement) are requested to attend.

A copy of the Scheme of Arrangement and a copy of the Explanatory Statement required to be furnished pursuant to Part 26 of the Companies Act 2006 are incorporated in the document of which this Notice forms part.

Voting on the resolution to approve the Scheme of Arrangement will be by poll, which shall be conducted as the Chairman of the Court Meeting may determine.

Nightstar Scheme Shareholders entitled to attend and vote at the Court Meeting may vote in person at the Court Meeting or they may appoint another person or persons, whether or not a member of Nightstar, as their proxy or proxies to attend and vote in their stead.

A blue Form of Proxy for use in connection with the Court Meeting is enclosed with this Notice or shall be sent in a separate mailing to those Nightstar Scheme Shareholders who have elected or are deemed to have elected to receive documents and notices from the Company via the Company’s website. Nightstar Scheme Shareholders entitled to attend and vote at the meeting, who hold their shares through CREST, may appoint a proxy using the CREST Electronic Proxy Appointment Service.

CREST members who wish to appoint a proxy or proxies through the CREST Electronic Proxy Appointment Service may do so for the Court Meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual.

In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with the specifications of Euroclear UK & Ireland Limited (“Euroclear”) and must contain the information required for such instructions, as described in the CREST Manual. The message, regardless of whether it relates to the appointment of a proxy or to an amendment to the instruction given to a previously appointed proxy must, in

 

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order to be valid, be transmitted so as to be received by the Company’s registrars, Computershare, (under CREST participant ID 3RA50) by          a.m. on                  2019 or in the case of any adjournment, not later than 48 hours before the time appointed for the adjourned Court Meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Applications Host) from which Computershare is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.

Nightstar may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

Completion and return of a blue Form of Proxy will not prevent a Nightstar Scheme Shareholder from attending and voting in person at the Court Meeting or at any adjournment thereof.

In the case of joint holders, the vote of the Nightstar Scheme Shareholder whose name is first listed in the register of members of Nightstar in respect of the joint holding will be accepted to the exclusion of the votes of the other joint holders.

Nightstar Scheme Shareholders are entitled to appoint a proxy in respect of some or all of their shares. Nightstar Scheme Shareholders are also entitled to appoint more than one proxy, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by such Nightstar Scheme Shareholder. A space has been included in the blue Form of Proxy to allow Nightstar Scheme Shareholders to specify the number of shares in respect of which that proxy is appointed. Nightstar Scheme Shareholders who return the blue Form of Proxy duly executed but leave this space blank shall be deemed to have appointed the proxy in respect of all their Nightstar Scheme Shares.

Nightstar Scheme Shareholders who wish to appoint more than one proxy in respect of their shareholding should contact the Company’s registrars, Computershare at The Pavilions, Bridgwater Road, Bristol, BS13 8AE, United Kingdom, for further blue Forms of Proxy, or photocopy the blue Form of Proxy as required. Such Nightstar Scheme Shareholders should also read the information regarding the appointment of multiple proxies set out on page xxi of the document of which this Notice forms part and on the blue Form of Proxy.

As an alternative to appointing a proxy, any Nightstar Scheme Shareholder which is a corporation may appoint one or more corporate representatives who may exercise on its behalf, all of its powers as a member, provided that they do not do so in relation to the same shares. Only one corporate representative is to be counted in determining whether under section 899(1) of the Companies Act 2006 a majority in number of the Nightstar Scheme Shareholders approved the Scheme of Arrangement. The Chairman of the Court Meeting may require a corporate representative to produce to the Company’s registrars, Computershare, his or her written authority to attend and vote at the Court Meeting at any time before the start of the Court Meeting. The representative shall not be entitled to exercise the powers conferred on them by the Nightstar Scheme Shareholder until any such demand has been satisfied.

It is requested that blue Forms of Proxy be returned using the prepaid envelope provided to Computershare at The Pavilions, Bridgwater Road, Bristol, BS13 8AE, United Kingdom by          a.m. on                  2019 or in the case of any adjournment, not later than 48 hours before the time appointed for the adjourned Court Meeting, but if blue Forms of Proxy are not so returned they may be handed to the Chairman of the Court Meeting at the commencement of the Court Meeting.

Only those Nightstar Scheme Shareholders registered in the register of members of Nightstar as at          p.m. on                  2019 or, in the event that the Court Meeting is adjourned, in the register of members at          p.m. 48 hours (excluding any part of a day that is not a working day) before the day of any adjourned meeting shall be entitled to attend or vote in respect of the number of shares registered in their name at the relevant time. Changes to entries in the relevant register of members after          p.m. on                  2019 or, in the event that the Court

 

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Meeting is adjourned, after          p.m. 48 hours (excluding any part of a day that is not a working day) before the day of any adjourned meeting shall be disregarded in determining the rights of any person to attend or vote at the Court Meeting. Nightstar Shareholders who hold their Nightstar Scheme Shares in the name of a broker, bank or other nominee should follow the voting instructions provided by such nominee to ensure that their Nightstar Scheme Shares are represented at the Court Meeting.

By the said order, the Court has appointed                  or, failing him,                  or, failing him, any other director of the Company to act as Chairman of the Court Meeting and has directed the Chairman to report the result of the Court Meeting to the Court.

The Scheme of Arrangement will be subject to the subsequent approval of the Court.

DATED:                  2019

Skadden, Arps, Slate, Meagher & Flom (UK) LLP

40 Bank Street

London E14 5DS

Solicitors for the Company

 

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NOTICE OF GENERAL MEETING

NIGHTSTAR THERAPEUTICS PLC

(incorporated in England and Wales with registered number 10852952)

NOTICE IS HEREBY GIVEN that a General Meeting of Nightstar Therapeutics plc, a public limited company incorporated in England and Wales with its registered office at 10 Midford Place, London, W1T 5BJ (the “Company”) will be held at the offices of Nightstar’s solicitors, Skadden, Arps, Slate, Meagher & Flom (UK) LLP, at 40 Bank Street, London E14 5DS, at             , on              2019 at          a.m. (or as soon thereafter as the meeting of Nightstar Scheme Shareholders (as defined in the document dated              2019 of which this Notice forms part) of the Company convened by direction of the Court for the same place and date shall have been concluded or adjourned) for the purpose of considering and, if thought fit, passing the following resolution which will be proposed as a special resolution.

SPECIAL RESOLUTION

THAT:

for the purpose of giving effect to the scheme of arrangement dated              2019 (the “Scheme”) between the Company and the holders of the Nightstar Scheme Shares (as defined in the Scheme), a print of which has been produced to this meeting and for the purposes of identification signed by the Chairman hereof, in its original form or subject to such modification, addition or condition agreed between the Company and Biogen Switzerland Holdings GmbH and approved or imposed by the Court:

 

A.

the directors of the Company be authorised to take all such action as they may consider necessary or appropriate for carrying the Scheme into effect; and

 

B.

with effect from the passing of this resolution, the articles of association of the Company be amended by the adoption and inclusion of the following new article 141 after existing article 140:

 

“141.

SCHEME OF ARRANGEMENT

 

141.1

In this Article, references to the “Scheme” are to the scheme of arrangement dated              2019 between the Company and the holders of Nightstar Scheme Shares (as defined in the Scheme) under Part 26 of the Act in its original form or with or subject to any modification, addition or condition agreed by the Company and Biogen Switzerland Holdings GmbH (“Bidder”) (which expression includes any other name which Bidder may adopt from time to time) and which the Court may approve and (save as defined in this Article) expressions defined in the Scheme shall have the same meanings in this Article.

 

141.2

Notwithstanding any other provision of these Articles or the terms of any resolution, whether ordinary or special, passed by the Company in general meeting, if the Company issues any ordinary shares (other than to Bidder or Tungsten Bidco Limited, a wholly-owned subsidiary of Bidder (“Bidco”) or any parent undertaking or subsidiary undertaking or nominee of Bidder or Bidco) on or after the adoption of this Article and on or prior to the Scheme Record Time (as defined in the Scheme), such shares shall be issued subject to the terms of the Scheme (and shall be Nightstar Scheme Shares for the purposes thereof) and the original or any subsequent holder or holders of such ordinary shares shall be bound by the Scheme accordingly.

 

141.3

Subject to the Scheme becoming Effective, if the Company issues or is obliged to issue any ordinary shares in the Company to any person (a “New Member”) after the Scheme Record Time (other than under the Scheme or to Bidder, Bidco or any parent undertaking or subsidiary undertaking or nominee of Bidder or Bidco) (the “Post-Scheme Shares”), such New Member (or any subsequent holder or any nominee of such New Member or any such subsequent holder) will, provided the Scheme has become Effective, be obliged to transfer all the ordinary shares in the Company held by the New Member (or any

 

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  subsequent holder or any nominee of such New Member or any such subsequent holder) to Bidco (or as Bidco may direct) who shall be obliged to acquire all of the Post-Scheme Shares. In consideration for the transfer of the Post-Scheme Shares, the purchaser shall pay to the New Member the Consideration for each Post-Scheme Share transferred to it (or such lesser or greater amount as may be payable for Nightstar Scheme Shares under the Scheme if each Post-Scheme Share were a Nightstar Scheme Share), provided that any New Member may, prior to the issue of any Post-Scheme Shares to such New Member pursuant to the exercise of an option or satisfaction of an award under any of the Nightstar Share Schemes, give not less than five Business Days’ written notice to the Company in such manner as the board shall prescribe of their intention to transfer some or all of such Post-Scheme Shares to their spouse or civil partner. Any such New Member may, if such notice has been validly given, on such Post-Scheme Shares being issued to such New Member, immediately transfer to their spouse or civil partner any such Post-Scheme Shares, provided that such Post-Scheme Shares shall then be immediately transferred from that spouse or civil partner to Bidco (or as Bidco may direct) pursuant to this Article as if the spouse or civil partner were a New Member. Where a transfer of Post-Scheme Shares to a New Member’s spouse or civil partner takes place in accordance with this Article, references to “New Member” in this Article shall be taken as referring to the spouse or civil partner of the New Member. If notice has been validly given pursuant to this Article but the New Member does not immediately transfer to their spouse or civil partner the Post-Scheme Shares in respect of which notice was given, such shares shall be transferred directly to Bidco (or as Bidco may direct) pursuant to this Article.

For the purposes of this Article, “Nightstar Share Schemes” means:

 

  (i)

the Nightstar Therapeutics plc 2017 Equity Incentive Plan; and

 

  (ii)

the terms governing the Pre-IPO Equity Awards,

each as amended from time to time.

 

141.4

On any reorganisation of, or material alteration to, the share capital of the Company (including, without limitation, any subdivision and/or consolidation) effected after the Effective Date, the amount of Consideration due to a New Member for each Post-Scheme Share pursuant to Article 141.3 above may be adjusted by the board of the Company and the directors of Bidder in such manner as the auditors of the Company may determine to be appropriate to reflect such reorganisation or alteration. References in this Article to ordinary shares shall, following such adjustment, be construed accordingly.

 

141.5

To give effect to any transfer of Post-Scheme Shares, the Company may appoint any person as attorney and agent for the New Member (the “agent”) to transfer the Post-Scheme Shares to Bidco (or as Bidco may direct) and do all such other things and execute and deliver all such documents as may in the opinion of the agent be necessary or desirable to vest the Post-Scheme Shares in Bidco (or another person as directed by Bidco), and pending such vesting to exercise all such rights attaching to the Post-Scheme Shares as Bidco may direct. If an agent is so appointed, the New Member shall not thereafter (except to the extent that the agent fails to act in accordance with the directions of Bidco) be entitled to exercise any rights attaching to the Post-Scheme Shares unless so agreed by Bidco. The agent shall be empowered to execute and deliver as transferor a form of transfer or other instrument or instruction of transfer on behalf of the New Member (or any subsequent holder) in favour of Bidco and/or another person as directed by Bidco and the Company may give a good receipt for the Consideration for the Post-Scheme Shares and may register Bidco and/or another person as directed by Bidco as holder thereof and issue to it certificates for the same. The Company shall not be obliged to issue a certificate to the New Member for the Post-Scheme Shares. Bidco shall, subject to Article 141.3 above, settle the Consideration due to the New Member within 14 days of the issue of the Post-Scheme Shares to the New Member.

 

141.6

Notwithstanding any other provision of these Articles, neither the Company nor the board shall register the transfer of any Nightstar Scheme Shares effected between the Scheme Record Time and the Effective Date.

 

141.7

If the Scheme shall not have become Effective by the date referred to in Clause 5 of the Scheme, this Article 141 shall be of no effect.”

 

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Registered Office:

Nightstar Therapeutics plc

10 Midford Place

London

W1T 5BJ

  

By order of the Board

Bryan Yoon

Group Company Secretary

   Dated                  2019

Notes

The following notes explain your general rights as a shareholder and your rights to attend and vote at the General Meeting or to appoint someone else to vote on your behalf.

 

1.

Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001 and section 360B of the Companies Act 2006, the Company specifies that only persons on the register of members as at          p.m. on                  2019 (or, if the meeting is adjourned, at          p.m. on the date which is not later than 48 hours (excluding any part of a day that is not a working day) prior to the date set for the adjourned meeting) shall be entitled to attend the General Meeting either in person or by proxy and the number of shares then registered in their respective names shall determine the number of votes such persons are entitled to cast on a poll at the meeting. Changes to entries on the register after that time shall be disregarded in determining the rights of any person to attend or vote at the General Meeting.

 

2.

A shareholder is entitled to appoint a proxy to exercise all or any of his rights to attend and to speak and vote instead of him at the General Meeting. A white Form of Proxy is enclosed with this notice for use in relation to the General Meeting. A shareholder may appoint more than one proxy in relation to the General Meeting provided that each proxy is appointed to exercise the rights attached to a different share or shares held by him. A proxy need not be a shareholder of the Company. If you do not have a proxy form and believe that you should have one, or if you require additional forms, please contact the Company’s registrars, Computershare. Instructions for use are shown on the white Form of Proxy. Completion and return of a white Form of Proxy, an electronic proxy, or any CREST Proxy Instruction (as described in note 8 below) will not preclude a shareholder from attending the meeting and voting there in person.

 

3.

The special resolution to be put to the General Meeting will be voted on by way of a poll.

 

4.

If you have been nominated to receive general shareholder communications directly from the Company, it is important to remember that your main contact in terms of your investment remains the broker, bank or other nominee who administers the investment on your behalf. Therefore, any changes or queries relating to your personal details and holding (including any administration) must continue to be directed to your existing contact at your investment manager or custodian. Nightstar Shareholders who hold their Nightstar Shares in the name of a broker, bank or other nominee should follow the voting instructions provided by such nominee to ensure that their Nightstar Shares are represented at the General Meeting. The Company cannot guarantee dealing with matters that are directed to them in error. The only exception to this is where the Company, in exercising one of its powers under the Companies Act 2006, writes to you directly for a response.

 

5.

To be valid, the Form of Proxy must be executed by or on behalf of the shareholder or, if the shareholder is a corporate, under its common seal or be signed on its behalf by an attorney or officer duly authorised, stating their capacity (e.g. director or secretary).

 

6.

If two or more valid, but differing, appointments of proxy are delivered or received in respect of the same share, the one which is last validly delivered or received (regardless of its date or of the date of its execution) shall be treated as replacing and revoking the other or others as regards that share. If the Company is unable to determine which instrument was last validly delivered or received, none of them shall be treated as valid in respect of that share.

 

7.

The Form of Proxy and power of attorney or other authority, if any, under which it is signed or a notarially certified or copy of such power or authority must be received by the Company’s registrars, Computershare,

 

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  The Pavilions, Bridgwater Road, Bristol, BS13 8AE, United Kingdom, not later than          a.m. on                  2019, or if the General Meeting is adjourned, 48 hours prior to the adjourned meeting. Shareholders may also lodge their proxy vote online at www.eproxyappointment.com. In order for an online proxy vote to be valid it must be received by Computershare not later than          a.m. on                  2019. Any communication found to contain a computer virus will not be accepted. In order to access the voting system, shareholders will need their shareholder investor code which can be found on their proxy card. Return of the Form of Proxy, submitting an online proxy vote or any CREST Proxy Instruction (as described in note 8 below) will not prevent you from attending and voting at the meeting instead of the proxy, if you wish. If you do this and there is a poll vote, your proxy votes will be ignored.

 

8.

CREST members who wish to appoint a proxy or proxies by utilising the CREST Electronic Proxy Appointment Service may do so for the meeting and any adjournment(s) thereof by utilising the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a CREST Proxy Instruction) must be properly authenticated in accordance with Euroclear UK & Ireland Limiteds specifications and must contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by Computershare (under CREST participant ID 3RA50) not later than          a.m. on                  2019. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which Computershare is able to retrieve the message by enquiry to CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.

CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

 

9.

Any corporation which is a shareholder can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a shareholder, provided that they do not do so in relation to the same shares.

 

10.

Shareholders attending the meeting have the right to ask questions. The Company has an obligation to answer such questions relating to the business being dealt with at the meeting, but no such answer need be given if: (i) it is undesirable in the interest of the Company or the good order of the meeting; (ii) to do so would unduly interfere with the preparation for the meeting or involve the disclosure of confidential information; or (iii) the answer has already been given on a website in the form of an answer to a question.

 

11.

The “Vote Withheld” option is provided to enable you to abstain on the specified resolution. However, it should be noted that a “Vote Withheld” is not a vote in law and will not be counted in the calculation of the proportion of votes “For” and “Against” the specified resolution.

 

12.

In the case of joint holders, the vote of the Shareholder whose name is first listed in the register of members of the Company in respect of the joint holding will be accepted to the exclusion of the votes of the other joint holders.

 

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13.

As at                  2019 (being the last practicable date prior to the publication of this notice), the Company’s issued share capital consisted of                  Nightstar Shares, carrying one vote each. As at                  2019 (being the last practicable date prior to the publication of this notice), the Company held                  shares in treasury. Therefore, the total voting rights in the Company as at                  2019 was                 . On a vote by poll, every shareholder who is present in person or by proxy has one vote for every Nightstar Share held.

 

14.

A copy of this notice, and other information required by section 311A of the Companies Act 2006, can be found at www.nightstartx.com.

 

15.

Copies of the Company’s existing articles of association and the articles of association as proposed to be amended by the special resolution set out in this notice are available for inspection at the offices of the Company’s Solicitors, Skadden, Arps, Slate, Meagher & Flom (UK) LLP, at 40 Bank Street, London E14 5DS during normal business hours on any weekday (excluding Saturdays, Sundays and public holidays), until the opening of business on the day on which the meeting is held, and will also be available for inspection at the place of the meeting for at least 15 minutes prior to and during the meeting.

 

16.

Except as provided above, shareholders who have general queries about the meeting should use the following means of communication (no other methods of communication will be accepted): call our general shareholder helpline on +44 370 703 6033; or write to the Company’s registrars, Computershare, The Pavilions, Bridgwater Road, Bristol, BS13 8AE, United Kingdom. Shareholders may not use any electronic address provided either in this notice or any related documents (including the Chairman’s letter and white Form of Proxy) to communicate with the Company for any purposes other than those expressly stated. Calls from outside the U.K. will be charged at applicable international rates. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. Please note that Computershare cannot provide advice on the merits of the Acquisition or give any financial, legal or tax advice.

 

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EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 

Event

   Time/date(1)

Nightstar ADS Voting Record Time

                    on                   2019

Publication of this document

                               March 2019

Latest time for receipt of ADS Voting Instruction Cards for the

Nightstar Shareholder Meetings

                    on                  2019

Latest Time for Nightstar ADS Holders to cancel out of the Nightstar

ADS Programme and receive Nightstar Shares ahead of the Scheme

Voting Record Time

                    on                  2019

Latest time for lodging Forms of Proxy for use at the Court

Meeting (BLUE Form of Proxy)

            a.m. on                  2019(2)

Latest time for lodging Forms of Proxy for use at the General

Meeting (WHITE Form of Proxy)

            a.m. on                  2019(3)

Scheme Voting Record Time

            p.m. on                   2019(4)
Court Meeting              a.m. on                  2019
General Meeting             a.m. on                  2019(5)

 

The expected date of the Court Hearing to sanction the Scheme and each of the other dates and times set out below will depend, among other things, on the date on which the conditions to the Scheme and the Acquisition are satisfied or, if capable of waiver, waived. They are accordingly presented as indicative and referable to the date on which those conditions are satisfied or waived (as the case may be). Further details of the conditions are set out in Part III (Conditions to and Further Terms of the Scheme and the Acquisition) of this document.

Nightstar will give notice of each of the below dates and times, when known, by issuing an announcement through GlobeNewswire or another national news wire service and by making such announcement available on Nightstar’s website www.nightstartx.com. Further updates or changes to other times or dates indicated below shall be notified in the same manner.

 

Event

   Time/date(1)  

Latest Time for Nightstar ADS Holders to cancel out of the Nightstar

ADS Programme and receive Nightstar Shares ahead of the Scheme

Record Time

              p.m. on D – 2 Business Days  

Last day of trading in Nightstar ADSs on Nasdaq

     D – 1 Business Day  

Court Hearing to sanction the Scheme

     D(6)  

Suspension of trading in Nightstar ADSs on Nasdaq

     9.00 a.m. (New York time) on D  

Scheme Record Time

              p.m. on D  

Effective Date of the Scheme

     D+1 Business Day(7)  

Cancellation of listing of Nightstar ADSs on Nasdaq

    

by 8.00 a.m. (New York time) on D+2

Business Days(7)

 

 

Despatch of cheques and crediting of CREST for Consideration due

under the Scheme

    

as soon as practicable after the Effective

Date and in any event within 14 days of

the Effective Date

 

 

 

Long Stop Date      4 September 2019(8)  

 

The Court Meeting and the General Meeting will each be held at the offices of Nightstar’s solicitors, Skadden, at 40 Bank Street, London E14 5DS, at                  on                  2019.

 

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(1)

These times and dates are indicative only and will depend, amongst other things, on the dates upon which: (i) the Conditions are satisfied or (where applicable) waived; (ii) the Court sanctions the Scheme; and (iii) a copy of the Court Order is delivered to the Registrar of Companies. Nightstar will give notice of any change(s) by issuing an announcement through GlobeNewswire or other national news wire service.

(2)

It is requested that blue Forms of Proxy for the Court Meeting be lodged not later than          a.m. on                  2019 or, if the Court Meeting is adjourned, not later than 48 hours before the time appointed for the holding of the adjourned meeting. However, blue Forms of Proxy not so lodged may be handed to the Chairman of the Court Meeting before the start of the Court Meeting.

(3)

White Forms of Proxy for the General Meeting must be lodged not later than 10.40 a.m. on                  2019 in order to be valid or, if the General Meeting is adjourned, not later than 48 hours before the time appointed for the holding of the adjourned meeting. White Forms of Proxy cannot be handed to the Chairman of the General Meeting at that meeting.

(4)

If either of the Nightstar Shareholder Meetings is adjourned, the Scheme Voting Record Time for the relevant adjourned meeting will be          p.m. on the date 48 hours (excluding any part of a day that is not a working day) before the date set for the adjourned meeting.

(5)

To commence at          a.m. or, if later, immediately after the conclusion or adjournment of the Court Meeting.

(6)

A date expected to be mid-year 2019, and no earlier than 7 June 2019, subject to obtaining Clearances.

(7)

These dates depend, among other things, on the date upon which the Court sanctions the Scheme and the date which the Court Order sanctioning the Scheme is delivered to and, if ordered by the Court, registered by, the Registrar of Companies.

(8)

This date may be extended to such date as Nightstar, Bidco and Bidder may agree and the Court (if required) may allow.

All references in this timetable to times are to times in London (unless otherwise stated).

 

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TO VOTE ON THE PROPOSALS

The Court Meeting and the General Meeting will be held at the offices of Nightstar’s solicitors, Skadden, at 40 Bank Street, London E14 5DS, at                 , on                  2019 at         a.m. and         a.m., respectively (or, in the case of the General Meeting, as soon thereafter as the Court Meeting has been concluded or adjourned). In respect of the Court Meeting, you are entitled to one vote for each Nightstar Scheme Share that you hold as at the Scheme Voting Record Time. In respect of the General Meeting, you are entitled to one vote for each Nightstar Share that you hold as at the Scheme Voting Record Time. As at                  2019 (being the last practicable date prior to the publication of this document), there were                  Nightstar Shares issued and outstanding.

Whether or not you plan to attend the Nightstar Shareholder Meetings, if you are a Nightstar Shareholder, please:

 

   

complete and return the BLUE Form of Proxy (for the Court Meeting); and

 

   

complete and return the WHITE Form of Proxy (for the General Meeting),

so that they are received no later than         a.m. on                  2019 (in the case of the BLUE Form of Proxy for the Court Meeting) or         a.m. on                  2019 (in the case of the WHITE Form of Proxy for the General Meeting). A prepaid envelope is provided for this purpose in the U.K. only.

Alternatively, BLUE Forms of Proxy (but NOT WHITE Forms of Proxy) may be handed to a representative of Computershare, on behalf of the Chairman of the Court Meeting, at the venue of the Court Meeting or the Chairman of the Court Meeting before the start of the Court Meeting on                  2019. In the case of the General Meeting, unless the WHITE Form of Proxy is returned by the time and date mentioned in the instructions printed thereon, it will be invalid.

The completion and return of the Forms of Proxy will not prevent eligible Nightstar Shareholders from attending and voting at the Court Meeting or the General Meeting, or any adjournment thereof, in person.

Nightstar Shareholders who hold Nightstar Shares in CREST may appoint a proxy or proxies through the CREST Electronic Proxy Appointment Service using the procedures described in the CREST Manual.

Nightstar Shareholders who prefer to register the appointment of their proxy electronically via the internet can do so through www.eproxyappointment.com using their shareholder investor code found on their Form of Proxy and following the online instructions. Further details in relation to electronic appointment of proxies are set out on page xxii of this document.

IT IS IMPORTANT THAT, FOR THE COURT MEETING, AS MANY VOTES AS POSSIBLE ARE CAST SO THAT THE COURT MAY BE SATISFIED THAT THERE IS A FAIR REPRESENTATION OF NIGHTSTAR SHAREHOLDER OPINION. YOU ARE THEREFORE STRONGLY URGED TO SIGN THE FORMS OF PROXY AND RETURN THEM BY POST USING THE PREPAID ENVELOPE PROVIDED, DURING NORMAL BUSINESS HOURS ONLY, TO COMPUTERSHARE AT THE PAVILIONS, BRIDGWATER ROAD, BRISTOL, BS13 8AE, UNITED KINGDOM, AS SOON AS POSSIBLE AND, IN ANY EVENT, SO AS TO BE RECEIVED BY COMPUTERSHARE PRIOR TO THE DEADLINES SET OUT ABOVE, OR IN THE CASE OF AN ADJOURNED MEETING, NOT LESS THAN 48 HOURS PRIOR TO THE TIME AND DATE SET FOR THE ADJOURNED MEETING.

IF YOU ARE A NIGHTSTAR SHAREHOLDER, YOUR ATTENTION IS DRAWN TO THE REGIME FOR THE APPOINTMENT OF PROXIES SET OUT IN THE NOTES TO THE FORMS OF PROXY AND THE NOTES SET OUT IN THE NOTICE OF COURT MEETING AND THE NOTICE OF THE GENERAL MEETING, INCLUDING IN RESPECT OF THE APPOINTMENT OF MULTIPLE PROXIES.

 

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This page should be read in conjunction with the section entitled “ACTION TO BE TAKEN” on pages xviii and xix of this document and the section entitled “FORM OF PROXY FOR VOTING AT THE COURT MEETING AND GENERAL MEETING” on page xx of this document, the rest of this document and the accompanying Forms of Proxy.

Nightstar Shareholder Helpline

If you have any queries relating to this document or the completion and return of the Forms of Proxy, please call the Nightstar Shareholder Helpline at +44 370 703 6033. Lines are open Monday to Friday (except public holidays) between 8.30 a.m. and 5.30 p.m.

Nightstar ADS Holders who have any questions should contact the Nightstar Depositary using the contact details provided on the ADS Voting Instruction Card provided to you or found at www.citi.com/dr. If you hold Nightstar ADSs indirectly, you should contact the bank, broker, financial institution or administrator through which you hold Nightstar ADSs.

Calls will be charged at the standard geographic rate and will vary by provider. International calls will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. Please note that the Nightstar Shareholder Helpline operators cannot provide advice on the merits of the Scheme or the Acquisition or give any financial, legal, investment or tax advice.

Proposals

At the Court Meeting you will be asked to approve the Scheme, with or subject to any modification, addition or condition which Nightstar and Bidder may agree and which the Court may approve or impose, pursuant to which the Nightstar Scheme Shares will be acquired by Bidco.

At the General Meeting you will be asked to approve a resolution to authorise the Nightstar Directors to take all such action as they may consider necessary or appropriate for carrying the Scheme into effect; and to amend, with effect from the passing of such resolution, the Nightstar Articles to ensure that any Nightstar Shares issued after the General Meeting will be subject to the Scheme or otherwise transferred to Bidco.

Recommendation and Voting by Nightstar Directors

For the reasons set out in this document, the Nightstar Directors, who have been so advised by Centerview as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing advice to the Nightstar Directors, Centerview has taken into account the commercial assessments of the Nightstar Directors. Centerview’s advice to the Nightstar Directors is set out in its written opinion, dated 3 March 2019, attached hereto as Annex B and which also sets out in full the relevant assumptions and qualifications to such advice.

The Nightstar Directors believe that the terms of the Acquisition, including the terms of the Implementation Agreement, are fair and reasonable and that proceeding with the Acquisition is likely to promote the success of Nightstar for the benefit of its shareholders, having had regard to the interests of other stakeholders, and unanimously recommend that you vote in favour of the Scheme at the Court Meeting and the Special Resolution to be proposed at the General Meeting, as the Nightstar Directors have irrevocably undertaken to do, or to procure, in respect of their own beneficial holdings of Nightstar Shares amounting to, in aggregate,                  Nightstar Shares representing approximately                  per cent. of the existing issued ordinary share capital of Nightstar on              2019 (being the last practicable date prior to the publication of this document). Further details of these Irrevocable Undertakings are contained in paragraph 7 of Part V (Additional Information) of this document.

 

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ACTION TO BE TAKEN / GENERAL INFORMATION

The Scheme requires approval at a meeting of the Nightstar Scheme Shareholders convened with the permission of the Court (known as the Court Meeting) and at the General Meeting. The Court Meeting and the General Meeting will be held at the offices of Nightstar’s solicitors, Skadden, at 40 Bank Street, London E14 5DS, at                 , on                  2019 at         a.m. and         a.m., respectively (or, in the case of the General Meeting, as soon thereafter as the Court Meeting has been concluded or adjourned).

Please check you have received the following with this document:

All Nightstar Shareholders:

 

   

a BLUE Form of Proxy for use in respect of the Court Meeting on                  2019;

 

   

a WHITE Form of Proxy for use in respect of the General Meeting on                  2019; and

 

   

a prepaid envelope.

If you have not received these documents, please contact Nightstar’s registrars, Computershare, on the Nightstar Shareholder Helpline referred to on page xvii of this document, or your broker, bank or other nominee.

All Nightstar ADS Holders:

 

   

an ADS Voting Instruction Card; and

 

   

the Notice of Court Meeting and General Meeting document issued by the Nightstar Depositary.

If you have not received these documents, please contact the Nightstar Depositary’s ADS shareholder services at +1-877-248-4237, or your broker, bank or other nominee.

Solicitation of Proxies

The Nightstar Directors are soliciting your proxy, and Nightstar will bear the cost of this solicitation of proxies. This includes the charges and expenses of brokerage firms and others for forwarding solicitation material to Nightstar Shareholders.

Nightstar has retained MacKenzie Partners, Inc., a proxy solicitation firm, to assist the Nightstar Directors in the solicitation of proxies for the Court Meeting and the General Meeting. Nightstar expects to pay MacKenzie Partners, Inc., approximately USD 20,000, plus reimbursement of out-of-pocket expenses. Proxies may be solicited by mail, personal interview, e-mail, telephone, or via the internet by MacKenzie Partners, Inc. or, without additional compensation, by certain Nightstar Directors, officers and employees.

Shareholder Proposals

Under English law, except as provided below, there is no general right for a shareholder of a U.K. public limited company to put items on the agenda of a general meeting (save for the annual general meeting) that has been convened by directors. English law provides that shareholders holding not less than 5 per cent. of Nightstar’s paid up share capital carrying voting rights may requisition the Nightstar Board to convene a general meeting and may require resolutions to be put before a general meeting they have convened.

If the Acquisition does not become Effective, Nightstar Shareholders will be entitled to attend and participate in Nightstar’s annual general meeting. Under the Companies Act 2006, Nightstar is required to hold its 2019 annual general meeting by no later than 30 June 2019. If any such annual general meeting is held, shareholder proposals will be eligible for consideration for inclusion in the proxy statement and form of proxy for such annual general meeting in accordance with Rule 14a-8 under the U.S. Exchange Act and the Nightstar Articles.

 

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Because the 2019 annual general meeting would be Nightstar’s first annual general meeting, pursuant to Rule 14a-8 under the U.S. Exchange Act, Nightstar may set a deadline for receipt of Rule 14a-8 shareholder proposals that is a reasonable time before Nightstar plans to print and send its proxy materials. Nightstar Shareholders who wish to have a proposal considered for inclusion in Nightstar’s proxy materials for its 2019 annual general meeting pursuant to Rule 14a-8 must ensure that their proposal is received at Nightstar’s registered office by 30 April 2019, which Nightstar has determined to be a reasonable time before it expects to begin to print and send its proxy materials. The 30 April 2019 deadline will also apply in determining whether notice of a shareholder proposal is timely for purposes of exercising discretionary voting authority with respect to proxies under Rule 14a-4(c) under the U.S. Exchange Act.

In addition to the process under the U.S. Exchange Act described above, under the Companies Act 2006, shareholders representing at least 5 per cent. of the total voting rights of all shareholders who have a right to vote at the 2019 annual general meeting of Nightstar can require Nightstar to give Nightstar Shareholders notice of a resolution which may be and is intended to be moved at the 2019 annual general meeting of Nightstar unless (a) the resolution would, if passed, be ineffective (whether by reason of inconsistency with any enactment or Nightstar’s Articles or otherwise); (b) it is defamatory of any person; or (c) it is frivolous or vexatious. Such a request, made by the requisite number of Nightstar Shareholders, must be received by Nightstar not later than six weeks before the annual general meeting.

 

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FORM OF PROXY FOR VOTING AT THE COURT MEETING

AND GENERAL MEETING

It is important that, for the Court Meeting, as many votes as possible are cast so that the Court may be satisfied that there is a fair representation of the opinion of Nightstar Scheme Shareholders. Therefore, whether or not you plan to attend the Nightstar Shareholder Meetings, please complete and sign both the enclosed BLUE and WHITE Forms of Proxy, or deliver your voting instructions by one of the other methods mentioned below, as soon as possible.

Sending Forms of Proxy by post

Nightstar Shareholders will find enclosed with this document a BLUE Form of Proxy for use in connection with the Court Meeting and a WHITE Form of Proxy for use in connection with the General Meeting. Please complete and sign the enclosed Forms of Proxy in accordance with the instructions printed thereon and return them by post using the prepaid envelope provided to Computershare at The Pavilions, Bridgwater Road, Bristol, BS13 8AE, United Kingdom, so as to be received as soon as possible and in any event not later than:

 

•  BLUE Forms of Proxy for the Court Meeting

           a.m. on                  2019

•  WHITE Forms of Proxy for the General Meeting

           a.m. on                  2019

or, in the case of either meeting being adjourned, not later than 48 hours before the time fixed for the holding of the adjourned meeting. A prepaid envelope is provided for this purpose in the U.K. only, Forms of Proxy returned by fax will not be accepted. This will enable your votes to be counted at the Nightstar Shareholder Meetings in the event of your absence.

If the BLUE Form of Proxy for use at the Court Meeting is not returned by such time, it may be handed to the Chairman of the Court Meeting or a representative of Nightstar’s registrars, Computershare, on behalf of the Chairman of the Court Meeting, before the start of that meeting. However, in the case of the General Meeting, the WHITE Form of Proxy must be received by the time mentioned above, or it will be invalid.

Proxy appointment

Nightstar Shareholders entitled to attend and vote at the Court Meeting and the General Meeting may appoint a proxy to attend and to speak and vote in his/her place.

Nightstar Shareholders are entitled to appoint a proxy in respect of some or all of their Nightstar Shares and may also appoint more than one proxy, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by such holder. A proxy need not be a member of Nightstar.

Please note that the appointment of a proxy or proxies is separate for each of the Court Meeting and the General Meeting.

To be valid, Forms of Proxy must be executed by or on behalf of the Nightstar Shareholder or, if you are a corporate, under the hand of a duly authorised officer or attorney.

If two or more valid, but differing, appointments of proxy are delivered or received in respect of the same share, the one which is last validly delivered or received (regardless of its date or of the date of its execution) shall be treated as replacing and revoking the other or others as regards that share. If Nightstar is unable to determine which instrument was last validly delivered or received, none of them shall be treated as valid in respect of that share.

 

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The completion and return of the Forms of Proxy, or the appointment of a proxy electronically using CREST (or any other procedure listed below), will not prevent Nightstar Shareholders from attending and voting in person at the Court Meeting and/or the General Meeting, or any adjournment thereof, if you wish and are entitled to do so. Shareholders who hold their Nightstar Shares in the name of a broker, bank or other nominee should follow the voting instructions provided by such nominee to ensure that their Nightstar Shares are represented at the Court Meeting and the General Meeting.

Revocability of proxies

Any person submitting a Form of Proxy pursuant to this solicitation has the power to revoke and change it at any time before it is voted. If you are a Nightstar Shareholder of record, you may revoke your proxy at any time before the vote is taken at the Court Meeting or the General Meeting, as applicable, by:

 

   

submitting a new Form of Proxy with a later date, by using the telephone or electronic proxy submission procedures described herein, or by completing, signing, dating and returning a new Form of Proxy by mail to Computershare;

 

   

attending the Court Meeting and/or the General Meeting and voting in person; or

 

   

delivering a written notice of revocation by mail to Computershare at The Pavilions, Bridgwater Road, Bristol, BS13 8AE, United Kingdom.

Please note, however, that only your last validly delivered or received proxy will count (regardless of its date or of the date of its execution). Attending the Court Meeting or General Meeting without taking one of the actions described above will not in itself revoke your proxy.

If you hold your shares indirectly through a broker, bank or other nominee, you will need to follow the instructions provided to you by your broker, bank or other nominee in order to revoke your proxy or submit new voting instructions. If you hold your shares indirectly, you may also revoke a prior proxy by voting in person at the Court Meeting and/or General Meeting if you obtain a Form of Proxy executed in your favour from your broker, bank or other nominee in order to be able to vote in person at such meeting.

Effect of abstentions and broker non-votes

An abstention occurs when a shareholder abstains from voting (either in person or by proxy) on one or more of the proposals. Broker non-votes occur when a broker, bank, trust or other nominee returns a proxy but does not have authority to vote on a particular proposal.

In connection with the Court Meeting, abstentions and broker non-votes will not be considered votes cast and will therefore not have any effect on the outcome of the vote at the Court Meeting.

In connection with the General Meeting, abstentions and broker non-votes will be considered in determining the presence of a quorum. However, abstentions and broker non-votes are not considered votes cast and therefore will not have any effect on the outcome of the vote for the purposes of determining whether the Special Resolution has been approved.

Multiple proxy voting instructions

Nightstar Shareholders who wish to appoint more than one proxy in respect of their shareholding should photocopy the Form of Proxy or call the Nightstar Shareholder Helpline on the telephone number set out on page xvii of this document. You should also indicate by ticking the box provided if the proxy is one of multiple instructions being given, fill in the name of the proxy and the number of shares in respect of which the proxy is appointed and return the multiple forms together (please ensure that all of the multiple Forms of Proxy in respect of one registered holding are sent in the same envelope if possible) by the time and date mentioned above.

 

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Online appointment of proxies

As an alternative to completing and returning the printed Forms of Proxy, Forms of Proxy may be submitted electronically by logging on to the following website: www.eproxyappointment.com and following the instructions there. For an electronic proxy appointment to be valid, the appointment must be received by Computershare no later than:

 

   

        a.m. on              2019 in the case of the Court Meeting; and

 

   

        a.m. on              2019 in the case of the General Meeting,

or, in the case of either meeting being adjourned, no later than 48 hours before the time fixed for the holding of the adjourned meeting. In order to access the voting system, Nightstar Shareholders will need their shareholder investor code found on their Form of Proxy.

In the case of the Court Meeting only, if you have not appointed a proxy electronically by such time you may complete the BLUE Form of Proxy and hand it to the Chairman of the Court Meeting or a representative of Computershare, on behalf of the Chairman of the Court Meeting, before the start of that meeting.

Electronic appointment of proxies through CREST

If you hold your Nightstar Shares in uncertificated form through CREST and wish to appoint a proxy or proxies for the Nightstar Shareholder Meetings (or any adjourned meeting) by using the CREST Electronic Proxy Appointment Service, you may do so using the procedures described in the CREST Manual (available at www.euroclear.com). CREST personal members or other CREST sponsored members, and those CREST members who have appointed any voting service provider(s), should refer to their CREST sponsor or voting service providers, who will be able to take the appropriate action on their behalf.

In order for a proxy appointment or instruction made using the CREST service to be valid, the CREST Proxy Instruction must be properly authenticated in accordance with Euroclear’s specifications and must contain the information required for such instructions, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by Computershare (under CREST participant ID 3RA50) not later than         a.m. on                  2019 in the case of the Court Meeting and not later than         a.m. on                  2019 in the case of the General Meeting or, in the case of any adjournment, not later than 48 hours before the time fixed for the holding of the adjourned meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Applications Host) from which Computershare is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.

CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear does not make available special procedure(s) in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed one or more voting service providers, to procure that his or her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service provider(s) are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. Nightstar may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

 

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Further information about proxies and voting

Further information in relation to the appointment of proxies for and voting at the Nightstar Shareholder Meetings is set out in paragraph 19 of Part II (Explanatory Statement) of this document, in the notice of the Court Meeting set out on pages vi to viii of this document (Notice of Court Meeting), in the notes to the notice of the General Meeting set out on pages ix to xiii of this document (Notice of General Meeting), and in the instructions printed on the Forms of Proxy.

If you hold Nightstar Shares indirectly, you must rely on the procedures of the bank, broker, financial institution, share plan administrator or share plan nominee or other securities intermediary through which you hold Nightstar Shares. You should contact such intermediary for further instructions on how you can instruct that intermediary to vote on your behalf at the Nightstar Shareholder Meetings and the date by which you must provide such instructions to the intermediary.

If the Scheme becomes Effective, it will be binding on all Nightstar Scheme Shareholders, including any Nightstar Shareholders who did not vote to approve the Scheme or who voted against the Scheme at the Court Meeting or against the Special Resolution at the General Meeting.

No “appraisal” rights

No Nightstar Shareholders or Nightstar ADS Holders will have “appraisal” or “dissenters” rights or otherwise have any right to seek an appraisal of the Nightstar Shares.

Nightstar Share Schemes

Participants in the Nightstar Share Schemes should refer to paragraph 9 of Part II (Explanatory Statement) of this document for information relating to the effect of the Acquisition on their rights under the Nightstar Share Schemes.

Nightstar ADS Holders

Nightstar ADS Holders should refer to paragraph 15 of Part II (Explanatory Statement) of this document.

 

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CONTENTS

 

     Page  

NOTICE OF COURT MEETING

     vi  

NOTICE OF GENERAL MEETING

     ix  

SUMMARY

     1  

QUESTIONS AND ANSWERS ABOUT THE NIGHTSTAR SHAREHOLDER MEETINGS AND THE ACQUISITION

     14  

Part I LETTER FROM THE CHAIRMAN OF NIGHTSTAR THERAPEUTICS PLC

     20  

Part II EXPLANATORY STATEMENT

     46  

Part III CONDITIONS TO AND FURTHER TERMS OF THE SCHEME AND THE ACQUISITION

     62  

Part IV FINANCIAL INFORMATION

     65  

Part V ADDITIONAL INFORMATION

     66  

Part VI SOURCES OF INFORMATION AND BASIS OF CALCULATION

     95  

Part VII DEFINITIONS

     96  

Part VIII THE SCHEME OF ARRANGEMENT

     104  
Annex A: Implementation Agreement      A-1  
Annex B: Opinion of Centerview      B-1  
Annex C: Form of Director’s Irrevocable Undertaking      C-1  
Annex D: Form of Shareholder’s Irrevocable Undertaking      D-1  

 

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SUMMARY

This summary highlights selected information contained in this document, including with respect to the Implementation Agreement, the Scheme and the Acquisition. You are encouraged to, and you should, carefully read this entire document, its annexes and the documents referred to or incorporated by reference, as this summary may not contain all of the information that may be important to you in determining how to vote. Page references have been included to direct you to a more complete description of the topics presented in this summary. You may obtain the information incorporated by reference into this document without charge by following the instructions under the section entitled “Documents” in paragraph 12 of Part V (Additional Information).

Information on Nightstar (page 48) and Information on Bidder and Bidco (page 48)

Nightstar

Nightstar is a public limited company incorporated in England and Wales. Nightstar is a leading clinical-stage gene therapy company focused on developing and commercialising novel one-time treatments for patients suffering from rare inherited retinal diseases that would otherwise progress to blindness. Nightstar’s lead product candidate, NSR-REP1, is currently in Phase 3 development for the treatment of patients with choroideremia, a rare, degenerative, genetic retinal disorder that has no treatments currently available and affects approximately one in every 50,000 people. Nightstar’s second product candidate, NSR-RPGR, is currently being evaluated in a clinical trial known as the XIRIUS trial for the treatment of patients with X-linked retinitis pigmentosa, an inherited X-linked recessive retinal disease that affects approximately one in every 40,000 people.

Nightstar manages its business as a single operating segment, which is the business of developing and commercialising gene therapies; however, Nightstar operates in two geographic regions: the United Kingdom and the United States.

The Nightstar ADSs are traded on Nasdaq under the symbol “NITE.” Nightstar’s principal executive offices are located at 10 Midford Place, London W1T 5BJ, United Kingdom, and its telephone number is +44 0(20) 7062 2777.

Additional information about Nightstar is contained in its public filings, which are incorporated by reference herein. See the sections entitled “Documents” in paragraph 12 of Part V (Additional Information), and “Information on Nightstar” in paragraph 5 of Part II (Explanatory Statement).

Bidder

Bidder is a limited liability company incorporated in Switzerland. Biogen, the ultimate parent company of Bidder, is a global biopharmaceutical company focused on discovering, developing and delivering worldwide innovative therapies for people living with serious neurological and neurodegenerative diseases, including in its core growth areas of multiple sclerosis and neuroimmunology, Alzheimer’s disease and dementia, movement disorders, including Parkinson’s disease, and neuromuscular disorders, including spinal muscular atrophy and amyotrophic lateral sclerosis. Biogen is also focused on discovering, developing and delivering worldwide innovative therapies in its emerging growth areas of acute neurology, neurocognitive disorders, pain and ophthalmology. In addition, Biogen employs innovative technologies to discover potential treatments for rare and genetic disorders, including new ways of treating diseases through gene therapy in its core and emerging growth areas. Biogen also manufactures and commercialises biosimilars of advanced biologics.

Bidder’s registered offices are located at Neuhofstrasse 30, 6340 Baar, Switzerland and its telephone number is +41 41 728 7444. Biogen’s principal executive offices are located at 225 Binney Street, Cambridge, Massachusetts 02142 and its telephone number is +1 (617) 679-2000.



 

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Bidco

Bidco is a newly incorporated English private limited company, and a direct, wholly-owned subsidiary of Bidder. Bidco has been formed at the direction of Bidder solely for the purposes of implementing the Acquisition. Bidco has not traded since its date of incorporation, nor has it entered into any obligations other than in connection with the Acquisition.

Bidco’s registered offices are located at 70 Norden Road, Maidenhead, Berkshire, SL6 4AY and its telephone number is +44 1628 501 000.

Summary of the Terms of the Acquisition (page 46)

On 4 March 2019, Bidder, Bidco and Nightstar entered into the Implementation Agreement. A copy of the Implementation Agreement is attached hereto as Annex A. The Implementation Agreement provides, among other things, for the acquisition of Nightstar by Bidder through Bidco, whereby Bidco will acquire all of the issued and to be issued share capital of Nightstar for cash by means of the Scheme. Upon consummation of the Acquisition, Nightstar will become a wholly-owned subsidiary of Bidco.

The Acquisition, which will be on the terms and subject to the conditions described in detail in this document, will be made on the following basis:

                for each Nightstar Scheme Share,            USD 25.50 in cash

 

   

the terms of the Acquisition valued each Nightstar Share at GBP             per share and Nightstar’s entire issued and to be issued share capital at approximately GBP             million (USD             million); and

 

   

the terms of the Acquisition represent a premium of approximately:

 

   

68.2 per cent. to the Closing Price per Nightstar Share of USD 15.16 on 1 March 2019 (being the last practicable date prior to the date of the Announcement); and

 

   

69.8 per cent. to the 30 trading day volume weighted average price per Nightstar Share of USD 15.02 for the period from 17 January 2019 to 1 March 2019 (being the last practicable date prior to the date of the Announcement).

The Consideration (pages 46 and 58)

The consideration payable by Bidco pursuant to the Acquisition will be USD 25.50 per Nightstar Scheme Share in cash, without interest, and subject to any applicable withholding taxes. The consideration for Nightstar ADS Holders will be USD 25.50 per Nightstar ADS validly surrendered to the Nightstar Depositary after the Scheme becomes Effective, without interest, and subject to the Nightstar Depositary fees for the cancellation of the Nightstar ADSs (up to USD 0.05 per Nightstar ADS) and the distribution of the consideration (up to USD 0.05 per Nightstar ADS) to the surrendering Nightstar ADS Holders and any applicable withholding taxes.

Settlement (page 55)

Subject to the Scheme becoming Effective (except as set forth herein), settlement of the Consideration to which any Nightstar Shareholder is entitled will be effected in the following manner:

 

   

Nightstar Shares in uncertificated form (that is, in CREST): Where, at the Scheme Record Time, a Nightstar Scheme Shareholder holds Nightstar Shares in uncertificated form, the Consideration to which such person is entitled will be transferred to such person through CREST by Bidco procuring,



 

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via Computershare, the creation of an assured payment obligation in favour of the appropriate CREST account, as soon as practicable after the Effective Date, subject to certain limitations set out below. As from the Scheme Record Time, each holding of Nightstar Shares credited to any stock account in CREST will be disabled and all Nightstar Shares will be removed from CREST.

 

   

Nightstar Shares in certificated form (that is, not in CREST): Where, at the Scheme Record Time, a Nightstar Scheme Shareholder holds Nightstar Shares in certificated form, settlement of the Consideration will be despatched (i) by first class post, by cheque drawn on a branch of a U.K. clearing bank; or (ii) by such other method as may be agreed between the parties

 

   

All such cash payments will be made in U.S. dollars. Payments made by cheque will be payable to the Nightstar Scheme Shareholder concerned or, in the case of joint holders, to all joint holders on the register of members of Nightstar. Cheques will be despatched as soon as practicable after the Effective Date and in any event within 14 days of the Effective Date to the person entitled thereto at the address as appearing in the register of members of Nightstar at the Scheme Record Time. None of Nightstar, Bidder, Bidco, any of their nominee(s) or any of their respective agents shall be responsible for any loss or delay in the transmission of cheques sent in this way, and such cheques shall be sent entirely at the risk of the person entitled thereto.

Subject to the Scheme becoming Effective (except as set forth herein), settlement of any consideration to which any Nightstar ADS Holder is entitled will be effected in the following manner:

 

   

On the Effective Date, Nightstar Scheme Shares as at the Scheme Record Time represented by the Nightstar ADSs will be transferred to Bidco (or such of its nominee(s) as are agreed between Bidco and Nightstar). As soon practicable after the Effective Date, the Nightstar Depositary will, in accordance with the terms of the Scheme, receive an amount in cash in U.S. dollars equal to the total amount due by way of Consideration under the terms of the Scheme in respect of all the Nightstar Scheme Shares held by the Nightstar Depositary at the Scheme Record Time.

 

   

Once the Nightstar Depositary has received the aggregate Consideration for the Nightstar Scheme Shares held by it, each Nightstar ADS Holder will receive (upon surrender of their Nightstar ADSs to the Nightstar Depositary) their pro rata portion of the cash in U.S. dollars, net of the Nightstar Depositary fees for the cancellation of the Nightstar ADSs (up to USD 0.05 per Nightstar ADS) and the distribution of the Consideration to the surrendering Nightstar ADS Holders (up to USD 0.05 per Nightstar ADS) and applicable withholding taxes. Nightstar ADS Holders who hold their Nightstar ADSs in certificated form will, on or after the Effective Date, receive a letter of transmittal from the Nightstar Depositary with an explanation on how to surrender the Nightstar ADSs to the Nightstar Depositary. Such Nightstar ADS Holders must sign and return the letter of transmittal, together with their Nightstar ADS certificates, to receive any consideration to which they are entitled. Nightstar ADS Holders who hold their Nightstar ADSs in uncertificated form will automatically receive any consideration to which they are entitled and do not need to take any further action. Payments to Nightstar ADS Holders will be made by cheque mailed by the Nightstar Depositary to the address the Nightstar Depositary has in its records for such Nightstar ADS Holder.

 

   

Any Nightstar ADS Holders who hold their Nightstar ADSs indirectly through a bank, broker, or other securities intermediary or share plan administrator within DTC, will receive credit of the funds to their account from their bank, broker or other securities intermediary or share plan administrator. The Nightstar Depositary will remit the applicable funds (net of Nightstar Depositary fees and applicable withholding taxes) to DTC, and DTC will, in turn, credit the Nightstar ADS Holder’s bank, broker, securities intermediary or share plan administrator.

For more information, see the section entitled “Settlement” in paragraph 14 of Part II (Explanatory Statement).



 

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Nightstar Equity Awards (page 50)

Upon the completion of the Acquisition, all outstanding stock options, restricted shares and restricted stock units awarded pursuant to the 2017 Equity Incentive Plan will be cancelled and cease to be outstanding, and the holder will be entitled to receive the Consideration less any applicable exercise or purchase price. All Pre-IPO Equity Awards will be acquired in the Scheme. Any Pre-IPO Equity Awards that were deferred upon the termination of the holder’s employment will not receive the Consideration and will be repurchased by Nightstar for a total payment of GBP 0.01 to the holder of such Deferred Share, pursuant to the terms of the applicable Vesting Agreement.

Conditions to the Scheme and the Acquisition (page 62)

The implementation of the Scheme and the Acquisition is conditional upon the satisfaction (or waiver, if permissible) of the following:

 

   

approval of the Scheme by a majority in number of the Nightstar Scheme Shareholders representing not less than 75 per cent. in value of the Nightstar Scheme Shares in each case present, entitled to vote and voting, either in person or by proxy, at the Court Meeting and at any separate class meeting which may be required by the Court or at any adjournment of any such meeting;

 

   

the Court Meeting and any separate class meeting which may be required by the Court or any adjournment of any such meeting being held on or before the 22nd day after the expected date of the Court Meeting (or such later date as may be agreed between Bidder and Nightstar and as the Court may allow);

 

   

all resolutions necessary to approve and implement the Scheme being duly passed by the requisite majority or majorities at the General Meeting or at any adjournment of that meeting;

 

   

the General Meeting or any adjournment of that meeting being held on or before the 22nd day after the expected date of the General Meeting (or such later date as may be agreed between Bidder and Nightstar and as the Court may allow);

 

   

the Court Hearing being held on or before the date immediately preceding the Long Stop Date (or such later date as may be agreed between Bidder and Nightstar and as the Court may allow); and

 

   

the sanction of the Scheme by the Court (with or subject to any modification, addition or condition which Nightstar and Bidder may agree and which the Court approves) and the delivery of a copy of the order of the Court sanctioning the Scheme under section 899 of the Companies Act 2006 to the Registrar of Companies.

The obligation of Bidder to complete the Acquisition is subject to the satisfaction (or waiver, if permissible) of the following additional conditions:

 

   

there being no applicable law, preliminary or permanent injunction, judgment or ruling of any governmental authority in effect that enjoins, restrains, prevents or prohibits or otherwise makes the Acquisition illegal;

 

   

obtaining certain competition law and regulatory approvals in the United States and Germany;

 

   

the accuracy of the representations and warranties of Nightstar both as at 4 March 2019 and as at the date immediately preceding the date of the Court Hearing as though made on the date immediately preceding the date of the Court Hearing (except for any such representations and warranties made as at a particular date or period, which representations and warranties must be true and correct only as at that date or period), subject in most cases to a materiality or “material adverse effect” standard as provided in the Implementation Agreement;



 

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Nightstar having performed and complied in all material respects with all obligations required by the Implementation Agreement to be performed or complied with by it prior to the date of the Court Hearing;

 

   

the absence of a material adverse effect with respect to Nightstar, since 4 March 2019; and

 

   

receipt by Bidder of a certificate, dated as at the date immediately preceding the Court Hearing and signed by an authorised officer of Nightstar, certifying to the effect that the conditions described in the three preceding bullet points have been satisfied.

Recommendation of the Nightstar Board (page 22)

The Nightstar Directors believe that the terms of the Acquisition, including the terms of the Implementation Agreement, are fair and reasonable and that proceeding with the Acquisition is likely to promote the success of Nightstar for the benefit of its shareholders, having had regard to the interests of other stakeholders, and unanimously recommend that Nightstar Shareholders vote in favour of the Scheme at the Court Meeting and the Special Resolution to be proposed at the General Meeting, as they have irrevocably undertaken to do in respect of their own holdings of, in aggregate,                  Nightstar Shares (representing approximately          per cent. of the issued ordinary share capital of Nightstar on                  2019 (being the last practicable date prior to the publication of this document)).

Shareholders Entitled to Vote; Votes Required (page 51 and 56)

Nightstar Scheme Shareholders as at the Scheme Voting Record Time are entitled to notice of, and to vote at, the Court Meeting and Nightstar Shareholders as at the Scheme Voting Record Time are entitled to notice of, and to vote at, the General Meeting. As at                  2019, the last practicable date before this document, there were                  Nightstar Shares issued and outstanding, held by approximately                  holders of record. Each Nightstar Scheme Share is entitled to one vote at the Court Meeting and each Nightstar Share is entitled to one vote at the General Meeting. Nightstar ADS Holders will not be entitled to vote directly on the Scheme and the Special Resolution, but Nightstar ADS Holders as of the Nightstar ADS Voting Record Time will have the right to instruct the Nightstar Depositary how to vote the Nightstar Scheme Shares underlying the Nightstar ADSs with respect to the Acquisition. Shareholders who hold their Nightstar Shares (including Nightstar ADSs) in the name of a broker, bank or other nominee should follow the voting instructions provided by such nominee to ensure that their Nightstar Shares are represented at the Court Meeting and the General Meeting.

In connection with the General Meeting, a quorum will be present if two Nightstar Scheme Shareholders as at the Scheme Voting Record Time are present in person or represented by proxy. Abstentions and broker non-votes will be considered in determining the presence of a quorum at the General Meeting. Under Nasdaq rules, Nightstar is required to amend the Nightstar Articles by 30 June 2019 (subject to the Acquisition having not become Effective by that date) to require a quorum for a general meeting of Nightstar Shareholders to be Nightstar Shareholders present who hold Nightstar Shares representing in aggregate at least one-third of the voting rights of Nightstar. Although this quorum requirement does not currently apply to Nightstar, pursuant to the Irrevocable Undertakings, Nightstar Shareholders representing in aggregate at least one-third of the voting rights of Nightstar have irrevocably undertaken that they will vote, in person or by proxy, at the Nightstar Shareholder Meetings, meaning that the proposed amended quorum requirement would be satisfied had it applied to the Nightstar Shareholder Meetings.

In connection with the Court Meeting, there must be a sufficiently large (in the Court’s judgment) number of Nightstar Scheme Shares included in the vote to fairly represent the opinion of Nightstar Scheme Shareholders. Abstentions and broker non-votes will not be considered votes cast and will therefore not have any effect on the outcome of the vote at the Court Meeting.



 

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At the Court Meeting, the Scheme will be approved by Nightstar Shareholders if both (i) a majority in number of Nightstar Scheme Shareholders who vote (in person or by proxy) vote in favour of the Scheme and (ii) Nightstar Scheme Shares representing at least 75 per cent. in value of the total number of Nightstar Scheme Shares voted at the Court Meeting are voted in favour of the Scheme. At the General Meeting, the Special Resolution must be approved by Nightstar Shareholders representing at least 75 per cent. of the votes cast.

The Court Meeting (page vi)

The Court Meeting will be held at the offices of Nightstar’s solicitors, Skadden, at 40 Bank Street, London E14 5DS, on                  2019 at     .

The purpose of the Court Meeting is to allow Nightstar Scheme Shareholders to vote on the Scheme. At the Court Meeting, you will be asked to consider and vote upon a resolution to approve the Scheme, with or subject to any modification, addition or condition which Nightstar and Bidder may agree and which the Court approves. For the Scheme to be approved at the Court Meeting, the Scheme must be approved by a majority in number of Nightstar Scheme Shareholders voting at the Court Meeting, either in person or by proxy, representing at least 75 per cent. in value of Nightstar Scheme Shares voted.

The General Meeting (page ix)

The General Meeting will be held at the offices of Nightstar’s solicitors, Skadden, at 40 Bank Street, London E14 5DS, on                  2019 at      or, as soon thereafter as the Court Meeting has been concluded or adjourned.

At the General Meeting, you will be asked to consider and vote upon resolutions to give the Nightstar Board the authority to take all necessary action to carry the Scheme into effect and to amend the Nightstar Articles as described in “Amendment to the Nightstar Articles” (see page 52), proposed by way of the Special Resolution. For the Special Resolution to be approved at the General Meeting, the Special Resolution must be approved by Nightstar Shareholders representing at least 75 per cent. of the votes cast at the General Meeting, either in person or by proxy.

Irrevocable Undertakings from the Nightstar Board and Certain Shareholders (page 76)

Bidco has received irrevocable undertakings to vote or procure votes in favour of the resolutions relating to the Scheme at the Nightstar Shareholder Meetings from the Nightstar Directors, in respect of their entire beneficial holdings, amounting to                  Nightstar Shares, in aggregate, representing approximately      per cent. of the issued share capital of Nightstar as at                  2019, being the last practicable date prior to the publication of this document. The form of the Director’s Irrevocable Undertaking is attached hereto as Annex C and incorporated by reference herein.

Bidco has also received irrevocable undertakings from Syncona Portfolio Limited and New Enterprise Associates, both Nightstar Shareholders, to vote or procure votes in favour of the resolutions relating to the Scheme at the Nightstar Shareholder Meetings in respect of their entire beneficial holdings, amounting to                  Nightstar Shares, in aggregate, representing approximately              per cent. of the issued share capital of Nightstar as at                  2019, being the last practicable date prior to the publication of this document. The form of the Shareholder’s Irrevocable Undertaking is attached hereto as Annex D and incorporated by reference herein.

Court Hearing to Sanction the Scheme (page 52)

Under the Companies Act 2006, the Scheme also requires the sanction of the Court. The Court Hearing to sanction the Scheme is currently expected to take place mid-year 2019. All Nightstar Scheme Shareholders are



 

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entitled to attend the Court Hearing in person or through Counsel to support or oppose the sanctioning of the Scheme. The Scheme will become Effective as soon as a copy of the Court Order has been delivered to the Registrar of Companies. This is currently expected to occur mid-year 2019, and no earlier than 7 June 2019.

If the Scheme becomes Effective, it will be binding on all Nightstar Scheme Shareholders, including Nightstar Scheme Shareholders who did not vote to approve the Scheme or who voted against the Scheme at the Court Meeting or General Meeting.

Reasons for the Recommendation (page 38)

For a description of the reasons considered by the Nightstar Board in deciding to recommend that Nightstar Shareholders vote in favour of the Scheme and the Special Resolution, see the section entitled “Reasons for the Recommendation” in paragraph 9 of Part I (Letter from the Chairman of Nightstar Therapeutics plc).

Opinion of Nightstar’s Financial Advisor (page 22)

Nightstar retained Centerview which acted, with its affiliate Centerview UK, as financial advisor to the Nightstar Board in connection with the proposed Acquisition and the other transactions contemplated by the Implementation Agreement. In connection with this engagement, the Nightstar Board requested that Centerview evaluate the fairness, from a financial point of view, to the holders of the Nightstar Shares, other than (i) any of the Nightstar Shares legally or beneficially held by Bidder or any of its subsidiary undertakings; (ii) any of the Nightstar Shares which are for the time being held by Nightstar as treasury shares (within the meaning of the Companies Act 2006); (iii) any Deferred Shares; and (iv) any of the Nightstar Shares held by any affiliate of Nightstar or Bidder, which are collectively referred to as “Excluded Shares” throughout this section and the summary of Centerview’s opinion in the section “Opinion of Nightstar’s Financial Advisor” in paragraph 5 of Part I (Letter from the Chairman of Nightstar Therapeutics plc) of the Consideration proposed to be paid to such holders pursuant to the Implementation Agreement. On 3 March 2019, Centerview rendered to the Nightstar Board its oral opinion, which was subsequently confirmed by delivery of a written opinion dated such date, that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Consideration proposed to be paid to the holders of the Nightstar Shares (other than Excluded Shares) pursuant to the Implementation Agreement was fair, from a financial point of view, to such holders.

The full text of Centerview’s written opinion, dated 3 March 2019, which describes the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, is attached hereto as Annex B and is incorporated herein by reference. Centerview’s financial advisory services and opinion were provided for the information and assistance of the Nightstar Board (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the Acquisition and Centerview’s opinion addressed only the fairness, from a financial point of view, as of the date thereof, to the holders of the Nightstar Shares (other than Excluded Shares) of the Consideration to be paid to such holders pursuant to the Implementation Agreement. Centerview’s opinion did not address any other term or aspect of the Implementation Agreement or the Acquisition and does not constitute a recommendation to any Nightstar Shareholder or any other person as to how such shareholder or other person should vote with respect to the Acquisition or the Scheme or whether or not such shareholder should tender their Nightstar Shares in connection with an Offer or any other matter.

The full text of Centerview’s written opinion should be read carefully in its entirety for a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion.



 

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Interests of Nightstar Directors and Executive Officers and the Effect of the Scheme on Their Interests (page 67)

In considering the recommendation of the Nightstar Board with respect to the Scheme and the Special Resolution, you should be aware that Nightstar’s Directors and executive officers have interests in the Acquisition that may be different from, or in addition to, the interests of Nightstar Shareholders generally. Interests of Nightstar Directors and executive officers that may be different from or in addition to the interests of Nightstar Shareholders generally include treatment of compensatory equity awards and eligibility for certain severance payments and benefits. For further information, see the section entitled “Interests of Nightstar’s Non-Employee Directors and Executive Officers” in paragraph 4 of Part V (Additional Information). The Nightstar Board was aware of the different or additional interests described herein and considered these interests along with other matters in approving the Implementation Agreement.

Material United Kingdom Tax Consequences of the Acquisition (page 71)

The comments set out below are based on current United Kingdom tax law as applied in England and Wales and HMRC practice (which may not be binding on HMRC) as at the date of this document, both of which are subject to change, possibly with retrospective effect. They are intended as a general guide to certain limited aspects of the United Kingdom tax treatment of the Scheme and apply only to Nightstar Shareholders and Nightstar ADS Holders (i) resident and, in the case of an individual, domiciled for tax purposes in the United Kingdom only; (ii) to whom “split year” treatment does not apply; (iii) who hold their Nightstar Shares or Nightstar ADSs as an investment (other than under a pension arrangement or an ISA or a Lifetime ISA); and (iv) who are the absolute beneficial owners of their Nightstar Shares or, in respect of Nightstar ADS Holders, who are treated as absolute beneficial owners of the Nightstar Shares underlying their Nightstar ADSs. The discussion does not address all possible tax consequences relating to the Scheme. This discussion does not address the tax considerations relevant to the receipt of Nightstar dividends. Certain categories of shareholders, including those carrying on certain financial activities, those subject to specific tax regimes or benefitting from certain reliefs and exemptions, those connected with Nightstar or Bidder, and those for whom the shares are employment-related securities may be subject to special rules and this summary does not apply to such shareholders.

Nightstar Shareholders, Nightstar ADS Holders or prospective shareholders who are in any doubt about their tax position, or who are resident or otherwise subject to taxation in a jurisdiction outside the United Kingdom, should consult their own professional advisers immediately.

Where a Nightstar Shareholder receives cash in respect of his or her Nightstar Shares, that Nightstar Shareholder will be treated as disposing of his Nightstar Shares which may, depending on the Nightstar Shareholder’s individual circumstances (including the availability of exemptions, reliefs or allowable losses) give rise to a liability to U.K. tax on chargeable gains or, alternatively, an allowable capital loss. The same treatment will apply to U.K. resident Nightstar ADS Holders, who will receive cash consideration for their Nightstar ADSs.

No U.K. stamp duty or stamp duty reserve tax should be payable by the Nightstar Shareholders or Nightstar ADS Holders on a disposal of their shares or ADSs in accordance with the Scheme.

Material United States Federal Income Tax Consequences of the Acquisition (page 71)

The Scheme will be a taxable event for U.S. federal income tax purposes. Accordingly, a U.S. Shareholder (as defined in paragraph 6 of part V (Additional Information) beginning on page 71) will recognise gain or loss with respect to its Nightstar Shares and Nightstar ADSs, measured by the difference between the amount of Consideration paid to such U.S. Shareholder and such U.S. Shareholder’s adjusted tax basis in its Nightstar



 

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Shares or Nightstar ADSs, as applicable. Any gain realised by a Non-U.S. Shareholder pursuant to the Scheme generally will not be subject to U.S. federal income tax unless such Non-U.S. Shareholder has certain connections with the United States as set forth in the section entitled “United States taxation” in paragraph 6 of part V (Additional Information) beginning on page 71.

Nightstar Shareholders and Nightstar ADS Holders should carefully read the section entitled “United States taxation” in paragraph 6 of Part V (Additional Information) beginning on page 71. Tax matters are complicated and the tax consequences of the Scheme to Nightstar Shareholders and Nightstar ADS Holders will depend upon the facts of their respective situations. Accordingly, each Nightstar Shareholder and Nightstar ADS Holder is urged to consult with his, her or its own tax adviser to determine the particular U.S. federal, state, local and non-U.S. tax consequences to it of the Scheme.

Competition Law and Regulatory Approvals (page 89)

Completion of the Acquisition is subject to the receipt of certain regulatory approvals, including (i) the expiration or early termination of the applicable waiting period under the U.S. HSR Act; and (ii) receipt of any necessary approval from the German antitrust authority.

No Appraisal Rights (page 58)

If Nightstar Scheme Shareholders approve the Scheme at the Court Meeting and the Court sanctions the Scheme, then, subject to the Scheme becoming Effective in accordance with its terms, the Scheme will be binding on all Nightstar Shareholders, including those who did not vote or who voted against it at the Court Meeting. If Nightstar Scheme Shareholders approve the Scheme and the Court sanctions the Scheme, no Nightstar Shareholder or Nightstar ADS Holder will have “dissenters” or “appraisal” rights or otherwise have any right to seek a court appraisal of the value of Nightstar Shares. If the Scheme becomes Effective, all Nightstar Scheme Shareholders will receive the Consideration.

Nightstar ADSs (page 56)

As each Nightstar ADS represents one Nightstar Share, the Scheme becoming Effective will result, in effect, in each Nightstar ADS Holder being entitled to receive USD 25.50 in cash for each Nightstar ADS surrendered to the Nightstar Depositary, without interest, and subject to the Nightstar Depositary fees for the cancellation of the



 

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Nightstar ADSs (up to USD 0.05 per Nightstar ADS) and the distribution of the Consideration (up to USD 0.05 per Nightstar ADS) to the Nightstar ADS Holders surrendering such Nightstar ADSs and any applicable withholding taxes. Nightstar ADS Holders have been sent or will be sent a Depositary’s Notice of Court Meeting and General Meeting and an ADS Voting Instruction Card for use in connection with the Court Meeting and the General Meeting.

Delisting and Deregistration of Nightstar ADSs (page 55)

If the Acquisition is completed, the Nightstar ADSs will be delisted from Nasdaq and the Nightstar ADSs and Nightstar Shares will be deregistered under the U.S. Exchange Act.

Alternative Proposals; Non-Solicitation (page 83)

Except as permitted by the Implementation Agreement, between 4 March 2019, and the earlier of the termination of the Implementation Agreement in accordance with its terms and the Effective Date, Nightstar may not, and must use its reasonable best endeavours to cause its directors, officers, employees, agents and consultants and financial advisors and attorneys, not to directly or indirectly:

 

   

solicit, initiate, or knowingly encourage or facilitate any inquiries regarding, or the making of any proposal or offer that constitutes, or could reasonably be expected to lead to, an “acquisition proposal,” as defined in the section entitled “Alternative Proposals; Non-Solicitation” in paragraph 9 of Part V (Additional Information);

 

   

engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any other person any information in connection with, or for the purpose of soliciting or knowingly encouraging or facilitating, an acquisition proposal or any proposal or offer that could reasonably be expected to lead to an acquisition proposal;

 

   

enter into any letter of intent, implementation agreement, co-operation agreement, acquisition agreement, agreement in principle or similar agreement with respect to an acquisition proposal or any proposal or offer that could reasonably be expected to lead to an acquisition proposal; or

 

   

waive or release any person from, forebear in the enforcement of, or amend any standstill agreement or any standstill provisions of any other contract.

However, if between 4 March 2019, and the earlier of (i) the termination of the Implementation Agreement in accordance with its terms and (ii) the Effective Date, Nightstar receives an unsolicited bona fide written acquisition proposal (that did not result from a material breach of the non-solicitation provisions of the Implementation Agreement), and if the Nightstar Board determines in good faith, after consultation with its financial advisors and outside legal counsel, that such acquisition proposal constitutes or is reasonably likely to lead to a superior proposal as defined in the section entitled “Receipt of Competing Acquisition Proposals” in paragraph 9 of Part V (Additional Information) and the failure to take such action would be in breach of their fiduciary duties or would violate their obligations under the Companies Act 2006, then Nightstar and its representatives may take the following actions:

 

   

furnish, pursuant to an acceptable confidentiality agreement, information (including non-public information) with respect to Nightstar and its subsidiaries to the person who has made such acquisition proposal (provided, that Nightstar must as promptly as practicable provide to Bidder any such non-public information to the extent not previously provided to Bidder); and

 

   

engage in or otherwise participate in discussions or negotiations with such person for so long as Nightstar and its representatives reasonably believe it may lead to a superior proposal.



 

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Changes in Board Recommendation (page 84)

The Nightstar Board has unanimously recommended that Nightstar Shareholders vote in favour of the Scheme and the Special Resolution. The Implementation Agreement permits the Nightstar Board to change its recommendation only in certain limited circumstances, as described below.

At any time between 4 March 2019, and the earlier of (i) the termination of the Implementation Agreement in accordance with its terms and (ii) the Effective Date, if Nightstar or any of its subsidiaries has received a bona fide written acquisition proposal (as defined in the section entitled “Alternative Proposals; Non-Solicitation” in paragraph 9 of Part V (Additional Information)) which did not result from a breach of Nightstar’s no solicitation obligations that has not been withdrawn and, after consultation with its financial advisors and outside legal counsel the Nightstar Board determines in good faith that such acquisition proposal constitutes a superior proposal, as defined in the section entitled “Receipt of Competing Acquisition Proposals” in paragraph 9 of Part V (Additional Information), the Nightstar Board may: (i) change its recommendation and/or (ii) cause Nightstar to terminate the Implementation Agreement in order to enter into a definitive agreement relating to such superior proposal, subject to paying the USD 8,773,855 compensatory payment due to Bidder under the terms of the Implementation Agreement. Prior to changing its recommendation and/or terminating the Implementation Agreement, (a) Nightstar must have given Bidder at least four Business Days’ prior written notice of its intention to take such action, including the material terms and conditions of any such superior proposal and have contemporaneously provided to Bidder a copy of the superior proposal; (b) at the end of such notice period, if Bidder has not elected to negotiate in good faith with respect to any revisions to the terms of the Acquisition or another proposal by Bidder so that the terms proposed by Bidder are at least as favourable as the competing acquisition proposal, and must have determined in good faith, after consultation with its financial advisors and outside legal counsel, that the competing acquisition proposal would nevertheless continue to constitute a superior proposal if the revisions proposed by Bidder were to be given effect. In the event of any material amendment to an acquisition proposal or another proposal proposed by Bidder on terms at least as favourable as a competing acquisition proposal, Nightstar must satisfy the notice requirement described above with a new written notice to Bidder, and comply with the requirements described above (but any such subsequent notice period will only be three Business Days).

Termination (page 90)

The Implementation Agreement may be terminated at any time prior to the Effective Date in the following circumstances:

 

   

by the written agreement of Nightstar and Bidder;

 

   

by Nightstar in accordance with the provisions regarding its right to terminate the Implementation Agreement to enter into a definitive agreement relating to a superior proposal as defined in the section entitled “Receipt of Competing Acquisition Proposals” in paragraph 9 of Part V (Additional Information);

 

   

by either Nightstar or Bidder, if:

 

   

the Effective Date has not occurred by the Long Stop Date (provided that the right to terminate pursuant to this provision is not available to any party whose material breach of the Implementation Agreement caused the failure of the Effective Date to have occurred by the Long Stop Date);

 

   

this document is not distributed to Nightstar Scheme Shareholders in accordance with the terms of the Implementation Agreement (provided that the right to terminate pursuant to this provision is not available to a party whose breach of any provision of the Implementation Agreement was the primary cause of such failure to distribute this document);



 

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an injunction shall have been entered permanently restraining, enjoining or otherwise prohibiting the consummation of the Acquisition and such injunction shall have become final and non-appealable (provided that the right to terminate pursuant to this provision is not available to a party whose breach of any provision of the Implementation Agreement was the primary cause of such injunction); or

 

   

any Condition that has not been waived (or is incapable of waiver) is (or has become) incapable of satisfaction by the Long Stop Date;

 

   

by Bidder, if:

 

   

the Nightstar Board notifies Bidder or publicly states that it no longer recommends (or intends to recommend) that the Nightstar Shareholders vote in favour of the Scheme and the Special Resolution;

 

   

Nightstar intentionally and materially breaches the provisions of the Implementation Agreement limiting its ability to communicate with third parties during the period between 4 March 2019, and the earlier of (i) the termination of the Implementation Agreement in accordance with its terms and (ii) the Effective Date, and such breach results in an acquisition proposal (as defined in the section entitled “Alternative Proposals; Non-Solicitation” in paragraph 9 of Part V (Additional Information));

 

   

following the Court Meeting or the General Meeting, the Nightstar Board notifies Bidder in writing or publicly states that Nightstar will not seek the sanctioning of the Scheme by the Court;

 

   

(i) the Nightstar Board (a) withdraws (or modifies in a manner adverse to Bidder), or publicly proposes to withdraw (or modify in a manner adverse to Bidder), its recommendation, or (b) approves, recommends or declares advisable, or publicly proposes to approve, recommend or declare advisable, any acquisition proposal; (ii) the Nightstar Board fails to include its recommendation in this document when mailed; or (iii) the Nightstar Board fails to reaffirm its recommendation within 10 days after Bidder so requests in writing or, if earlier, three days prior to the General Meeting (it being understood Nightstar will have no obligation to make such reaffirmation on more than three occasions); or

 

   

Nightstar breaches any of its representations and warranties set out in the Implementation Agreement or fails to perform any covenant or obligation in the Implementation Agreement on the part of Nightstar such that the condition regarding the accuracy of the representations and warranties of Nightstar both as at 4 March 2019 and as at the date immediately preceding the date of the Court Hearing would not be satisfied and cannot be cured by Nightstar by the Long Stop Date, or if capable of being cured by the Long Stop Date, is not cured within 30 days of the date Bidder gives Nightstar written notice of such breach or failure to perform (provided that the right to terminate pursuant to this provision is not available to Bidder if either Bidder or Bidco is then in material breach of any representation, warranty, covenant or obligation set out in the Implementation Agreement).

Compensatory Payment (page 91)

Nightstar will pay Bidder a compensatory payment in an amount equal to USD 8,773,855 if the Implementation Agreement is terminated in the following circumstances:

 

   

if the Implementation Agreement is terminated by Nightstar in order to enter into a definitive agreement relating to a superior proposal (in accordance with, and as defined in, the provisions set forth in the section entitled “Receipt of Competing Acquisition Proposals” in paragraph 9 of Part V (Additional Information));

 

   

if the Implementation Agreement is terminated by Bidder because the Nightstar Board has changed its recommendation;



 

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if (i) the Nightstar Board changes its recommendation, or (ii)(a) the Nightstar Board withdraws or adversely modifies, or publicly proposes to withdraw or adversely modify, its recommendation, or approves, recommends or declares advisable, or publicly proposes to approve, recommend or declare advisable, any acquisition proposal; (b) the Nightstar Board fails to include its recommendation in this document when mailed; or (c) the Nightstar Board fails to reaffirm its recommendation as requested by Bidder; or

 

   

(i) after 4 March 2019, any person shall have publicly disclosed a bona fide acquisition proposal (as defined in the section entitled “Alternative Proposals; Non-Solicitation” in paragraph 9 of Part V (Additional Information)), which has not been withdrawn prior to such termination; (ii) the Implementation Agreement is thereafter terminated (a) by Bidder because a Condition has not been satisfied by the Long Stop Date, (b) by Bidder because the Nightstar Board notifies Bidder in writing or publicly states that Nightstar will not seek the sanctioning of the Scheme by the Court following the Court Meeting or the General Meeting, (c) by Bidder because Nightstar breaches any of its representations and warranties or fails to perform any covenant or obligation on the part of Nightstar set out in the Implementation Agreement such that the condition regarding the accuracy of the representations and warranties of Nightstar would not be satisfied and cannot be cured by Nightstar by the Long Stop Date, or if capable of being cured by the Long Stop Date, is not cured within 30 days of the date Nightstar receives written notice of such breach or failure to perform, or (d) by either Nightstar or Bidder because the Effective Date has not occurred by the Long Stop Date; and (iii) at any time on or before the 12-month anniversary of such termination an acquisition proposal is announced, which is subsequently completed.



 

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QUESTIONS AND ANSWERS ABOUT THE NIGHTSTAR SHAREHOLDER MEETINGS AND THE ACQUISITION

The following questions and answers address briefly some questions you may have regarding the Nightstar Shareholder Meetings and the proposals to be voted on at the Nightstar Shareholder Meetings. These questions and answers may not address all of the questions that may be important to you as a Nightstar Shareholder. Please refer to the more detailed information contained elsewhere in this document, the annexes to this document and the documents referred to or incorporated by reference in this document, which you should read carefully and in their entirety. You may obtain the information incorporated by reference into this document without charge by following the instructions under the section entitled “Documents” in paragraph 12 of Part V (Additional Information).

 

Q:

Why am I receiving this document?

 

A:

On 4 March 2019, Nightstar entered into an agreement in connection with the acquisition of Nightstar by Bidder through Bidco, whereby Bidco will acquire all of the issued and to be issued share capital of Nightstar for USD 25.50 in cash by way of a “scheme of arrangement” under Part 26 of the U.K. Companies Act 2006. You are receiving this proxy statement in connection with the solicitation of proxies by the Nightstar Board in favour of approval of the Acquisition.

 

Q:

What is a “scheme of arrangement”?

 

A:

A “scheme of arrangement” is a Court-sanctioned arrangement between a company and its shareholders, which can be used as a transaction structure to effect a “takeover” or “merger.” If the Scheme becomes Effective, then:

 

   

Bidco will pay Nightstar Scheme Shareholders USD 25.50 in cash per Nightstar Scheme Share;

 

   

all Nightstar Scheme Shares will be transferred to Bidco; and

 

   

the Scheme will be binding on all Nightstar Shareholders, whether or not they voted in support of the Scheme.

 

Q:

What is the Court Meeting?

 

A:

In order for the Scheme to become Effective, the Scheme must be approved by Nightstar Shareholders. This approval is obtained at a shareholder meeting convened with the permission of the Court referred to as the “Court Meeting.” The purpose of the Court Meeting is to allow the Court to ascertain whether Nightstar Scheme Shareholders are in favour of the Scheme.

 

Q:

When and where is the Court Meeting?

 

A:

The Court Meeting will be held at the offices of Nightstar’s solicitors, Skadden, at 40 Bank Street, London E14 5DS, on                 ,                  2019, at                 .

 

Q:

What is the General Meeting?

 

A:

In addition to the approval of the Scheme at the Court Meeting, certain additional resolutions, necessary for Nightstar to implement the Acquisition are required to be approved at a general meeting of Nightstar Scheme Shareholders, referred to as the “General Meeting.”

 

Q:

When and where is the General Meeting?

 

A:

The General Meeting will be held at the offices of Nightstar’s solicitors, Skadden, at 40 Bank Street, London E14 5DS, on                 ,                  2019, at                 , or, if later, immediately after the conclusion of the Court Meeting.

 

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Q:

Who is entitled to vote at the Court Meeting and the General Meeting?

 

A:

Nightstar Scheme Shareholders are entitled to vote at the Court Meeting and Nightstar Shareholders are entitled to vote at the General Meeting.

If you hold your Nightstar Shares through a broker, bank or other nominee at the Scheme Voting Record Time you will need to contact your broker, bank or other nominee in order to submit your voting instructions.

If you hold Nightstar Shares registered in your own name, you are entitled, subject to compliance with procedures described below, to vote either in person or by appointing another person or persons as your proxy or proxies to attend and vote in your stead.

 

Q:

What matters will be voted on at the Nightstar Shareholder Meetings?

 

A:

At the Court Meeting, Nightstar Scheme Shareholders will vote on the approval of the Scheme.

At the General Meeting, Nightstar Shareholders will vote on a resolution to (i) authorise the Nightstar Board to take all necessary action to carry the Scheme into effect and (ii) amend the Nightstar Articles to ensure that any Nightstar Shares issued after the Scheme Record Time will be subject to the Scheme or otherwise transferred to Bidco, so that no other person will hold Nightstar Shares following the Effective Date. This resolution is referred to as the “Special Resolution.”

 

Q:

How do I attend the Nightstar Shareholder Meetings?

 

A:

If you plan to attend the Court Meeting in person, you will need to provide proof that you own Nightstar Scheme Shares in order to be admitted to the meeting. If you plan to attend the General Meeting in person, you will need to provide proof that you own Nightstar Shares in order to be admitted to the meeting.

If you are a shareholder of record, please be prepared to provide proper identification, such as a driver’s license. If you hold your shares through a broker, bank or other nominee you will need to provide proof of ownership, such as a recent account statement provided by your broker, bank or other nominee or other similar evidence of ownership, along with proper identification.

Nightstar ADS Holders will not be able to attend the Court Meeting or the General Meeting in person. If you are a Nightstar ADS Holder as of the Nightstar ADS Voting Record Time and you wish to attend the Court Meeting and the General Meeting, you will need to arrange for the cancellation of your Nightstar ADSs in order to become a Nightstar Shareholder prior to the applicable Scheme Voting Record Time. If you present your Nightstar ADSs for cancellation after the Nightstar ADS Voting Record Time to attend the Court Meeting or the General Meeting, you will need to certify that you were a Nightstar ADS Holder as of the Nightstar ADS Voting Record Time and that you will not vote the Nightstar ADSs previously held.

 

Q:

What constitutes a quorum for the Nightstar Shareholder Meetings?

 

A:

In connection with the General Meeting, a quorum will be present if two Nightstar Shareholders as at the Scheme Voting Record Time are present, in person or represented by proxy. As at the close of business on                  2019, the last practicable date before this document, there were                  Nightstar Shares outstanding. Abstentions and broker non-votes will be considered in determining the presence of a quorum at the General Meeting.

In connection with the Court Meeting, there must be a sufficiently large (in the Court’s judgment) number of Nightstar Scheme Shares included in the vote to fairly represent the opinion of Nightstar Scheme Shareholders. Abstentions and broker non-votes will not be considered votes cast and will therefore not have any effect on the outcome of the vote at the Court Meeting.

 

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Q:

What vote of Nightstar Scheme Shareholders is required to approve the Scheme?

 

A:

At the Court Meeting, the Scheme will be approved by Nightstar Scheme Shareholders if both (i) a majority in number of Nightstar Scheme Shareholders who vote (in person or by proxy) at the Court Meeting vote in favour of the Scheme and (ii) Nightstar Scheme Shares representing at least 75 per cent. in value of the total number of Nightstar Schemes Shares voted (in person or by proxy) at the Court Meeting are voted in favour of the Scheme.

In addition to approval by Nightstar Scheme Shareholders at the Court Meeting, approval of the Scheme will also require sanction by the Court. In considering whether to sanction the Scheme, the Court will consider whether there has been a sufficiently large (in the Court’s judgment) number of Nightstar Scheme Shares included in the vote in favour of the Scheme to fairly represent the opinion of Nightstar Scheme Shareholders, in addition to whether the required majority (as described above), is obtained.

At the General Meeting, the Special Resolution must be approved by Nightstar Shareholders representing at least 75 per cent. of the votes cast.

 

Q:

How does the Nightstar Board recommend that I vote?

 

A:

The Nightstar Board unanimously recommends that you vote in favour of the Scheme at the Court Meeting and in favour of the Special Resolution at the General Meeting.

 

Q:

How do Nightstar Directors and officers intend to vote?

 

A:

Bidder has received irrevocable undertakings from all Nightstar Directors, whereby they have agreed to vote in favour of the Acquisition at the Nightstar Shareholder Meetings in their capacity as shareholders in respect of their entire beneficial holdings of Nightstar Shares, which amounts to          Nightstar Shares, representing approximately          per cent. of the issued and outstanding ordinary share capital of Nightstar as at                  2019, the last practicable date before this document.

It is currently expected that Nightstar’s executive officers will vote their Nightstar Shares in favour of the Acquisition and the other proposals to be considered at the Nightstar Shareholder Meetings.

 

Q:

What is the Court Hearing?

 

A:

In addition to the approval of the Scheme by the Nightstar Shareholders at the Court Meeting and the General Meeting, in order for the Scheme to become Effective, the Court must sanction the Scheme at a hearing. This hearing is referred to as the “Court Hearing.”

 

Q:

When and where is the Court Hearing?

 

A:

Subject to the approval of Nightstar Shareholders and the prior satisfaction of the Conditions to completion of the Acquisition, the Court Hearing will be held at the Court, by mid-year 2019.

 

Q:

When is the Acquisition expected to be completed?

 

A:

As at the date of this document, it is expected that the Scheme will become Effective during the middle of 2019, and no earlier than 7 June 2019. However, the Acquisition cannot proceed until all of the Conditions are waived (if capable of waiver) or satisfied at or prior to the Long Stop Date in accordance with their respective terms, including the approval of the Scheme at the Court Meeting and the Special Resolution at the General Meeting. The Scheme also requires the sanction by the Court. It is possible that factors outside the control of Nightstar and Bidder could delay the completion of the Acquisition, or prevent it from being completed at all.

 

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Q:

What happens if the Acquisition is not completed?

 

A:

If the Scheme is not approved by Nightstar Shareholders, or if the Acquisition does not become Effective for any other reason, the Scheme will lapse and Nightstar Shareholders will not receive any payment for their Nightstar Shares in connection with the Acquisition. Instead, Nightstar will remain a public company, and Nightstar Shares and Nightstar ADSs will continue to be registered under the U.S. Exchange Act and the Nightstar ADSs will continue to be listed and traded on Nasdaq. In the event that either Nightstar or Bidder terminates the Implementation Agreement, then, in certain circumstances, Nightstar will pay Bidder a compensatory payment in an amount equal to USD 8,773,855.

 

Q:

What do I need to do now? How do I vote my Nightstar Shares?

 

A:

If you hold Nightstar Scheme Shares registered in your own name, you are entitled to attend the Court Meeting to vote in person or to appoint another person or persons as your proxy or proxies to attend and vote in your stead, in accordance with the procedures further outlined in this document.

If you hold Nightstar Shares registered in your own name, you are entitled to attend the General Meeting to vote in person or to appoint another person or persons as your proxy or proxies to attend and vote in your stead, in accordance with the procedures further outlined in this document.

If you hold your Nightstar Shares through a broker, bank or other nominee you will need to contact your broker, bank or other nominee in order to submit your voting instructions for both the Court Meeting and the General Meeting.

You are strongly encouraged to sign and return the blue Form of Proxy for the Court Meeting as soon as possible or, if you hold Nightstar Shares in CREST, via a CREST Proxy Instruction. You are also encouraged to sign and return the white Form of Proxy for the General Meeting at the same time as the blue Form of Proxy for the Court Meeting or if you hold Nightstar Shares in CREST, via a CREST Proxy Instruction.

 

Q:

Can I revoke my proxy?

 

A:

Any person submitting a Form of Proxy pursuant to this solicitation has the power to revoke and change it at any time before it is voted.

If you are a Nightstar Shareholder of record, you may revoke your proxy at any time before the vote is taken at the Court Meeting or the General Meeting, as applicable, by:

 

   

submitting a new Form of Proxy with a later date, by using the telephone or electronic proxy submission procedures described herein, or by completing, signing, dating and returning a new Form of Proxy by mail to Computershare;

 

   

attending the Court Meeting and/or the General Meeting and voting in person; or

 

   

delivering a written notice of revocation by mail to Computershare at The Pavilions, Bridgwater Road, Bristol, BS13 8AE, United Kingdom.

Please note, however, that only your last validly delivered or received proxy will count (regardless of its date or of the date of its execution). Attending the Court Meeting or General Meeting without taking one of the actions described above will not in itself revoke your proxy.

If you hold your shares indirectly through a broker, bank or other nominee, you will need to follow the instructions provided to you by your broker, bank or other nominee in order to revoke your proxy or submit new voting instructions. If you hold your shares indirectly, you may also revoke a prior proxy by voting in person at the Court Meeting and/or General Meeting if you obtain a Form of Proxy executed in your favour from your broker, bank or other nominee in order to be able to vote in person at such meeting.

 

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Q:

What happens if I do not vote or if I abstain from voting on the proposals?

 

A:

If you are the registered holder of Nightstar Shares and do not vote either in person or by appointing another person as your proxy to attend and vote in your stead, your shares will not be counted for purposes of determining whether a quorum is present at the General Meeting or for calculating the proportion of votes “For” and “Against” at either of the Nightstar Shareholder Meetings.

If your Nightstar Shares are held by a broker, bank or other nominee, you will need to contact your broker, bank or other nominee in order to confirm the answer to this question. However, if you do not instruct your broker, bank or other nominee how to vote your shares, your shares will not be counted for purposes of calculating the proportion of votes “For” and “Against” at the Nightstar Shareholder Meetings. Broker non-votes will be considered in determining the presence of quorum at the General Meeting.

There is a “Vote Withheld” option to enable you to abstain on the Special Resolution at the General Meeting. A “Vote Withheld” will count towards quorum at the General Meeting, however a “Vote Withheld” is not a vote in law and will not be counted in the calculation of the proportion of votes “For” and “Against” the Special Resolution at the General Meeting.

 

Q:

Will my Nightstar Shares held by a broker, bank or other nominee be combined for voting purposes with Nightstar Shares I hold of record?

 

A:

If your Nightstar Shares are held by a broker, bank or other nominee, these will not be combined for voting purposes with Nightstar Shares in relation to which you are the registered holder.

 

Q:

Can Nightstar ADS Holders vote at the Nightstar Shareholder Meetings?

 

A:

Nightstar ADS Holders will not be entitled to attend the Court Meeting or General Meeting in person or vote directly on the Acquisition. Instead, Nightstar will request that the Nightstar Depositary delivers to Nightstar ADS Holders as at the Nightstar ADS Voting Record Time a notice of (or notices for) the Court Meeting and the General Meeting, and Nightstar ADS Holders as at the Nightstar ADS Voting Record Time will have the right to instruct the Nightstar Depositary, by means of the ADS Voting Instruction Cards, how to vote the Nightstar Shares underlying the Nightstar ADSs held as of the Nightstar ADS Voting Record Time, subject to and in accordance with the terms of the Deposit Agreement with the Nightstar Depositary, a copy of which is available free of charge at the SEC’s website at www.sec.gov.

If you are a Nightstar ADS Holder as of the Nightstar ADS Voting Record Time and you wish to attend the Court Meeting and the General Meeting, you will need to arrange for the cancellation of your Nightstar ADSs in order to become a Nightstar Scheme Shareholder prior to the applicable Scheme Voting Record Time. If you present your Nightstar ADSs for cancellation after the Nightstar ADS Voting Record Time to attend the Court Meeting or the General Meeting, you will need to certify that you were a Nightstar ADS Holder as of the Nightstar ADS Voting Record Time and that you will not vote the Nightstar ADSs previously held.

 

Q:

Why did I receive more than one proxy card or voting instruction card?

 

A:

You will receive separate proxy cards for voting on approval of the Scheme at the Court Meeting and for voting on the Special Resolution at the General Meeting.

 

Q:

What happens if I sell my Nightstar Scheme Shares before completion of the Acquisition?

 

A:

In order to receive the Consideration of USD 25.50 per Nightstar Scheme Share, you must hold your Nightstar Scheme Shares at the Scheme Record Time. Consequently, if you transfer your shares before the Scheme Record Time, you will have transferred your right to receive the Consideration.

 

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The Scheme Voting Record Time, which determines the Nightstar Shareholders entitled to vote at the Nightstar Shareholder Meetings, is earlier than the consummation of the Acquisition. If you transfer your Nightstar Scheme Shares after the Scheme Voting Record Time but prior to the Scheme Record Time, you will retain any rights you hold to vote at the Nightstar Shareholder Meetings but not the right to receive the Consideration.

If you are a Nightstar ADS Holder, in order to receive the consideration to which you are entitled in relation to any Nightstar ADS, you must surrender your Nightstar ADS to the Nightstar Depositary after the Effective Date. Consequently, if you transfer your Nightstar ADSs on or before the Effective Date, you will not be able to present your Nightstar ADSs to the Nightstar Depositary to receive any consideration in relation thereto.

 

Q:

Should I send in my share certificates or other evidence of ownership now?

 

A:

No, do not send your certificates now.

There is no requirement for registered Nightstar Shareholders to take any action with regard to their share certificates. Share certificates in respect of Nightstar Shares will cease to be valid upon the Scheme becoming Effective.

If you are a Nightstar ADS Holder who holds your Nightstar ADSs in certificated form you will, after the Effective Date, receive a letter of transmittal from the Nightstar Depositary with an explanation on how to surrender the Nightstar ADSs to the Nightstar Depositary. Such Nightstar ADS Holders must sign and return the letter of transmittal, together with their Nightstar ADS certificates, to receive any consideration to which they are entitled.

If you are a Nightstar ADS Holders who holds your Nightstar ADSs in uncertificated form, you will automatically receive any consideration to which they are entitled and do not need to take any further action (unless your broker, bank or other nominee advises that further action is necessary).

If your Nightstar Shares or Nightstar ADSs are held on your behalf by a broker, bank or other nominee, you may receive instructions from your broker, bank or other nominee as to what action, if any, you need to take to effect the surrender of your Nightstar Shares or Nightstar ADSs in exchange for the Consideration.

 

Q:

Where can I find more information about Nightstar?

 

A:

You can find more information about Nightstar from the various sources described in the section entitled “Documents” in paragraph 12 of Part V (Additional Information).

 

Q:

Can I access these materials on the Internet?

 

A:

These materials can be found at Nightstar’s website, www.nightstartx.com.

 

Q:

Who can help answer my other questions?

 

A:

You can contact the Nightstar Shareholder Helpline on +44 370 703 6033. Lines are open Monday to Friday (except public holidays) between 8.30 a.m. and 5.30 p.m.

If your broker, bank or other nominee holds your shares, you may also call your broker, bank or other nominee for additional information.

ADS Holders may contact the Nightstar Depositary’s ADS shareholder services at +1-877-248-4237 or MacKenzie Partners, Inc., the proxy solicitor for the Nightstar ADSs toll-free at 1-800-322-2885, or +1-212-929-5500 and by email at proxy@mackenziepartners.com.

 

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PART I

LETTER FROM THE CHAIRMAN OF NIGHTSTAR THERAPEUTICS PLC

(incorporated in England and Wales with registered number 10852952)

 

Directors:

  

Registered office:

10 Midford Place,

London W1T 5BJ

Chris Hollowood (Chairman)

David Fellows (Chief Executive Officer)

Paula Cobb

David Lubner

James McArthur

David Mott

Scott Whitcup

                 2019

To all Nightstar Shareholders and, for information only, to participants in the Nightstar Share Schemes and persons with information rights

Dear Shareholder

RECOMMENDED ACQUISITION

of

NIGHTSTAR THERAPEUTICS PLC

by

TUNGSTEN BIDCO LIMITED

a wholly-owned subsidiary of

BIOGEN SWITZERLAND HOLDINGS GMBH

 

1.

Introduction

On 4 March 2019, the Nightstar Board and Biogen announced that they had agreed to the terms of a recommended cash Acquisition of Nightstar pursuant to which Bidco will acquire the entire issued and to be issued share capital of Nightstar. The Acquisition is to be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006, which requires the approval of Nightstar Shareholders and the sanction of the Court. The Acquisition remains subject to the terms and conditions set out in Part III (Conditions to and Further Terms of the Scheme and the Acquisition) of this document.

 

2.

Summary of the terms of the Acquisition

The Acquisition is to be effected by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006, which requires the approval of Nightstar Scheme Shareholders at the Court Meeting, the passing of the Special Resolution at the General Meeting and the sanction of the Court.

In accordance with the terms of the Acquisition, which is subject to the Conditions and further terms set out in Part III (Conditions to and Further Terms of the Scheme and the Acquisition) of this document, Nightstar Scheme Shareholders at the Scheme Record Time will be entitled to receive:

For each Nightstar Scheme Share,                     USD 25.50 in cash

Based on the exchange rate of USD         : GBP 1 at 4.00 p.m. on                  (being the last practicable date prior the date of this document):

 

   

the terms of the Acquisition valued each Nightstar Share at GBP                  per share and Nightstar’s entire issued and to be issued share capital at approximately GBP                  million (USD                  million); and

 

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the terms of the Acquisition represent a premium of approximately:

 

   

68.2 per cent. to the Closing Price per Nightstar Share of USD 15.16 on 1 March 2019 (being the last practicable date prior to the date of the Announcement); and

 

   

69.8 per cent. to the 30 trading day volume weighted average price per Nightstar Share of USD 15.02 for the period from 17 January 2019 to 1 March 2019 (being the last practicable date prior to the date of the Announcement).

The Nightstar Shares will be acquired by Bidco with full title guarantee, fully paid and free from all liens, equitable interests, charges, encumbrances, rights of pre-emption and any other third party rights or interests whatsoever and together with all rights existing at the date of this document or thereafter attaching thereto, including (without limitation) the right to receive and retain, in full, all dividends and other distributions (if any) declared, made or paid or any other return of capital (whether by way of reduction of share capital or share premium account or otherwise) made on or after the Effective Date in respect of the Nightstar Shares.

The Acquisition remains subject to the Conditions and further terms set out in full in Part III (Conditions to and Further Terms of the Scheme and the Acquisition) of this document.

Amongst others, the Conditions include the expiration or early termination of the applicable waiting period under the U.S. HSR Act and the receipt of any necessary approval from the German antitrust authority.

The Scheme is also conditional, amongst other things, upon:

 

  (i)

it becoming Effective by the Long Stop Date, failing which it will lapse;

 

  (ii)

its approval by a majority in number of the Nightstar Scheme Shareholders, representing not less than 75 per cent. in value of the Nightstar Scheme Shares held by those Nightstar Scheme Shareholders, present and voting, either in person or by proxy, at the Court Meeting or at any adjournment thereof on or before                  2019 (or such later date as may be agreed between Bidder and Nightstar and as the Court may allow);

 

  (iii)

the passing of the Special Resolution by the requisite majority at the General Meeting to be held on or before                  2019 (or such later date as may be agreed between Bidder and Nightstar and as the Court may allow); and

 

  (iv)

the sanction by the Court on or before the date immediately preceding the Long Stop Date (or such later date as may be agreed between Bidder and Nightstar and as the Court may allow) and the delivery of a copy of the Court Order to the Registrar of Companies.

At this stage, subject to the approval and availability of the Court (which is subject to change), and subject to the satisfaction (or, where applicable, waiver) of the Conditions, Bidder expects that the Acquisition will become Effective by mid-year 2019, and no earlier than 7 June 2019.

 

3.

Background to and reasons for the Acquisition

Biogen is focused on discovering, developing, and delivering worldwide innovative therapies for people living with serious neurological and neurodegenerative diseases. Nightstar is a gene therapy company focused on developing novel treatments for patients suffering from rare inherited retinal diseases that would otherwise lead to blindness.

Nightstar’s lead asset is NSR-REP1 for the treatment of choroideremia (CHM), a rare, degenerative, X-linked inherited retinal disorder, which leads to blindness and has no approved treatments. CHM primarily affects males and is caused by loss of function in the CHM gene which encodes the Rab escort protein-1 (REP-1). The REP-1 protein plays a role in intracellular protein trafficking, and loss of function in the CHM gene leads to abnormal intracellular protein trafficking and impaired elimination of waste products from the retinal pigment epithelium and photoreceptors. Initially, patients with CHM experience poor night vision, and over time progressive visual loss ultimately leads to complete blindness.

 

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NSR-REP1 is comprised of an AAV vector administered by subretinal injection which provides a functioning CHM gene and expression of the REP-1 protein to restore membrane trafficking and thereby slow, stop, or potentially reverse the decline in vision. Data from the Phase 1/2 trial of NSR-REP1 demonstrated potentially meaningful slowing of decline in visual acuity as compared to natural history as well as signs of improved visual acuity in some patients. NSR-REP1 is currently being evaluated in the ongoing Phase 3 STAR trial with data expected in the second half of 2020.

Nightstar’s second clinical program is NSR-RPGR for the treatment of X-linked retinitis pigmentosa (“XLRP”), which is also a rare inherited retinal disease primarily affecting males with no approved treatments. XLRP is characterised by mutations in the retinitis pigmentosa GTPase regulator (“RPGR”) gene leading to a lack of active protein transport in photoreceptors. This abnormality leads to loss of the photoreceptor cells, resulting in retinal dysfunction by adolescence and early adulthood, progressing to legal blindness when patients are in their 40s.

NSR-RPGR is comprised of an AAV vector administered by subretinal injection which provides a functioning RPGR gene and thus expression of the RPGR protein, which is critical for protein transport in photoreceptors. The restoration of photoreceptor function is intended to slow, stop, or potentially reverse the decline in vision. Phase 1/2 data from the dose escalation portion of the XIRIUS trial for NSR-RPGR demonstrated an increase in central retinal sensitivity. The Phase 2/3 dose expansion portion of the XIRIUS trial is currently ongoing.

Nightstar’s preclinical pipeline includes NSR-ABCA4 for Stargardt disease and potential programs targeting Best vitelliform macular dystrophy (Best disease) and other genetic forms of retinitis pigmentosa.

The proposed acquisition of Nightstar would bolster Biogen’s pipeline and further execute on its strategy to develop and expand a multi-franchise neuroscience pipeline across multiple complementary modalities. Ophthalmology is an emerging growth area for Biogen, and the proposed acquisition of Nightstar would accelerate Biogen’s entry into ophthalmology by adding two mid- to late-stage gene therapy assets to Biogen’s pipeline, with the potential to create long-term shareholder value.

 

4.

Board recommendation

For the reasons set out in this document, the Nightstar Directors, who have been so advised by Centerview as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing advice to the Nightstar Directors, Centerview has taken into account the commercial assessments of the Nightstar Directors. Centerview’s advice to the Nightstar Directors is set out in its written opinion, dated 3 March 2019, attached hereto as Annex B and which also sets out in full the relevant assumptions and qualifications to such advice.

Accordingly, the Nightstar Directors believe that the terms of the Acquisition, including the terms of the Implementation Agreement, are fair and reasonable and that proceeding with the Acquisition is likely to promote the success of Nightstar for the benefit of its shareholders, having had regard to the interests of other stakeholders and unanimously recommend that Nightstar Shareholders vote in favour of the Scheme at the Court Meeting and the Special Resolution to be proposed at the General Meeting, as they have irrevocably undertaken to do in respect of their own holdings of, in aggregate,              Nightstar Shares (representing approximately              per cent. of the issued ordinary share capital of Nightstar on                  2019 (being the last practicable date prior to the publication of this document)).

 

5.

Opinion of Nightstar’s Financial Advisor

On 3 March 2019, Centerview rendered to the Nightstar Board its oral opinion, subsequently confirmed in a written opinion dated such date, that, as of such date and based upon and subject to various assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Consideration to be paid to the holders of the Nightstar Shares (other than Excluded Shares) pursuant to the Implementation Agreement was fair, from a financial point of view, to such holders.

 

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The full text of Centerview’s written opinion, dated 3 March 2019, which describes the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, is attached hereto as Annex B and is incorporated herein by reference. The summary of the written opinion of Centerview set forth below is qualified in its entirety to the full text of Centerview’s written opinion attached as Annex B. Centerview’s financial advisory services and opinion were provided for the information and assistance of the Nightstar Board (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the Acquisition and Centerview’s opinion only addressed the fairness, from a financial point of view, as of the date thereof, to the holders of the Nightstar Shares (other than Excluded Shares) of the Consideration to be paid to such holders pursuant to the Implementation Agreement. Centerview’s opinion did not address any other term or aspect of the Implementation Agreement or the Acquisition and does not constitute a recommendation to any Nightstar Shareholder or any other person as to how such shareholder or other person should vote with respect to the Acquisition or the Scheme or whether or not such shareholder should tender their Nightstar Shares in connection with an Offer or any other matter.

The full text of Centerview’s written opinion should be read carefully in its entirety for a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion.

In connection with rendering the opinion described above and performing its related financial analyses, Centerview reviewed, among other things:

 

   

a draft of the Implementation Agreement dated 3 March 2019, referred to in this summary of Centerview’s opinion as the “Draft Implementation Agreement”;

 

   

a draft of the form of Shareholder’s Irrevocable Undertaking dated 2 March 2019 by and among Bidder and certain Nightstar Shareholders;

 

   

a draft of the form of Director’s Irrevocable Undertaking dated 2 March 2019 by and between Bidder and each of the Nightstar Directors;

 

   

the Annual Report on Form 20-F of Nightstar for the year ended 31 December 2017;

 

   

the registration statement on Form F-1 of Nightstar filed on 31 August 2017, as amended;

 

   

certain interim reports to Nightstar Shareholders;

 

   

certain publicly available research analyst reports for Nightstar; and

 

   

certain internal information relating to the business, operations, earnings, cash flow, assets, liabilities and prospects of Nightstar, including unaudited financial results for the year ended 31 December 2018 and certain financial forecasts, analyses and projections relating to Nightstar prepared by management of Nightstar and furnished to Centerview by Nightstar for purposes of Centerview’s analysis, which are referred to in this summary of Centerview’s opinion as the “Forecasts,” and which are collectively referred to in this summary of Centerview’s opinion as the “Internal Data.”

Centerview also participated in discussions with members of the senior management and representatives of Nightstar regarding their assessment of the Internal Data. In addition, Centerview reviewed publicly available financial and stock market data, including valuation multiples, for Nightstar and compared that data with similar data for certain other companies, the securities of which are publicly traded, in lines of business that Centerview deemed relevant. Centerview also compared certain of the proposed financial terms of the Acquisition with the financial terms, to the extent publicly available, of certain other transactions that Centerview deemed relevant, and conducted such other financial studies and analyses and took into account such other information as Centerview deemed appropriate.

Centerview assumed, without independent verification or any responsibility therefor, the accuracy and completeness of the financial, legal, regulatory, tax, accounting and other information supplied to, discussed

 

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with, or reviewed by Centerview for purposes of its opinion and, with Nightstar’s consent, Centerview relied upon such information as being complete and accurate. In that regard, Centerview assumed, at Nightstar’s direction, that the Internal Data (including, without limitation, the Forecasts) were reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of Nightstar as to the matters covered thereby and Centerview relied, at Nightstar’s direction, on the Internal Data for purposes of Centerview’s analysis and opinion. Centerview expressed no view or opinion as to the Internal Data or the assumptions on which it was based. In addition, at Nightstar’s direction, Centerview did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet or otherwise) of Nightstar, nor was Centerview furnished with any such evaluation or appraisal, and was not asked to conduct, and did not conduct, a physical inspection of the properties or assets of Nightstar. Centerview assumed, at Nightstar’s direction, that the final executed Implementation Agreement would not differ in any respect material to Centerview’s analysis or opinion from the Draft Implementation Agreement reviewed by Centerview. Centerview also assumed, at Nightstar’s direction, that the Acquisition will be consummated on the terms set forth in the Implementation Agreement and in accordance with all applicable laws and other relevant documents or requirements, without delay or the waiver, modification or amendment of any term, condition or agreement, the effect of which would be material to Centerview’s analysis or Centerview’s opinion and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the Acquisition, no delay, limitation, restriction, condition or other change will be imposed, the effect of which would be material to Centerview’s analysis or Centerview’s opinion. Centerview did not evaluate and did not express any opinion as to the solvency or fair value of Nightstar, or the ability of Nightstar to pay its obligations when they come due, or as to the impact of the Acquisition on such matters, under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. Centerview is not a legal, regulatory, tax or accounting advisor, and Centerview expressed no opinion as to any legal, regulatory, tax or accounting matters.

Centerview expressed no view as to, and Centerview’s opinion did not address, Nightstar’s underlying business decision to proceed with or effect the Acquisition, or the relative merits of the Acquisition as compared to any alternative business strategies or transactions that might be available to Nightstar or in which Nightstar might engage. Centerview’s opinion was limited to and addressed only the fairness, from a financial point of view, as of the date of Centerview’s written opinion, to the holders of the Nightstar Shares (other than Excluded Shares) of the Consideration to be paid to such holders pursuant to the Implementation Agreement. For purposes of its opinion, Centerview was not asked to, and Centerview did not, express any view on, and its opinion did not address, any other term or aspect of the Implementation Agreement or the Acquisition, including, without limitation, the structure or form of the Acquisition, or any other agreements or arrangements contemplated by the Implementation Agreement or entered into in connection with or otherwise contemplated by the Acquisition, including, without limitation, the fairness of the Acquisition or any other term or aspect of the Acquisition to, or any consideration to be received in connection therewith by, or the impact of the Acquisition on, the holders of any other class of securities, creditors or other constituencies of Nightstar or any other party. In addition, Centerview expressed no view or opinion as to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to be paid or payable to any of the officers, directors or employees of Nightstar or any party, or class of such persons in connection with the Acquisition, whether relative to the Consideration to be paid to the holders of the Nightstar Shares (other than Excluded Shares) pursuant to the Implementation Agreement or otherwise. Centerview’s opinion was necessarily based on financial, economic, monetary, currency, market and other conditions and circumstances as in effect on, and the information made available to Centerview as of, the date of Centerview’s written opinion, and Centerview does not have any obligation or responsibility to update, revise or reaffirm its opinion based on circumstances, developments or events occurring after the date of Centerview’s written opinion. Centerview’s opinion does not constitute a recommendation to any Nightstar Shareholder or any other person as to how such shareholder or other person should vote with respect to the Acquisition or the Scheme or whether or not such shareholder should tender the Nightstar Shares in connection with an Offer or any other matter. Centerview’s financial advisory services and its written opinion were provided for the information and assistance of the Nightstar Board (in their capacity as

 

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directors and not in any other capacity) in connection with and for purposes of its consideration of the Acquisition. The issuance of Centerview’s opinion was approved by the Centerview Partners LLC Fairness Opinion Committee.

Summary of Centerview Financial Analysis

The following is a summary of the material financial analyses prepared and reviewed with the Nightstar Board in connection with Centerview’s opinion, dated 3 March 2019. The summary set forth below does not purport to be a complete description of the financial analyses performed or factors considered by, and underlying the opinion of, Centerview, nor does the order of the financial analyses described represent the relative importance or weight given to those financial analyses by Centerview. Centerview may have deemed various assumptions more or less probable than other assumptions, so the reference ranges resulting from any particular portion of the analyses summarised below should not be taken to be Centerview’s view of the actual value of Nightstar. Some of the summaries of the financial analyses set forth below include information presented in tabular format. In order to fully understand the financial analyses, the tables must be read together with the text of each summary, as the tables alone do not constitute a complete description of the financial analyses performed by Centerview. Considering the data in the tables below without considering all financial analyses or factors or the full narrative description of such analyses or factors, including the methodologies and assumptions underlying such analyses or factors, could create a misleading or incomplete view of the processes underlying Centerview’s financial analyses and its opinion. In performing its analyses, Centerview made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Nightstar or any other parties to the Acquisition. None of Nightstar, Bidder, Bidco or Centerview or any other person assumes responsibility if future results are materially different from those discussed. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favourable than as set forth below. In addition, analyses relating to the value of Nightstar do not purport to be appraisals or reflect the prices at which Nightstar may actually be sold. Accordingly, the assumptions and estimates used in, and the results derived from, the financial analyses are inherently subject to substantial uncertainty. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before 1 March 2019 (the last trading day before the public announcement of the Acquisition) and is not necessarily indicative of current market conditions.

Selected Comparable Company Analysis

Centerview reviewed certain financial information of Nightstar and compared it to corresponding financial information of certain publicly traded, gene therapy-focused companies with market capitalizations of less than approximately USD 1.5 billion and clinical stage assets that Centerview selected based on its experience and professional judgment (which are referred to as the “selected companies” in this summary of Centerview’s opinion). Although none of the selected companies is directly comparable to Nightstar, the companies listed below were chosen by Centerview, among other reasons, because they are publicly traded, gene therapy-focused companies with clinical stage assets with certain operational, business and/or financial characteristics that, for purposes of Centerview’s analysis, may be considered similar to those of Nightstar.

However, because none of the selected companies is exactly the same as Nightstar, Centerview believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the selected public company analysis. Accordingly, Centerview also made qualitative judgments, based on its experience and professional judgment, concerning differences between the operational, business and/or financial characteristics of Nightstar and the selected companies that could affect the public trading values of each in order to provide a context in which to consider the results of the quantitative analysis.

 

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The selected companies are set forth below:

 

Company Name

   EV/2024E
Revenue
Multiple
 

Audentes Therapeutics, Inc.

     1.7x  

Sangamo Therapeutics, Inc.

     1.5x  

Rocket Pharmaceuticals, Inc.

     n.a.

Voyager Therapeutics, Inc.

     0.6x  

MeiraGTx Holdings plc

     n.a.

AVROBIO, Inc.

     0.7x  

Solid Biosciences Inc.

     0.2x  

Abeona Therapeutics Inc.

     0.4x  

Adverum Biotechnologies, Inc.

     n.m. ** 

GenSight Biologics S.A.

     0.5x  

Applied Genetic Technologies Corporation

     n.m. ** 

 

  *

Not available as consensus estimates of risk-adjusted revenues for calendar year 2024 were not available.

  **

Not meaningful as the EV/2024E Revenue Multiple was less than 0.0x or more than 50.0x.

Centerview calculated and compared forward revenue multiples for the selected companies based on information it obtained from public filings and other data sources. With respect to each of the selected companies, Centerview calculated enterprise value (calculated as the market value of common equity (determined using the treasury stock method and taking into account outstanding in-the-money options, warrants, restricted stock units and performance share units), plus certain liabilities less cash and cash equivalents) as a multiple of consensus estimated risk-adjusted revenues for calendar year 2024, which is referred to in the table above as the “EV/2024E Revenue Multiple.”

Based on this analysis and other considerations that Centerview deemed relevant in its professional judgment and expertise, Centerview applied a multiple range, derived from the estimated 2024 revenue multiples of the selected companies, of 0.5x to 1.0x to Nightstar’s estimated risk-adjusted calendar year 2024 revenue for each of the Case A Forecasts of USD 1.080 billion, Case B Forecasts of USD 633 million and Case C Forecasts of USD 415 million as set forth in the section entitled “Certain Forecasts” in paragraph 6 of Part I (Letter from the Chairman of Nightstar Therapeutics plc) and added to each Nightstar’s estimated net cash position as of 28 February 2019 of USD 158 million, and divided each result by the number of fully-diluted Nightstar Shares outstanding (determined using the treasury stock method and taking into account outstanding options and restricted stock units) as of 28 February 2019 based on the Internal Data provided by Nightstar management.

This analysis resulted in the following implied per share equity value ranges for the Nightstar Shares:

 

Case

   Implied Per Nightstar Share
Equity Value Range
 

Case A Forecasts

   $ 20.47 – $35.58  

Case B Forecasts

   $ 14.15 – $23.07  

Case C Forecasts

   $ 10.92 – $16.95  

Centerview compared these ranges to the USD 25.50 per Nightstar Share proposed to be paid to the holders of the Nightstar Shares (other than Excluded Shares) pursuant to the Implementation Agreement.

Discounted Cash Flow Analysis

Centerview performed a discounted cash flow analysis of Nightstar based on Case A Forecasts, Case B Forecasts and Case C Forecasts as set forth in the section entitled “Certain Forecasts” in paragraph 6 of

 

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Part I (Letter from the Chairman of Nightstar Therapeutics plc). A discounted cash flow analysis is a traditional valuation methodology used to derive a valuation of an asset or set of assets by calculating the “present value” of estimated future cash flows of the asset or set of assets. “Present value” refers to the current value of future cash flows and is obtained by discounting those future cash flows by a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors.

In performing this analysis, Centerview calculated a range of equity values for Nightstar by (i) discounting to present value as of 31 March 2019 using discount rates ranging from 12.5% to 15.0% (reflecting Centerview’s analysis of Nightstar’s weighted average cost of capital, which is based on the assumption that Nightstar continues to hold no debt) and the mid-year convention: (a) the forecasted risk adjusted, after-tax unlevered free cash flows of Nightstar based on each of Case A Forecasts, Case B Forecasts and Case C Forecasts over the period beginning on 1 April 2019 and ending on 31 December 2035 utilised by Centerview as set forth in the section entitled “Certain Forecasts” in paragraph 6 of Part I (Letter from the Chairman of Nightstar Therapeutics plc) and (b) the forecasted tax savings from usage of net operating losses and future losses and (ii) adding to the foregoing results (i) Nightstar’s net cash balance as of 28 February 2019 of USD 158 million, as set forth in the Internal Data and (ii) an assumed USD 75 million equity financing in 2019, issued at USD 15 per share with USD 14 per share proceeds, to fund future development and commercialisation of Nightstar’s products. Centerview divided the result of the foregoing calculations by the number of fully-diluted outstanding Nightstar Shares (determined using the treasury stock method and taking into account outstanding options and restricted stock units) as at 28 February 2019 based on the Internal Data provided by Nightstar management and adjusting for the assumed USD 75 million equity financing in 2019.

This analysis resulted in the following implied per share equity value ranges for the Nightstar Shares:

 

Case

   Implied Per Nightstar Share
Equity Value Range
 

Case A Forecasts

   $ 34.19 – $38.89  

Case B Forecasts

   $ 19.72 – $22.19  

Case C Forecasts

   $ 11.98 – $13.31  

Centerview compared these ranges to the USD 25.50 per Nightstar Share proposed to be paid to the holders of the Nightstar Shares (other than Excluded Shares) pursuant to the Implementation Agreement.

Other Factors

Centerview noted for the Nightstar Board certain additional factors solely for informational purposes, including, among other things, the following:

 

   

Historical Stock Price Trading Analysis. Centerview reviewed historical Nightstar Share price performance of the Nightstar Shares for the 52-week period ended 1 March 2019, which reflected low and high closing prices for the Nightstar Shares during this 52-week period of USD 10.00 and USD 27.78.

 

   

Analyst Price Target Analysis. Centerview reviewed stock price targets for the Nightstar Shares in Wall Street research analyst reports publicly available as at 1 March 2019, noting these stock price targets ranged from USD 21.00 per share to USD 42.00 per Nightstar Share.

 

   

Precedent Premiums Paid Analysis. Centerview reviewed premiums paid in select transactions involving publicly traded, clinical stage biopharmaceutical companies with lead asset an estimated two to three years from commercialisation at the time of acquisition that Centerview, based on its experience and professional judgment, deemed relevant to consider in relation to the Acquisition. These transactions were selected, among other reasons, because their participants, size or other factors, for purposes of Centerview’s analysis, may be considered similar to the Acquisition. Centerview used its experience, expertise and knowledge of these industries to select transactions that involved

 

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companies with certain operational, business and/or financial characteristics that, for purposes of this analysis, may be considered similar to those of Nightstar. However, because none of the selected transactions used in this analysis is identical or directly comparable to the Acquisition, Centerview believed that it was inappropriate to consider solely the quantitative results of the selected premiums paid analysis. Centerview also made qualitative judgments, based on its experience and professional judgment, concerning differences between the operational, business and/or financial characteristics of Nightstar and each target company as well as the Acquisition and the selected transactions that could affect the premiums paid in each in order to provide a context in which to consider the results of the quantitative analysis. Using public filings and other data sources as of 1 March 2019, Centerview calculated, for each selected transaction, (i) the percentage premium represented by the transaction price per share to the target company’s market price per share on the trading day prior to the first public knowledge of the possibility of the transaction, and (ii) the percentage premium represented by the transaction price per share to the target company’s volume weighted average market price per share, which is referred to as the “VWAP,” over the 30 trading days prior to the first public knowledge of the possibility of the transaction. Based on the analysis above and other considerations that Centerview deemed relevant in its experience and professional judgment, Centerview applied (i) an illustrative range of 40 per cent. to 80 per cent. to Nightstar’s closing stock price on 1 March 2019 of USD 15.16, which resulted in an implied per share equity value range for the Nightstar Shares of approximately USD 21.22 to USD 27.29 and (ii) an illustrative range of 30 per cent. to 80 per cent. to Nightstar’s 30-day VWAP on 1 March 2019 of USD 15.02, which resulted in an implied per share equity value range for the Nightstar Shares of approximately USD 19.52 to USD 27.03.

General

The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to summary description. In arriving at its opinion, Centerview did not draw, in isolation, conclusions from or with regard to any factor or analysis that it considered. Rather, Centerview made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of the analyses.

Centerview’s financial analyses and opinion were only one of many factors taken into consideration by the Nightstar Board in its evaluation of the Acquisition. Consequently, the analyses described above should not be viewed as determinative of the views of the Nightstar Board or management of Nightstar with respect to the Consideration or as to whether the Nightstar Board would have been willing to determine that a different consideration was fair. The consideration for the transaction was determined through arm’s-length negotiations between Nightstar and Bidder and was approved by the Nightstar Board. Centerview provided advice to Nightstar during these negotiations. Centerview did not, however recommend any specific amount of consideration to Nightstar or the Nightstar Board or that any specific amount of consideration constituted the only appropriate consideration for the Acquisition.

Centerview is a securities firm engaged directly and through affiliates and related persons in a number of investment banking, financial advisory and merchant banking activities. In the two years prior to the date of its written opinion, except for Centerview’s current engagement with Nightstar, Centerview has not been engaged to provide financial advisory or other services to Nightstar, and Centerview has not received compensation from Nightstar during such period. In the two years prior to the date of its written opinion, Centerview has not been engaged to provide financial advisory or other services to Syncona Portfolio Limited, Biogen, Bidder or Bidco, and Centerview has not received compensation from Syncona Portfolio Limited, Biogen, Bidder or Bidco during such period. Centerview may provide financial advisory and other services to or with respect to Nightstar or Bidder or their respective affiliates in the future, for which Centerview may receive compensation. Certain (i) of Centerview’s and its affiliates’ directors, officers, members and employees, or family members of such persons, (ii) of Centerview’s affiliates or related investment funds and (iii) investment funds or other persons in which any of the foregoing may have

 

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financial interests or with which they may co-invest, may at any time acquire, hold, sell or trade, in debt, equity and other securities or financial instruments (including derivatives, bank loans or other obligations) of, or investments in, Nightstar, Bidder, or any of their respective affiliates, or any other party that may be involved in the Acquisition.

The Nightstar Board selected Centerview as its financial advisor in connection with the Acquisition based on Centerview’s reputation and experience. Centerview is an internationally recognised investment banking firm that has substantial experience in transactions similar to the Acquisition.

In connection with Centerview’s services as the financial advisor to the Nightstar Board, Nightstar has agreed to pay Centerview an aggregate fee of USD 15,792,939, USD 2,000,000 of which was payable upon the rendering of Centerview’s opinion and USD 13,792,939 of which is payable contingent upon consummation of the Acquisition. In addition, Nightstar has agreed to reimburse certain of Centerview’s expenses arising, and to indemnify Centerview against certain liabilities that may arise, out of Centerview’s engagement.

 

6.

Certain Forecasts

Nightstar, which does not yet have any marketed products, does not make public long-term projections as to future revenues, earnings or other results due to the uncertainty of the underlying assumptions and estimates. However, in connection with the Nightstar Board’s evaluation of the Acquisition and other strategic alternatives available to the company, Nightstar’s management prepared certain long-range, risk-adjusted financial projections for the years 2019 through 2035 for three cases reflecting varying assumptions. The Forecasts were provided to the Nightstar Board and to Centerview, but not to Bidder.

The Forecasts were based on certain internal assumptions about the probability of success and regulatory approval, launch timing, pricing, market growth, market share, competition and other relevant factors relating to the commercialisation of Nightstar’s product candidates. Nightstar’s management considered it appropriate to prepare forecasts presenting three scenarios to reflect varying commercial assumptions and probability of success with respect to Nightstar’s lead clinical product candidates. All of these factors are difficult to predict and many are beyond Nightstar’s control. Accordingly, there can be no assurance that the Forecasts will be realised, and actual results may vary materially from those shown.

Nightstar is electing to summarise the Forecasts in this document to provide Nightstar Shareholders access to certain prospective financial information that was made available to the Nightstar Board at the time of its evaluation of the Acquisition and the Implementation Agreement, and to Centerview. The Forecasts are not included to influence a Nightstar Shareholder’s decision whether to vote in favour of the Acquisition. The Forecasts were not prepared with a view toward public disclosure, nor were they prepared with a view toward compliance with the published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts, or U.S. generally accepted accounting principles. In addition, the Forecasts were not prepared with the assistance of, or reviewed, compiled or examined by, independent accountants. Nightstar makes and has made no representation to Bidder or Bidco, in the Implementation Agreement or otherwise, concerning the Forecasts.

The Forecasts are summarised below:

Case A Forecasts

 

    Fiscal years ended December 31 (dollars in millions)  
    2019     2020     2021     2022     2023     2024     2025     2026     2027     2028     2029     2030     2031     2032     2033     2034     2035  

Total Company Sales

    —         —         $21       $225       $681       $1080       $1224       $940       $556       $239       $85       $36       $20       $13       $11       $10       $9  

Total Gross Profit(1)

    ($0     ($1     $19       $210       $639       $1015       $1151       $884       $523       $225       $80       $34       $19       $13       $10       $9       $9  

Operating Income(2)

    ($73     ($77     ($69     $100       $511       $857       $981       $731       $405       $161       $54       $24       $11       $6       $4       $3       $2  

Unlevered Free Cash Flow(3)

    ($63     ($65     ($75     $32       $310       $611       $778       $678       $432       $213       $83       $32       $13       $6       $4       $3       $2  

 

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(1)

Total Gross Profit, as presented herein, reflects Total Company Sales, less product cost of goods sold, less royalty payments, and less milestone payments.

(2)

Operating Income, as presented herein, reflects Total Gross Profit, less research and development expenses, less sales and marketing expenses, and less general and administrative expenses.

(3)

Unlevered Free Cash Flow, as presented herein, reflects Operating Income, less tax expenses, less changes in net working capital, less capital expenditures, plus research and development tax rebates, and plus depreciation and amortisation. At the direction of Nightstar management, Centerview calculated Unlevered Free Cash Flow based on the financial projections provided by Nightstar management. Unlevered free cash flow is a non-GAAP financial measure. Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP. Additionally, non-GAAP financial measures as presented in this document may not be comparable to similarly titled measures reported by other companies.

Case B Forecasts

 

    Fiscal years ended December 31 (dollars in millions)  
    2019     2020     2021     2022     2023     2024     2025     2026     2027     2028     2029     2030     2031     2032     2033     2034     2035  

Total Company Sales

    —         —         $15       $157       $416       $633       $648       $505       $300       $129       $47       $21       $12       $8       $7       $6       $6  

Total Gross Profit(1)

    ($0     ($1     $13       $147       $389       $593       $608       $473       $281       $121       $45       $20       $11       $8       $6       $6       $5  

Operating Income(2)

    ($73     ($77     ($73     $48       $293       $487       $504       $377       $206       $79       $26       $12       $5       $2       $1       $0       ($0

Unlevered Free Cash Flow(3)

    ($63     ($65     ($77     $4       $179       $350       $415       $349       $222       $109       $42       $17       $6       $2       $1       $0       ($0

 

(1)

Total Gross Profit, as presented herein, reflects Total Company Sales, less product cost of goods sold, less royalty payments, and less milestone payments.

(2)

Operating Income, as presented herein, reflects Total Gross Profit, less research and development expenses, less sales and marketing expenses, and less general and administrative expenses.

(3)

Unlevered Free Cash Flow, as presented herein, reflects Operating Income, less tax expenses, less changes in net working capital, less capital expenditures, plus research and development tax rebates, and plus depreciation and amortisation. At the direction of Nightstar management, Centerview calculated Unlevered Free Cash Flow based on the financial projections provided by Nightstar management. Unlevered free cash flow is a non-GAAP financial measure. Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP. Additionally, non-GAAP financial measures as presented in this document may not be comparable to similarly titled measures reported by other companies.

Case C Forecasts

 

    Fiscal years ended December 31 (dollars in millions)  
    2019     2020     2021     2022     2023     2024     2025     2026     2027     2028     2029     2030     2031     2032     2033     2034     2035  

Total Company Sales

    —         —         $13       $117       $299       $415       $379       $271       $145       $56       $18       $8       $4       $3       $3       $2       $2  

Total Gross Profit(1)

    ($0     ($1     $12       $108       $278       $386       $352       $250       $134       $52       $17       $7       $4       $3       $2       $2       $2  

Operating Income(2)

    ($73     ($77     ($75     $14       $197       $304       $278       $180       $81       $23       $5       $1       ($2     ($3     ($3     ($3     ($3

Unlevered Free Cash Flow(3)

    ($63     ($65     ($78     ($15     $118       $223       $239       $176       $98       $41       $13       $3       ($1     ($2     ($3     ($3     ($3

 

(1)

Total Gross Profit, as presented herein, reflects Total Company Sales, less product cost of goods sold, less royalty payments, and less milestone payments.

(2)

Operating Income, as presented herein, reflects Total Gross Profit, less research and development expenses, less sales and marketing expenses, and less general and administrative expenses.

(3)

Unlevered Free Cash Flow, as presented herein, reflects Operating Income, less tax expenses, less changes in net working capital, less capital expenditures, plus research and development tax rebates, and plus depreciation and amortisation. At the direction of Nightstar management, Centerview calculated Unlevered Free Cash Flow based on the financial projections provided by Nightstar management. Unlevered free cash flow is a non-GAAP financial measure. Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP. Additionally, non-GAAP financial measures as presented in this document may not be comparable to similarly titled measures reported by other companies.

 

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The inclusion of the above financial projections in this document should not be regarded as an indication that any of Nightstar or its affiliates, advisors or representatives considered, or that Nightstar, Bidder, Bidco or their respective affiliates, advisors or representatives consider such projections to be predictive of actual future events, and they should not be relied upon as such. None of Nightstar, Bidder, Bidco or their respective affiliates, advisors, officers, directors or representatives can give any assurance that actual results will not differ from the projections and none of them undertakes any obligation to update or otherwise revise or reconcile such projections to reflect circumstances existing after the date such projections were generated or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the projections are shown to be in error. None of Nightstar, Bidder or Bidco intends to make publicly available any update or other revisions to the projections described above, except as required by law.

All financial projections are forward-looking statements. These and other forward-looking statements are expressly qualified in their entirety by the risks and uncertainties identified above and the cautionary statements contained in Nightstar’s Form 10-K for the year ended 31 December 2018. Any provisions of the Private Securities Litigation Reform Act of 1995 that may be referenced in this document or in Nightstar’s other filings with the SEC are not applicable to any forward-looking statements made in connection with the Acquisition. Please refer to the discussion entitled “Warning Regarding Forward-Looking Statements.”

In light of the foregoing factors and the uncertainties inherent in these projections, shareholders are cautioned not to place undue, if any, reliance on these projections.

 

7.

Irrevocable undertakings to vote in favour of the Scheme

Bidder has received irrevocable undertakings to vote or procure votes in favour of the resolutions relating to the Scheme at the Nightstar Shareholder Meetings (or in the event that the Acquisition is implemented by way of an Offer, to accept or procure acceptance of such Offer) from the Nightstar Directors, in respect of their entire beneficial holdings, amounting to                  Nightstar Shares, in aggregate, representing approximately          per cent. of the issued share capital of Nightstar as at                  2019, being the last practicable date prior to the publication of this document.

Bidco has also received irrevocable undertakings from Syncona Portfolio Limited and New Enterprise Associates, both Nightstar Shareholders, to vote or procure votes in favour of the resolutions relating to the Scheme at the Nightstar Shareholder Meetings (or in the event that the Acquisition is implemented by way of an Offer, to accept or procure acceptance of such Offer) in respect of their entire beneficial holdings, amounting to                  Nightstar Shares, in aggregate, representing approximately                  per cent. of the issued share capital of Nightstar as at                  2019, being the last practicable date prior to the publication of this document.

The Irrevocable Undertakings given by the Nightstar Directors will cease to be binding if:

 

   

the Acquisition is implemented by way of an Offer and an Offer Document is not posted within 15 Business Days following the date Nightstar has cleared comments received from the SEC, if any, on such document; or

 

   

the Scheme or Offer (as applicable) does not become Effective, lapses or is withdrawn without becoming or being declared unconditional in accordance with its terms; or

 

   

the Scheme or Offer (as applicable) lapses or is withdrawn or otherwise becomes incapable of becoming Effective or has not become Effective on or before the Long Stop Date,

and will remain binding if a higher competing offer is made for Nightstar.

 

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The Irrevocable Undertakings given by Syncona Portfolio Limited and New Enterprise Associates will cease to be binding if:

 

   

the Scheme lapses or is withdrawn in accordance with its terms and Bidder or Bidco publicly confirms that it does not intend to proceed with the Acquisition or to implement the Acquisition by way of an Offer or otherwise;

 

   

the Scheme or Offer (as applicable) does not become Effective by the Long Stop Date; or

 

   

the Implementation Agreement is terminated in accordance with its terms,

and will remain binding if a higher competing offer is made for Nightstar.

The form of the Director’s Irrevocable Undertaking is attached hereto as Annex C and the form of the Shareholder’s Irrevocable Undertaking is attached hereto as Annex D. Further details of these Irrevocable Undertakings are set out in Part V (Additional Information) of this document.

 

8.

Background to the Recommendation

The Nightstar Board, together with Nightstar’s senior management team, regularly reviews Nightstar’s performance, growth prospects and overall strategic direction and evaluates potential opportunities to strengthen Nightstar’s businesses and enhance shareholder value. From time to time these reviews and evaluations have included Nightstar’s strategy as a stand-alone company and potential opportunities for business combinations, strategic partnerships, mergers and acquisitions and other financial and strategic alternatives.

From time to time prior to Nightstar’s initial public offering in September 2017, representatives of Nightstar engaged in preliminary discussions with representatives of Biogen, Company A and Company B regarding potential strategic partnerships with Nightstar. These conversations were primarily focused on the licensing of Nightstar’s product candidate for choroideremia, NSR-REP1.

On 28 June 2018, a representative of Company A emailed David Fellows, Nightstar’s Chief Executive Officer and a member of the Nightstar Board, expressing Company A’s interest in Nightstar’s product candidate for choroideremia and desire to conduct diligence under a non-disclosure agreement. During a subsequent telephone call on 5 July 2018, a representative of Company A indicated to Mr. Fellows that Company A might be interested in a portfolio of Nightstar’s product candidates, including NSR-RPGR, Nightstar’s product candidate for the treatment of XLRP, and requested an in-person or telephonic meeting in August to conduct clinical as well as chemistry, manufacturing and controls (“CMC”) diligence.

On 10 July 2018, Nightstar sent a draft non-disclosure agreement to Company A. The parties negotiated the form over the following days, and the non-disclosure agreement was subsequently executed on 8 August 2018. Neither this non-disclosure agreement, nor the non-disclosure agreements Nightstar entered into with Company B and Company C, contained a stand-still provision.

On 30 July 2018, Senthil Sundaram, Nightstar’s Chief Financial Officer, had a discussion with Daniel Karp, Biogen’s Executive Vice President, Corporate Development, regarding Nightstar and Biogen’s interests in the field of gene therapy.

On 16 August 2018, Mr. Sundaram had a call with a representative of Company A to discuss next steps in its evaluation of a potential transaction. Company A indicated a specific interest in Nightstar’s three most advanced product candidates (NSR-REP1, NSR-RPGR and NSR-ABCA4) and its manufacturing capabilities, and requested a meeting in September with Nightstar management to review the product candidates in greater detail.

On 24 August 2018, David Mott, a non-executive director of Nightstar, had a meeting with a representative of Company B to discuss general strategic topics in biotechnology. During this meeting, the representative of Company B expressed an interest in Nightstar’s portfolio of product candidates and requested a meeting with Mr. Fellows to discuss that interest in more detail.

 

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On 20 September 2018, Mr. Fellows met with a representative of Company B to discuss Company B’s strategic interests in the field of ophthalmology gene therapy.

On 22 September 2018, Nightstar publicly announced preliminary safety and efficacy results from the Phase 1 dose escalation study in the XIRIUS trial for NSR-RPGR, which provided the basis for an early clinical proof of concept to progress to the Phase 2/3 expansion study in the XIRIUS trial that is currently in progress.

On 2 October 2018, Nightstar completed a follow-on equity offering resulting in net proceeds of approximately USD 77.1 million.

On 4 October 2018, Mr. Sundaram met with representatives of Company C at an industry conference, where they discussed Company C’s strategic interests in ophthalmology gene therapy and desire to learn more about Nightstar’s product candidates in a meeting with Nightstar’s management.

Throughout September, October, November and December of 2018, representatives of Nightstar, including members of Nightstar management, held in-person and telephonic meetings with representatives of Company A, Company B and Company C as they conducted due diligence on Nightstar’s product candidates and operations and to discuss the ongoing status of each counterparty’s interest in a potential transaction with Nightstar.

On 24 October 2018, at a special meeting of the Nightstar Board convened by telephone, representatives of Nightstar’s financial advisor, Centerview, discussed with the Nightstar Board market perspectives on Nightstar and a general overview of process considerations relating to third-party expressions of interest in a strategic transaction with Nightstar.

On 4 November 2018, Mr. Fellows received an email from a representative of Company B regarding its interest in engaging in confidential discussions regarding a strategic transaction with Nightstar. After discussion with Bryan Yoon, Nightstar’s General Counsel, Mr. Fellows confirmed with Company B the existence of an effective confidentiality agreement from the interactions between the two companies prior to Nightstar’s IPO.

On 6 November 2018, Mr. Sundaram had a telephone call with Mr. Karp, on which Mr. Karp confirmed that Biogen was open to continuing discussions with Nightstar.

On 7 November 2018, following initial discussions and due diligence by representatives of Company A, Nightstar provided Company A with access to a limited electronic data room to conduct additional diligence.

On 13 November 2018, Nightstar announced the planned initiation of a Phase 2/3 expansion study in the XIRIUS trial of NSR-RPGR in XLRP.

On 16 November 2018, Mr. Fellows met with a representative from Company A to discuss the key assumptions that Company A was using to develop its valuation forecast of Nightstar’s product candidates. Company A confirmed that it was preparing a non-binding offer and inquired regarding Nightstar’s valuation expectations. Mr. Fellows responded that any offer should reflect the fundamental future value of Nightstar’s complete pipeline of product candidates.

On 30 November 2018, representatives of Nightstar’s management met with representatives of Company B at their offices and conducted an in-depth review of Nightstar’s infrastructure and pipeline.

On 5 December 2018, representatives of Company A emailed Mr. Fellows to note that Company A was in the process of finalising its valuation assumptions, and that its proposal would be submitted within the following two weeks.

On 10 December 2018, Mr. Fellows and Mr. Sundaram had a call with representatives of Company B to discuss process and timing considerations. Company B indicated on the call that it would send an indication of interest to Nightstar later in that week and expressed Company B’s desire to move quickly on diligence.

 

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On 12 December 2018, Nightstar received a non-binding proposal from Company B outlining the terms of an acquisition of Nightstar at a price of USD 20.50 per share in cash (representing a premium of 70.1 per cent. over the Closing Price on 12 December 2018), subject to satisfactory completion of due diligence and negotiation of definitive documentation.

On 14 December 2018, the Nightstar Board held a telephonic meeting to review the non-binding proposal received from Company B on 12 December 2018, which was attended by Mr. Fellows, Mr. Sundaram and Mr. Yoon as well as representatives of Skadden and Centerview. The Nightstar Board instructed Nightstar management to provide Company B with access to a limited electronic data room to conduct additional diligence. At the same meeting, the Nightstar Board authorised Nightstar’s management and Centerview to contact Company A, Company C and Biogen to better understand their desire to participate in a targeted evaluation process for a potential acquisition of Nightstar.

On 18 December 2018, a representative of Centerview, at the direction of the Nightstar Board, invited Biogen to participate in Nightstar’s evaluation process with respect to a possible acquisition and Nightstar sent Biogen a draft of a non-disclosure agreement with Nightstar. Subsequently, on 21 December 2018, Biogen and Nightstar entered into a non-disclosure agreement and representatives of Nightstar held a telephonic meeting with representatives of Biogen on which the participants reviewed a confidential management presentation that related to Nightstar’s lead product candidates and CMC capabilities. On the same day, Biogen was granted access to a limited electronic data room.

On 19 December 2018, a representative of Centerview had a telephone call with a representative of Company A, who indicated that Company A was committed to submitting a non-binding indication of interest during the week of 14 January 2019.

On 20 December 2018, at the direction of the Nightstar Board, a representative of Centerview sent a draft non-disclosure agreement to Company C. Company C and Nightstar negotiated the form over the following days, and on 2 January 2019, Company C and Nightstar executed the non-disclosure agreement.

On 21 December 2018, Mr. Fellows received a telephone call from the chief executive officer of Company B, who indicated that Company B had a high degree of interest in acquiring Nightstar and wanted to move quickly to complete a transaction pending access to more detailed information in an electronic data room. On the same day following this call, Company B was provided with access to a limited electronic data room.

Throughout January of 2019, Nightstar continued to hold in-person and telephonic meetings with each of Biogen, Company A, Company B and Company C to address outstanding diligence topics.

On 3 January 2019, Company C was provided with access to a limited electronic data room.

On 7 January 2019, Mr. Fellows and Mr. Sundaram met with representatives of Company A during an industry conference. During that meeting the parties discussed the transaction process, key outstanding areas of Company A’s due diligence and Company A’s goal to provide a written indication of interest during the week of 21 January 2019.

Also on 7 January 2019, Mr. Fellows and Mr. Sundaram met with representatives of Company B, and Mr. Mott separately met with another representative of Company B. These conversations centered on key outstanding areas of Company B’s due diligence.

On 8 January 2019, Mr. Fellows and Mr. Sundaram met with Mr. Karp, Nicholas Scarchilli, Biogen’s Director, Business Development and other Biogen employees during an industry conference to discuss Biogen’s continued interest in a strategic transaction with Nightstar.

On 15 January 2019, representatives of Nightstar met with representatives of Biogen at Biogen’s offices to address its key outstanding areas of due diligence. The following day, on 16 January 2019, representatives of Nightstar and Biogen held a telephone call to conduct CMC diligence.

On 16 January 2019, representatives of Nightstar met with the FDA to review non-clinical, clinical and CMC questions relating to the NSR-RPGR development program.

 

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On 18 January 2019, after representatives of Centerview disclosed to the Nightstar Board certain relationships that Centerview had with potential parties that were likely to be contacted in connection with a potential transaction, representatives of Skadden discussed with the Nightstar Board its duties with respect to potential conflicts of interests. Following this discussion, the Nightstar Board approved the engagement of Centerview as financial adviser in connection with a potential transaction.

During the week of 14 January 2019, at the direction of the Nightstar Board, representatives of Centerview directed each of Biogen, Company A, Company B and Company C to submit indications of interest during the week of 21 January 2019.

On 22 January 2019, Nightstar entered into an engagement letter with Centerview pursuant to which Centerview was formally retained as financial advisor to Nightstar in connection with a potential transaction.

On 23 January 2019, Mr. Scarchilli informed representatives of Centerview that Biogen needed additional time to complete diligence and finalise its proposal. Subsequently, on 25 January 2019, Mr. Sundaram and Mr. Scarchilli had a telephone call on which Mr. Scarchilli indicated that Biogen expected to submit a formal bid during the week of 30 January 2019.

Also on 23 January 2019, a representative of Company C informed representatives of Centerview that Company C would need additional time to prepare and submit a proposal.

On 29 January 2019, Company A informed representatives of Centerview that it was determining next steps internally and that if Company A elected to move forward, it would submit a bid letter by the end of that week.

Also on 29 January 2019, Mr. Fellows, Mr. Sundaram and Dr. Tuyen Ong, Nightstar’s Chief Development Officer, met with representatives of Company B at their offices. Later that day, the same members of Nightstar’s management met representatives of Company C at their offices. The participants from Company B and Company C, at their respective meetings, conducted an in-depth review of Nightstar’s clinical and preclinical programs.

On 30 January 2019, Nightstar received a non-binding proposal from Biogen outlining the terms of an acquisition of Nightstar at a price of USD 19.00-21.00 per share in cash (representing a premium of 47.2-62.7 per cent. over the Closing Price on 30 January 2019), subject to satisfactory completion of due diligence and obtaining requisite approvals.

On 1 February 2019, at the direction of the Nightstar Board, representatives of Centerview discussed Biogen’s proposal with Mr. Scarchilli, stating that the Nightstar Board would likely not agree to a sale in the price range proposed on 30 January.

On 2 February 2019, Mr. Fellows, Mr. Sundaram and Mr. Yoon updated Chris Hollowood, Nightstar’s non-executive Chairman, and Mr. Mott regarding the developments with each of the parties, during which it was agreed that Nightstar would grant expanded data room access to Biogen but that Biogen’s 30 January offer price of USD 19.00-21.00 per share was well below the stand-alone value of the business. Afterwards, Mr. Fellows provided telephonic updates to the other members of Nightstar’s Board.

On 4 February 2019, representatives of Centerview held a telephone call with representatives of Biogen and Biogen’s financial advisor, Goldman Sachs, on which representatives of Centerview relayed the conclusions of the 2 February 2019 discussion of Nightstar Directors and noted that if Nightstar did not receive an attractive proposal, the Nightstar Board considered remaining a stand-alone company to be a promising alternative. Later in the day on 4 February, Biogen was granted access to a second electronic data room containing a comprehensive set of confidential materials.

Also on 4 February 2019, Company A communicated to representatives of Centerview that it did not wish to pursue an acquisition transaction with Nightstar at that time, but it expressed an interest in potentially pursuing a strategic partnership involving a collaboration and license arrangement with Nightstar.

 

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Also on 4 February 2019, Company C communicated to representatives of Centerview that it did not desire to pursue an acquisition transaction at such time.

On 5 February 2019, Mr. Fellows had a telephone call with a representative of Company A to further discuss Company A’s interest in pursuing a strategic partnership.

Also on 5 February 2019, Company B communicated to representatives of Nightstar that it did not wish to pursue an acquisition transaction with Nightstar at that time, but it also expressed an interest in possibly pursuing a strategic partnership.

On 7 February 2019, at the direction of the Nightstar Board, representatives of Centerview delivered a bid process letter to Biogen.

Also on 8 February 2019, Mr. Fellows spoke to a representative of Company B requesting details around a potential strategic partnership between the parties.

On 9 February 2019, a representative of Company A and Mr. Fellows discussed potential terms for a possible strategic collaboration. Mr. Fellows responded that he would discuss the proposal with the Nightstar Board.

Throughout February 2019, Biogen continued to perform due diligence on Nightstar, including reviewing materials made available in Nightstar’s electronic data room and holding telephonic and in-person meetings with members of Nightstar’s management and certain Nightstar employees.

On 11 February 2019, representatives of Biogen provided an extensive diligence request list to representatives of Nightstar. That list was subsequently updated by Biogen throughout the month of February.

On 12 February 2019, representatives of Nightstar’s legal M&A counsel, Skadden, sent an initial draft Implementation Agreement to representatives of Biogen’s legal counsel, Ropes, along with drafts of the Announcement and the Irrevocable Undertakings.

On 18 and 19 February 2019, a representative of Company A and Mr. Fellows discussed a revised set of terms for a potential strategic collaboration.

Between 20 February and 3 March 2019, representatives of Nightstar and representatives of Company B exchanged communications seeking to set a meeting to discuss a potential strategic collaboration.

On 21 February 2019, representatives of Centerview and Goldman Sachs discussed the process and valuation for a potential transaction. Representatives of Centerview indicated, at the direction of the Nightstar Board, that Nightstar remained focused on announcing a transaction on 4 March 2019 and that the Nightstar Board would not find a modest increase to Biogen’s prior proposal acceptable.

On 22 February 2019, a representative of Company A emailed Mr. Fellows requesting on update on Nightstar’s interest in a potential collaboration. Mr. Fellows replied with a collaboration framework, which the representative of Company A responded with a number of clarifying questions.

On 25 February 2019, representatives of Ropes sent a revised draft Implementation Agreement to representatives of Skadden. Following delivery of the draft Implementation Agreement, representatives of Centerview held a call with representatives of Biogen and Goldman Sachs to discuss process. Representatives of Centerview stated that its prior discussions regarding guidance on timing and price had not changed.

On 26 February 2019, the Nightstar Board held a regularly scheduled meeting. Following adjournment of the meeting, the Nightstar Board convened a special meeting that was attended by Mr. Fellows, Mr. Sundaram and Mr. Yoon as well as representatives of Skadden and Centerview. During the special meeting, the Nightstar Board reviewed certain financial projections that had been prepared by Nightstar’s management and discussed the valuation implied by such projections. Additionally, representatives of Skadden reviewed with the Nightstar Board the revised terms of the Implementation Agreement as proposed

 

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by Ropes, and representatives of Centerview reviewed with the Nightstar Board strategic considerations and next steps in responding to the Implementation Agreement markup. Also at this meeting, the Nightstar Board received an update from Nightstar’s management regarding the status of discussions with Company A with respect to a possible strategic partnership between the parties. Later on the same day, representatives of Centerview held a call with representatives of Goldman Sachs to discuss process. Representatives of Centerview stated that its prior discussions regarding timing and price had not changed and recent transaction premiums supported a higher price.

Also on 26 February 2019, representatives of Skadden sent a draft of the Disclosure Schedules to the Implementation Agreement to representatives of Ropes. The parties negotiated and revised the Disclosure Schedules during the period between this initial delivery and finalisation of the Implementation Agreement on 3 March 2019.

On 27 February 2019, representatives of Nightstar, Skadden, Biogen and Ropes spoke by telephone regarding open issues in the Implementation Agreement. On that same day, Skadden sent a revised draft of the Implementation Agreement to Ropes.

On 1 March 2019, Nightstar received a revised proposal from Biogen that had been approved by Biogen’s Board outlining the terms of an acquisition of Nightstar at a price of USD 25.00 per share in cash (representing a premium of 64.9 per cent. to the Closing Price on 1 March 2019). Immediately after Biogen’s revised proposal was delivered, Ropes sent a revised draft of the Implementation Agreement to Skadden.

Thereafter on 1 March 2019, the Nightstar Board held a special meeting by telephone that was attended by Mr. Fellows, Mr. Sundaram and Mr. Yoon as well as representatives of Skadden and Centerview. The Nightstar Board reviewed the terms of Biogen’s revised proposal, and representatives of Skadden reviewed with the Nightstar Board the revised terms of the Implementation Agreement as proposed by Ropes. Following this meeting, representatives of Centerview, at the direction of the Nightstar Board, had a call with representatives of Goldman Sachs on which representatives of Centerview conveyed that the price proposed in Biogen’s proposal of 1 March 2019 was not sufficient for the Nightstar Board to agree to a transaction and that remaining independent or entering into a strategic collaboration agreement remained viable options, so Biogen would need to increase its proposal to reach an agreement. At the direction of the Nightstar Board, representatives of Centerview also contacted Mr. Karp and communicated that Biogen’s proposal was inadequate and a price of USD 26.50 per share would be compelling to the Nightstar Board.

Also on 1 March 2019, a representative of Company A requested a call with Mr. Fellows to discuss further potential collaboration terms. A representative of Company A also contacted Dr. Hollowood to inquire further about the Board’s interest in a strategic partnership. Dr. Hollowood responded by email the same day.

Throughout the period of 1 March to 3 March 2019, representatives of Ropes and representatives of Skadden discussed and exchanged comments to the draft Implementation Agreement and related transaction documents.

The Nightstar Board held a special meeting on 2 March 2019 by telephone that was attended by Mr. Fellows, Mr. Sundaram and Mr. Yoon as well as representatives of Skadden and Centerview. During that meeting Skadden delivered an update to the Nightstar Board regarding the status of negotiations on the Implementation Agreement and Disclosure Schedules thereto.

Also on 2 March 2019, Nightstar received a revised proposal from Biogen on substantially identical terms to the proposal of 1 March 2019 at a price of USD 25.50 per share in cash.

Also on 2 March 2019, Mr. Fellows contacted a representative of Company A to progress discussions around a potential strategic collaboration during the week of 4 March 2019.

Also on 3 March 2019, following further negotiations between representatives of Skadden and representatives of Ropes, the parties agreed on the final form of Implementation Agreement. In addition, the parties finalised the Announcement and Disclosure Schedules to the Implementation Agreement.

 

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Also on 3 March 2019, the Nightstar Board held a special meeting to consider Biogen’s revised proposal that was attended by representatives of Skadden, and, for portions of the meeting, Mr. Fellows, Mr. Sundaram and Mr. Yoon and representatives of Centerview. Representatives of Skadden reviewed with the Nightstar Board their fiduciary duties applicable to a sale of Nightstar and described certain key legal terms of the Implementation Agreement. Representatives of Centerview reviewed with the Nightstar Board Centerview’s financial analysis of the proposed consideration of USD 25.50 per share in cash, and rendered an oral opinion to the Nightstar Board, which was subsequently confirmed by delivery of a written opinion dated such date, that, as of such date and based upon and subject to various assumptions made, procedures followed, matters considered and qualifications and limitations upon the review undertaken in preparing its opinion, the USD 25.50 per share in cash to be paid to the holders of the Nightstar Shares (other than as specified in such opinion) pursuant to the Implementation Agreement was fair, from a financial point of view, to such holders. For a detailed discussion of Centerview’s opinion, please see the section entitled “Opinion of Nightstar’s Financial Advisor” in paragraph 5 of Section I (Letter from the Chairman of Nightstar Therapeutics plc). The written opinion delivered by Centerview is attached to this document as Annex B.

Following additional discussion and consideration of the Implementation Agreement and the Acquisition, including a discussion of the comparative value that Nightstar Shareholders might realise from Nightstar continuing as a stand-alone business, the Nightstar Board unanimously (i) approved the Implementation Agreement and declared that the Implementation Agreement, the Acquisition and the other transactions contemplated by the Implementation Agreement are fair and reasonable and are likely to promote the success of Nightstar for the benefit of its shareholders, having had regard to the interests of other stakeholders, and (ii) resolved to recommend that Nightstar’s shareholders vote in favour of the General Meeting Resolution.

Later in the day on 3 March 2019, representatives of Nightstar telephoned representatives of Biogen to inform Biogen that the Nightstar Board had unanimously approved the proposed transaction with Biogen. Thereafter on 4 March 2019, Nightstar, Bidder and Bidco executed the Implementation Agreement.

Before the opening of trading on Nasdaq on 4 March 2019, Nightstar and Biogen issued the Announcement to announce the execution of the Implementation Agreement.

On      March 2019, Nightstar filed this document.

 

9.

Reasons for the Recommendation

In evaluating the Implementation Agreement, the Acquisition and the other transactions contemplated by the Implementation Agreement, the Nightstar Board consulted with the senior management of Nightstar, and representatives of Centerview and Skadden. In the course of making the determination that the Implementation Agreement, the Acquisition and the other transactions contemplated by the Implementation Agreement are fair and reasonable and are likely to promote the success of Nightstar for the benefit of its shareholders, having had regard to the interests of other stakeholders, and to recommend that Nightstar’s shareholders vote in favour of the General Meeting Resolutions, the Nightstar Board considered numerous reasons, including the following material reasons and benefits of the Acquisition:

 

   

Acquisition Price; Premium to the Trading Price of Nightstar Shares. The terms of the Acquisition represent a premium of approximately:

 

   

68.2 per cent. to the Closing Price per Nightstar Share of USD 15.16 on 1 March 2019 (being the last practicable date prior to the date of the Announcement); and

 

   

69.8 per cent. to the 30 trading day volume weighted average price per Nightstar Share of USD 15.02 for the period from 17 January 2019 to 1 March 2019 (being the last practicable date prior to the date of the Announcement).

 

   

Cash Consideration; Certainty of Value. The Nightstar Board considered the fact that the form of consideration payable to Nightstar’s shareholders will be cash, which will provide Nightstar’s shareholders

 

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with certainty of value and immediate liquidity, while reducing the risks associated with the development, regulatory approval and commercialisation of Nightstar’s products, as well as the market and long-term business risks related to Nightstar’s future growth prospects, including those risks described herein and those set forth in Nightstar’s Form 10-K for the year ended 31 December 2018. These risks include risks related to potential difficulties in obtaining U.S. and non-U.S. regulatory approvals for Nightstar’s products, including from the U.S. Food and Drug Administration, European Medicines Agency, potential difficulties and delays in clinical trials of product candidates, regulatory developments involving Nightstar’s current and future products and product candidates, and risks related to effectively commercialising Nightstar’s products in the U.S. and elsewhere in the world.

 

   

No Financing Condition. The Nightstar Board considered the fact that Bidder and Bidco would have sufficient cash resources to pay the amounts required to be paid under the Implementation Agreement without obtaining third-party financing and that the Acquisition is not subject to a financing condition.

 

   

Strategic Alternatives. The Nightstar Board considered the potential benefits of exploring alternative strategic transactions, including business combinations, partnerships, collaborations, and licensing arrangements, with other potential counterparties and the likelihood that any such parties would engage in such a transaction with Nightstar on the same or a similar timeframe as Bidder and with a value and contractual terms and conditions superior to those contained in the Implementation Agreement. The Nightstar Board considered, after discussions with representatives of Centerview and senior management, that (i) a broader outreach to other strategic counterparties could delay a potential transaction and cause significant disruption at a critical stage of Nightstar’s development, putting at risk a transaction with Bidder at the price and terms negotiated, (ii) management had spoken with other potential counterparties and that such potential counterparties had not submitted a final proposal regarding a strategic transaction with Nightstar and (iii) should any potential counterparty be interested in pursuing a transaction on terms more favourable to Nightstar and its shareholders than those contemplated by the Implementation Agreement, such counterparty would be able to pursue such a transaction despite Parent and Nightstar having entered into the Implementation Agreement. The Nightstar Board also considered the possibility of continuing as an independent company. Based on the value, timing, risk allocation and other terms and conditions negotiated with Bidder, the Nightstar Board ultimately determined that the Acquisition is fair and reasonable and is likely to promote the success of Nightstar for the benefit of its shareholders, having had regard to the interests of other stakeholders.

 

   

Centerview’s Fairness Opinion and Related Analysis. The opinion of Centerview rendered to the Nightstar Board on 3 March 2019, which was subsequently confirmed by delivery of a written opinion dated such date, that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the USD 25.50 per share in cash to be paid to the holders of the Nightstar Shares (other than as specified in such opinion) pursuant to the Implementation Agreement was fair, from a financial point of view, to such holders as more fully described below in the section entitled “Opinion of Nightstar’s Financial Advisor” in paragraph 5 of Part I (Letter from the Chairman of Nightstar Therapeutics plc). The written opinion delivered by Centerview is attached to this document as Annex B.

 

   

Negotiation Process. The Nightstar Board considered the fact that the terms of the Acquisition were the result of robust negotiations conducted by Nightstar with the knowledge and at the direction of the Nightstar Board and with the assistance of independent financial and legal advisors. The Nightstar Board also considered the enhancements that Nightstar and its advisors were able to obtain as a result of robust negotiations with Biogen, including the increase in the valuation suggested by Biogen from the time of its initial expression of interest to the end of the negotiations and the inclusion of provisions in the Implementation Agreement that increase the likelihood of completing the Acquisition.

 

   

Reputation and Resources of Biogen. The Nightstar Board considered Biogen’s global commercial capabilities as well as its extensive experience and resources.

 

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Existing Resources. The Nightstar Board considered the fact that Nightstar will likely require additional capital in order to complete the remaining clinical development for its product candidates and potentially commercialise these product candidates, as well as fund its other ongoing operations. The Nightstar Board also took into consideration that, while Nightstar may seek additional funding through future debt and equity issuances, financing or additional collaborations or strategic partnerships, any such fundraising could be highly dilutive to Nightstar’s existing shareholders, might be available only on unfavorable terms, or might not be available at all.

 

   

Industry and Economy. The Nightstar Board considered the current state of the economy and assessed the stage of the pharmaceutical industry cycle, financing markets, uncertainty in pricing and uncertainty surrounding forecasted economic conditions, both in the near term and the long term, generally and within Nightstar’s industry in particular.

 

   

Product Development and Regulatory Risks. The Nightstar Board considered the status and prospects for Nightstar’s current pipeline. The Nightstar Board considered the risks inherent in the research, development, regulatory review and potential future commercialisation of these product candidates, and the risks related to market acceptance of Nightstar’s product candidates, if approved, and other factors potentially impacting the revenues and profitability of biotechnology and pharmaceutical products generally.

 

   

Certain Forecasts. The Nightstar Board considered certain forecasts for Nightstar prepared by senior management of Nightstar, which reflected an application of various assumptions of Nightstar’s senior management. For further discussion, see the section entitled “Certain Forecasts” in paragraph 6 of Part I (Letter from the Chairman of Nightstar Therapeutics plc).

 

   

Likelihood of Completion. The Nightstar Board considered that the potential for closing in a relatively short timeframe could reduce the amount of time in which Nightstar’s business would be subject to potential disruption and uncertainty pending closing. The Nightstar Board also considered the likelihood that the Acquisition would be completed based on, among other things (not in any relative order of importance):

 

   

the fact that there is no financing condition to the completion of the Acquisition;

 

   

the fact that there are not expected to be significant antitrust or other regulatory impediments, other than review pursuant to the U.S. HSR Act and German antitrust approval;

 

   

the business reputation, capabilities and financial condition of Biogen, including Biogen’s ability to finance to fund the Consideration with cash, and the Nightstar Board’s perception that Biogen is willing and able to devote the resources necessary to complete the Acquisition in an expeditious manner; and

 

   

the availability of the remedy of specific performance to Nightstar under the Implementation Agreement, in the event of breaches by Bidder or Bidco.

 

   

Terms of the Implementation Agreement. The Nightstar Board considered the terms and conditions of the Implementation Agreement, including:

 

   

the right of Nightstar, under certain circumstances and subject to certain conditions, to furnish non-public information to, and to participate in discussions with, third parties in response to certain proposals relating to alternative acquisition transactions;

 

   

the right of the Nightstar Board, under certain circumstances and subject to certain conditions, to withdraw or modify its recommendation in favor of the Acquisition, or to terminate the Implementation Agreement, if the Nightstar Board determines, in good faith, after consultation with outside counsel and financial advisors, that Nightstar has received an alternative acquisition proposal that constitutes a superior proposal;

 

   

the belief of the Nightstar Board that the approximately USD 8.8 million compensatory payment, representing 1 per cent. of the equity value of Nightstar based on the consideration of USD 25.50 per share, and the requirement that a superior proposal (for purposes of the Implementation Agreement)

 

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include a price per Nightstar Share that is more than 7.5 per cent. above the Consideration, would not unreasonably deter another party with the strategic interest and financial capability from making a competing proposal for Nightstar; and

 

   

the conditions to the completion of the Acquisition, including the fact that the completion of the Acquisition is conditioned upon a vote of at least 75 per cent. in value and a majority in number of the Nightstar Shareholders, which vote would demonstrate strong support by Nightstar Shareholders for the Acquisition.

 

   

Irrevocable Undertaking. The Nightstar Board also considered the Irrevocable Undertakings Bidder received from each of the Nightstar Directors in respect of their entire beneficial holdings, amounting to              Nightstar Shares, representing approximately              per cent. of the issued share capital of Nightstar, and from Syncona Portfolio Limited and New Enterprise Associates in respect of their entire beneficial holdings, amounting to              Nightstar Shares, representing approximately              per cent. of the issued share capital of Nightstar. Pursuant to the Irrevocable Undertakings, the Nightstar Directors and Syncona Portfolio Limited and New Enterprise Associates have agreed to vote in favor of the Acquisition, demonstrating substantial support for the Acquisition from Nightstar Directors and Nightstar Shareholders.

In reaching its determinations and recommendations described above, the Nightstar Board also considered the following potentially negative reasons:

 

   

No Participation in Nightstar’s Future Growth or Earnings. The Nightstar Board considered that if the Acquisition is completed, Nightstar Shareholders will receive the Consideration in cash and will no longer have the opportunity to participate in any future earnings or growth of Nightstar or the combined company or benefit from any potential future appreciation in the values of the Nightstar Shares, including any value that could be achieved if Nightstar engages in future strategic or other transactions. However, Biogen is a public company and Nightstar Shareholders would have the choice to invest in Biogen separately.

 

   

Disruption of Nightstar’s Business. The Nightstar Board considered the effect of a public announcement of the Acquisition on Nightstar’s operations, stock price and employees and its ability to attract and retain key management, research and development and other personnel while the Acquisition is pending, and the potential adverse effects on the financial and other results of Nightstar.

 

   

Non-Solicitation Covenant. The Nightstar Board considered that the Implementation Agreement imposes restrictions on Nightstar’s solicitation of acquisition proposals from third parties and requires Nightstar to provide Biogen with an opportunity to propose adjustments to the Implementation Agreement prior to Nightstar being able to terminate the Implementation Agreement and accept a Superior Proposal (as defined in the Implementation Agreement), although the Nightstar Board believes this would not preclude another potential acquiror from submitting a proposal to acquire Nightstar. The Nightstar Board also considered that a superior proposal must be a proposal for 80 per cent. or more of the voting power and economic rights or all or substantially all of Nightstar’s assets, which proposal the Nightstar Board has determined, in good faith, after consultation with its outside counsel and financial advisors, (i) would result in greater value to Nightstar Shareholders from a financial point of view than the Acquisition, including a price per Nightstar Share payable in cash that is more than 7.5 per cent. above the Consideration, and (ii) that is reasonably likely to be completed relative to the Acquisition.

 

   

Compensatory Payment. The Nightstar Board considered the fact that Nightstar must pay Bidder a compensatory payment of approximately USD 8.8 million if the Acquisition is terminated under certain circumstances, including to accept a superior proposal, and that the amount of the compensatory payment was reasonable, would not likely deter competing bids and would not likely be required to be paid unless Nightstar entered into a more favorable transaction.

 

   

Interim Operating Covenants. The Implementation Agreement imposes restrictions on the conduct of Nightstar’s business prior to completion of the Acquisition, requiring Nightstar to conduct its business in the

 

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ordinary course and refrain from taking specified actions. The Nightstar Board considered that such restrictions may delay or prevent Nightstar from pursuing business strategies or opportunities that may arise pending completion of the Acquisition.

 

   

Risks the Acquisition May Not Be Completed. Although Nightstar expects that the Acquisition will be completed, there can be no assurance that all conditions to the parties’ obligations will be satisfied. The Nightstar Board considered the risk that (i) conditions to the parties’ obligations to complete the Acquisition may not be satisfied, (ii) completion may be unduly delayed or (iii) the Acquisition may not otherwise be completed despite the parties’ efforts. The Nightstar Board also considered the potential resulting disruptions to Nightstar’s business in the event the Acquisition is not completed, including the diversion of management and employee attention, employee attrition and the effect on vendors, contract research organisations, suppliers and others that do business with Nightstar, and the potential effect on the trading price of the Nightstar Shares.

 

   

Transaction Costs. Significant costs have been and will continue to be incurred in connection with negotiating and entering into the Implementation Agreement and completing the Acquisition, and substantial time and effort of management will be required, potentially resulting in disruptions to the operation of Nightstar’s business.

 

   

Potential Conflicts of Interest. The Nightstar Board considered the potential conflict of interest created by the fact that Nightstar’s executive officers and directors have financial interests in the transactions contemplated by the Implementation Agreement, which may be different from or in addition to those of other shareholders, as more fully described in the section entitled “Interests of Nightstar Non-Employee Directors and Executive Officers” in paragraph 4 of Part V (Additional Information).

The foregoing discussion of the reasons considered by the Nightstar Board is not intended to be exhaustive, but rather includes the principal reasons considered by the Nightstar Board. The Nightstar Board collectively reached the conclusion to approve the Implementation Agreement, the Acquisition and the other transactions contemplated by the Implementation Agreement in light of the various reasons described above and other reasons that the members of the Nightstar Board believed were appropriate. The Nightstar Board did not assign relative weights to the foregoing reasons or otherwise determine that any one reason was of greater or lesser importance. Rather, the Nightstar Board viewed its positions and recommendation as being based on the totality of information presented to, and considered by, the Nightstar Board. In considering the reasons discussed above, individual directors may have given different weights to different reasons.

 

10.

Nightstar Equity Awards

On the Effective Date, all outstanding stock options, restricted shares and restricted stock units awarded pursuant to the 2017 Equity Incentive Plan will be cancelled and cease to be outstanding, and the holder will be entitled to receive a payment equal to the Consideration with respect to each Nightstar Share subject to the Award less any applicable exercise or purchase price and applicable withholdings.

Following the Effective Date, any Nightstar Shares subject to or issued in connection with the vesting or exercise of any Pre-IPO Equity Award will be immediately acquired by Bidco from the relevant Award holder in exchange for the Consideration for each Nightstar Share so acquired.

Awards held by the Nightstar Directors, which consist of stock options and restricted shares, will be treated in the same way as the Awards held by other participants in the Nightstar Share Schemes.

Any Pre-IPO Equity Awards that were deferred upon the termination of the holder’s employment will be repurchased by Nightstar prior to the Effective Date for a total payment of GBP 0.01 to the holder of such Deferred Shares, pursuant to the terms of the applicable Vesting Agreement.

Any Consideration payable to Award holders in the Nightstar Share Schemes will be paid to them in accordance with the terms of the Scheme, subject to any arrangements that are required to be put in place to effect the payment of any income tax and/or social security contributions that arise in connection with the Awards.

 

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Award holders under the Nightstar Share Schemes will be written to separately to inform them of the effect of the Scheme on their rights under the Nightstar Share Schemes, including any appropriate proposals being made to them about their rights. Further details are set out in paragraph 9 of Part II (Explanatory Statement) of this document.

 

11.

The Scheme and the Nightstar Shareholder Meetings

It is intended that the Acquisition will be implemented by way of a Court-sanctioned scheme of arrangement between Nightstar and the Nightstar Scheme Shareholders, made under Part 26 of the Companies Act 2006. The procedure involves, amongst other things, an application by Nightstar to the Court to sanction the Scheme, in consideration for which the Nightstar Scheme Shareholders will receive the Consideration. The purpose of the Scheme is to provide for Bidco to become the owner of the entire issued and to be issued share capital of Nightstar.

The Scheme will only become Effective if, amongst other things, the following events occur on or before the Long Stop Date:

 

   

a resolution to approve the Scheme is passed by a majority in number representing not less than 75 per cent. in value of Nightstar Scheme Shareholders, present and voting, whether in person or by proxy, at the Court Meeting;

 

   

the Special Resolution is passed by the requisite majority of Nightstar Shareholders at the General Meeting;

 

   

the Scheme is sanctioned (with or subject to any modification, addition or condition which Nightstar and Bidder may agree and which the Court approves) by the Court;

 

   

a copy of the Court Order is delivered to the Registrar of Companies; and

 

   

all other Conditions to the Acquisition are either fulfilled or (if capable of waiver) waived.

The Court Meeting and the General Meeting are scheduled to be held on              2019.

Upon the Scheme becoming Effective: (i) it will be binding on all Nightstar Scheme Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the General Meeting (and if they attended and voted, whether or not they voted in favour); and (ii) share certificates in respect of Nightstar Shares will cease to be valid and entitlements to Nightstar Shares held within the CREST system will be cancelled. The Consideration will be despatched by Bidder to Nightstar Scheme Shareholders as soon as practicable after the Effective Date and in any event within 14 days of the Effective Date.

It is important that, for the Court Meeting, as many votes as possible are cast so that the Court may be satisfied that there is a fair representation of opinion of the Nightstar Scheme Shareholders. You are therefore urged to complete and return your Forms of Proxy, make an electronic appointment of a proxy or submit a proxy vote via CREST as soon as possible.

If the Scheme does not become Effective by the Long Stop Date, it will lapse and the Acquisition will not proceed (unless extended with the agreement of Bidder, Bidco, Nightstar and, if required, the approval of the Court).

The Scheme will be governed by English law and will be subject to the jurisdiction of the courts of England and Wales. The Scheme is not subject to U.S. law.

Further details of the Scheme and the Nightstar Shareholder Meetings are set out in paragraph 10 of Part II (Explanatory Statement) of this document.

 

12.

Nightstar ADSs

Nightstar ADS Holders should refer to paragraph 15 of Part II (Explanatory Statement) of this document.

 

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13.

Delisting and re-registration

Prior to the Scheme becoming Effective, a request will be made by Nightstar to Nasdaq to suspend trading of, and de-list, the Nightstar ADSs on Nasdaq, to take effect on, or shortly after, the Effective Date. Subsequently, the Nightstar ADSs and Nightstar Shares will be deregistered under the U.S. Exchange Act.

As soon as practicable after the Effective Date and after the cancellation of the listing and admission to trading of the Nightstar ADSs on Nasdaq, it is intended that Nightstar will be re-registered as a private limited company under the relevant provisions of the Companies Act 2006.

 

14.

United Kingdom and United States taxation

A summary of certain United Kingdom and United States taxation consequences of the implementation of the Scheme for certain Nightstar Shareholders is set out in paragraph 6 of Part V (Additional Information) of this document.

That summary does not constitute tax advice and does not purport to be a full analysis of all potential United Kingdom and United States tax consequences of the Acquisition. Nightstar Shareholders who are in any doubt about their taxation position, or who are subject to taxation in a jurisdiction outside of the United Kingdom and the United States are strongly advised to contact an appropriate independent professional adviser immediately.

 

15.

Overseas Shareholders

Overseas Shareholders should refer to paragraph 17 of Part II (Explanatory Statement) of this document for further details.

 

16.

Actions to be taken

Your attention is drawn to paragraph 19 of Part II (Explanatory Statement) of this document, which explains the actions you should take in relation to the Acquisition and the Scheme.

 

17.

Further information

Your attention is drawn to Part II (Explanatory Statement) of this document (being the Explanatory Statement made in compliance with section 897 of the Companies Act 2006), which gives further details about the Acquisition and the terms of the Scheme that are set out in full at the end of this document. Please note that reading the information in Part II (Explanatory Statement) is not a substitute for reading the remainder of this document.

You are advised to read the whole of this document and not just to rely on the summary information in this letter.

Your attention is further drawn to the information contained in Part III (Conditions to and Further Terms of the Scheme and the Acquisition), Part V (Additional Information), Part VIII (The Scheme of Arrangement) and to the expected timetable of principal events set out on page xiv of this document.

 

18.

Recommendation

For the reasons set out in this document, the Nightstar Directors, who have been so advised by Centerview as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing advice to the Nightstar Directors, Centerview has taken into account the commercial assessments of the Nightstar Directors. Centerview’s advice to the Nightstar Directors is set out in its written opinion, dated 3 March 2019, attached hereto as Annex B and which also sets out in full the relevant assumptions and qualifications to such advice.

 

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Accordingly, the Nightstar Directors believe that the terms of the Acquisition, including the terms of the Implementation Agreement, are fair and reasonable and that proceeding with the Acquisition is likely to promote the success of Nightstar for the benefit of its shareholders, having had regard to the interests of other stakeholders, and unanimously recommend that Nightstar Scheme Shareholders vote in favour of the Scheme at the Court Meeting and the Special Resolution to be proposed at the General Meeting, as they have irrevocably undertaken to do in respect of their own holdings of, in aggregate,                  Nightstar Shares (representing approximately                  per cent. of the issued ordinary share capital of Nightstar on                  2019 (being the last practicable date prior to the publication of this document)).

Yours faithfully,

Chris Hollowood

Chairman

 

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PART II

EXPLANATORY STATEMENT

(in compliance with section 897 of the Companies Act 2006)

                 2019

RECOMMENDED ACQUISITION OF

NIGHTSTAR THERAPEUTICS PLC BY BIDCO

A WHOLLY-OWNED SUBSIDIARY OF BIDDER

 

1.

Introduction

On 4 March 2019, the Nightstar Board and Biogen announced that they had agreed to the terms of a recommended cash Acquisition of Nightstar by Bidco (a newly-incorporated company and wholly-owned subsidiary of Bidder) pursuant to which Bidco will acquire the entire issued and to be issued share capital of Nightstar. The Acquisition is to be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006, which requires the approval of Nightstar Shareholders and the sanction of the Court. The Acquisition remains subject to the terms and conditions set out in Part III (Conditions to and Further Terms of the Scheme and the Acquisition).

Your attention is drawn to the letter from the Chairman of Nightstar, Chris Hollowood, set out in Part I (Letter from the Chairman of Nightstar Therapeutics plc) of this document, which forms part of this Explanatory Statement. That letter contains, amongst other things, information on the background to and reasons for the recommendation and the unanimous recommendation by the Nightstar Board to Nightstar Shareholders to vote in favour of the resolutions to approve and implement the Acquisition to be proposed at the Nightstar Shareholder Meetings.

Your attention is also drawn to the information contained in Part III (Conditions to and Further Terms of the Scheme and the Acquisition) and Part V (Additional Information) of this document. The Scheme is set out in full in Part VIII (The Scheme of Arrangement) at the end of this document.

Nightstar retained Centerview which acted, with its affiliate Centerview UK, as financial advisor to the Nightstar Board in connection with the proposed Acquisition. The purpose of this Explanatory Statement is to explain the terms of the Acquisition and to provide you with other relevant information.

Nightstar Shareholders should read the whole of this document before deciding whether or not to vote in favour of the Scheme at the Court Meeting and the Special Resolution to be proposed at the General Meeting.

 

2.

Summary of the terms of the Acquisition

The Acquisition is to be effected by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006, which requires the approval of Nightstar Shareholders at the Court Meeting, the passing of the Special Resolution at the General Meeting and the sanction of the Court.

In accordance with the terms of the Acquisition, which will be subject to the Conditions and further terms set out in Part III (Conditions to and Further Terms of the Scheme and the Acquisition) of this document, Nightstar Scheme Shareholders at the Scheme Record Time will be entitled to receive:

For each Nightstar Scheme Share,                      USD 25.50 in cash

Based on the exchange rate of USD                 : GBP 1 at 4.00 p.m. on              (being the last practicable date prior the date of this document):

 

   

the terms of the Acquisition valued each Nightstar Share at GBP              per share and Nightstar’s entire issued and to be issued share capital at approximately GBP                  million (USD              million); and

 

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the terms of the Acquisition represent a premium of approximately:

 

   

68.2 per cent. to the Closing Price per Nightstar Share of USD 15.16 on 1 March 2019 (being the last practicable date prior to the date of the Announcement); and

 

   

69.8 per cent. to the 30 trading day volume weighted average price per Nightstar Share of USD 15.02 for the period from 17 January 2019 to 1 March 2019 (being the last practicable date prior to the date of the Announcement).

The Nightstar Shares will be acquired by Bidco with full title guarantee, fully paid and free from all liens, equitable interests, charges, encumbrances, rights of pre-emption and any other third party rights or interests whatsoever and together with all rights existing at the date of this document or thereafter attaching thereto, including (without limitation) the right to receive and retain, in full, all dividends and other distributions (if any) declared, made or paid or any other return of capital (whether by way of reduction of share capital or share premium account or otherwise) made on or after the Effective Date in respect of the Nightstar Shares.

 

3.

Background to, and reasons for, the Acquisition

Biogen is focused on discovering, developing, and delivering worldwide innovative therapies for people living with serious neurological and neurodegenerative diseases. Nightstar is a gene therapy company focused on developing novel treatments for patients suffering from rare inherited retinal diseases that would otherwise lead to blindness.

Nightstar’s lead asset is NSR-REP1 for the treatment of choroideremia (CHM), a rare, degenerative, X-linked inherited retinal disorder, which leads to blindness and has no approved treatments. CHM primarily affects males and is caused by loss of function in the CHM gene which encodes the Rab escort protein-1 (REP-1). The REP-1 protein plays a role in intracellular protein trafficking, and loss of function in the CHM gene leads to abnormal intracellular protein trafficking and impaired elimination of waste products from the retinal pigment epithelium and photoreceptors. Initially, patients with CHM experience poor night vision, and over time progressive visual loss ultimately leads to complete blindness.

NSR-REP1 is comprised of an AAV vector administered by subretinal injection which provides a functioning CHM gene and expression of the REP-1 protein to restore membrane trafficking and thereby slow, stop, or potentially reverse the decline in vision. Data from the Phase 1/2 trial of NSR-REP1 demonstrated potentially meaningful slowing of decline in visual acuity as compared to natural history as well as signs of improved visual acuity in some patients. NSR-REP1 is currently being evaluated in the ongoing Phase 3 STAR trial with data expected in the second half of 2020.

Nightstar’s second clinical program is NSR-RPGR for the treatment of XLRP, which is also a rare inherited retinal disease primarily affecting males with no approved treatments. XLRP is characterised by mutations in the retinitis pigmentosa GTPase regulator (RPGR) gene leading to a lack of active protein transport in photoreceptors. This abnormality leads to loss of the photoreceptor cells, resulting in retinal dysfunction by adolescence and early adulthood, progressing to legal blindness when patients are in their 40s.

NSR-RPGR is comprised of an AAV vector administered by subretinal injection which provides a functioning RPGR gene and thus expression of the RPGR protein, which is critical for protein transport in photoreceptors. The restoration of photoreceptor function is intended to slow, stop, or potentially reverse the decline in vision. Phase 1/2 data from the dose escalation portion of the XIRIUS trial for NSR-RPGR demonstrated an increase in central retinal sensitivity. The Phase 2/3 dose expansion portion of the XIRIUS trial is currently ongoing.

Nightstar’s preclinical pipeline includes NSR-ABCA4 for Stargardt disease and potential programs targeting Best vitelliform macular dystrophy (Best disease) and other genetic forms of retinitis pigmentosa.

The Acquisition would bolster Biogen’s pipeline and further execute on the its strategy to develop and expand a multi-franchise neuroscience pipeline across multiple complementary modalities. Ophthalmology

 

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is an emerging growth area for Biogen, and the proposed acquisition of Nightstar would accelerate Biogen’s entry into ophthalmology by adding two mid- to late-stage gene therapy assets to Biogen’s pipeline, with the potential to create long-term shareholder value.

 

4.

Financing

Bidder and Bidco intend to finance the Consideration payable by Bidco to Nightstar Scheme Shareholders with existing cash resources.

 

5.

Information on Nightstar

Nightstar is a public limited company incorporated in England and Wales with its registered office at 10 Midford Place, London W1T 5BJ, United Kingdom. Nightstar is a leading clinical-stage gene therapy company focused on developing and commercialising novel one-time treatments for patients suffering from rare inherited retinal diseases that would otherwise progress to blindness. Nightstar’s lead product candidate, NSR-REP1, is currently in Phase 3 development for the treatment of patients with choroideremia, a rare, degenerative, genetic retinal disorder that has no treatments currently available and affects approximately one in every 50,000 people. Positive results from a Phase 1/2 trial of NSR-REP1 were published in Nature Medicine in 2018, in The New England Journal of Medicine in 2016, and in The Lancet in 2014. Nightstar’s second product candidate, NSR-RPGR, is currently being evaluated in a clinical trial known as the XIRIUS trial for the treatment of patients with X-linked retinitis pigmentosa, an inherited X-linked recessive retinal disease that affects approximately one in every 40,000 people. In September 2018, Nightstar announced positive preliminary safety and efficacy data from the XIRIUS trial for the first five cohorts (combined n=15) of the dose escalation study at the EURETINA medical meeting.

Nightstar manages its business as a single operating segment, which is the business of developing and commercialising gene therapies; however, Nightstar operates in two geographic regions: the United Kingdom and the United States.

The Nightstar ADSs are traded on Nasdaq under the symbol “NITE.” Nightstar’s registered office is located at 10 Midford Place, London W1T 5BJ, United Kingdom, and its telephone number is +44 0(20) 7062 2777.

 

6.

Information on Bidder and Bidco

Bidder

Bidder is a limited liability company incorporated in Switzerland. Biogen, the ultimate parent company of Bidder, is a global biopharmaceutical company which is focused on discovering, developing, and delivering worldwide innovative therapies for people living with serious neurological and neurodegenerative diseases. One of the world’s first global biotechnology companies, Biogen was founded in 1978 by Charles Weissmann, Heinz Schaller, Kenneth Murray, and Nobel Prize winners Walter Gilbert and Phillip Sharp, and today has the leading portfolio of medicines to treat multiple sclerosis, has introduced the first and only approved treatment for spinal muscular atrophy, and is focused on advancing neuroscience research programs in Alzheimer’s disease and dementia, multiple sclerosis and neuroimmunology, movement disorders, neuromuscular disorders, acute neurology, neurocognitive disorders, pain, and ophthalmology. Biogen also manufactures and commercialises biosimilars of advanced biologics.

Bidder’s registered offices are located at Neuhofstrasse 30, 6340 Baar, Switzerland and its telephone number is +41 41 728 7444. Biogen’s principal executive offices are located at 225 Binney Street, Cambridge, Massachusetts 02142 and its telephone number is +1 (617) 679-2000.

Bidco

Bidco is a newly incorporated English private limited company, and a direct, wholly-owned subsidiary of Bidder. Bidco has been formed at the direction of Bidder solely for the purposes of implementing the

 

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Acquisition. Bidco has not traded since its date of incorporation, nor has it entered into any obligations other than in connection with the Acquisition.

Bidco’s registered offices are located at 70 Norden Road, Maidenhead, Berkshire, SL6 4AY and its telephone number is +44 1628 501 000.

 

7.

Nightstar’s current trading and prospects

Since its inception in May 2013, Nightstar has devoted substantially all its resources to conducting preclinical studies and clinical trials, organising and staffing the company, business planning, raising capital and establishing its intellectual property portfolio. Nightstar does not have any products approved for sale and to-date, Nightstar has not generated any revenue and does not expect to generate revenue from the sale of products or any other source in the near future. If Nightstar’s development efforts for its product candidates are successful and result in regulatory approval, Nightstar may generate revenue in the future from product sales. Nightstar could also potentially generate revenue in the future from other sources including entering longer-term collaboration agreements with third parties.

Nightstar has funded its operations to date primarily with subscription proceeds from the issuance of Nightstar ADSs and Nightstar Shares. As at 31 December 2018, Nightstar had received net cash proceeds of USD 255.2 million from sales of Nightstar ADSs and Nightstar Shares. Since inception, Nightstar has incurred significant operating losses. Nightstar’s net losses were USD 37.5 million, USD 29.7 million and USD 12.2 million for the years ended 31 December 2018, 2017 and 2016, respectively. As at 31 December 2018, Nightstar had an accumulated deficit of USD 99.7 million. Nightstar expects to continue to incur significant expenses for the foreseeable future as it advances its product candidates through preclinical and clinical development, seeks regulatory approval and pursues commercialisation of any approved product candidates. In addition, if Nightstar obtains marketing approval for any of its product candidates, it expects to incur significant commercialisation expenses related to product manufacturing, marketing, sales and distribution. Nightstar’s pipeline currently contains two late stage clinical product candidates, including NSR-REP1 and NSR-RPGR, which Nightstar believes are the leading candidates in choroideremia and XLRP, respectively, and a number of earlier stage candidates at various stages of preclinical development.

As at 31 December 2018, Nightstar held cash, cash equivalents and marketable securities of USD 164.2 million.

 

8.

Irrevocable undertakings to vote in favour of the Scheme

Bidco has received irrevocable undertakings to vote or procure votes in favour of the resolutions relating to the Scheme at the Nightstar Shareholder Meetings (or in the event that the Acquisition is implemented by way of an Offer, to accept or procure acceptance of such Offer) from the Nightstar Directors, in respect of their entire beneficial holdings, amounting to              Nightstar Shares, in aggregate, representing approximately                  per cent. of the issued share capital of Nightstar as at                  2019, being the last practicable date prior to the publication of this document.

Bidco has also received irrevocable undertakings from Syncona Portfolio Limited and New Enterprise Associates, both Nightstar Shareholders, to vote or procure votes in favour of the resolutions relating to the Scheme at the Nightstar Shareholder Meetings (or in the event that the Acquisition is implemented by way of an Offer, to accept or procure acceptance of such Offer) in respect of their entire beneficial holdings, amounting to              Nightstar Shares, in aggregate, representing approximately              per cent. of the issued share capital of Nightstar as at                  2019, being the last practicable date prior to the publication of this document.

The Irrevocable Undertakings given by the Nightstar Directors will cease to be binding if:

 

   

the Acquisition is implemented by way of an Offer and an Offer Document is not posted within 15 Business Days following the date Nightstar has cleared comments received from the SEC, if any, on such document; or

 

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the Scheme or Offer (as applicable) does not become Effective, lapses or is withdrawn without becoming or being declared unconditional in accordance with its terms; or

 

   

the Scheme or Offer (as applicable) lapses or is withdrawn or otherwise becomes incapable of becoming Effective or has not become Effective on or before the Long Stop Date,

and will remain binding if a higher competing offer is made for Nightstar.

The Irrevocable Undertakings given by Syncona Portfolio Limited and New Enterprise Associates will cease to be binding if:

 

   

the Scheme lapses or is withdrawn in accordance with its terms and Bidder or Bidco publicly confirms that it does not intend to proceed with the Acquisition or to implement the Acquisition by way of an Offer or otherwise;

 

   

the Scheme or Offer (as applicable) does not become Effective by the Long Stop Date; or

 

   

the Implementation Agreement is terminated in accordance with its terms,

and will remain binding if a higher competing offer is made for Nightstar.

The form of the Director’s Irrevocable Undertaking is attached hereto as Annex C and the form of the Shareholder’s Irrevocable Undertaking is attached hereto as Annex D. Further details of these Irrevocable Undertakings are set out in Part V (Additional Information) of this document.

 

9.

Nightstar Equity Awards

Award holders in the Nightstar Share Schemes will be contacted as soon as reasonably practicable in the weeks following the date of this document regarding the effect of the Scheme on their Awards and with details of Bidder’s proposals about their rights. A summary of the effect of the Scheme on Awards is set out below.

The Scheme will apply to any Nightstar Shares which are issued pursuant to Awards (and no longer subject to forfeiture restrictions) before the Scheme Record Time. Any Nightstar Shares allotted or issued to satisfy Awards after the Scheme Record Time will, subject to the Scheme becoming Effective and the proposed amendments to the Nightstar Articles being approved at the General Meeting, be acquired by Bidco in exchange for the Consideration for each Nightstar Share so acquired.

On the Effective Date, all Awards will be cancelled and cease to be outstanding, and the holder will be entitled to receive a payment equal to the Consideration with respect to each Nightstar Share subject to the Award less any applicable exercise or purchase price and applicable withholdings.

Following the Effective Date, any Nightstar Shares subject to or issued in connection with the vesting or exercise of any Pre-IPO Equity Awards will be immediately acquired by Bidco from the relevant Award holder in exchange for the Consideration for each Nightstar Share so acquired.

Awards held by the Nightstar Directors, which consist of stock options and restricted shares, will be treated in the same way as the Awards held by other participants in the Nightstar Share Schemes.

Any Pre-IPO Equity Awards that were deferred upon the termination of the holder’s employment will be repurchased by Nightstar prior to the Effective Date for a total payment of GBP 0.01 to the holder of such Deferred Shares, pursuant to the terms of the applicable Vesting Agreement.

Any Consideration payable to Award holders in the Nightstar Share Schemes will be paid to them in accordance with the terms of the Scheme, subject to any arrangements that are required to be put in place to effect the payment of any income tax and/or social security contributions that arise in connection with the Awards.

Further information in respect of the proposed amendments to the Nightstar Articles is contained in paragraph 10(d) below and in the Notice of General Meeting which is set out at pages ix to xiii of this document.

 

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10.

Structure of the Acquisition

 

(a)

The Scheme

It is intended that the Acquisition will be effected by way of the Scheme. The Scheme is an arrangement made between Nightstar and the Nightstar Scheme Shareholders under Part 26 of the Companies Act 2006. The provisions of the Scheme are set out in full in Part VIII (The Scheme of Arrangement) of this document. The Scheme involves an application by Nightstar to the Court to sanction the Scheme pursuant to which the Nightstar Scheme Shares will be transferred to Bidco, in consideration for which Nightstar Scheme Shareholders on the register of members of Nightstar at the Scheme Record Time will receive the Consideration. The transfer of the Nightstar Scheme Shares to Bidco, provided for in the Scheme, will result in the entire issued and to be issued share capital of Nightstar being held by Bidco and Nightstar becoming a wholly-owned subsidiary of Bidco.

Prior to the Scheme Record Time, Nightstar may allot and issue Nightstar Shares pursuant to the vesting and/or exercise of Awards under the Nightstar Share Schemes. Nightstar will not issue any shares after the Scheme Record Time until the Scheme has become Effective.

The expected timetable of principal events for the Acquisition and Scheme is set out on page xiv of this document. It is currently expected that the Scheme will become Effective mid-year 2019, subject to the satisfaction or (where applicable) waiver of all the relevant Conditions.

 

(b)

Nightstar Shareholder approvals

The Scheme is subject to the approval of Nightstar Shareholders at the Court Meeting. As at                  2019, the last practicable date before this document, there were                  Nightstar Shares issued and outstanding, held by approximately                  holders of record. Nightstar Shares in which Bidder or a member of the Bidder Group is interested will not be eligible to be voted on the resolution at the Court Meeting to approve the Scheme and the Scheme will not apply to such Nightstar Shares. As at                  2019 (the last practicable date prior to the publication of this document), no member of the Bidder Group held interests in Nightstar Shares.

It is important that, for the Court Meeting, as many votes as possible are cast so that the Court may be satisfied that there is a fair representation of opinion of the Nightstar Scheme Shareholders. You are therefore urged to complete and return your Form of Proxy, make an electronic appointment of a proxy or submit a proxy via CREST as soon as possible.

In addition, the Acquisition will require the approval of certain resolutions by the Nightstar Shareholders at the General Meeting. The General Meeting has been convened to consider and, if thought fit, to pass the Special Resolution to authorise the Nightstar Directors to implement the Scheme and approve the adoption of certain amendments to the Nightstar Articles in accordance with the Scheme and in the manner described in paragraph 10(d) below. The General Meeting will be held shortly after the Court Meeting.

 

  (i)

The Court Meeting

The Court Meeting has been convened at the direction of the Court for          a.m. on                  2019 for Nightstar Scheme Shareholders to consider and, if thought fit, approve the Scheme.

At the Court Meeting, voting will be by poll (and not a show of hands) and each Nightstar Scheme Shareholder present, in person or by proxy, will be entitled to one vote for each Nightstar Scheme Share held as at the Scheme Voting Record Time. The approval required at the Court Meeting is a majority in number of the Nightstar Scheme Shareholders representing not less than 75 per cent. in value of the Nightstar Scheme Shares held by such Nightstar Scheme Shareholders present and voting, either in person or by proxy.

 

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  (ii)

The General Meeting

In addition to the Court Meeting, the General Meeting has been convened for          a.m. on                  2019, or, if later, as soon after that time as the Court Meeting has been concluded or adjourned, for Nightstar Shareholders to consider and, if thought fit, pass, the Special Resolution to approve:

 

  (A)

giving the Nightstar Board authority to take all necessary action to carry the Scheme into effect; and

 

  (B)

amending the Nightstar Articles.

Voting on the Special Resolution will be by poll, and each Nightstar Shareholder present, in person or by proxy, will be entitled to one vote for every Nightstar Share held as at the Scheme Voting Record Time. The approval required for the Special Resolution to be passed is at least 75 per cent. of the votes cast (in person or by proxy) on the Special Resolution.

The quorum for the General Meeting will be two or more Nightstar Shareholders who held shares as at the Scheme Voting Record Time present in person or by proxy.

Entitlement to attend, speak and vote at these meetings and the number of votes which may be cast at the meetings will be determined by reference to the register of members of Nightstar at the Scheme Voting Record Time. Nightstar Scheme Shareholders whose names appear on the register of members of Nightstar at          p.m. on                 2019 or, if the Court Meeting is adjourned, on the register of members at         p.m. 48 hours before the date set for the adjourned meeting, shall be entitled to attend and speak and vote at the Court Meeting in respect of the number of Nightstar Scheme Shares registered in their name at the Scheme Voting Record Time. Nightstar Shareholders whose names appear on the register of members of Nightstar at          p.m. on                  2019 or, if the General Meeting is adjourned, on the register of members at          p.m. 48 hours before the date set for the adjourned meeting, shall be entitled to attend and speak and vote at the General meeting in respect of the number of Nightstar Shares registered in their name at the Scheme Voting Record Time.

You will find the Notices of the Court Meeting and of the General Meeting set out on pages vi to viii (Notice of Court Meeting) and pages ix to xiii (Notice of General Meeting) of this document, respectively.

 

(c)

Court Hearing to sanction the Scheme

Under the Companies Act 2006, the Scheme also requires the sanction of the Court.

The Court Hearing to sanction the Scheme is currently expected to take place mid-year 2019. All Nightstar Shareholders are entitled to attend the Court Hearing in person or through Counsel to support or oppose the sanctioning of the Scheme.

The Scheme will become Effective as soon as a copy of the Court Order has been delivered to the Registrar of Companies. This is currently expected to occur mid-year 2019, and no earlier than 7 June 2019. It is intended that Nightstar will be re-registered as a private limited company shortly afterwards.

If the Scheme becomes Effective, it will be binding on all Nightstar Scheme Shareholders, including any Nightstar Shareholders who did not vote to approve the Scheme or who voted against the Scheme at the Court Meeting or the General Meeting.

Unless the Scheme becomes Effective by the Long Stop Date, it will lapse and the Acquisition will not proceed (unless extended with the agreement of Bidder, Bidco, Nightstar and, if required, the approval of the Court).

 

(d)

Amendment to the Nightstar Articles

The Special Resolution to be proposed at the General Meeting contains provisions to amend the Nightstar Articles to ensure that any Nightstar Shares issued (other than to Bidco or any member of the Bidder

 

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Group): (i) between the General Meeting and the Scheme Record Time will be subject to the Scheme; and (ii) after the Scheme Record Time will automatically be acquired by Bidco on the same terms as under the Scheme. These provisions will avoid any person (other than a member of the Bidder Group) holding Nightstar Shares following the Effective Date.

 

(e)

Modifications to the Scheme

The Scheme contains a provision for Nightstar and Bidco to consent on behalf of all persons concerned to any modification of, or addition to, the Scheme or to any condition approved or imposed by the Court. The Court would be unlikely to approve any modification of, or additions to, or impose a condition to the Scheme which might be material to the interests of the Nightstar Shareholders unless Nightstar Shareholders were informed of such modification, addition or condition. It would be a matter for the Court to decide, in its discretion, whether or not a further meeting of Nightstar Scheme Shareholders should be held in these circumstances.

 

(f)

Conditions to the Acquisition

The Acquisition is subject to the Conditions and further terms set out in full in Part III (Conditions to and Further Terms of the Scheme and the Acquisition) of this document.

Amongst others, the Conditions include competition law clearances under the U.S. HSR Act and in Germany.

The Scheme is also conditional, amongst other things, upon:

 

  (i)

it becoming Effective by the Long Stop Date, failing which it will lapse;

 

  (ii)

its approval by a majority in number of the Nightstar Scheme Shareholders, representing not less than 75 per cent. in value of the Nightstar Scheme Shares held by those Nightstar Scheme Shareholders, present and voting, either in person or by proxy, at the Court Meeting or at any adjournment thereof on or before                  2019 (or such later date as may be agreed between Bidder and Nightstar and as the Court may allow);

 

  (iii)

the passing of the resolutions by the requisite majority at the General Meeting to be held on or before                  2019 (or such later date as may be agreed between Bidder and Nightstar and the Court may allow); and

 

  (iv)

sanction of the Scheme on or before the date immediately preceding the Long Stop Date (or such later date as may be agreed between Bidder and Nightstar and as the Court may allow) and the delivery of a copy of the Court Order to the Registrar of Companies.

At this stage, subject to the approval and availability of the Court (which is subject to change), and subject to the satisfaction (or, where applicable, waiver) of the Conditions, Bidder expects that the Acquisition will become Effective by mid-year 2019, and no earlier than 7 June 2019.

If any Condition is not capable of being satisfied by the date specified therein, Bidder shall make an announcement through GlobeNewswire or another national news wire service as soon as practicable and, in any event, by no later than 7.00 a.m. (New York time) on the Business Day following the date so specified, stating whether Bidder has invoked that Condition, waived that Condition or, with the agreement of Nightstar, specified a new date by which that Condition must be satisfied. Further details on the Conditions are set out in Part III (Conditions to and Further Terms of the Scheme and the Acquisition) of this document.

 

(g)

Alternative means of implementing the Acquisition

Each of Bidder and Bidco reserves the right to elect, subject to the consent of Nightstar and subject to the terms of the Implementation Agreement, to implement the Acquisition by way of an Offer for the entire

 

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issued and to be issued share capital of Nightstar as an alternative to the Scheme. In such an event, the Offer will be implemented on the same terms (subject to appropriate amendments), so far as applicable, as those which would apply to the Scheme and subject to the amendment referred to in paragraph A of Part III (Conditions to and Further Terms of the Scheme and the Acquisition) of this document.

 

11.

Offer-related arrangements

Summaries of the offer-related arrangements entered into in connection with the Acquisition are set out in paragraph 9 of Part V (Additional Information) of this document. These agreements have been made available on Nightstar’s website, www.nightstartx.com.

 

12.

Nightstar Directors and the effect of the Scheme on their interests

Details of the interests of the Nightstar Directors in Nightstar Shares and options under the Nightstar Share Schemes are set out in paragraph 5 of Part V (Additional Information) of this document.

The following Nightstar Directors have given irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the Special Resolution to be proposed at the General Meeting as described in paragraph 8 above, in relation to the following Nightstar Shares currently held by them as well as any further Nightstar Shares they may acquire:

 

Name

   Number of
Nightstar
Shares
     Percentage of
issued
ordinary
share capital
of Nightstar
(%)
 

Paula Cobb

                                       

David Fellows

                                       

Chris Hollowood

                                       

David Lubner

                                       

James McArthur

                                       

David Mott

                                       

Scott Whitcup

                                       
  

 

 

    

 

 

 

TOTAL

                                       
  

 

 

    

 

 

 

These Irrevocable Undertakings will continue to be binding in the event that a higher competing offer is made for Nightstar.

Bidco has also received irrevocable undertakings from Syncona Portfolio Limited and New Enterprise Associates, both Nightstar Shareholders, to vote or procure votes in favour of the resolutions relating to the Scheme at the Nightstar Shareholder Meetings (or in the event that the Acquisition is implemented by way of an Offer, to accept or procure acceptance of such Offer) in respect of their entire beneficial holdings, amounting to              Nightstar Shares, in aggregate, representing approximately          per cent. of the issued share capital of Nightstar as at                  2019, being the last practicable date prior to publication of this document.

The Irrevocable Undertakings given by the Nightstar Directors will cease to be binding if:

 

   

the Acquisition is implemented by way of an Offer and an Offer Document is not posted within 15 Business Days following the date Nightstar has cleared comments received from the SEC, if any, on such document; or

 

   

if the Scheme or Offer (as applicable) does not become Effective, lapses or is withdrawn without becoming or being declared unconditional in accordance with its terms; or

 

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the Scheme or Offer (as applicable) lapses or is withdrawn or otherwise becomes incapable of becoming Effective or has not become Effective on or before the Long Stop Date,

and will remain binding if a higher competing offer is made for Nightstar.

The Irrevocable Undertakings given by Syncona Portfolio Limited and New Enterprise Associates will cease to be binding if:

 

   

the Scheme lapses or is withdrawn in accordance with its terms and Bidder or Bidco publicly confirms that it does not intend to proceed with the Acquisition or to implement the Acquisition by way of an Offer or otherwise;

 

   

the Scheme or Offer (as applicable) does not become Effective by the Long Stop Date; or

 

   

the Implementation Agreement is terminated in accordance with its terms,

and will remain binding if a higher competing offer is made for Nightstar.

The form of the Director’s Irrevocable Undertaking is attached hereto as Annex C and the form of the Shareholder’s Irrevocable Undertaking is attached hereto as Annex D.

Awards held by the Nightstar Directors, which consist of stock options and restricted shares, will be treated in the same way as the other participants in the Nightstar Share Schemes.

The effect of the Scheme on the interests of the Nightstar Directors does not differ from its effect on like interests of any other Nightstar Shareholder.

 

13.

Delisting and re-registration

Delisting of Nightstar Shares

Prior to the Scheme becoming Effective, a request will be made by Nightstar to Nasdaq to suspend trading of, and de-list, the Nightstar ADSs on Nasdaq, to take effect on, or shortly after, the Effective Date. Subsequently, the Nightstar ADSs and Nightstar Shares will be deregistered under the U.S. Exchange Act.

As soon as practicable after the Effective Date and after the cancellation of the listing and admission to trading of the Nightstar ADSs on Nasdaq, it is intended that Nightstar will be re-registered as a private limited company under the relevant provisions of the Companies Act 2006.

 

14.

Settlement

Subject to the Scheme becoming Effective (and except as provided in paragraph 17 of Part II (Explanatory Statement) in relation to certain Overseas Shareholders), settlement of the Consideration to which any Nightstar Shareholder is entitled under the Scheme will be effected in the following manner:

 

(a)

Consideration

 

  (i)

Nightstar Shares in uncertificated form (that is, in CREST)

Where, at the Scheme Record Time, a Nightstar Scheme Shareholder holds Nightstar Shares in uncertificated form, the Consideration to which such Nightstar Scheme Shareholder is entitled will be transferred to such person through CREST by Bidco procuring, via Computershare, the creation of an assured payment obligation in favour of the appropriate CREST account as soon as practicable after the Effective Date.

As from the Scheme Record Time, each holding of Nightstar Shares credited to any stock account in CREST will be disabled and all Nightstar Shares will be removed from CREST.

Bidder and Bidco reserve the right to pay all, or any part of, the Consideration referred to above in the manner referred to in sub-paragraph (ii) below if, for any reason outside Bidder and Bidco’s reasonable control, they are not able to effect payment in accordance with this sub-paragraph or if they otherwise wish to do so.

 

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  (ii)

Nightstar Shares in certificated form (that is, not in CREST)

Where, at the Scheme Record Time, a Nightstar Scheme Shareholder holds Nightstar Scheme Shares in certificated form, settlement of the Consideration will be despatched:

 

  (A)

by first class post, by cheque drawn on a branch of a U.K. clearing bank; or

 

  (B)

by such other method as may be agreed between the parties.

All such cash payments will be made in U.S. dollars. Payments made by cheque will be payable to the Nightstar Scheme Shareholder concerned or, in the case of joint holders, to all joint holders on the register of members of Nightstar. Cheques will be despatched as soon as practicable after the Effective Date and in any event within 14 days of the Effective Date to the person entitled thereto at the address as appearing in the register of members of Nightstar at the Scheme Record Time. None of Nightstar, Bidder, Bidco, any of their nominee(s) or any of their respective agents shall be responsible for any loss or delay in the transmission of cheques sent in this way, and such cheques shall be sent entirely at the risk of the person entitled thereto.

 

(b)

General

All documents and remittances sent to, or from, by or on behalf of Nightstar Shareholders will be sent entirely at their own risk. On the Effective Date each certificate representing a holding of Nightstar Shares will cease to be a valid document of title and should be destroyed or, at the request of Nightstar, delivered to Nightstar, or to any person appointed by Nightstar to receive the same. At the Scheme Record Time entitlements to Nightstar Shares held within CREST will be disabled and all Nightstar Shares will be removed from CREST.

Settlement of the Consideration to which any Nightstar Shareholder is entitled under the Scheme will be implemented in full in accordance with the terms of the Scheme free of any lien, right of set-off, counterclaim or other analogous right to which Bidder or Bidco might otherwise be, or claim to be, entitled against such Nightstar Shareholder.

 

15.

Nightstar ADSs

Nightstar ADS Holders will not be entitled to attend the Court Meeting or General Meeting in person or vote directly on the Acquisition. Instead, Nightstar will request that the Nightstar Depositary delivers to Nightstar ADS Holders as of the Nightstar ADS Voting Record Time a notice of (or notices for) the Court Meeting and the General Meeting, and Nightstar ADS Holders as of the Nightstar ADS Voting Record Time will have the right to instruct the Nightstar Depositary how to vote the Nightstar Shares underlying the Nightstar ADSs with respect to the Acquisition, subject to and in accordance with the terms of the Deposit Agreement, a copy of which is available free of charge at the SEC’s website at www.sec.gov or by directing a request to Nightstar’s contact for enquiries identified above. Shareholders, including ADS Holders, who hold their Nightstar Shares in the name of a broker, bank or other nominee should follow the voting instructions provided by such nominee to ensure that their Nightstar Shares are represented at the Court Meeting and the General Meeting.

 

(a)

Consideration

On the Effective Date, Nightstar Scheme Shares as at the Scheme Record Time represented by the Nightstar ADSs will be transferred to Bidco (or such of its nominee(s) as are agreed between Bidco and Nightstar). As soon practicable after the Effective Date, the Nightstar Depositary will, in accordance with the terms of the Scheme, receive a cash amount in U.S. dollars equal to the total amount due by way of Consideration under the terms of the Scheme in respect of all the Nightstar Scheme Shares held by the Nightstar Depositary at the Scheme Record Time.

 

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(b)

Voting Instructions

Nightstar ADS Holders as of the Nightstar ADS Voting Record Time have been sent or will be sent an ADS Voting Instruction Card and a Depositary Notice of Court Meeting and General Meeting by the Nightstar Depositary. Nightstar ADS Holders as of the Nightstar ADS Voting Record Time can direct the voting of the Nightstar Shares represented by their Nightstar ADSs, subject to the terms of the Deposit Agreement, a copy of which is available free of charge at the SEC’s website at www.sec.gov or by directing a request to Nightstar’s contact for enquiries identified above.

Nightstar ADS Holders as at the Nightstar ADS Voting Record Time should, if they wish to direct the voting of the Nightstar Shares represented by their Nightstar ADSs held by the Nightstar Depositary (or its nominee) at the General Meeting and Court Meeting, sign, complete and return the ADS Voting Instruction Card in accordance with the instructions printed thereon and in the Depositary Notice of Court Meeting and General Meeting received from the Nightstar Depositary. The ADS Voting Instruction Card should be returned by mail to Nightstar Therapeutics plc, c/o Citibank Shareholder Services, PO Box 43099, Providence RI 02940-5000, USA, as soon as possible and, in any event, so as to be received no later than 10.00 a.m. (New York time) on                  or if either the Court Meeting or the General Meeting is adjourned, such later date as may be notified by the Nightstar Depositary.

Nightstar ADS Holders who hold their Nightstar ADSs indirectly (through a broker, bank or other nominee) must follow the instructions from such broker, bank or other nominee if they wish to give voting instructions to the Nightstar Depositary. Providing voting instructions via a broker, bank or other nominee may require the provision of information by a particular deadline, well in advance of the deadline to give the Nightstar Depositary voting instructions, and therefore you are encouraged to reach out to such broker, bank or other nominee as quickly as possible.

Following timely receipt of valid voting instructions from a Nightstar ADS Holder, the Nightstar Depositary shall endeavour, insofar as practicable and permitted under the provisions of, or governing, the Nightstar Shares represented by Nightstar ADSs, to vote or cause its nominee to vote (by means of the appointment of a proxy or otherwise) such Nightstar Shares represented by the Nightstar ADSs in respect of which instructions have been received in accordance with those instructions.

 

(c)

Cancellation of Nightstar ADSs so as to become a Nightstar Shareholder

Nightstar ADS Holders will not be able to attend the Court Meeting or the General Meeting in person. Nightstar ADS Holders who wish to attend the Nightstar Shareholder Meetings must take steps to present their Nightstar ADSs (and, to the extent that such Nightstar ADSs are certificated, the certificates evidencing such Nightstar ADSs) to the Nightstar Depositary for cancellation before 5.00 p.m. (New York time) on                  (subject to the relevant Nightstar ADS Holder’s compliance with the terms of the Deposit Agreement and payment of the Nightstar Depositary’s fees), together with: (i) delivery instructions for the Nightstar Shares represented by such Nightstar ADSs (including, if applicable, the name and address of the person who will be the registered holder of such Nightstar Shares); and (ii) if the Nightstar ADS cancellation is to take place after the Nightstar ADS Voting Record Time and before the Scheme Record Time, a certification that the Nightstar ADS Holder: (x) beneficially owned the relevant Nightstar ADSs as at the Nightstar ADS Voting Record Time and has not given, and will not give, voting instructions to the Nightstar Depositary in respect of such Nightstar ADSs in relation to the Nightstar Shareholder Meetings (or has cancelled all voting instructions previously given); (y) beneficially owned the relevant Nightstar ADSs as at the Nightstar ADS Voting Record Time and has given voting instructions to the Nightstar Depositary in respect of such Nightstar ADSs in relation to the Nightstar Shareholder Meetings, but undertakes not to vote the Nightstar Shares represented by such Nightstar ADSs at the Nightstar Meetings; or (z) did not beneficially own the relevant Nightstar ADSs as at the Nightstar ADS Voting Record Time, but undertakes not to vote the Nightstar Shares represented by such Nightstar ADSs at the Nightstar Shareholder Meetings. Nightstar ADS Holders who hold their Nightstar ADSs through a broker, bank or other nominee should promptly contact their broker, bank or other nominee to find out what actions are required to cancel the Nightstar ADSs.

 

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Nightstar ADS Holders who present their Nightstar ADSs to the Nightstar Depositary for cancellation in order to take delivery of Nightstar Shares will be responsible for the payment of the Nightstar Depositary’s fees associated with such cancellation (up to USD 0.05 per Nightstar ADS presented for cancellation).

Nightstar ADS Holders will not be permitted to cancel their Nightstar ADSs from 5.00 p.m. (New York time) on                  2019 until 8.00 a.m. (New York time) on             . Nightstar ADS Holders who take steps (as described in the paragraphs above) to cancel their Nightstar ADSs before 5.00 p.m. (New York time) on                  2019 and become Nightstar Scheme Shareholders before the Scheme Voting Record Time will have the right to attend the both the Nightstar Shareholder Meetings in person and be represented by counsel to support or oppose the sanctioning of the Scheme (subject to the limitations and qualifications above).

 

(d)

Settlement

Once the Nightstar Depositary has received the relevant cash amount in U.S. dollars, each Nightstar ADS Holder will receive (upon surrender of their Nightstar ADSs to the Nightstar Depositary) their pro rata portion of the cash in U.S. dollars, net of the Nightstar Depositary fees for the cancellation of the Nightstar ADSs (up to USD 0.05 per Nightstar ADS) and the distribution of the Consideration (up to USD 0.05 per Nightstar ADS) to the surrendering Nightstar ADS Holders and applicable withholding taxes. Nightstar ADS holders who hold their Nightstar ADSs in certificated form will, on or after the Effective Date, receive letters of transmittal from the Nightstar Depositary with an explanation on how to surrender the Nightstar ADSs to the Nightstar Depositary. Those holders must sign and return the letter of transmittal, together with their Nightstar ADS certificates, to receive any consideration to which they are entitled. Nightstar ADS Holders who hold their Nightstar ADSs in uncertificated form will automatically receive Consideration to which they are entitled and do not need to take any further action. Payments to Nightstar ADS Holders will be made by cheques mailed by the Nightstar Depositary to the address the Nightstar Depositary has in its records for such registered holder.

Any Nightstar ADS Holders who hold their Nightstar ADSs indirectly through a bank, broker, or other nominee within DTC, will receive credit of the funds to their account from their bank, broker or other nominee. The Nightstar Depositary will remit the applicable funds (net of Nightstar Depositary fees and applicable withholding taxes) to DTC, and DTC will, in turn, credit the Nightstar ADS Holder’s bank, broker, securities intermediary or share plan administrator.

 

16.

No Appraisal Rights

If Nightstar Scheme Shareholders approve the Scheme at the Court Meeting and the Court sanctions the Scheme, then, subject to the Scheme becoming Effective in accordance with its terms, the Scheme will be binding on all Nightstar Shareholders, including those who did not vote or who voted against it at the Court Meeting. If Nightstar Scheme Shareholders approve the Scheme and the Court sanctions the Scheme, no Nightstar Shareholder or Nightstar ADS Holder will have “dissenters” or “appraisal” rights or otherwise have any right to seek a court appraisal of the value of Nightstar Shares. If the Scheme becomes Effective, all Nightstar Scheme Shareholders will receive the Consideration.

 

17.

Overseas Shareholders

 

(a)

General

This document has been prepared for the purposes of complying with English law and U.S. proxy rules and the information disclosed may not be the same as that which would have been disclosed if this document had been prepared in accordance with the laws of jurisdictions outside the United Kingdom and the United States.

This document does not constitute an offer to sell or issue or the solicitation of an offer to buy or subscribe for shares in any jurisdiction in which such offer or solicitation is unlawful.

 

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Overseas Shareholders should consult their own legal and tax advisers with respect to the legal and tax consequences of the Scheme.

The availability of the Acquisition to Overseas Shareholders may be affected by the laws of the relevant jurisdictions in which they are located. Overseas Shareholders should inform themselves about and should observe any applicable legal or regulatory requirements. It is the responsibility of all Overseas Shareholders to satisfy themselves as to the full compliance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents which may be required, or the compliance with other necessary formalities which are required to be observed and the payment of any issue, transfer or other taxes due in such jurisdiction.

The release, publication or distribution of this document and/or any accompanying documents in or into or from jurisdictions other than the United Kingdom or the United States may be restricted by law and therefore any persons who are subject to the law of any jurisdiction other than the United Kingdom or the United States should inform themselves about, and observe, any applicable legal or regulatory requirements. In particular, the ability of persons who are not resident in the United Kingdom to vote their Nightstar Shares with respect to the Scheme at the Nightstar Shareholder Meetings, or to appoint another person as proxy may be affected by the laws of the relevant jurisdictions in which they are located. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such Restricted Jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Acquisition disclaim any responsibility or liability for the violation of such restrictions by any person or any other failure to satisfy any applicable laws, regulations or requirements.

Unless otherwise determined by Bidder, and permitted by applicable law and regulation, the Acquisition will not be made available, directly or indirectly, in, into or from a jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Acquisition by any such use, means, instrumentality or form within any jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this document and all documents relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this document and all documents relating to the Acquisition (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions where to do so would violate the laws in that jurisdiction.

Persons who are not resident in the United Kingdom or the United States should inform themselves of, and observe, any applicable legal and regulatory requirements.

 

(b)

Securities laws

Copies of this document and any formal documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction or any jurisdiction where to do so would constitute a violation of the laws of such jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction. Doing so may render invalid any related purported vote in respect of the Acquisition.

Neither this document nor the accompanying documents are intended to, and do not, constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities or the solicitation of any vote or approval pursuant to the Scheme or otherwise, in any jurisdiction in which such offer, invitation or solicitation is unlawful. Nothing in this document or the accompanying documents should be relied upon for any other purpose.

This document and the accompanying documents have been prepared for the purposes of complying with English law and U.S. proxy rules and the information disclosed may not be the same as that which would have been disclosed if this document had been prepared in accordance with the laws of jurisdictions outside the United Kingdom and the United States. Overseas Shareholders should consult their own legal and

 

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tax advisers with regard to the legal and tax consequences of the Scheme for their particular circumstances.

All Nightstar Shareholders (including, without limitation, nominees, trustees or custodians) who would, or otherwise intend to, forward this document and its accompanying documents to any jurisdiction outside the United Kingdom, should seek appropriate independent professional advice before taking any action.

 

(c)

Additional information for U.S. investors

The Acquisition is to be implemented by way of a scheme of arrangement under Part 26 of the Companies Act 2006. If, in the future, Bidder or Bidco exercises its right to implement the Acquisition by way of an Offer, subject to the terms of the Implementation Agreement, and determines to extend the Offer into the U.S., the Acquisition will be made in compliance with applicable U.S. laws and regulations.

It may be difficult for U.S. Nightstar Shareholders and Nightstar ADS Holders to enforce their rights and any claim arising out of the U.S. federal securities laws, because Nightstar is located in a country outside of the U.S., and some or all of its officers and directors are residents of countries outside of the U.S., the U.S. Nightstar Shareholders and Nightstar ADS Holders may not be able to sue a non-U.S. company or its officers or directors in a non-U.S. court for violations of the U.S. securities laws. Further, it may be difficult to compel a non-U.S. company and its affiliates to subject themselves to a U.S. court’s judgment.

U.S. Nightstar Shareholders and Nightstar ADS Holders also should be aware that the transaction contemplated herein may have tax consequences in the U.S. A summary of certain U.S. taxation consequences of the implementation of the Scheme for certain Nightstar Shareholders and Nightstar ADS Holders is set out in paragraph 6 of Part V (Additional Information) of this document. That summary does not constitute tax advice and does not purport to be a full analysis of all potential United States tax consequences of the Acquisition. Nightstar Shareholders and Nightstar ADS Holders who are in any doubt about their taxation position, or who are subject to taxation in a jurisdiction outside of the United Kingdom and United States are strongly advised to contact an appropriate independent professional adviser immediately.

 

18.

United Kingdom and United States taxation

A summary of certain United Kingdom and United States taxation consequences of the implementation of the Scheme for certain Nightstar Shareholders is set out in paragraph 6 of Part V (Additional Information) of this document.

That summary does not constitute tax advice and does not purport to be a full analysis of all potential United Kingdom and United States tax consequences of the Acquisition. Nightstar Shareholders who are in any doubt about their taxation position, or who are subject to taxation in a jurisdiction outside of the United Kingdom and the United States are strongly advised to contact an appropriate independent professional adviser immediately.

 

19.

Actions to be taken

You will find enclosed with this document:

All Nightstar Shareholders:

 

   

a blue Form of Proxy to be used in connection with the Court Meeting;

 

   

a white Form of Proxy to be used in connection with the General Meeting; and

 

   

a prepaid envelope.

If you hold Nightstar Shares in CREST, you may instead appoint a proxy by completing and transmitting a CREST Proxy Instruction to Nightstar’s registrars, Computershare.

If you have not received the correct documents please contact the Nightstar Shareholder Helpline on the telephone number set out on page xvii of this document.

 

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Forms of Proxy

Whether or not you intend to attend the Court Meeting and/or the General Meeting, please complete and sign both Forms of Proxy in accordance with the instructions printed thereon and return them by post using the prepaid envelope provided, during normal business hours only, to Computershare at The Pavilions, Bridgwater Road, Bristol, BS13 8AE, United Kingdom, so as to be received as soon as possible and in any event not later than, than         a.m. on                  2019 in the case of the Court Meeting and         a.m. on                  2019 in the case of the General Meeting.

If the blue Form of Proxy for the Court Meeting is not lodged by such time, it may be handed to a representative of Computershare at the venue of the Court Meeting or the Chairman of the Court Meeting before the start of the Court Meeting. However, in the case of the General Meeting, unless the white Form of Proxy is lodged so as to be received by         a.m. on                  2019, it will be invalid. The completion and return of the Forms of Proxy or transmittal of a CREST Proxy Instruction will not prevent you from attending the Court Meeting or the General Meeting and voting in person, if you so wish and are so entitled.

If you hold your Nightstar Shares in uncertificated form (that is, in CREST) you may vote using the CREST Proxy Voting Service in accordance with the procedures set out in the CREST Manual (please also refer to the accompanying notes for the Notice of General Meeting set out at pages ix to xiii of this document).

Nightstar Shareholders who prefer to register the appointment of their proxy electronically via the internet can do so through the Computershare website at www.eproxyappointment.com. In order to access the voting system, shareholders will need their shareholder investor code found on their Form of Proxy. Further details in relation to electronic appointment of proxies are set out on page xxii of this document.

Proxies submitted via CREST (under CREST participant ID 3RA50) or electronically through the Computershare website must be received by Computershare not later than         a.m. on                  2019 in the case of the Court Meeting and         a.m. on                  2019 in the case of the General Meeting (or, in the case of an adjourned meeting, not less than 48 hours prior to the time and date set for the adjourned meeting).

Notices convening the Court Meeting and the General Meeting are set out on pages vi to viii (Notice of Court Meeting) and pages ix to xiii (Notice of General Meeting) of this document respectively.

It is important that as many votes as possible are cast at the Court Meeting so that the Court may be satisfied that there is a fair representation of Nightstar Scheme Shareholder opinion. You are therefore strongly encouraged to sign and return the blue Form of Proxy for the Court Meeting as soon as possible. You are also encouraged to sign and return the white Form of Proxy for the General Meeting at the same time as the blue Form of Proxy for the Court Meeting or if you hold Nightstar Shares in CREST, via a CREST Proxy Instruction.

If you have any queries relating to this document or the completion and return of the Forms of Proxy, please call the Nightstar Shareholder Helpline on +44 370 703 6033. Lines are open Monday to Friday (except public holidays) between 8.30 a.m. and 5.30 p.m.

Calls will be charged at the standard geographic rate and will vary by provider. International calls will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. Please note that the Nightstar Shareholder Helpline operators cannot provide advice on the merits of the Scheme or the Acquisition or give any financial, legal, investment or tax advice.

 

20.

Further information

The terms of the Scheme are set out in full in Part VIII (The Scheme of Arrangement) of this document. Your attention is also drawn to the further information contained in Part III (Conditions to and Further Terms of the Scheme and the Acquisition), Part IV (Financial Information) and Part V (Additional Information).

 

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PART III

CONDITIONS TO AND FURTHER TERMS OF THE SCHEME AND THE ACQUISITION

Part A

Conditions to the Scheme and the Acquisition

The Acquisition is conditional upon the Scheme becoming unconditional and becoming Effective, by no later than 11.59 p.m. on the Long Stop Date.

Scheme approval

 

A.

The Scheme is conditional upon:

 

  (i)

 

  (A)

its approval by a majority in number representing not less than 75 per cent. in value of the Nightstar Shareholders (or the relevant class or classes thereof, if applicable) in each case present, entitled to vote and voting, either in person or by proxy, at the Court Meeting and at any separate class meeting which may be required by the Court or at any adjournment of any such meeting; and

 

  (B)

the Court Meeting and any separate class meeting which may be required by the Court or any adjournment of any such meeting being held on or before                  2019 (or such later date, if any, as Bidder and Nightstar may agree and the Court may allow);

 

  (ii)

 

  (A)

all resolutions necessary to approve and implement the Scheme being duly passed by the requisite majority or majorities at the General Meeting or at any adjournment of that meeting; and

 

  (B)

the General Meeting or any adjournment of that meeting being held on or before                  2019 (or such later date, if any, as Bidder and Nightstar may agree and the Court may allow); and

 

  (iii)

 

  (A)

the sanction of the Scheme by the Court with or without modification (but subject to any such modification being acceptable to Bidder and Nightstar) and the delivery of a copy of the Court Order to the Registrar of Companies; and

 

  (B)

the Court Hearing being held on or before the date immediately preceding the Long Stop Date (or such later date, if any, as Bidder and Nightstar may agree and the Court may allow).

If any Condition referred to in paragraphs A(i) to A(iii) above is not capable of being satisfied by the date specified therein, Bidder shall make an announcement through GlobeNewswire or another national news wire service as soon as practicable and, in any event, by not later than 7.00 a.m. (New York time) on the Business Day following the date so specified, stating whether Bidder has invoked that Condition or, with the agreement of Nightstar, specified a new date by which that Condition must be satisfied.

In addition, Bidder and Nightstar have agreed that the Acquisition is conditional upon the following Conditions and, accordingly, the necessary actions to make the Scheme Effective will not be taken unless the following Conditions have been satisfied or, where relevant, waived:

No restraints

 

B.

no Law shall have been enacted, issued, enforced or entered into, and no preliminary or permanent injunction, judgment or ruling shall have been issued by any Governmental Authority that is, in either case, in effect and enjoins, restrains, prevents or prohibits or otherwise makes illegal the Acquisition;

 

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Competition law and regulatory approvals

 

C.

the waiting period (and any extension thereof) applicable to the consummation of the Acquisition under the U.S. HSR Act, shall have expired or been terminated and the anti-trust notifications and approvals set forth in Paragraph 4.5 of Schedule V to the Implementation Agreement shall have been obtained;

Accuracy of representations and warranties

 

D.

except as Disclosed, (i) the representations and warranties set forth in Clause 11.1.1 (Corporate Existence and Power), Clause 11.1.2 (Subsidiaries), Clause 11.1.3 (Organisational Documents), Clause 11.1.4 (Corporate Authorisation), Clause 11.1.5 (Binding Obligations), Clause 11.1.8(c) – (f) (Capitalisation; Indebtedness), Clause 11.1.21 (Opinion of Financial Advisor) and Clause 11.1.22 (Finders Fees) of the Implementation Agreement shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or Company Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Company Material Adverse Effect) as at the date of the Implementation Agreement and as at 11.59 p.m. on the date immediately preceding the date of the Court Hearing, as though made as at 11.59 p.m. on the date immediately preceding the date of the Court Hearing (except to the extent such representations and warranties are made as at an earlier date, in which case as at such earlier date), (ii) the representations and warranties set forth in Clause 11.1.8(a) and (b) (Capitalisation) of the Implementation Agreement shall be true and correct in all respects other than de minimis inaccuracies as at the date of the Implementation Agreement and as at 11.59 p.m. on the date immediately preceding the date of the Court Hearing, as though made as at 11.59 p.m. on the date immediately preceding the date of the Court Hearing (except to the extent such representations and warranties are made as at an earlier date, in which case as at such earlier date) and (iii) each of the other representations and warranties of Nightstar contained in the Implementation Agreement shall be true and correct as at the date of the Implementation Agreement and as at 11.59 p.m. on the date immediately preceding the date of the Court Hearing, as though made as at 11.59 p.m. on the date immediately preceding the date of the Court Hearing (except to the extent such representations and warranties are made as at an earlier date, in which case as at such earlier date), except in the case of clause (iii) where such failure(s) to be true and correct (without giving effect to any materiality or Company Material Adverse Effect qualifications set forth therein) have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect;

Compliance with terms of the Implementation Agreement

 

E.

Nightstar shall have performed or complied in all material respects with all obligations, agreements and covenants required by the Implementation Agreement to be performed or complied with by it at or prior to 9.00 a.m. on the date of the Court Hearing;

No Company Material Adverse Effect

 

F.

since the date of the Implementation Agreement, no Company Material Adverse Effect shall have occurred and be continuing; and

Delivery of officer’s certificate

 

G.

Nightstar shall have delivered to Bidder a certificate, effective as at 9.00 a.m. on the date of the Court Hearing and signed by an authorised officer of Nightstar, certifying that the conditions in paragraphs D to F above have been satisfied.

 

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Part B

Waiver and Invocation of the Conditions

Each of Bidder and Bidco reserves the right to waive, in whole or in part, all or any of the Conditions in Part A above, except for Conditions A(i)(A), A(ii)(A) and A(iii)(A) (Scheme approval), which cannot be waived.

The Acquisition is subject to the satisfaction (or waiver, if permitted) of the Conditions in Part A above, and to certain further terms set out in Part D below, and to the full terms and conditions set out in this document.

Conditions A(i), A(ii) (Scheme approval) and B (No restraints) to G (Delivery of officer’s certificate) (inclusive) must be fulfilled, determined by Bidder to be or to remain satisfied or (if capable of waiver) waived, by no later than 9.00 a.m. on the date of the Court Hearing, failing which the Acquisition will lapse. Bidder and Bidco shall be under no obligation to waive or treat as satisfied any of Conditions B (No restraints) to G (Delivery of officer’s certificate) (inclusive) by a date earlier than the latest date specified above for the fulfilment or waiver thereof, notwithstanding that the other Conditions to the Acquisition may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such Conditions may not be capable of fulfilment.

Part C

Implementation by way of an Offer

Subject to the terms of the Implementation Agreement, each of Bidder and Bidco reserves the right to elect to implement the Acquisition by way of an Offer as an alternative to the Scheme, if Nightstar provides its written consent.

In such event, such Offer will be implemented on the same terms and conditions, so far as applicable, as those which would apply to the Scheme subject to appropriate amendments to reflect the change in method of effecting the Offer, including (without limitation) the inclusion of an acceptance condition set at 90 per cent. of the Nightstar Shares to which the Offer relates or such lesser percentage as Bidder or Bidco, decides with Nightstar’s written consent, being in any case more than 50 per cent. of the Nightstar Shares to which the Offer relates.

Part D

Certain further terms of the Acquisition

The Acquisition will lapse if the Scheme does not become Effective by 11.59 p.m. on the Long Stop Date.

The availability of the Acquisition to persons not resident in the U.K. or U.S. may be affected by the Laws of the relevant jurisdictions. Persons who are not resident in the U.K. or U.S. should inform themselves about, and observe, any applicable requirements. Nightstar Shareholders who are in any doubt about such matters should consult an appropriate independent professional adviser in the relevant jurisdiction without delay and observe any applicable requirements.

This Acquisition will be governed by English law and be subject to the jurisdiction of the English courts.

Each of the Conditions shall be regarded as a separate Condition and shall not be limited by reference to any other Condition.

The Nightstar Shares will be acquired by Bidco (or its nominee) with full title guarantee, fully paid and free from all liens, equitable interests, charges, encumbrances, rights of pre-emption and any other third party rights or interests whatsoever and together with all rights existing at the date of the Announcement or thereafter attaching thereto, including (without limitation) the right to receive and retain, in full, all dividends and other distributions (if any) declared, made or paid or any other return of capital (whether by way of reduction of share capital or share premium account or otherwise) made on or after the Effective Date in respect of the Nightstar Shares.

 

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PART IV

FINANCIAL INFORMATION

Part A: Financial Information relating to Nightstar

The following sets out financial information in respect of Nightstar. The documents referred to below, the contents of which have previously been filed with the SEC, are incorporated into this document by reference:

 

Financial Information

  

Reference

Audited consolidated accounts for the financial years ended 31 December 2016 and 31 December 2017   

https://ir.nightstartx.com/static-files/6d1be3a6-2f7a-4424-9cf1-f6a9d19d0f14

 

The audited consolidated accounts of the Nightstar Group for the financial years ended 31 December 2016 and 31 December 2017 are set out in Part III in the Form 20-F of Nightstar for the year ended 31 December 2017, filed on 3 April 2018 and are available from Nightstar’s website (at the link referred to above)

Unaudited interim condensed consolidated financial statements for the three months and nine months ended 30 September 2018   

https://ir.nightstartx.com/static-files/223132c6-1bec-4081-afa1-ceb409db7da5

 

The unaudited interim condensed consolidated financial statements of the Nightstar Group for the three months and nine months ended 30 September 2018 are set out in Exhibit 99.1 in the Form 6-K of Nightstar filed on 20 November 2018 and are available from Nightstar’s website (at the link referred to above)

Part B: Financial Information relating to the Biogen Group

The following sets out financial information in respect of Biogen. The documents referred to below, the contents of which have previously been filed with the SEC, are incorporated into this document by reference:

 

Financial Information

  

Reference

Audited consolidated accounts for the financial year ended 2017   

http://investors.biogen.com/sec-filings/sec-filing/10-k/0000875045-18-000005

 

The audited consolidated accounts of the Biogen Group for the financial year ended 31 December 2017 are set out in the annual report of Biogen on Form 10-K for the year ended 31 December 2017, filed on 1 February 2018 and available from Biogen’s website (at the link referred to above)

Audited consolidated accounts for the financial year ended 2018   

http://investors.biogen.com/sec-filings/sec-filing/10-k/0000875045-19-000006

 

The audited consolidated accounts of the Biogen Group for the financial year ended 31 December 2018 are set out in the annual report of Biogen on Form 10-K for the year ended 31 December 2018, filed on 6 February 2019 and available from Biogen’s website (at the link referred to above)

No incorporation of website information

Save as expressly referred to herein, neither the content of Biogen’s or Nightstar’s websites, nor the contents of any website accessible from hyperlinks from Biogen’s or Nightstar’s website, is incorporated into, or forms part of, this document.

 

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PART V

ADDITIONAL INFORMATION

 

1.

Responsibility

 

(a)

The Nightstar Directors, whose names are set out in paragraph 2(a) below, each accept responsibility for the information contained in this document other than the information for which responsibility is taken by others pursuant to paragraph 1(b) below. To the best of the knowledge and belief of the Nightstar Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

 

(b)

The Bidco Director, whose name is set out in paragraph 2(b) below, accepts responsibility for the information contained in this document relating to Biogen, the Bidder Group and the Bidco Director (including their immediate families, related trusts and persons connected with them). To the best of the knowledge and belief of the Bidco Director (who has taken all reasonable care to ensure that such is the case), the information contained in this document for which he accepts responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

 

2.

Directors

 

(a)

The Nightstar Directors and their respective positions in Nightstar are as follows:

 

Name

  

Position

Chris Hollowood    Chairman
David Fellows    Chief Executive Officer
Paula Cobb    Director
David Lubner    Director
James McArthur    Director
David Mott    Director
Scott Whitcup    Director

The registered office of Nightstar and the business address of each of the Nightstar Directors is 10 Midford Place, London, W1T 5BJ.

 

(b)

The Bidco Director and his positions in Bidco and Biogen are as follows:

 

Name

  

Position

Daniel Karp   

Director of Bidco

Executive Vice President, Corporate Development of Biogen

The registered office of Bidco is 70 Norden Road, Maidenhead, United Kingdom, SL6 4AY. The business address of the Bidco Director is 225 Binney Street, Cambridge, Massachusetts, 02142.

 

3.

Market quotations

Set out below are the Closing Prices of Nightstar Shares as derived from Nasdaq on:

 

  (i)

the first dealing day in each of the six months immediately before the date of this document; and

 

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  (ii)

                 2019 (the last practicable date prior to the publication of this document).

 

Date

   Nightstar
ADSs
(USD)
 

                

               

1 March 2019

     15.16  

1 February 2019

     14.50  

2 January 2019

     12.10  

3 December 2018

     15.32  

1 November 2018

     10.83  

1 October 2018

     18.52  

 

4.

Interests of Nightstar Non-Employee Directors and Executive Officers

In considering the recommendation of the Nightstar Board that you vote in favour of the Scheme and the Special Resolution, you should be aware that aside from their interests as Nightstar Shareholders, Nightstar’s Non-Employee Directors and executive officers have interests in the Acquisition that may be different from, or in addition to those of Nightstar Shareholders generally. Members of the Nightstar Board were aware of and considered these interests, among other matters, in evaluating and negotiating the Implementation Agreement and the Acquisition and in recommending to Nightstar Shareholders that they vote in favour of the Scheme and the Special Resolution. See the section entitled “Reasons for the Recommendation” in paragraph 9 of Part I (Letter from the Chairman of Nightstar Therapeutics plc). These interests are described in more detail and certain of them are quantified in the narrative below.

Treatment of Nightstar Director and Executive Officer Equity Awards

As described more fully in the section entitled “Nightstar Equity Awards” in paragraph 9 of Part II (Explanatory Statement), in addition to any Consideration received in respect of Nightstar Shares in their capacity as Nightstar Shareholders, all Non-Employee Directors and executive officers will receive in respect of each Nightstar Share subject to their outstanding equity awards issued pursuant to the 2017 Equity Incentive Plan (whether vested or unvested), which consists of stock options and restricted shares, a payment equal to the Consideration less any applicable exercise or purchase price and applicable withholdings. Any Pre-IPO Equity Awards held by Non-Employee Directors or executive officers will be acquired in the Scheme and the holders will receive the Consideration in respect of each Nightstar Share acquired and any Deferred Shares will be repurchased by Nightstar prior to the Effective Date for a total payment of GBP 0.01 to the holder.

The following table sets forth for the Non-Employee Directors (as a group) and for each Nightstar executive officer, the number of unvested Nightstar options and unvested shares of Nightstar restricted stock based on the individual’s holdings as at 4 March 2019. The table separately quantifies the value of such unvested awards using a price per share of USD 25.50, which is the Consideration per Nightstar Share provided for under the Implementation Agreement (net of applicable exercise prices).

 

    

Unvested
Options

(#)

    

Unvested
Options

(USD)

    

Unvested
Restricted
Stock
Awards

(#)

    

Unvested
Restricted
Stock
Awards

(USD)

 

Non-Employee Directors (as a group)*

     265,534        2,880,019        79,665        2,031,458  

Executive Officers

           

David Fellows

     426,933        4,671,716        182,862        4,662,981  

Tuyen Ong

     123,963        1,347,123        81,401        2,075,726  

Gregory Robinson

     144,525        1,581,652        75,091        1,914,821  

Senthil Sundaram

     151,200        1,648,162        74,207        1,892,279  

Bryan Yoon

     205,725        1,334,514        n/a        n/a  

 

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  *

Robert MacLaren resigned as a director of Nightstar, effective 15 April 2018 and will not receive any acceleration of equity awards or other compensation or benefits in connection with the completion of the Acquisition.

Indemnification of Nightstar Directors and Officers

The rights of Nightstar Directors and executive officers to indemnification and directors’ and officers’ liability insurance will survive following the Scheme becoming Effective.

Executive Officer Employment Agreements and Severance Program

Each of Nightstar’s executive officers is party to an employment agreement with Nightstar Inc. (except that the agreements with Dr. Ong and Mr. Sundaram are with NightstaRx Limited). The employment agreements provide for severance benefits in connection with a qualifying termination, and, for Mr. Fellows, Mr. Robinson and Mr. Yoon, enhanced severance benefits in the event the executive officer experiences a qualifying termination that occurs during the twelve-month period immediately following the Effective Date. In addition, Nightstar will adopt a severance program in connection with the Acquisition that will provide for a pro rata bonus upon termination if not specified in an executive officer’s contract. In the event of such a qualifying termination in connection with the completion of the Acquisition, the executive officer would be entitled to cash severance in an amount equal to twelve months of base salary continuation, lump sum target cash annual cash bonus for the year of termination (pro-rated to the date of termination), payable in a lump sum, and certain health coverage benefits for up to twelve months.

The table below sets forth an estimate of the value of the cash severance, pro rata bonus and health coverage benefits each executive officer would be eligible to receive in accordance with such individual’s employment agreement and Nightstar’s severance program upon experiencing a qualifying termination in connection with the completion of the Acquisition, assuming the Effective Date of the Scheme occurs on 30 June 2019.

 

Executive Officer   

Severance

(USD)

    

Change in
Control

Pro Rata
Bonus

(USD)

    

Health
and
Welfare
Benefits

(USD)

 

David Fellows

     533,100        133,275        28,870  

Tuyen Ong

     441,200        88,240        0  

Gregory Robinson

     365,300        73,060        30,184  

Senthil Sundaram

     374,500        74,900        10,658  

Bryan Yoon

     370,800        74,160        30,184  

 

5.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information regarding the beneficial ownership of Nightstar Shares as at 28 February 2019 by: (i) each Nightstar Director; (ii) each Nightstar named executive officer; (iii) all of the Nightstar Directors and executive officers as a group; and (iv) each person, or group of affiliated persons, known by Nightstar to beneficially own more than 5 per cent. of the issued share capital. Unless otherwise indicated, the persons or entities identified in the table have sole voting and investment power with respect to all Nightstar Shares shown as beneficially owned by them, subject to applicable community property laws.

Information with respect to beneficial ownership has been furnished by each Nightstar Director and executive officer. With respect to beneficial owners of more than 5 per cent. of the issued share capital of Nightstar, information is based on information filed with the SEC. Nightstar has determined beneficial ownership in accordance with the rules of the SEC. The rules require inclusion of shares issuable to such persons within 60 days after 28 February 2019. These shares are deemed to be outstanding and beneficially

 

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owned by the person holding the right to issuance for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Percentage ownership calculations are based on 33,483,821 Nightstar Shares (excluding Deferred Shares) outstanding as at 28 February 2019.

Except as otherwise indicated in the table below, addresses of the directors, executive officers and named beneficial owners are in care of Nightstar Therapeutics plc, 10 Midford Place, London W1T 5BJ, United Kingdom.

 

Name and Address of Beneficial Owner

   Number of
Nightstar
Shares(1)
     Percentage of issued
ordinary share
capital of Nightstar
 

5 per cent. Shareholders

 

Redmile Group, LLC(2) 

One Letterman Drive

Building D, Suite D3-300

The Presidio of San Francisco

San Francisco, California 94129

     1,795,846        5.4

Woodford Investment Management Ltd.(3)

9400 Garsington Road, Oxford OX4 2HN

United Kingdom

     1,921,315        5.7

Syncona Portfolio Ltd(4) 

Arnold House, St. Julian’s Avenue

St. Peter Port, Guernsey GY1 3RD

Channel Islands

     13,203,922        39.4

Wellington Management Group LLP(5)

280 Congress St.

Boston, Massachusetts 02210

     3,071,865        9.2

New Enterprise Associates 15, L.P.(6)

1954 Greenspring Drive, Suite 600

Timonium, Maryland 21093

     6,662,532        19.9

Biogen Inc.(7)

225 Binney Street

Cambridge Massachusetts 02142

     20,638,209        61.6

Named Executive Officers and Directors

 

Paula Cobb

     —          —    

David Fellows

     695,145        2.07

Chris Hollowood(8)

     13,216,055        39.5

David Lubner

     29,124        *  

James McArthur

     49,370        *  

David Mott(9)

     6,662,532        19.9

Gregory Robinson

     127,029        *  

Senthil Sundaram

     146,027        *  

Scott Whitcup

     74,568        *  

All current directors and executive officers as a group (11 persons)

     21,155,847        63.2

 

  *

Less than 1 per cent. of the outstanding ordinary share capital of Nightstar.

 

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  (1)

Includes all options and other rights to acquire shares as follows: David Fellows 68,750; Chris Hollowood, 12,133 shares; James McArthur, 12,133 shares; Gregory Robinson, 23,437 shares; Senthil Sundaram, 18,750 shares; and all current directors and executive officers as a group, 208,275 shares.

  (2)

Consists of Nightstar Shares reported on a Schedule 13G/A (Amendment No. 1) filed with the SEC on 14 February 2019 by Redmile Group LLC, or “Redmile”. Redmile serves as the manager to the private investment vehicles and/or separately managed accounts that own the shares. Redmile, as the manager to the private investment vehicles and managed accounts and Jeremy Green, as the principal of Redmile, may therefore be deemed to beneficially own securities owned by such private investment vehicles and/or separately managed accounts for the purposes of Rule 13d-3 of the U.S. Exchange Act, insofar as they may be deemed to have the power to direct the voting or disposition of the shares. As at 31 December 2018, Redmile and Mr. Green had shared dispositive power and voting power over 1,795,846 Nightstar Shares. Redmile and Mr. Green each disclaim beneficial ownership of all shares held of record by Redmile in which they do not have an actual pecuniary interest.

  (3)

Consists of Nightstar Shares reported on a Schedule 13G filed with the SEC on 14 February 2019 by Woodford Investment Management Ltd or Woodford Investment Management. Woodford Investment Management serves as the investment manager of LF Woodford Equity Income Fund and the West Fund who are the holders of record of the Nightstar Shares. Woodford Investment Management and Neil Woodford, the Head of Investment for Woodford Investment Management may therefore be deemed to beneficially own securities owned by such private investment vehicles and/or separately managed accounts for the purposes of Rule 13d-3 of the U.S. Exchange Act, insofar as they may be deemed to have the power to direct the voting or disposition of the shares. As at 31 December 2018, Woodford Investment Management and Neil Woodford, had shared voting power with respect to 1,150,000 Nightstar Shares and shared dispositive power with respect to 1,921,315 Nightstar Shares. Neither LF Woodford Equity Income Fund nor the West Fund beneficially owns more than 5 per cent of the issued and outstanding Nightstar Shares individually. Mr. Woodford disclaims beneficial ownership of all shares held of record by Woodford Investment Management in which he does not have an actual pecuniary interest.

  (4)

Consists of Nightstar Shares and Nightstar ADSs reported in a Schedule 13G/A (Amendment No. 2) filed with the SEC on 14 March 2018 by Syncona Portfolio Limited. The shares are held directly by Syncona Portfolio Limited, a subsidiary of Syncona Holdings Limited. Investment and voting decisions with respect to the shares are made by Syncona Portfolio Limited, acting upon the recommendation of an investment committee of Syncona Investment Management Limited, also a subsidiary of Syncona Holdings Limited. Syncona Holdings Limited is a wholly controlled subsidiary of Syncona Limited. As at 31 December 2018, Syncona Portfolio Limited, Syncona Holdings Limited, Syncona Investment Management Limited and Syncona Limited report shared voting power with respect to 11,203,922 Nightstar Shares and 2,000,000 Nightstar ADSs and shared dispositive power with respect to all of such Nightstar Shares and Nightstar ADSs. Each of these entities disclaim beneficial ownership of all shares held of record by Syncona Portfolio Limited in which they do not have an actual pecuniary interest.

  (5)

Consists of Nightstar Shares reported in a Schedule 13G/A (Amendment No. 4) filed with the SEC on 12 February 2018 by Wellington Management Group LLP. As at 31 December 2018, Wellington Management Group LLP, Wellington Group Holdings LLP and Wellington Investment Advisors Holdings LLP each report shared voting power with respect to 2,895,136 Nightstar Shares and shared dispositive power with respect to 3,071,865 Nightstar Shares. Wellington Management Company LLP reports shared voting power with respect to 2,882,395 Nightstar Shares and shared dispositive power with respect to 2,945,153 Nightstar Shares. According to that filing, the Nightstar Shares are owned of record by clients of certain investment advisors controlled, directly or indirectly, by Wellington Investment Advisors Holdings LLP, including Wellington Management Company LLP. Wellington Investment Advisors Holdings LLP is owned by Wellington Group Holdings LLP. Wellington Group Holdings LLP is owned by Wellington Management Group LLP.

  (6)

Consists of Nightstar Shares and Nightstar ADSs as reported in a Schedule 13D/A (Amendment No. 2) filed with the SEC on 13 March 2019. Each of New Enterprise Associates 15, L.P., NEA Partners 15, L.P., NEA 15 GP, LLC, Peter J. Barris, Forest Baskett, Anthony A. Florence, Jr., Mohamad Makhzoumi, Joshua Makower, David M. Mott, Scott D. Sandell and Peter W. Sonsini report shared voting power with respect to 5,448,247 Nightstar Shares and 1,214,285 Nightstar ADSs and shared dispositive power with respect to all of such Nightstar Shares and Nightstar ADSs. New Enterprise Associates 15, L.P. is the record owner of the Nightstar Shares and Nightstar ADSs. NEA Partners 15, L.P. is the sole general partner of New Enterprise Associates 15, L.P. NEA 15 GP, LLC is the sole general partner of NEA Partners 15, L.P. Peter Barris, Forest Baskett, Anthony Florence, Jr., Mohamad Makhzoumi, Joshua Makower, David Mott, Scott Sandell and Peter Sonsini are the individual managers of NEA 15 GP, LLC. David Mott is also a member of the Nightstar Board. Each of these individuals and entities disclaims beneficial ownership of all shares held of record by New Enterprise Associates 15, L.P. other than those shares which each such individual/entity owns of record.

  (7)

As required under SEC rules, Biogen and Bidder may report indirect beneficial ownership with respect to 20,638,209 Nightstar Shares and Nightstar ADSs only as a result of the Irrevocable Undertakings, which are described in paragraph 7 of Part V (Additional Information). For these purposes the term “beneficial ownership” is defined in accordance with applicable SEC rules and Biogen does not hold, directly or indirectly, any legal or economic interest in Nightstar Shares or Nightstar ADSs.

  (8)

Includes Nightstar Shares and Nightstar ADSs set forth in footnote (4) above held by Syncona Portfolio Limited. Dr. Hollowood, a member of the Nightstar Board, is a member of the investment committee of Syncona Investment Management Limited, a subsidiary of Syncona Holdings Limited, the parent company of Syncona Portfolio Limited.

  (9)

Consists of the Nightstar Shares and Nightstar ADSs set forth in footnote (6) above held by New Enterprise Associates 15, L.P. Mr. Mott, a member of the Nightstar Board, is a partner at NEA 15 LLC.

 

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6.

United Kingdom and United States taxation

United Kingdom taxation

The comments set out below are based on current United Kingdom tax law as applied in England and Wales and HMRC practice (which may not be binding on HMRC) as at the date of this document, both of which are subject to change, possibly with retrospective effect. They are intended as a general guide to certain limited aspects of the United Kingdom tax treatment of the Scheme and apply only to Nightstar Shareholders and Nightstar ADS Holders (i) resident and, in the case of an individual, domiciled for tax purposes in the United Kingdom only; (ii) to whom “split year” treatment does not apply; (iii) who hold their Nightstar Shares or Nightstar ADSs as an investment (other than under a pension arrangement or an ISA or a Lifetime ISA); and (iv) who are the absolute beneficial owners of their Nightstar Shares or, in respect of Nightstar ADS Holders, who are treated as absolute beneficial owners of the shares underlying their Nightstar ADSs. The discussion does not address all possible tax consequences relating to the Scheme. This discussion does not address the tax considerations relevant to the receipt of Nightstar dividends. Certain categories of shareholders, including those carrying on certain financial activities, those subject to specific tax regimes or benefitting from certain reliefs and exemptions, those connected with Nightstar or Bidder, and those for whom the shares are employment-related securities may be subject to special rules and this summary does not apply to such shareholders.

Nightstar Shareholders, Nightstar ADS Holders or prospective shareholders who are in any doubt about their tax position, or who are resident or otherwise subject to taxation in a jurisdiction outside the United Kingdom, should consult their own professional advisers immediately.

Where a Nightstar Shareholder receives cash in respect of his or her Nightstar Shares, that Nightstar Shareholder will be treated as disposing of his Nightstar Shares which may, depending on the Nightstar Shareholder’s individual circumstances (including the availability of exemptions, reliefs or allowable losses) give rise to a liability to U.K. tax on chargeable gains or, alternatively, an allowable capital loss. The same treatment will apply to U.K. resident Nightstar ADS Holders, who will receive cash consideration for their Nightstar ADSs.

No U.K. stamp duty or stamp duty reserve tax should be payable by the Nightstar Shareholders or Nightstar ADS Holders on a disposal of their Nightstar Shares or Nightstar ADSs in accordance with the Scheme.

United States taxation

The following discussion summarises certain material U.S. federal income tax considerations of the Scheme generally relevant to holders of Nightstar Shares and Nightstar ADSs who are U.S. Shareholders (as defined below), assuming that the Scheme becomes Effective. This discussion is based on the Code, Treasury Regulations promulgated under the Code, judicial decisions, administrative rulings and other official interpretations thereof, in effect as at the date of this document and all of which are subject to change, possibly with retroactive effect. The discussion below does not address all U.S. federal income tax consequences or any state, local or non-U.S. tax consequences of the Scheme or any U.S. federal estate, gift or alternative minimum tax considerations. This discussion does not apply to Nightstar Shareholders or Nightstar ADS Holders who received Nightstar Shares or Nightstar ADSs, as applicable, pursuant to the exercise of employee share options, warrants or otherwise in connection with the performance of services. The tax treatment of Nightstar Shareholders and Nightstar ADS Holders may vary depending upon each Nightstar Shareholder’s or Nightstar ADS Holder’s particular situation and each Nightstar Shareholder and Nightstar ADS Holder should consult a professional tax adviser with respect to the tax consequences of the Scheme to it. Also, this discussion does not apply to Nightstar Shareholders or Nightstar ADS Holders subject to special treatment, including:

 

   

brokers and dealers in securities or currencies;

 

   

traders in securities that elect to use the mark-to-market method of accounting;

 

   

tax-exempt entities (including private foundations);

 

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banks and thrifts and other financial institutions;

 

   

regulated investment companies;

 

   

retirement plans and pension plans;

 

   

real estate investment trusts;

 

   

insurance companies;

 

   

persons that hold their Nightstar Shares or Nightstar ADSs in a tax deferred account;

 

   

persons that hold Nightstar Shares or Nightstar ADSs as part of a “straddle,” a “hedge,” a “constructive sale” transaction, a “conversion transaction,” a “synthetic security” or other integrated investment;

 

   

persons that own or have owned within the past five years (or are deemed to own or to have owned within the past five years), actually or through certain “constructive ownership” rules, 10 per cent. or more of the outstanding Nightstar Shares (including indirectly through Nightstar ADSs);

 

   

persons that have a “functional currency” other than the U.S. dollar;

 

   

certain former citizens or residents of the United States;

 

   

controlled foreign corporations;

 

   

passive foreign investment companies; and

 

   

subchapter S corporations, partnerships or other pass-through entities for U.S. federal income tax purposes and persons that hold Nightstar Shares or Nightstar ADSs through such pass-through entities.

This discussion also does not address the U.S. federal income tax consequences of the Scheme to holders of Nightstar Shares or Nightstar ADSs who do not hold such shares as a capital asset, which is generally property held for investment, and does not address tax consequences of the Scheme to Nightstar Shareholders or Nightstar ADS Holders who are not U.S. Shareholders (as defined below). For purposes of this discussion, a “U.S. Shareholder” is any beneficial owner of Nightstar Shares or Nightstar ADSs who, for U.S. federal income tax purposes, is:

 

  a)

a citizen or individual resident of the United States;

 

  b)

a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organised in or under the laws of the United States, any state thereof, or the District of Columbia;

 

  c)

an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

 

  d)

a trust, if (1) a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all the substantial decisions of the trust, or (2) the trust has a valid election in effect under current Treasury Regulations to be treated as a U.S. person.

For investors who own Nightstar Shares or Nightstar ADSs through a partnership or an entity treated as a partnership for U.S. federal income tax purposes, the U.S. federal income tax treatment will generally depend upon the status of the partner and the activities of the partnership. Such investors should consult their own tax adviser as to their particular tax consequences.

No ruling has been or will be sought from the IRS with respect to any of the U.S. federal income tax considerations discussed below, and no assurance can be given that the IRS will not take a position contrary to the discussion below, or that a court will not sustain any challenge by the IRS in the event of litigation.

Part A: Income Tax Consequences to U.S. Shareholders

The Scheme will be a taxable event for U.S. federal income tax purposes and each U.S. Shareholder will recognise gain or loss with respect to its Nightstar Shares and Nightstar ADSs, measured by the difference

 

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between the amount of Consideration paid to such U.S. Shareholder and such U.S. Shareholder’s adjusted tax basis in its Nightstar Shares or Nightstar ADSs, as applicable. If a U.S. Shareholder acquired Nightstar Shares or Nightstar ADSs by purchase, the U.S. Shareholder’s adjusted tax basis in its Nightstar Shares or Nightstar ADSs will generally equal the amount the U.S. Shareholder paid for the relevant Nightstar Shares or Nightstar ADSs, less any returns of capital that the U.S. Shareholder might have received with regard to the relevant Nightstar Shares or Nightstar ADSs. In the case of a U.S. Shareholder who holds multiple blocks of Nightstar Shares or Nightstar ADSs (blocks of Nightstar Shares or Nightstar ADSs acquired separately at different times and/or prices), gain or loss and holding period must be calculated and accounted for separately for each block.

Subject to the discussion under “Passive Foreign Investment Company Status and Related Tax Consequences” below, the gain or loss on the sale of Nightstar Shares or Nightstar ADSs will constitute long-term capital gain or loss if the Nightstar Shares or Nightstar ADSs have been held for more than one year as at the Effective Date. If a U.S. Shareholder receiving long-term capital gain is an individual or other non-corporate shareholder, then the capital gain will generally be subject to U.S. federal income tax at a maximum rate of 20 per cent. Short-term capital gains received by such shareholders will be subject to tax at ordinary income rates of up to 37 per cent. U.S. Shareholders that are taxable as corporations for U.S. federal income tax purposes will generally be subject to 21 per cent. tax on any gain (whether long-term or short-term) from the sale or exchange of Nightstar Shares or Nightstar ADSs. A U.S. Shareholder’s ability to deduct capital losses is subject to several limitations. The gain or loss will generally be U.S.-source gain or loss for foreign tax credit purposes.

Part A-1: Passive Foreign Investment Company Status and Related Tax Consequences

If Nightstar was classified as a PFIC in any taxable year in which a U.S. Shareholder held Nightstar Shares or Nightstar ADSs, such U.S. Shareholder will be subject to special rules with respect to any gain recognised under the Scheme.

A non-U.S. corporation will be classified as a PFIC for any taxable year in which, after applying certain look-through rules, either:

 

   

at least 75 per cent. of its gross income is passive income (such as interest income); or

 

   

at least 50 per cent. of its gross assets (determined on the basis of a quarterly average) is attributable to assets that produce passive income or are held for the production of passive income.

For purposes of applying these tests, Nightstar will be treated as owning its proportionate share of the assets and earning its proportionate share of the income of any other corporation, the equity of which Nightstar owns, directly or indirectly, 25 per cent. or more (by value).

Nightstar believes that it was not classified as a PFIC in any prior taxable year, and does not expect to be classified as a PFIC in the current taxable year. However, there can be no assurance that Nightstar will not be classified as a PFIC for the current, or any prior, taxable year. The determination of whether Nightstar is a PFIC is a fact-intensive determination made on an annual basis and the applicable law is subject to varying interpretation. Because of the uncertainties involved in establishing Nightstar’s PFIC status, Nightstar’s U.S. counsel expresses no opinion regarding Nightstar’s PFIC status.

If Nightstar is treated as a PFIC with respect to U.S. Shareholders in the taxable year of the Effective Date, or in any prior taxable year in which a U.S. Shareholder held Nightstar Shares or Nightstar ADSs, such U.S. Shareholders will be subject to special tax rules with respect to any gain such U.S. Shareholder recognises from a sale of Nightstar Shares or Nightstar ADSs pursuant to the Scheme, unless such U.S. Shareholder has made a mark-to-market election as discussed below. Under these special tax rules:

 

   

the gain will be allocated ratably over a U.S. Shareholder’s holding period for the Nightstar Shares or Nightstar ADSs;

 

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the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which Nightstar became a PFIC, will be treated as ordinary income; and

 

   

the amount allocated to each other year will be subject to the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

The tax liability for amounts allocated to years prior to the year of disposition cannot be offset by any net operating losses for such years, and gains (but not losses) realised on the sale of the Nightstar Shares or Nightstar ADSs cannot be treated as capital, even if a U.S. Shareholder holds the Nightstar Shares or Nightstar ADSs as capital assets.

U.S. Shareholders can avoid the interest charge on gain relating to the Nightstar Shares or Nightstar ADSs by making a mark-to-market election with respect to the Nightstar Shares or Nightstar ADSs, provided that the Nightstar Shares or Nightstar ADSs are “marketable.” Nightstar Shares or Nightstar ADSs will be marketable if they are “regularly traded” on certain U.S. stock exchanges or on a foreign stock exchange that meets certain conditions. For these purposes, the Nightstar Shares or Nightstar ADSs will be considered regularly traded during any calendar year during which they are traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. Any trades that have as their principal purpose meeting this requirement will be disregarded. Nightstar ADSs are listed on Nasdaq, which is a qualified exchange for these purposes. Consequently, if Nightstar ADSs remain listed on Nasdaq and are regularly traded, and a U.S. Shareholder is a Nightstar ADS Holder, Nightstar expects the mark-to-market election would be available to U.S. Shareholders if Nightstar is a PFIC.

If a U.S. Shareholder has made a valid mark-to-market election, gains from the sale of the applicable Nightstar Shares or Nightstar ADSs pursuant to the Scheme will be treated as ordinary income, and any losses incurred on a sale or other disposition of the shares pursuant to the Scheme will be treated as an ordinary loss to the extent of any net mark-to-market gains for prior years. Once made, the election cannot be revoked without the consent of the IRS unless the Nightstar Shares or Nightstar ADSs cease to be marketable.

U.S. Shareholders should consult their tax advisors as to the availability and desirability of a mark-to-market election, as well as the impact of such election on interests in any lower-tier PFICs.

Unless otherwise provided by the U.S. Treasury, each U.S. Shareholder of a PFIC is required to file an annual report containing such information as the U.S. Treasury may require. A U.S. Shareholder’s failure to file the annual report will cause the statute of limitations for such U.S. Shareholder’s U.S. federal income tax return to remain open with regard to the items required to be included in such report until three years after the U.S. Shareholder files the annual report, and, unless such failure is due to reasonable cause and not wilful neglect, the statute of limitations for the U.S. Shareholder’s entire U.S. federal income tax return will remain open during such period. U.S. Shareholders should consult their tax advisors regarding the requirements of filing such information returns under these rules.

Part A-2: Net Investment Income Tax

U.S. Shareholders that are individuals, estates or trusts and whose income exceeds certain thresholds will be subject to an additional 3.8 per cent. net investment income tax on any capital gains and dividend income arising from the sale of their Nightstar Shares or Nightstar ADSs pursuant to the Scheme. Special rules apply and certain elections are available for certain U.S. Shareholders that are subject to the 3.8 per cent. net investment income tax and hold shares in a PFIC. U.S. Shareholders are urged to consult their tax advisers regarding the application of the net investment income tax to them as a result of the Scheme.

Part A-3: Information Reporting and Backup Withholding

Information reporting generally applies to certain payments to U.S. Shareholders which are made within the United States (or through certain related U.S. intermediaries), unless the U.S. Shareholder is an exempt

 

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recipient (such as a corporation). Generally, backup withholding will apply to U.S. Shareholders selling their Nightstar Shares or Nightstar ADSs unless they provide a correct taxpayer identification number and make appropriate certifications concerning, or otherwise establish that they are exempt from, backup withholding tax requirements. Any amounts withheld under the backup withholding rules will be allowed as a refund or credit against the U.S. Shareholder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS by the U.S. Shareholder. U.S. Shareholders are urged to consult their tax advisers regarding the imposition of backup withholding and information reporting with respect to distributions on or dispositions of their Nightstar Shares or Nightstar ADSs.

Part B: Income Tax Consequences to Non-U.S. Shareholders

For purposes of this summary, the term “Non-U.S. Shareholder” means a beneficial owner of Nightstar Shares or Nightstar ADSs who is not a U.S. Shareholder.

Any gain realised by a Non-U.S. Shareholder pursuant to the Scheme generally will not be subject to U.S. federal income tax unless (1) the gain is effectively connected with a trade or business of such Non-U.S. Shareholder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by such Non-U.S. Shareholder in the United States), in which case such gain generally will be subject to U.S. federal income tax at rates generally applicable to U.S. Shareholders, and, if the Non-U.S. Shareholder is a corporation (or any entity or arrangement treated as a corporation for U.S. federal income tax purposes), such gain may also be subject to the branch profits tax at a rate of 30 per cent. (or a lower rate under an applicable tax treaty); or (2) such Non-U.S. Shareholder is an individual who is present in the United States for one-hundred and eighty-three (183) days or more in the taxable year of the Scheme, and certain other specified conditions are met, in which case such gain will be subject to U.S. federal income tax at a rate of 30 per cent. (or a lower rate under an applicable tax treaty).

Part B-1: Information Reporting and Backup Withholding

Non-U.S. Shareholders are generally exempt from backup withholding, but such Non-U.S. Shareholders may have to comply with certification procedures to prove entitlement to this exemption.

The discussion above is not tax advice, and it is not a complete analysis or description of every potential U.S. federal income tax consequence or any other tax consequence of the Scheme. In addition, the summary does not address U.S. federal income tax consequences that may vary with, or are contingent on, individual circumstances, nor does it address any U.S. non-income, state, local or non-U.S. tax consequences. Accordingly, each Nightstar Shareholder and Nightstar ADS Holder is urged to consult with his, her or its own tax adviser to determine the particular U.S. federal, state, local and non-U.S. tax consequences to it of the Scheme.

 

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7.

Irrevocable Undertakings

Irrevocable Undertakings from Nightstar Directors

The following Nightstar Directors have given irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the Special Resolution to be proposed at the General Meeting as described in paragraph 8 of Part II (Explanatory Statement) above, in relation to the following Nightstar Shares currently held by them as well as any further Nightstar Shares they may acquire:

 

Name

   Number of
Nightstar
Shares
     Percentage of
issued ordinary
share capital of
Nightstar (%)
 

Paula Cobb

                                               

David Fellows

                                               

Chris Hollowood

                                               

David Lubner

                                               

James McArthur

                                               

David Mott

                                               

Scott Whitcup

                                               
  

 

 

    

 

 

 

TOTAL

                                               
  

 

 

    

 

 

 

These Irrevocable Undertakings will continue to be binding in the event that a higher competing offer is made for Nightstar.

Bidco has also received irrevocable undertakings from Syncona Portfolio Limited and New Enterprise Associates, both Nightstar Shareholders, to vote or procure votes in favour of the resolutions relating to the Scheme at the Nightstar Shareholder Meetings (or in the event that the Acquisition is implemented by way of an Offer, to accept or procure acceptance of such Offer) in respect of their entire beneficial holdings, amounting to                  Nightstar Shares, in aggregate, representing approximately                  per cent. of the issued share capital of Nightstar as at                  March 2019, being the last practicable date prior to the publication of this document.

The Irrevocable Undertakings given by the Nightstar Directors will cease to be binding if:

 

   

the Acquisition is implemented by way of an Offer and an Offer Document is not posted within 15 Business Days following the date Nightstar has cleared comments received from the SEC, if any, on such document; or

 

   

if the Scheme or Offer (as applicable) does not become Effective, lapses or is withdrawn without becoming or being declared unconditional in accordance with its terms; or

 

   

the Scheme or Offer lapses or is withdrawn or otherwise becomes incapable of becoming Effective or has not become Effective on or before the Long Stop Date,

and will remain binding if a higher competing offer is made for Nightstar.

The Irrevocable Undertakings given by Syncona Portfolio Limited and New Enterprise Associates will cease to be binding if:

 

   

the Scheme lapses or is withdrawn in accordance with its terms and Bidder or Bidco publicly confirms that it does not intend to proceed with the Acquisition or to implement the Acquisition by way of an Offer or otherwise;

 

   

the Scheme or Offer does not become Effective by the Long Stop Date; or

 

   

if the Implementation Agreement is terminated in accordance with its terms,

and will remain binding if a higher competing offer is made for Nightstar.

 

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The above is a summary of the material provisions of the Irrevocable Undertakings, copies of the forms of which are attached hereto as Annexes C and D, and which are incorporated by reference. This summary does not purport to be complete and may not contain all of the information about the Irrevocable Undertakings that is important to shareholders. You should carefully read the Irrevocable Undertakings in their entirety, as the rights and obligations of the parties thereto are governed by the express terms of the Irrevocable Undertakings and not by this summary or any other information contained in this document.

 

8.

Service contracts and remuneration of Nightstar Directors

Save as disclosed below, there are no service contracts in force between any director or proposed director of Nightstar or any of its subsidiaries and no such contract has been entered into or amended during the six months preceding the date of this document.

Nightstar Executive Director

David Fellows is Nightstar’s Chief Executive Officer. He is engaged under a service agreement with Nightstar dated 12 September 2017, which amends and restates his previous service agreement with Nightstar dated 1 February 2017. He receives an annual base salary of USD 533,100.

The service agreement provides that Mr. Fellows’ employment with Nightstar is at-will. Nightstar may terminate Mr. Fellows’ service contract without cause at any time effective upon written notice to Mr. Fellows.

If Mr. Fellows’ employment with Nightstar is terminated without cause, or if he resigns for good reason (as such terms are defined in his service agreement dated 12 September 2017), Mr. Fellows will also be entitled to receive severance equal to continuation of his base salary as then currently in effect for 12 months following his date of termination and will be eligible for reimbursement for medical coverage premiums for up to the same period. Mr. Fellows, his spouse and eligible dependents are entitled to stay on Nightstar’s health insurance plans for a period of 12 months following his termination for any reason. Mr. Fellows’ severance benefits are conditioned on, among other things, his execution of Nightstar’s standard separation agreement and a general release of claims in Nightstar’s favour. Further, if such termination of employment occurs within 12 months following a change in control of Nightstar, Mr. Fellows will also be entitled to receive (i) a pro-rated cash bonus for the year of such termination and (ii) accelerated vesting of any then unvested equity awards held by Mr. Fellows that are subject to time-based vesting. The service agreement provides that if payments and benefits payable to Mr. Fellows in connection with a change in control would result in adverse tax consequences under Sections 280G and 499 of the U.S. Internal Revenue Code, such payments will be cut back to the extent necessary to avoid such adverse tax consequences unless Mr. Fellows would be better off on an after-tax basis receiving the full amount of such payments and benefits.

Mr. Fellows is subject to a six-month non-competition covenant and a 12-month non-solicitation covenant.

Mr. Fellows is eligible to receive an annual bonus of up to 50 per cent. of his base salary (increased from 40 per cent. of his base salary), such bonus amount to be determined in Nightstar’s sole discretion. Mr. Fellows is also eligible to receive employee share incentives. He is also entitled to participate in health insurance plans, for which Nightstar will pay 75 per cent. of the premium.

Nightstar Non-Employee Directors

Chris Hollowood, Paula Cobb, David Lubner, James McArthur, David Mott and Scott Whitcup, all of whom are non-employee directors (the “Non-Employee Directors”), are engaged by Nightstar under letters of appointment entered into on 20 March 2018, and for Ms. Cobb, 12 September 2018. Non-Employee Directors receive annual fees of USD 35,000, with additional fees ranging from USD 4,000 to USD 15,000 for committee membership or committee chair service. Dr. Hollowood has served as Chairman of the Nightstar Board since November 2013 and receives an annual fee of USD 72,500.

 

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Each of the Non-Employee Directors’ appointments is subject to annual election at the Annual General Meeting of Nightstar. Nightstar may also remove a Non-Employee Director before the expiry of his or her period of office at any time by special resolution, or ordinary resolution of which special notice has been given in accordance with Section 312 of the Companies Act 2006. Each of the Non-Employee Directors is subject to a 12-month non-solicitation covenant following their termination.

Each Non-Employee Director is eligible to receive grants of non-qualified stock options under the 2017 Equity Incentive Plan, with a term of ten years from the grant date, including an initial one-time stock option grant upon appointment. The most recent one-time grants were made to Ms. Cobb and Messrs. Hollowood and Mott, each consisting of an option to subscribe for 36,400 new ordinary shares in Nightstar at an exercise price equal to the fair market value of the Nightstar ADS as determined on the grant date. The initial grant vests one-third on each of the first, second and third anniversaries of the grant date, provided that the Non-Employee Director continues to provide service to Nightstar on the applicable vesting date. Each Non-Employee Director is also eligible to receive annual stock option grants, which in 2018 consisted of 18,200 stock options (for Non-Employee Directors who served at the time such grants were made) and in 2019 consisted of 21,000 stock options. The annual grant vests in full on the day immediately preceding the next Nightstar annual general meeting, provided that the Non-Employee Director continues to provide service to Nightstar on the applicable vesting date.

 

9.

Offer-related arrangements

Implementation Agreement

Explanatory Note Regarding the Implementation Agreement

The following is a summary of the material provisions of the Implementation Agreement, a copy of which is attached hereto as Annex A and which is incorporated by reference. This summary does not purport to be complete and may not contain all of the information about the Implementation Agreement that is important to shareholders. You should carefully read the Implementation Agreement in its entirety, as the rights and obligations of the parties thereto are governed by the express terms of the Implementation Agreement and not by this summary or any other information contained in this document.

The following summary of the Implementation Agreement is intended to provide information regarding the terms of the Implementation Agreement and is not intended to provide any factual information about Nightstar or modify or supplement any factual disclosures about Nightstar in its public reports filed with the SEC. In particular, the Implementation Agreement and the related summary are not intended to be, and should not be relied upon as, disclosures regarding any facts and circumstances relating to Nightstar. The representations and warranties contained in the Implementation Agreement were made only for purposes of that agreement and as at specific dates, were solely for the benefit of the parties to the Implementation Agreement, may be subject to a contractual standard of materiality different from what might be viewed as material to shareholders and may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made by the parties to each other. You should not rely on the representations and warranties contained in the Implementation Agreement as characterisations of the actual state of facts or condition of Nightstar, Bidder, Bidco or any of their respective subsidiaries, affiliates or businesses. In addition, information concerning the subject matter of the representations, warranties and covenants may change, which subsequent information may or may not be fully reflected in Nightstar’s public disclosures.

Structure of the Acquisition

The Acquisition will be implemented by means of a scheme of arrangement under Part 26 of the Companies Act 2006. The Scheme involves an application by Nightstar to the Court to sanction the Scheme, pursuant to which all of the Nightstar Scheme Shares will be transferred to Bidco, in consideration for which holders of Nightstar Scheme Shares will receive the Consideration of USD 25.50 per share. The transfer of the

 

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Nightstar Scheme Shares to Bidco, provided for in the Scheme, will result in the entire issued and to be issued share capital of Nightstar (other than any treasury shares and Deferred Shares) being held by Bidco. Under the terms of the Implementation Agreement, Bidder and Bidco reserve the right to effect the Acquisition by means of a takeover offer, with the consent of Nightstar.

When the Acquisition Becomes Effective

The Acquisition will become Effective once all the Conditions have been satisfied or (where applicable) waived, the Scheme has been sanctioned by the Court and a copy of the Court Order has been delivered to the Registrar of Companies.

Treatment of Nightstar Equity Awards

Upon the completion of the Acquisition, all outstanding stock options, restricted shares and restricted stock units awarded pursuant to the 2017 Equity Incentive Plan will be cancelled and cease to be outstanding, and the holder will be entitled to receive the Consideration less any applicable exercise or purchase price. All outstanding Pre-IPO Equity Awards will be acquired in the Scheme. Any Deferred Shares will not receive the Consideration and will be repurchased by Nightstar for a total payment of GBP 0.01 to the holder of such Deferred Shares, pursuant to the terms of the applicable Vesting Agreement.

Representations and Warranties

The Implementation Agreement contains representations and warranties of Nightstar, subject to certain exceptions in the Implementation Agreement and in the disclosure schedule delivered in connection with the Implementation Agreement as to, among other things:

 

   

organisation, good standing and qualification to do business;

 

   

ownership of subsidiaries;

 

   

corporate authority, consents and approvals relating to the execution, delivery and performance of the Implementation Agreement;

 

   

the reports, forms, documents, certifications and financial statements of Nightstar required by the SEC;

 

   

the enforceability of the Implementation Agreement against Nightstar;

 

   

required filings with, and consents from, governmental entities in connection with the transactions contemplated by the Implementation Agreement;

 

   

the absence of any conflicts with or violations of organisational documents and other agreements or laws;

 

   

capital structure;

 

   

SEC documents, financial statements, and the establishment and maintenance of certain disclosure controls and procedures and internal control over financial reporting;

 

   

the absence of any changes, occurrences or developments that has had a material adverse effect with respect to Nightstar, the absence of certain material changes in the business of Nightstar since 31 December 2017;

 

   

real properties;

 

   

compliance with applicable laws and permits;

 

   

regulatory matters, including compliance with laws related to the safety, efficacy and quality of medicinal and pharmaceutical products;

 

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compliance with the US Foreign Corrupt Practices Act of 1977 and other anti-corruption laws;

 

   

the absence of litigation;

 

   

intellectual property;

 

   

tax matters;

 

   

material contracts;

 

   

environmental matters;

 

   

insurance policies;

 

   

receipt by the Nightstar Board of an opinion of Centerview as to the fairness, from a financial point of view, of the consideration to be paid to the holders of the Nightstar Shares (other than as specified in such opinion);

 

   

brokers’ and finders’ fees;

 

   

employee and employee benefit plan matters; and

 

   

privacy and data security.

The Implementation Agreement also contains representations and warranties of Bidder and Bidco as to, among other things:

 

   

organisation, good standing and qualification to do business;

 

   

corporate authority, consents and approvals relating to the execution, delivery and performance of the Implementation Agreement;

 

   

the enforceability of the Implementation Agreement against Bidder and Bidco;

 

   

the absence of any conflicts with or violations of organisational documents and other agreements or laws;

 

   

the absence of a need for a vote of Bidder or Bidco shareholders on the acquisition;

 

   

required filings with, and consents from, governmental entities in connection with the transactions contemplated by the Implementation Agreement;

 

   

any ownership of Nightstar Shares;

 

   

Bidder’s ownership of Bidco;

 

   

the absence of litigation; and

 

   

brokers’ and finders’ fees.

Some of the representations and warranties in the Implementation Agreement are qualified by materiality qualifications or a “material adverse effect” qualification with respect to either Nightstar or Bidder, as discussed below.

For purposes of the Implementation Agreement, a “material adverse effect” with respect to Nightstar means any state of facts, condition, development, circumstance, change, effect or event occurring on or after 4 March 2019 which, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (i) the condition (financial or otherwise), business, assets, liabilities or results of operations of Nightstar and its subsidiaries, taken as a whole, or (ii) the ability of Nightstar to consummate the acquisition on or before the Long Stop Date. However, for purposes of clause (i), any state of facts, condition, development, circumstance, change, effect or event, whether alone or in combination related to the following will not be taken into account in determining whether there is, or would reasonably be expected to be, a Nightstar “material adverse effect”:

 

   

changes in general economic conditions, or changes in securities, credit or other financial markets, in the U.S. or the U.K., or conditions generally affecting the pharmaceutical or biotechnology industries;

 

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acts of war, sabotage or terrorism or natural disasters or public health crises involving the U.S. or the U.K.;

 

   

changes of applicable law or Generally Accepted Accounting Principles (GAAP) or the interpretation thereof;

 

   

any event arising directly or indirectly from or otherwise relating to any change in, or any compliance with or action taken for the purpose of complying with any change in, any applicable law or GAAP (or interpretations of any applicable law or GAAP), provided that such change is not at Nightstar’s discretion in a manner inconsistent with past practice;

 

   

the announcement, pendency or consummation of the Implementation Agreement and the Acquisition, including the identity of, or the effect of any fact or circumstance relating to, Bidder or any of its affiliates or any communication by Bidder or any of its affiliates regarding plans, proposals or projections with respect to Nightstar or its employees;

 

   

the direct or indirect effects of: (1) any breach by Bidder or Bidco of the terms of the Implementation Agreement; (2) any action that Bidder or Bidco directs Nightstar to take in writing or to which Bidder or Bidco specifically consents in writing pursuant to the Implementation Agreement; or (3) any action specifically required to be taken by Nightstar, or the failure of Nightstar to take any action that Nightstar is specifically prohibited by the terms of the Implementation Agreement from taking, to the extent Bidder fails to give its timely consent thereto after a written request therefor;

 

   

any failure of Nightstar to meet any internal or public projections, forecasts, estimates of earnings or revenues; or

 

   

the results of Nightstar’s XIRIUS trial in NSR-RPGR,

however, with respect to the matters described in the foregoing first, second, third and fourth bullet points above, such impact will be taken into account to the extent that such changes or events disproportionately affect Nightstar relative to other participants in the industry in which Nightstar operates, and the exception set forth in the seventh bullet point above will not prevent or otherwise affect a determination that any fact, change, event, occurrence or effect underlying, or that may have contributed to, such decline or failure has resulted in or contributed to a Nightstar material adverse effect.

For the purpose of the Implementation Agreement, a “material adverse effect” with respect Bidder means a material adverse effect on Bidder’s ability to consummate the Acquisition.

Conduct of Business Pending the Acquisition

The Implementation Agreement provides that, during the period from 4 March 2019 until the earlier of (a) the termination of the Implementation Agreement in accordance with its terms and (b) the Effective Date, except (i) as required or otherwise contemplated under the Implementation Agreement or as required by applicable law; (ii) with the written consent of Bidder (which will not be unreasonably withheld, conditioned or delayed); or (iii) as set forth in the disclosure schedule delivered in connection with the Implementation Agreement, Nightstar will, and will cause each of its subsidiaries to use reasonable endeavors to conduct the business in the ordinary course, preserve intact its material assets and business organisation and maintain its advantageous relationships with patients, material suppliers, material distributors and regulators.

In addition, during the period from 4 March 2019 until the earlier of (a) the termination of the Implementation Agreement in accordance with its terms and (b) the Effective Date, except (i) as required or otherwise contemplated under the Implementation Agreement or as required by applicable law; (ii) with the written consent of Bidder (which will not be unreasonably withheld, conditioned or delayed); or (iii) as set forth in the disclosure schedule delivered in connection with the Implementation Agreement, Nightstar will,

 

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and will cause each of its subsidiaries not to, subject in each case to certain specified exceptions, among other things:

 

   

authorise or pay any dividends on or make any distribution with respect to the outstanding shares of its share capital or Awards (in cash or in kind);

 

   

repurchase, redeem, repay, reduce or otherwise reacquire any Nightstar Shares or other equity interests, or any Awards, rights, warrants or options to acquire any of the Nightstar Shares or other equity interests;

 

   

create, split, combine, subdivide or reclassify any Nightstar Shares or other equity interests;

 

   

issue, grant or sell or otherwise dispose of any additional shares of, or other equity interests in, Nightstar or any of its subsidiaries, or securities convertible into or exchangeable for such shares or equity interests or issue or grant any Awards, options, warrants, calls, subscription rights or other rights of any kind to acquire such shares, other equity interests or securities, other than as set out in the disclosure schedule delivered in connection with the Implementation Agreement;

 

   

amend or permit the adoption of any amendment to the Nightstar Articles or other charter or organisational documents;

 

   

acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any person or other business organisation or division thereof;

 

   

incur or guarantee any indebtedness or make any loans, capital contributions or advances to any person, other than to a wholly owned subsidiary of Nightstar;

 

   

amend or modify in any material respect, or waive any material rights under or cancel, fail to renew, voluntarily terminate, or assign any material contract, or enter into any contract which if entered into prior to 4 March 2019 would have been a material contract;

 

   

except with respect to tax matters, commence any new litigation involving claims for money damages in excess of USD 500,000; or enter into any material settlement, release, waiver or compromise of any pending or threatened litigation;

 

   

establish, adopt, enter into, amend or terminate any benefit plan or any plan, scheme, program, policy, agreement or arrangement that would be a benefit plan if it were in effect on 4 March 2019;

 

   

grant, increase, or pay any bonus, incentive, change in control, retention, severance, or termination payment or benefit, or increase the base compensation, cash bonus opportunity or other compensation of, or accelerate the vesting or payment of any payment or benefit payable to, any current or former employee, director or individual independent contractor of Nightstar or any of its subsidiaries;

 

   

hire, engage, promote or terminate the employment or engagement of (other than for cause) any employee, director or individual independent contractor;

 

   

enter into any collective bargaining agreement or other agreement or understanding with any labour organisation;

 

   

adopt or implement any shareholder rights plan or similar arrangement;

 

   

adopt a plan or agreement of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalisation or other reorganisation of Nightstar or any of its subsidiaries;

 

   

enter into any new line of business that is not reasonably related to the business of Nightstar and its subsidiaries as at 4 March, 2019;

 

   

sell, assign, lease, mortgage, pledge, encumber, transfer of dispose of any of its material assets, except for the sale or other reduction of inventory in the ordinary course of business;

 

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license or otherwise dispose of the rights to use any material Nightstar intellectual property rights, or disclose material trade secrets to a third party other than in the ordinary course of business pursuant to a non-disclosure or confidentiality agreement;

 

   

enter into any transaction with any Nightstar Shareholder; or

 

   

make or adopt any change in its accounting methods, principles, practices policies or procedures.

Alternative Proposals; Non-solicitation

Except as expressly permitted by the Implementation Agreement, between 4 March 2019 and the earlier of the termination of the Implementation Agreement in accordance with its terms and the Effective Date, Nightstar and its subsidiaries will not, directly or indirectly, and will use their reasonable best endeavours to cause their representatives not to:

 

   

continue, and will procure the termination of, any solicitation, knowing encouragement, discussions or negotiations with any persons that may be ongoing with respect to an acquisition proposal (as defined below) and Nightstar will by 5 March 2019, (i) terminate access to any third party to any data room containing confidential information of Nightstar and (ii) request the return or destruction of all confidential information provided to third parties prior to 4 March 2019 that have, since 1 January 2018 entered into confidentiality agreements with Nightstar relating to a possible acquisition proposal (such obligation having already been satisfied as at the date of this document);

 

   

solicit, initiate or knowingly facilitate or encourage (including by way of furnishing non-public information) any inquiries regarding, or the making of any proposal or offer that constitutes, or could reasonably be expected to lead to, an acquisition proposal;

 

   

engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any other person any non-public information in connection with, or for the purpose of soliciting or knowingly encouraging or facilitating, an acquisition proposal or any proposal or offer that could reasonably be expected to lead to an acquisition proposal;

 

   

enter into any letter of intent, implementation agreement, co-operation agreement, acquisition agreement, agreement in principle or similar agreement with respect to an acquisition proposal or any proposal or offer that could reasonably be expected to lead to an acquisition proposal; or

 

   

waive or release any person from, forebear in the enforcement of, or amend any standstill agreement or any standstill provisions of any other contract.

Pursuant to the Implementation Agreement, and as used throughout this document, an “acquisition proposal” means any inquiry, proposal or offer from any person (other than Bidder or Bidco) relating to (i) any direct or indirect acquisition or purchase, in a single transaction or a series of related transactions, of (A) 20% or more (based on the fair market value thereof, as reasonably determined by the Nightstar Board) of the assets (including share capital of Nightstar’s subsidiaries) of Nightstar and its subsidiaries, taken as a whole, or (B) shares carrying 20% or more of the aggregate voting power and economic rights of Nightstar or (ii) any takeover offer, exchange offer, merger, consolidation, business combination, recapitalisation, liquidation, dissolution, share exchange or similar transaction involving Nightstar that, if consummated, would result in any person (or the shareholders of any person) owning, directly or indirectly, shares carrying 20% or more of the aggregate voting power and economic rights of Nightstar or the resulting direct or indirect parent of Nightstar, other than, in each case, the Acquisition.

Receipt of Competing Acquisition Proposals

If at any time after 4 March 2019 and before the earlier of the termination of the Implementation Agreement in accordance with its terms and the Effective Date, Nightstar or any of its subsidiaries or any of their representatives receives an unsolicited bona fide written acquisition proposal from any person, which did

 

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not result from a material breach of the non-solicitation provisions of the Implementation Agreement, then after providing notice to Bidder, Nightstar and its representatives may contact such person solely to clarify the terms and conditions thereof, and if the Nightstar Board determines in good faith, after consultation with its financial advisers and outside legal counsel, that such acquisition proposal constitutes or is reasonably likely to lead to a superior proposal (as defined below) and the failure to take such action would be in breach of their fiduciary duties or would violate their obligations under the Companies Act 2006, then Nightstar and its representatives may:

 

   

furnish, pursuant to an acceptable confidentiality agreement, information (including non-public information) with respect to Nightstar and its subsidiaries to the person who has made such acquisition proposal; provided that Nightstar will, as promptly as practicable (and in any event within 24 hours), provide to Bidder any non-public information concerning Nightstar and its subsidiaries that is provided to any person pursuant to this bullet point to the extent access to such information was not previously provided to Bidder or its representatives; and

 

   

engage in or otherwise participate in discussions or negotiations with the person making such acquisition proposal for so long as Nightstar and its representatives reasonably believe it may lead to a superior proposal.

Nightstar must: (i) promptly (and in any event within 24 hours) notify Bidder if any inquiries, proposals or offers with respect to an acquisition proposal are received by Nightstar or its subsidiaries, including the identity of any third party that makes such an offer, and provide to Bidder a copy of any written acquisition proposal and a summary of any material unwritten terms and conditions thereof; (ii) keep Bidder reasonably informed of any material developments, discussions or negotiations regarding any acquisition proposal permitted by the Implementation Agreement on a prompt basis; and (iii) to respond promptly to any reasonable requests made by Bidder in light of such information.

Pursuant to the Implementation Agreement, and as used throughout this document, a “superior proposal” means any bona fide written acquisition proposal that, if consummated, would result in a person (or the shareholders of any person) owning, directly or indirectly, (i) 80% or more of the aggregate voting power and economic rights of Nightstar or the resulting direct or indirect parent of Nightstar or (ii) all or substantially all of the assets (including share capital of Nightstar’s subsidiaries) of Nightstar and its subsidiaries, taken as a whole, (A) on terms which the Nightstar Board determines, in good faith, after consultation with outside counsel and its financial adviser, would result in greater value to Nightstar Shareholders from a financial point of view than the acquisition, including a price per Nightstar Share payable in cash that is more than 7.5% above the Consideration, after taking into account all of the terms and conditions of such acquisition proposal and the Implementation Agreement and (B) that is reasonably likely to be completed relative to the Acquisition, taking into account all financial, regulatory, legal, timing and other aspects of such proposal.

Changes in Nightstar Board Recommendation

The Nightstar Board has unanimously recommended that Nightstar Shareholders vote in favour of the Scheme and the Special Resolution, which recommendation is referred to as the “Nightstar Board recommendation” in the Implementation Agreement. The Implementation Agreement permits the Nightstar Board to change its recommendation only in certain limited circumstances, as described below.

Except as expressly permitted by the Implementation Agreement, the Nightstar Board may not:

 

   

withdraw (or modify in a manner adverse to Bidder), or publicly propose to withdraw (or modify in a manner adverse to Bidder), the Nightstar Board recommendation; or (ii) approve, recommend or declare advisable, or publicly propose to approve, recommend or declare advisable, any acquisition proposal (any action listed in this bullet point being a “Nightstar adverse change recommendation”); or

 

   

approve, recommend or declare advisable, or propose to approve, recommend or declare advisable any contract with respect to any acquisition proposal, requiring, or reasonably expected to cause, Nightstar

 

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to delay or fail to consummate, or that would otherwise materially impede, interfere with or be inconsistent with, the Acquisition (other than an acceptable confidentiality agreement).

Notwithstanding anything to the contrary contained in the Implementation Agreement, at any time after 4 March 2019 and before the earlier of (i) the termination of the Implementation Agreement in accordance with its terms and (ii) the Effective Date, if Nightstar or any of its subsidiaries has received a bona fide written acquisition proposal, which did not result from a material breach of the non-solicitation provisions of the Implementation Agreement from any person that has not been withdrawn, and after consultation with its financial advisers and outside legal counsel the Nightstar Board has determined, in good faith, that such acquisition proposal is a superior proposal, then:

 

   

the Nightstar Board may make a Nightstar adverse change recommendation, and/or

 

   

Nightstar may terminate the Implementation Agreement (without prejudice to the compensatory payment in an amount equal to USD 8,773,855), and implement such superior proposal,

in both cases, if and only if:

 

   

Nightstar has given Bidder prior written notice of its intention to consider making a Nightstar adverse change recommendation or terminating the Implementation Agreement at least four Business Days prior to making any such Nightstar adverse change recommendation or termination, and Bidder has not elected during such notice period to negotiate in good faith with respect to any revisions to the terms of the Acquisition so that the revised terms proposed by Bidder are at least as favourable as the competing acquisition proposal; and

 

   

Nightstar has provided to Bidder information with respect to such acquisition proposal in accordance with the terms of the Implementation Agreement; and after giving effect to the proposals made by Bidder during such period, if any, after consultation with financial advisers or outside legal counsel, the Nightstar Board has determined, in good faith, that such acquisition proposal is a superior proposal.

Each of the above bullet points will also apply to any material amendment to any acquisition proposal or any matching acquisition proposal made by Bidder and require written notice of Nightstar’s intention to consider making a Nightstar adverse change recommendation or terminating the Implementation Agreement, except that the references to four Business Days will be three Business Days.

In the event that Bidder, in response to an acquisition proposal, proposes terms that are at least as favourable as the competing acquisition proposal, unless such competing party proposes a further superior proposal following Bidder’s proposal, within four Business Days of Bidder’s proposal, Nightstar will, and will procure its affiliates and representatives to, terminate all discussions with the other party.

The non-solicitation provisions of the Implementation Agreement do not prohibit Nightstar from (i) taking and disclosing to Nightstar Shareholders a position contemplated by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation M-A promulgated under the U.S. Exchange Act, including any “stop, look and listen” communication pursuant to Rule 14d-9(f) promulgated under the U.S. Exchange Act, or (ii) making any disclosure to Nightstar Shareholders that is required by applicable law; provided that any such disclosure (other than a “stop, look and listen” communication made in compliance with Rule 14d-9(f)) will be deemed to be a Nightstar adverse change recommendation unless the Nightstar Board expressly reaffirms the Nightstar Board recommendation in such disclosure.

Efforts to Complete the Acquisition

Nightstar and Bidder have agreed that prior to the Effective Date, Nightstar will use all reasonable endeavours to implement the Scheme in accordance with the terms of, and the timetable set out in, the Announcement and this document, and to consult with Bidder in relation to such implementation.

Subject to the terms and conditions of the Implementation Agreement, Nightstar and Bidder have agreed that each party to the Implementation Agreement will use all reasonable endeavours to: (i) make all filings

 

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(if any) and give all notices (if any) required to be made or given by such party pursuant to any material contract in connection with the Acquisition and (ii) seek any consent required to be obtained pursuant to any material contract by such party in connection with the Acquisition; and (iii) seek to lift any restraint, injunction or other legal bar to the Acquisition brought by any third person against such party.

Bidder has agreed to:

 

   

provide promptly to Nightstar all such information about itself, Bidco, the Bidder Group and the Bidder Directors and the Bidco Director as may reasonably be requested by Nightstar for the purpose of inclusion in this document and to provide such other co-operation and assistance as may reasonably be required in connection with the preparation of this document; and

 

   

notify Nightstar promptly of: (i) any changes in the information disclosed in any document or announcement published by Bidder in connection with the Acquisition which are material in the context of that document or announcement; and (ii) any material new information which may be relevant to a Nightstar Shareholder in considering the merits of the Acquisition, and agrees that any such information may be published by Nightstar if (a) it determines that such disclosure is necessary to ensure that all Nightstar Shareholders have sufficient information to consider the merits of the Acquisition and (b) Bidder has consented to the content and form of the disclosure (such consent not to be unreasonably withheld, conditioned or delayed).

Nightstar has agreed to, among other things:

 

   

prior to the General Meeting and Court Meeting, keep Bidder informed of the number of proxy votes received in respect of the Special Resolution to be proposed at the General Meeting and the Court Meeting and promptly provide Bidder with details of any material changes to Nightstar’s shareholder and other statutory registers which occur prior to the Effective Date,

 

   

co-ordinate with Bidder for the purpose of obtaining any tax clearances that Bidder may reasonably require to be obtained in connection with the Scheme and the Acquisition; and

 

   

provide, and procure that each member of the Nightstar Group provides, promptly to Bidder and its advisers such information, documentation and access to the management, employees, facilities and assets of the Nightstar Group and its advisers and independent auditors as is reasonably requested by Bidder for the purposes of implementing the Acquisition, post-Acquisition planning, verifying Nightstar’s business plan and preparing or making any filing, notification or submission with a tax authority or governmental authority in connection with the Acquisition.

Regulatory Clearances and Reasonable Endeavours

Bidder is responsible for contacting and corresponding with governmental authorities in relation to the regulatory clearances for which Bidder (either alone or jointly with Nightstar) is required to apply. Nightstar is responsible for contacting and corresponding with governmental authorities in relation to the regulatory clearances for which Nightstar alone is required to apply.

Each of Nightstar and Bidder shall consult with the other to the extent reasonably practicable and keep each other updated as to progress towards obtaining the regulatory clearances each is responsible for obtaining. Both Nightstar and Bidder have agreed to cooperate with each other in relation to said clearances and to assist each other in communicating with any governmental authority in relation to such regulatory clearances (including by submitting any necessary filings, notifications and submissions) and promptly to provide such information and assistance to each other as may reasonably be required for the purposes of obtaining any such regulatory clearance and for the purpose of making a submission, filing or notification to any governmental authority in connection with any such regulatory clearance as soon as reasonably practicable.

 

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Each party to the Implementation Agreement agrees:

 

   

to provide the other party, as promptly as reasonably practicable and in any event before any applicable deadline or due date, all such information as may reasonably be required by the other party to assist it in determining in which jurisdictions any merger control, health law or other filing with a governmental authority may be necessary or desirable for the purpose of obtaining the regulatory clearances and to provide all such other assistance as may reasonably be required by the other party in connection with obtaining the regulatory clearances for which that party is, pursuant to the first bullet point above, responsible for applying, including assistance in connection with such pre-notification contacts with governmental authorities as the other party reasonably considers desirable;

 

   

to take all such steps and make as promptly as reasonably practicable and within applicable deadlines and due dates such filings with all appropriate governmental authorities, jointly or separately, as are necessary or reasonably desirable to obtain the regulatory clearances;

 

   

subject to applicable law, promptly to notify the other party and provide copies of any significant communications with any governmental authority in connection with obtaining the regulatory clearances, subject to each party’s right not to provide any information to the other parties which is personally identifiable information of a director, officer or employee of the disclosing party, except to the other party’s advisers on an external counsel basis; and

 

   

subject to applicable law, to use all reasonable endeavours to procure that each party and its representatives are able to attend any significant meetings or hearings and participate in any substantive discussions with any governmental authority in connection with obtaining the regulatory clearances; provided that Bidder shall be permitted to take the lead in all joint meetings and communications with governmental authorities in connection with the regulatory clearances.

Bidder will use its reasonable endeavours, and take any and all steps necessary, to obtain the regulatory clearances as soon as practicable and in any event, prior to the date of the Court Hearing, or such later date as may be agreed between the parties in writing. For purposes of the foregoing, “reasonable endeavours” requires Bidder to propose, negotiate, agree to or effect, by undertaking, consent agreement, hold separate agreement or otherwise:

 

   

the sale, divestiture, licensing or disposition of all or any part of the businesses or assets of Nightstar, Bidder and/or Bidco;

 

   

the termination of any existing contractual rights, relationships and obligations, or entry into or amendment of any licensing arrangements;

 

   

the taking of any action that, after consummation of the Acquisition, would limit the freedom of action of, or impose any other requirement on, Bidder with respect to the operation of the business, or the assets, of Nightstar, Bidder and/or Bidco;

 

   

defending through litigation on the merits, including appeals, any claim asserted in any court or other proceeding by any party, including any governmental authority, in order to avoid entry of, or to have vacated or terminated, any decree, injunction, order or judgment that seeks to or could prevent or otherwise make it less likely that the Acquisition will occur by the Long Stop Date; and

 

   

any other remedial action whatsoever that may be necessary so as to permit the Acquisition to occur by the Long Stop Date.

Nightstar shall not be entitled to state or suggest that Bidder is prepared to provide or agree to particular undertakings or requirements without the prior consent of Bidder. Notwithstanding anything to the contrary in the Implementation Agreement, Bidder shall not be required to sell, divest, hold separate, license or agree to any other structural or conduct remedy with respect to, any operations, divisions, businesses, product lines, customers, assets or relationships of (a) Bidder in any circumstance, or (b) Nightstar, which would require the sale, divestiture, holding separate or license of Nightstar’s NSR-REP1 and NSR-RPGR clinical

 

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programs to any third party or materially impair the benefits expected by Bidder as at 4 March 2019 to be derived by Bidder from the acquisition of Nightstar’s NSR-REP1 and NSR-RPGR clinical programs.

Nightstar will adjourn the Scheme to a date agreed with Bidder to the extent that the condition that the waiting period (and any extension thereof) applicable to the consummation of the Acquisition under the U.S. HSR Act shall have expired or been terminated and the anti-trust notifications and approvals set forth in the disclosure schedule shall have been obtained has not been satisfied (or, where permitted or required under the Implementation Agreement, waived by Bidder or Nightstar, as applicable) by 9.00 a.m. on the date of the Court Hearing. Such adjournments shall continue until the Long Stop Date at the request of Bidder.

Directors’ and Officers’ Indemnification and Insurance

Nightstar and Bidder have agreed that, from and after the Effective Date, Bidder shall cause Nightstar and each of its subsidiaries to the fullest extent permitted by applicable law:

 

   

to indemnify, defend and hold harmless any directors, managers and officers of Nightstar or any of its subsidiaries and any person who was a director, manager or officer of Nightstar or any of its subsidiaries in the six years prior to the Effective Date (collectively referred to in the Implementation Agreement as the “D&O indemnified parties,”) against any liability arising in connection with or in relation to such D&O indemnified party’s position as a director, manager or officer of Nightstar or any of its subsidiaries at least to the extent such D&O indemnified party is indemnified immediately prior to the Effective Date pursuant to the Nightstar Articles or any deed of indemnity or other agreement between such D&O indemnified party and Nightstar or any of its subsidiaries; and

 

   

to maintain in effect for a period of six years after the Effective Date, (i) if available, the current policies of directors’ and officers’ liability insurance maintained by Nightstar or any of its subsidiaries immediately prior to the Effective Date for the benefit of any D&O indemnified party or (ii) to provide substitute policies of at least the same coverage and amounts and containing terms and conditions that are not less advantageous to the D&O indemnified parties when compared to the insurance maintained by Nightstar and its subsidiaries as at 4 March, 2019; or

 

   

to obtain as at the Effective Date “tail” directors’ and officers’ liability insurance policies with a claims period of six years from the Effective Date with at least the same coverage and amounts, and containing terms and conditions that are not less advantageous to the D&O indemnified parties when compared to the insurance maintained by Nightstar and its subsidiaries as at 4 March 2019,

in the case of (i) each of the three bullet points above, with respect to claims arising out of or relating to events which occurred on or prior to the Effective Date and (ii) the second and third bullet points above, provided that Bidder shall not be required to maintain such policies if the cost exceeds three times the annual cost of the current policies of directors’ and officers’ liability insurance maintained by Nightstar or any of its subsidiaries immediately prior to the Effective Date.

The obligations of Bidder and Nightstar and its subsidiaries under the directors’ and officers’ indemnification and insurance provision of the indemnification agreement shall not be terminated, amended or modified in any manner so as to materially adversely affect any D&O indemnified party (including such person’s successors, heirs and legal representatives) to whom the directors’ and officers’ indemnification and insurance provision of the indemnification agreement applies, without the written consent of such affected D&O indemnified party.

The rights of the D&O indemnified parties under the directors’ and officers’ indemnification and insurance provision of the indemnification agreement shall be in addition to any rights such D&O indemnified parties may have under the Nightstar Articles or other comparable organisational documents of any of Nightstar’s subsidiaries, or under any applicable contracts or applicable law, and Bidder shall, and shall cause Nightstar and each of its subsidiaries to, honour and perform under all indemnification agreements entered into by Nightstar or any of its subsidiaries, as applicable, as in effect on 4 March 2019.

 

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Coordination on Litigation

Nightstar shall as promptly as reasonably practicable notify Bidder in writing (and shall thereafter keep Bidder informed on a current basis with respect to), and shall give Bidder the opportunity to participate in the defence and settlement of any litigation related to the Acquisition or related transactions, including the right to review and comment on all filings and responses to be made by Nightstar and to attend any negotiations and discussions with third parties related thereto. Nightstar shall not agree to settle any such litigations without Bidder’s prior written consent.

Other Covenants and Agreements

The Implementation Agreement also contains additional covenants, including, among others, covenants relating to the filing of this document; the satisfaction of any Awards subject to and in accordance with the schedule to the Implementation Agreement relating to the Nightstar Share Schemes; Bidder and Bidco’s right to seek injunctive or other equitable relief in relation to any breach or prospective breach of the undertakings described above in the following sections of this description of the Implementation Agreement: “Conduct of Business Pending the Acquisition,” “Alternative Proposals; Non-solicitation,” “Receipt of Nightstar Takeover Proposals,” “Changes in Board Recommendation,” and any other covenants included in Clause 10 of the Implementation Agreement; the delisting and deregistration of Nightstar Shares, and public announcements with respect to the Acquisition.

Conditions to Completion of the Acquisition

The Conditions to completion of the Acquisition are set out in Part III (Conditions to and Further Terms of the Scheme and the Acquisition) of this document. The Acquisition is conditional upon the Scheme becoming unconditional and becoming Effective, by no later than 11.59 p.m. on the Long Stop Date. The Scheme is conditional on:

 

   

approval of the Scheme by Nightstar Scheme Shareholders at the Court Meeting and at any separate class meeting which may be required by the Court or at any adjournment of any such meeting;

 

   

the Court Meeting being held on or before the twenty-second day after the expected date of the Court Meeting as set out in the Scheme (or such later date, if any, as Bidder and Nightstar may agree and the Court may allow);

 

   

approval of the Scheme by Nightstar Shareholders at the General Meeting or any adjournment of that meeting;

 

   

the General Meeting being held on or before the twenty-second day after the expected date of the General Meeting as set out in the Scheme (or such later date, if any, as Bidder and Nightstar may agree and the Court may allow);

 

   

the sanction of the Scheme by the Court (with or subject to any modification, addition or condition which Nightstar and Bidder may agree and which the Court approves) and the delivery of a copy of the Court Order to the Registrar of Companies; and

 

   

the Court Hearing being held on or before the date immediately preceding the Long Stop Date (or such later date, if any, as Bidder and Nightstar may agree and the Court may allow).

If any Condition is not capable of being satisfied by the date specified therein, Bidder shall make an announcement through GlobeNewswire or another national news wire service as soon as practicable and, in any event, by not later than 7.00 a.m. (New York time) on the Business Day following the date so specified, stating whether Bidder has invoked that Condition or, with the agreement of Nightstar, specified a new date by which that Condition must be satisfied.

 

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In addition, Bidder and Nightstar have agreed that the Acquisition will be conditional upon the following Conditions and, accordingly, the necessary actions to make the Scheme Effective will not be taken unless the following Conditions have been satisfied or, where relevant, waived:

 

   

no law having been enacted, issued, enforced or entered into, and no preliminary or permanent injunction, judgment or ruling having been issued by any governmental authority that is, in either case, in effect and enjoins, restrains, prevents or prohibits or otherwise makes illegal the Acquisition;

 

   

the waiting period (and any extension thereof) applicable to the consummation of the Acquisition under the U.S. HSR Act having expired or terminated and the anti-trust notifications and approvals set forth in the disclosure schedule delivered in connection with the Implementation Agreement having been obtained;

 

   

the accuracy of the representations and warranties of Nightstar both as at 4 March 2019 and as at 11.59 p.m. on the date immediately preceding the Court Hearing as though made at that date (except for any such representations and warranties made as at a particular date or period, which representations and warranties must be true and correct only as at that date or period), subject in most cases to either a materiality standard or a Company Material Adverse Effect;

 

   

Nightstar having performed or complied in all material respects with all obligations, agreements and covenants required by the Implementation Agreement to be performed or complied with by it at or prior to 9.00 a.m. on the date of the Court Hearing;

 

   

since 4 March 2019, no Company Material Adverse Effect having occurred and be continuing; and

 

   

Nightstar having delivered to Bidder a certificate, effective as at 9.00 a.m. on the date of the Court Hearing and signed by an authorised officer of Nightstar, certifying that the Conditions set forth in the third, fourth and fifth bullet point above have been satisfied.

Termination

The Implementation Agreement may be terminated in the following circumstances:

 

   

upon agreement in writing between Bidder and Nightstar at any time prior to the Effective Date;

 

   

by Nightstar, in response to a superior proposal (as detailed in this section under the heading “Changes in Board Recommendation”);

 

   

by either Bidder or Nightstar, by written notice to the other, if:

 

   

the Effective Date has not occurred by the Long Stop Date (provided that, notwithstanding any other provision of the Implementation Agreement, the right to terminate the Implementation Agreement pursuant to this provision shall not be available to any party whose material breach of the Implementation Agreement has caused the failure of the Effective Date to have occurred by the Long Stop Date);

 

   

this document is not distributed to the Nightstar Shareholders in accordance with the Implementation Agreement (provided that the right to terminate the Implementation Agreement pursuant to this provision shall not be available to a party whose breach of any provision of the Implementation Agreement shall have been the primary cause of such failure to distribute this document in accordance therewith);

 

   

an injunction shall have been entered permanently restraining, enjoining or otherwise prohibiting the consummation of the Acquisition and such injunction shall have become final and non-appealable (provided that the right to terminate the Implementation Agreement pursuant to this provision point shall not be available to a party whose breach of any provision of the Implementation Agreement shall have been the primary cause of such injunction); or

 

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any Condition for the benefit of the terminating party which has not been waived (or is incapable of waiver) is (or has become) incapable of satisfaction by the Long Stop Date;

 

   

by Bidder, by written notice to Nightstar, if:

 

   

the Nightstar Board notifies Bidder or publicly states that it no longer recommends (or intends to recommend) that the Nightstar Shareholders vote in favour of the Acquisition;

 

   

an intentional or material breach of the non-solicitation provisions of the Implementation Agreement occurs that results in an acquisition proposal;

 

   

following the Court Meeting or the General Meeting the Nightstar Board notifies Bidder in writing or publicly states that Nightstar will not seek the sanctioning of the Scheme by the Court;

 

   

the Nightstar Board effects a Nightstar adverse change recommendation, (ii) the Nightstar Board shall have failed to include the Nightstar Board recommendation in this document when mailed, or (iii) the Nightstar Board shall have failed to reaffirm the Nightstar Board recommendation within 10 days after Bidder so requests in writing or, if earlier, three days prior to the General Meeting (it being understood Nightstar will have no obligation to make such reaffirmation on more than three occasions); or

 

   

Nightstar breaches any of its representations and warranties set out in the Implementation Agreement or fails to perform any covenant or obligation in the Implementation Agreement on the part of Nightstar such that certain Conditions would not be satisfied and cannot be cured by Nightstar by the Long Stop Date (subject to certain notice provisions); and

 

   

by Nightstar, with written notice to Bidder, if Bidder or Bidco breaches any of its representations and warranties set out in the Implementation Agreement or fails to perform any covenant or obligation in the Implementation Agreement on the part of Bidder or Bidco, in each case, if such breach or failure would reasonably be expected to prevent Bidder or Bidco from consummating the transactions contemplated by the Implementation Agreement and such breach or failure cannot be cured by Bidder or Bidco, as applicable, by the Long Stop Date (subject to certain notice provisions).

Compensatory Payment

Nightstar will pay Bidder a compensatory payment in an amount equal to USD 8,773,855 if the Implementation Agreement is terminated in the following circumstances:

 

   

if the Implementation Agreement is terminated by Nightstar, in response to a superior proposal (as detailed in this section under the heading “Changes in Board Recommendation”);

 

   

if the Implementation Agreement is terminated by Bidder, by written notice to Nightstar, if:

 

   

the Nightstar Board notifies Bidder or publicly states that it no longer recommends (or intends to recommend) that the Nightstar Shareholders vote in favour of the Acquisition, or

 

   

(i) the Nightstar Board effects a Nightstar adverse change recommendation, (ii) the Nightstar Board shall have failed to include the Nightstar Board recommendation in this document when mailed, or (iii) the Nightstar Board shall have failed to reaffirm the Nightstar Board recommendation within 10 days after Bidder so requests in writing or, if earlier, three days prior to the General Meeting; or

 

   

if the Implementation Agreement is terminated by Bidder or Nightstar if the Effective Date has not occurred by the Long Stop Date, or if the Implementation Agreement is terminated by Bidder if:

 

   

any Condition for the benefit of Bidder which has not been waived (or is incapable of waiver) is (or has become) incapable of satisfaction by the Long Stop Date,

 

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following the Court Meeting or the General Meeting the Nightstar Board notifies Bidder in writing or publicly states that Nightstar will not seek the sanctioning of the Scheme by the Court, or

 

   

Nightstar breaches any of its representations and warranties set out in the Implementation Agreement or fails to perform any covenant or obligation in the Implementation Agreement on the part of Nightstar such that certain Conditions would not be satisfied and cannot be cured by Nightstar by the Long Stop Date (subject to certain notice provisions);

and (i) any person shall have publicly disclosed a bona fide acquisition proposal after 4 March 2019 and prior to such termination, which acquisition proposal has not been publicly withdrawn prior to such termination and (ii) within twelve months of such termination, an acquisition proposal (which may be a different acquisition proposal than the one outstanding as at the termination date) is announced and becomes or is declared wholly unconditional or otherwise becomes effective or is completed anytime thereafter.

Limitation on Remedies

In the event of the termination of the Implementation Agreement pursuant to its terms, the Implementation Agreement will be terminated, the compensatory payment will be the sole and exclusive remedy of Bidder against Nightstar and no party shall have any other liability other than for fraud or willful and material breach of the Implementation Agreement prior to termination. The Confidentiality Agreement and certain sections of the Implementation Agreement relating to termination; the compensatory payment; fees, costs, payments and transfer taxes; remedies and waivers; and other miscellaneous provisions will survive termination.

The parties acknowledge and agree that in no event will Nightstar be required to pay the compensatory payment on more than one occasion to the Bidder, whether or not the compensatory payment may be payable under more than one provision of the Implementation Agreement at the same or at different times and the occurrence of different events.

Fees, Costs, Payments and Transfer Taxes

Without prejudice to its other rights pursuant to the Implementation Agreement (or in relation to a breach by any party of the terms of the Implementation Agreement), each party shall pay its own costs and expenses in relation to the negotiation, preparation, execution and carrying into effect of the Implementation Agreement and any other agreement incidental to the implementation of the Acquisition or referred to in the Implementation Agreement.

Notwithstanding any other provision of the Implementation Agreement, all tax returns with respect to any excise, sales, use, transfer (including real property transfer), stamp duty, documentary, filing, recordation and other similar taxes arising directly or indirectly from the entry into the Implementation Agreement or the Acquisition (defined in the Implementation Agreement as “transfer taxes”) shall be timely filed by the party responsible for such filing under applicable law (provided that the parties hereto shall cooperate in the preparation and filing of any tax returns with respect to the transfer taxes, including by promptly supplying any information in their possession that is reasonably necessary for the preparation and timely filing of such tax returns or the payment of any amounts pursuant to this provision). All stamp duty (and all reasonable out-of-pocket costs for the preparation of such tax returns) shall be borne by Bidder and Bidco.

Bidder and Bidco shall be entitled to deduct and withhold (or to direct Nightstar to deduct and withhold) from the Consideration otherwise payable pursuant to the Implementation Agreement such amounts as may be required to be deducted and withheld with respect to the making of such payment under any applicable laws related to tax. To the extent that amounts are so deducted and withheld and timely remitted to the appropriate tax authority by Bidder and Bidco (or Nightstar), such amounts shall be treated for all purposes of the Implementation Agreement as having been paid to the person in respect of which Bidder and Bidco (or Nightstar) made such deduction and withholding. Any amount so withheld will timely be remitted to the appropriate governmental authority.

 

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Amendment and Waiver

No amendment, variation, change or addition to the Implementation Agreement will be effective or binding on any party unless made in writing and executed by or on behalf of each of the parties. No waiver of any provision of the Implementation Agreement shall be effective unless such waiver is in writing and executed by or on behalf of the party waiving such provision.

Jurisdiction; Specific Enforcement

Each of the parties irrevocably submits to the exclusive jurisdiction of the courts of England and Wales and waives any objection to any proceedings in such courts or on the grounds of venue or on the grounds that such proceedings have been brought in an inappropriate forum.

Without prejudice to any other rights and remedies which a party may have, each party acknowledges and agrees that the other party would be materially harmed by a breach of any of the provisions of the Implementation Agreement and that damages alone would not be an adequate remedy for any such breach. Accordingly, each party acknowledges that the other party shall be entitled to seek the remedies of injunction, specific performance and other equitable relief for any threatened or actual breach of any provision of the Implementation Agreement and no proof of special damages will be necessary for the enforcement by a party of its rights under the Implementation Agreement.

Confidentiality Agreement

Nightstar and Biogen entered into the Confidentiality Agreement, pursuant to which each party has undertaken to keep confidential information relating to the other and to the Acquisition and not to disclosure it to third parties (with certain exceptions). These confidentiality obligations will remain in force until the seventh anniversary after the date of the Confidentiality Agreement.

 

10.

Householding Notice

The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements and annual reports with respect to two or more shareholders sharing the same address by delivering a single proxy statement or annual report, as applicable, addressed to those shareholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for shareholders and cost savings for companies.

Nightstar has elected to implement the SEC’s householding rules. Accordingly, only one copy of this document is being delivered to Nightstar Shareholders residing at the same address, unless such shareholders have notified Nightstar of their desire to receive multiple copies.

If you are a Nightstar ADS Holder and, at any time, you no longer wish to participate in householding and would prefer to receive a separate document, or if you are receiving multiple copies of this document and wish to receive only one, please call MacKenzie Partners, Inc., the proxy solicitor for the Nightstar ADSs, at 1-800-322-2885, or +1-212-929-5500 and by email at proxy@mackenziepartners.com.

 

11.

Consents

Each of Centerview and Goldman Sachs has given and not withdrawn its consent to the issue of this document with the inclusion herein of the referencing of their names in the form and context in which they appear.

 

12.

Documents

Nightstar is subject to the filing requirements of the U.S. Exchange Act, and, in accordance with the U.S. Exchange Act, is obligated to file with the SEC periodic reports, documents and other information relating

 

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to Nightstar’s business, financial condition and other matters. These reports, documents and other information may be found at the SEC’s Public Reference Room, 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information regarding the public reference room. You may also obtain copies of this information by mail from the Public Reference Section of the SEC at its address above, at prescribed rates. Nightstar’s public filings are also available to the public from document retrieval services and the Internet website maintained by the SEC at www.sec.gov.

In addition, copies of the following documents are available, subject to any restrictions relating to persons resident in Restricted Jurisdictions, at Nightstar’s website, www.nightstartx.com, until the Effective Date:

 

  (i)

this document and the Forms of Proxy;

 

  (ii)

the memorandum and Nightstar Articles and a copy of the articles of association as proposed to be amended at the General Meeting;

 

  (iii)

the Irrevocable Undertakings;

 

  (iv)

the offer-related arrangements described in paragraph 9 above;

 

  (v)

the written consents referred to in paragraph 11 above;

 

  (vi)

a copy of the Announcement; and

 

  (vii)

Nightstar’s Form 10-K for the year ended 31 December 2018.

The SEC allows Nightstar to “incorporate by reference” documents it files with the SEC. This means that Nightstar can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this document and later information that Nightstar files with the SEC will update and supersede that information. Information in documents that is deemed, in accordance with SEC rules, to be furnished and not filed will not be deemed to be incorporated by reference into this document. Nightstar incorporates by reference the documents listed below and any documents filed by it pursuant to Section 13(a), 13(c), 14 or 15(d) of the U.S. Exchange Act after the date of this document, and before the date of the Nightstar Shareholder Meetings:

 

  (i)

Nightstar’s Form 20-F for the year ended 31 December 2017;

 

  (ii)

Nightstar’s Form 6-K for the three months and nine months ended 30 September 2018; and

 

  (iii)

Nightstar’s Form 10-K for the year ended 31 December 2018.

The content of the websites referred to in this document is not incorporated into and does not form part of this document.

Dated:                  2019

 

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PART VI

SOURCES OF INFORMATION AND BASIS OF CALCULATION

In this document:

 

(a)

as at          (being the last practicable date prior to this document), Nightstar had          Nightstar Shares in issue;

 

(b)

the fully diluted share capital of Nightstar (being          shares) as at          (being the last practicable date prior to this document), was calculated on the basis of:

 

   

the number of issued Nightstar Shares in item (a) above;

 

   

                 outstanding share options that had been granted by Nightstar under the Nightstar Share Schemes as at         , with a weighted average exercise price of                 , resulting in the issuance of                  shares at the USD 25.50 per share consideration using the treasury stock method; and

 

   

                 outstanding share awards that have been granted under the Nightstar Share Schemes that may vest or become exercisable at no cost subject (where applicable) to certain conditions as at                 ;

 

(c)

the value of the Acquisition as at the date of this document (being                 ) is calculated by multiplying the USD 25.50 per share consideration by the fully diluted share capital of Nightstar as at                  (as referred to in item (b) above);

 

(d)

as at 28 February 2019 (being the last practicable date prior to the Announcement), Nightstar had 33,483,821 Nightstar Shares in issue, excluding 49,893 Deferred Shares;

 

(e)

unless otherwise stated, all prices for Nightstar Shares are the Closing Price derived from Nasdaq for the relevant date;

 

(f)

the 30 trading day volume weighted average price of a Nightstar Share is derived from data provided by Bloomberg;

 

(g)

the exchange rate of USD                 : GBP 1 for the conversion of U.S. dollars into pounds sterling for the purposes of this document has been derived from Bloomberg and is based on the exchange rate as at 4.00 p.m. New York time on                  (being the last practicable date before the date of this document);

 

(h)

unless otherwise stated, financial information concerning Nightstar has been extracted from Nightstars’s Form 10-K for the year ended 31 December 2018 or Nightstar’s management sources; and

 

(i)

certain figures included in this announcement have been subject to rounding adjustments.

 

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PART VII

DEFINITIONS

The following definitions apply throughout this document, other than in the Scheme set out at the end of this document and in the notices of the Nightstar Shareholder Meetings, unless the context requires otherwise:

 

2017 Equity Incentive Plan    the equity incentive plan approved by Nightstar in September 2017 whereby Nightstar was initially authorised to issue a total of 1,500,000 ordinary shares as incentives to Nightstar’s employees and directors;
Acquisition    the proposed acquisition by Bidco of the entire issued and to be issued share capital of Nightstar, to be implemented by means of the Sche